text:
    ATTORNEY GENERAL, ex rel. GIBSON, v. BOARD OF SUPERVISORS OF MONTCALM COUNTY.
    1. Counties — County Buildings — Repair and Reconstruction.
    A court-house having been destroyed by fire, the board of supervisors passed a resolution purporting to provide for the repair of the same. The plans and specifications for the work contemplated the retention of only the outside containing walls of the old building, and even they were to be reduced in height, entirely removed at the portico in front of the building, and strengthened at the bottom by a new four-inch brick wall, and flushed with cement. Only such portions of the outside walls were to be retained as were “solid, safe, and not damaged and stand erect.” The portico was to be entirely new. The entrance to the building, the hallways, windows, and doors, and arrangement of rooms were all to be changed, and other changes made. Held, that the action of the board of supervisors contemplated in effect the erection of a new structure, and was invalid, in the absence of a two-thirds vote in its favor.
    3. Same — Destruction by Fire.
    Section 2480, 1 Comp. Laws, limiting the amount to be expended by the board of supervisors in repairing county buildings to $500 in any one year, unless authorized by vote of the electors of the county, applies only to repairs made with money realized by a tax or loan, and does not apply to the repair of a building destroyed by fire, the expense of which is borne by the insurance fund realized on the destruction of the building.
    ■3. Same — Use of Insurance Money.
    ■The board of supervisors may use insurance moneys collected on the injury or destruction of a public building belonging to the county, either to repair or rebuild such building without submitting the question to the electors, but such action must be sanctioned by the votes of two-thirds of all the members elected to the board. Sections 2484, 2485, 2543, 2544, 1 Comp. Laws.
    ■4. Certiorari — Boards of Supervisors — Jurisdiction—Circuit Court Commissioners.
    A circuit court commissioner has authority to allow a writ of certiorari to review the proceedings of a board of supervisors in reference to the rebuilding of a court-house.
    '5. Same — Parties—Attorney General.
    Certiorari to review the proceedings of a board of supervisors with reference to the rebuilding of a court-house are properly instituted by the attorney general.
    Certiorari by John E. Bird, attorney general, on the relation of Frank S. Gibson, to review the proceedings of the board of supervisors of Montcalm county with reference to the reconstruction of a county building.
    Submitted October 21, 1905.
    (Docket No. 253.)
    Proceedings quashed October 31, 1905.

      Allen B. Morse, O. L. & O. B. Barden, E. J. Bowman, and N. O. Griswold, for relator.

      Frank A. Miller and George E. Nichols, for respondent.
   Blair, J.

This is a proceeding by writ of certiorari to review the proceedings of the board of supervisors of the county of Montcalm with reference to the reconstruction of the court-house, containing the jail and sheriff’s office and other county offices, which was destroyed by fire on the 16th day of February, 1905. On the 27th day of February, 1905, the board met in special session, upon the call of the county clerk, upon petition of more than one-third of the members of the board, at Corey’s Hall, in the city of Stanton. The board comprised 36 members, all of whom were present. At the afternoon session of the board, “ Supervisor Bailey moved that there be submitted to the qualified electors of the county the proposition to bond the county for $40,000, to be used to rebuild the court-house,” which motion prevailed by 14 yeas to 13 nays. On the following day, February 38, 1905, Supervisor Holland presented the following resolution :

“ Whereas, the Montcalm county court-house, which included the county offices, the county jail, and sheriff’s residence, was destroyed by fire on the 16th day of February, A. D. 1905, and for this reason it is a public necessity that a new county court-house, for the county offices and other county purposes, and a county jail and sheriff’s residence, be erected upon the present site, the court-house square, in the city of Stanton, Montcalm county, Michigan ; therefore, be it
Resolved, by the board of supervisors of the county of Montcalm, that the erection of a court-house for county offices and other county purposes, and also a county jail and sheriff’s residence, is a public necessity; and be it further
11 Resolved, that it is necessary for the county to borrow forty thousand dollars for the purpose of erecting said court-house, county jail, and sheriff’s residence; and be it further
Resolved, that there be submitted to the qualified electors of said county at the annual spring election, to be held on the first Monday of April, A. D. 1905, the proposition to borrow on the faith and credit of said county, and to issue its bonds therefor, the sum of forty thousand dollars, the proceeds to be used for the purpose of erecting a suitable court-house, and also a county jail and sheriff’s residence — said money so borrowed to be paid in eight equal installments of five thousand dollars each,” etc.

This resolution prevailed by 15 yeas to 10 nays. On the same day Supervisor Jenson presented the following resolution:

Resolved, by the board of supervisors, that Corey’s Hall, situated in the Corey Block, the north side of Main street, in the city of Stanton, be, and the same is hereby, designated as the place of holding the sessions of the circuit court of the county of Montcalm, from this 28th day of February, A. D. 1905, to and until the 1st day of December, A. D. 1905, and that the sessions of this board shall also be held at the same place.
“The motion prevailed, a majority of the members voting therefor by yeas and nays, as follows:
“Yeas — Messrs. Bailey, Bannen, Bower, Boyer, Church, Dales, Freeman, Helmick, Holcomb, J. S., Holcomb, M. H., Holland, Lucas, Lute, Jenson, Kirker, Montgomery, Newton, Nichols, Porter, Pinker, Sharp, Stearns, Train, Westcott (24).
“ Nays — None.”

At the afternoon session Supervisor Holland offered the following resolution:

Resolved, by the board of supervisors of the county of Montcalm, that the chairman of this board be, and he is hereby, requested to appoint a special building committee of said board, consisting of three members, and said committee be, and hereby is, instructed, empowered, and authorized to employ competent architects and adopt plans and specifications for the building of the new court-house, the county jail, and sheriff’s residence, subject to the approval of this board, and said committee is also hereby further instructed, empowered, and authorized to superintend the arrangement for the temporary offices, and also for the temporary jail, and said committee is given full power and authority to do whatever in its judgment it may be deemed expedient and necessary for the purposes herein specified.
“ Mr Bailey moved that the resolution be laid on the table.
‘ ‘ Mr. Bailey’s motion did not prevail, the yea and nay vote resulting as follows:
“Yeas — Messrs. Bailey, Bannen, Bower, Church, Holcomb, M. H., Newton, Sharp, Sprague (9).
“ Nays — Messrs. Boyer, Dales, Freeman, Helmick, Holcomb, J. S., Holland, Lucas, Lute, Jenson, Kirker, Porter, Banker, Stearns, Train, Westcott (15).
“ The resolution was adopted by the following yea and nay vote:
“Yeas — Messrs. Bailey, Bannen, Bower, Boyer, Church, Dales, Freeman, Helmick, Holcomb, J. S., Holcomb, M. H., Holland, Lucas, Lute, Jenson, Barker, Newton, Nichols, Porter, Rinker, Sharp, Sprague, Stearns, Train, Westeott (24).
“ Nays — None.
“ The chairman appointed as such committee Messrs. Holland, Jenson, and Porter.
“ The minutes were read by the clerk, and approved as read.
“Mr. Jenson moved that the board adjourn sine die.
“The motion prevailed.
“The chairman declared the board adjourned.”

The proposition to bond the county for $40,000 was submitted to the electors of the county, as provided in the resolution of February 28th, and was lost by a majority of 577. After the board of supervisors, at its session of April 11th, had canvassed the vote and arrived at this result, the committee on court-house and grounds presented the following report, which was adopted:

“ To the honorable board of supervisors of Montcalm county:
“Your committee on court-house and grounds and insurance beg leave to submit the following report: After the burning of the court-house on the 16th of February, 1905, we furnished the adjusters for the insurance companies an estimated cost of the property destroyed by fire, which estimate showed a loss far greater than the amount of insurance. The adjuster recommended the payment in full of the claim of loss on building and contents, and the insurance companies allowed the same in full, and the same has been paid to the county treasurer of said county, the total amount of such insurance being $20,000, and since which time we have had the records, furniture, and supplies of the several offices insured as follows- The county clerk, judge of probate and commissioner of schools, now located in the Cahalan Building, insured for $5,000. The register of deed’s records and office fixtures have not been insured, for the reason that we found it would cost us 6 per cent, to insure the records in the building where they were confined at the time we were authorized to insure them; and deeming this too high, we made arrangements with the city council to have his office removed into a safer place, and they secured room in the store building of Charles Holland, where the register of deeds has now moved. But no insurance has been taken out upon that office, but will be attended to at once, if this meets with the approval of your honorable body, and which we do recommend. We have no instructions for taking any insurance upon the records, furniture, and supplies of the county treasurer, but would recommend that this office be insured.”

At the afternoon session the building committee, by Supervisor Holland, reported as follows:

“Your committee has considered the matter of repairing the court-house at Stanton, and have secured plans from a competent architect, and we are inforrned'tbat it is practical to repair said court-house, and that the expense of repairing the same, carefully figured and estimated, amounts to $18,071. Therefore we have prepared a resolution which we will present at this time for the consideration of the board:
‘ ‘ Whereas, the Montcalm county court-house was injured and damaged by fire on the 16th day of February, A. D. 1905, and for this reason it is a public. necessity that said court-house be repaired and rebuilt; and,
“Whereas, the cost of repairing and rebuilding said court-house will not exceed the sum of $20,000, and,
Whereas, the said court-house at the time of the damage and injury by fire was insured in the sum of $20,000, which said money is now, or will be by the time the same is required for the purpose of such repairing and rebuilding, in the county treasury, to be used in the repairing and rebuilding of such court-house; therefore,
“Resolved, by the board of supervisors of the county of Montcalm, that the repairing and rebuilding of said court-house is a public necessity, and be it further
Resolved, that the building committee heretofore appointed by said board of supervisors be, and is hereby, authorized and empowered to proceed to repair and rebuild said court-house, the cost of said repairing and rebuilding not to exceed the said sum of $20,000 now on hand to be used for that purpose.
“Mr. Holland moved the adoption of the report and resolution.
“The motion prevailed, a majority of the members voting therefor by yeas and nays, as follows:
“Yeas — Boyer, Dales, Fournie, Freeman, Holcomb, J. S., Holland, Kirker, Lucas, Lute, Montgomery, Porter, Stearns, Westcott, Wood (14).
“Nays — Bailey, Bannen, Bower, Church, Dickerson, Holcomb, M. H., Jenson, Miller, Harden, Sharp, Sprague, Van Wormer (12).
“A majority of the members having voted in favor of the adoption of the resolution, the chairman declared the same duly adopted.”

On motion of Supervisor Dales, the accepting of plans for the repairing and building of the court-house was left in the hands of the building committee. This motion prevailed by 14 yeas and 12 nays.

The foregoing comprises substantially the entire record with reference to the rebuilding or repairing of the courthouse building. The issues raised by the allegations of error relate to the power of the board of supervisors in the premises. The petitioner claims that the proceedings of the board upon the 11th day of April were null and void, for the reasons:

First. That the proposed work was the erection of a new building and not the repairing of the old building, and required a two-thirds vote of all the members of the board elected.
Second. Because the board could not expend to exceed $500 in repairing and rebuilding without submitting the question to a vote of the people.
Third. Because, even if the contemplated building constituted repairs, and not the erection of a new building, still the board could not use the fund provided from the collection of the insurance money without a two-thirds vote of all the members elect.
Fourth. Because of a delegation of powers resting solely in the board of supervisors to the building committee.

The primary question in this case is whether the proposed construction of the court-house, under the action of the board of supervisors of April 11, 1905, provides for the repair of the existing court-house, as it purports to, or whether, under the guise of repairing, it in reality provides for the erection of a new court-house. It is conceded that, if the action of the board had the effect of providing for the erection of a new court-house, such action was void, since it was not supported by the necessary twofhirds vote of all of the supervisors elected. Board of Sup’rs of Wayne County v. Wayne Circuit Judge, 111 Mich. 33.

The dividing line between repairs and new construction is difficult of determination, and there is considerable conflict and uncertainty in the decisions of the courts upon this question. We think, however, that under statutes making a distinction between the erection of new structures and the repairing of existing structures, the repairing of a structure presupposes the retention of the substantial identity of the structure. As said by the court in Wattles v. Coal Co., 50 Neb. 351 (36 L. R. A. 434):

“These words ‘repair’ and ‘keep in repair’ are not technical words, nor should they be given a technical or strained interpretation. They should receive their ordinary interpretation. ‘ To repair,’ as it is ordinarily used, means to amend, not to make a new thing, but to refit, to make good, or restore an existing thing. See Todd v. Inhabitants of Rowley, 8 Allen (Mass.), 51; Stephens’ Ex’rs v. Milnor, 34 N. J. Eq. 358. When we speak of repairing a thing, the very expression presupposes something in existence to be repaired.”

In Ardesco Oil Co. v. Richardson, 63 Pa. 162, it is said:

“Repair means to restore to its former condition, not to change either the form or the material.”

In State v. White, 16 R. I. 591, the court say:

“To repair means, according to Webster:
“ ‘ To restore to a sound or good state after decay, injury, dilapidation, or partial destruction; as, to repair a house, a wall or a ship. ’

‘ ‘ To amend, according to the same author, means:

“ ‘ To change in any way for the better; as (a) by simply removing what is erroneous, corrupt, superfluous, faulty, and the like; (b) by supplying deficiencies; (c) by substituting something else in the place of what is removed.’

“We think that the building of a new bridge in a highway is something more than merely repairing the highway, within the meaning of said section 1. Indeed, the statute seems to view it in this light; for by Pub. Stat. R. I. chap. 34, § 5, it is provided that towns may appropriate money ‘for the building, repairing, and amending of bridges.’ To build is to construct and raise anew, and not simply to amend or repair something previously constructed.

“Says Rogers, J., in Cornell v. Vanartsdalen, 4 Pa. 364, 370, referring to the term ‘ repairs:’

“ ‘ It is not a technical expression, and must be taken as used in its ordinary sense, and does not extend to improvements of the soil. * * * Repairs do not include new buildings, but they are a restoration to a sound state of what had gone into partial decay or dilapidation, or bettering of what had been destroyed in part. * * * The word ‘ ‘ repairs ” is plain, unambiguous, and must be considered as used in the sense in which it is ordinarily understood. To repair is to restore to a sound state, to mend or refit.’”

In Board of Com’rs of White County v. Gwin, 136 Ind. 562 (22 L. R. A. 402), the circuit court under its power to order necessary repairs, after having condemned the court-room as unsafe, approved and adopted certain plans and specifications, and ordered “that said courtroom be repaired in accordance therewith.” The court say:'

“We have already seen that, when the plans and specifications made a part of the order are carried out, there will be left standing only a very small part of the old building, a small portion of the old walls. Everything else will be new, and there will be additions and extensions, all of which will be entirely new. It is manifest from the face of the record of the order that the intent was to come as near building a new court-house as possible, and yet retain any semblance of repairs.
“ It is quite manifest from the order that the only reason that any portion of the old, dilapidated wall was retained was to furnish a nucleus around which repairs could be made with some plausibility, and so that the court might be able to say the work ordered was repairs.
“The work contemplated and described in the plans and specifications cannot be denominated ‘ repairs ’ with any regard to accuracy of expression, as we shall hereinafter see. ”

And again:

‘ ‘ A case much more in point, and nearly parallel — indeed, exactly parallel — with the case at bar as to the extent of the power conferred where a duty to repair is imposed by law, was decided by this court, and a conclusion was therein reached contrary to that reached in the cases above referred to. It was said by Elliott, J., speaking for the whole court in that case, that:
‘“We are unable to resist the conclusion that the trustee, under color of making repairs and removing obstructions, has changed and improved the ditch in several essential particulars. The ditch had been greatly widened and deepened, and, doubtless, much improved, since the amount expended is almost twice the cost of the original ditch. The inference from the facts stated is that the trustee has improved the ditch instead of repairing it.
“‘Under authority to repair, there can be no enlargement and improvement, except in so far as the work of repairing necessarily enlarges and improves. “Repair,” says the supreme court of Pennsylvania, “means to restore to sound or good condition, after injury, or partial destruction.” Pittsburg, etc., R. Co. v. City of Pittsburg, 80 Pa. 72.
“ ‘ The authority of the township trustee was to restore the ditch as nearly as practicable to its original condition, not to enlarge or improve, no matter how much the improvement may have been needed, nor how much property owners may have been benefited.’ Weaver v. Templin, 113 Ind. 303.

“ The same principle was asserted by this court in Western Paving & Supply Co. v. Railroad Co., 128 Ind. 534 (10 L. R. A. 770), where it was said:

“ ‘ The obligation to repair a street is one thing, and the obligation to construct a street is another and different thing. To repair a thing is to restore it to a sound state after decay, injury, dilapidation, or partial destruction. To reconstruct is to construct or build again. One who only assumes an obligation to repair a house could not be required to tear it down apd rebuild it.’

“ So the weight of authority seems tobe that the power to repair does not carry with it or imply the power to rebuild or reconstruct.”

See, also, Fort Wayne, etc., R. Co. v. City of Detroit, 34 Mich. 78; Goodyear Shoe Machinery Co. v. Jackson, 112 Fed. 146 (65 L. R. A. 692); Gavan v. Norcross, 117 Ga. 356; Carlton v. Newman, 77 Me. 408.

The specifications for repairing the court-house provide, among other things, that:

“vThe outside walls of the building are not to be altered or changed in any way; it being the intention and purpose, under the plans as prepared and these specifications, to restore and refit said building for a court-house and county building within the present outside walls, and place the same in a good, safe, and sound condition, with fireproof offices, and in so doing to use and utilize the outside walls and as much of the inside walls as may be, in view of the changes and alterations to be made in the size, conditions, and location of the court-room and other rooms, offices, and vaults as shown by said plans and these specifications, and only so much of the outside and inside walls are to be altered, changed, or added to as may be necessary to carry out the general intention and purpose of repairing said building, and refitting and restoring the same for use as a court-house and county building, remodeled and repaired so as to be more convenient and practicable for public use and better in general appearance than heretofore.
“Such repairs, changes, and alterations are expressly limited to such alterations and changes as may be necessary to carry out the general intention of repairs upon and within said building as shown by the drawings, plans, and these specifications, that is to say: The outside brick walls to be taken down to remove the present brick cornice, and to such level as shown on elevation; also the entire wall of the front of the building at portico, all openings in walls for frames, etc., to be lowered, raised, or cut in new and built as shown on elevations and plans (see brick work), and the inside brick walls and foundations to be retained without change when the same can be used or utilized by repairing where needed, and when such walls and foundations shall conform to said plans and elevations.
“Common Brick Work. — Take down all inside brick walls, chimneys, vaults, and all other inside brick work required to carry out the work according to the plans and specifications.
‘ ‘ Build all brick walls above concrete walls, such as interior walls, backing for exterior walls, flues, patching, and all other brick work except face brick work (see face brick), with good, hard, common, merchantable brick, to be free from lime. * * *
“Build 4-inch brick wall inside around the entire outside walls in subbasement to receive ground floor joists, these bricks to be laid in cement mortar.
“ Also carry up brick wall in cement mortar on the inside of outside walls to receive first-story floor joists. * JÜ *
“ The outside walls of the building that are solid, safe, and not damaged, and stand erect, below the height of the walls as shown on the drawings, are not to be taken down, except where necessary to carry out the general intentions of the plans and these specifications according to the provisions and details as hereinbefore set forth under paragraph headed ‘ General Conditions.’ * * *
“ The foundation footings for all new exterior and interior walls, together with piers, chimneys, flues, etc., to be of the several widths and thicknesses as shown on plans. * * *
“ The new concrete foundation walls to be carried up to the several heights as shown on sectional drawings. * * *
“The entire outside foundation walls that remain standing to be flushed up on the inside with 1 to 2 Portland cement to a full and even surface satisfactory to architect, and all wooden charred timbers to be removed. * * *
“What Building Committee Will Furnish. — Will furnish and lay sidewalks. Will furnish and put in electric wiring. Will furnish and put in call bells. Will furnish and put in all electric-light fixtures. Will furnish and put in all plumbing. Will furnish and put in the entire beating plant, including the setting of boilers, etc. Will furnish vault doors, contractor to set. Will furnish all vault fixtures and steel shutters for windows. Will furnish all desks and cabinet fixtures for offices.”

As appears by the plans and specifications, substantially all that was to be retained of the old building was the outside containing walls, which were to be reduced in height some 10 feet, entirely removed at front of building at portico, and strengthened at the bottom on the inside up to the first-story joists by a new 4-inch brick wall and flushed with cement. Only such portions of the outside walls are to be retained as “are solid, safe, and not damaged and stand erect.” All else was new. The jail and sheriff’s office contained in the old building were entirely omitted from the new, and no provision was made for them elsewhere. The portico was entirely new. The entrance to the building, the hallways, the windows, and doors, the arrangement of the rooms, were all changed, and neither in the exterior nor the interior appearance of the proposed building, with its new portico, was there anything to remind any familiar observer of the old court-house. The old building was determined by the board of supervisors to have been “destroyed by fire,” and a new building required to take its place, to cost 140,000, as shown by their resolutions of February 27th and 28th, and the report of the committee in April shows that the actual loss was “ far greater than the amount of insurance,” which the insurance companies paid in full. We think it must be said, as remarked by the supreme court of Indiana in Board of Com’rs of White County v. Gwin, supra:

“It is manifest from the face of the record that the intent was to come as near building a new court-house as possible and yet retain any semblance of repairs.”

We think, however, that if the contemplated improve-' ments are properly designated as repairs, a two-thirds vote would still be required to render the action lawful. The contemplated repairs were to be paid for out of the insurance money collected by the county treasurer. Sections 2543 and 2544 of the Compiled Laws of 1897 provide as follows:

“ (2543) Sec. 44. When directed by the board'of supervisors, the county treasurer shall cause to be insured any or all the public buildings belonging to the county, as said board shall direct, and the insurance thereon shall be taken in the name of the treasurer, and his successors in office.
“(2544) Sec. 45. In case of the destruction of, or damage done to the buildings so insured, the treasurer shall have authority, and it shall be his duty, to demand and receive the moneys which shall be due on account of such insurance, and in case of neglect or refusal to pay the same, he shall sue for and collect such moneys in his name of office whenever directed by the board of supervisors, and pay the same into the county treasury, to be used in repairing or rebuilding such public buildings.”

It will be observed that there is no express provision in these sections authorizing the board of supervisors to use the money when collected by the treasurer, and unless authority to use such funds is granted by some other section it would be derived from subdivision 16 of section 3484, which reads as follows:

“ Sixteenth. To represent their respective counties, and to have the care and management of the property and business of the county in all cases where no other provision shall be made.”

Express authority is granted by section 3480 to repair public buildings, as follows:

“ (3480) Sec. 7. It shall be the duty of such board, as often as shall be necessary, to cause the court-house, jail, and public offices of their county to be duly repaired at the expense of such county; but the sums expended in such repairs shall not exceed five hundred dollars in any one year, unless authorized by a vote of the electors of such county, as hereinafter provided.”

This section limits the amount to be expended- in any year to $500, unless authority to expend more is granted by the electors of the county. This section clearly does not apply to the insurance fund, since the vote is only to be taken when the money is to be raised by tax or loan. We think, therefore, that subdivision 16, supra, governs, and, as any action under that subdivision requires for its validity a two-thirds vote, the action of the board was invalid. See section 3485, 1 Comp. Laws.

We think the board of supervisors has a right to use the insurance moneys collected, upon the injury or destruction of a public building, either to repair or rebuild the structure, without submitting the question to the electors; but such action must be sanctioned by the votes of two-thirds of all of the members elected.

We think that the circuit court commissioner had authority to allow the writ and that it was not improvidently allowed. 3 Comp. Laws, § 10498; Loder v. Littlefield, 39 Mich. 374; Monroe v. Reynells, 131 Mich. 259. The proceeding was properly instituted by the attorney general. Attorney General v. City of Detroit, 26 Mich. 263.

It results that the proceedings of the board must be quashed, with costs to relator.

McAlvay, Grant, and Hooker, JJ., concurred with Blair, J.

Montgomery, J. I concur on the last point.


source: Caselaw Access Project

author: McAlvay, J.

license: Public Domain

text:
    WHITE STAR LINE v. STAR LINE OF STEAMERS.
    1. Corporations — Powers—Partnership .
    Corporations cannot enter into copartnerships with each other.
    2. Same — Carriers—Pool.
    An agreement between corporations, operating distinct lines of steamers plying between the same points, to pool their earnings, and, after paying the ordinary running expenses of all the steamers and certain extraordinary expenses, to divide the net earnings in certain proportions, does not and cannot create a partnership.
    3. Contribution —Corporations Mutually Liable — Notice to Defend — Sufficiency.
    Notice by one member of a steamer pool to its associates to appear and take part in the defense of a suit for damages examined, with the circumstances of its giving, and held, insufficient to make them privies to the judgment.

      4. Contracts — Illegality—Remedy—Quantum Meruit.
    Where an accounting is permitted or a recovery is allowed for money or property parted with on the faith of an unlawful executed contract, relief is granted, not on the unlawful contract, but upon a quantum meruit, disaffirming the unlawful contract, and imposing liability for the value of benefits actually received.
    5. Monopolies — Illegal Combinations — Control oe Transportation.
    A combination between corporations engaged in the public employment of carrying freight and passengers by boat between points without and within this State, the purpose of which is to create a monopoly in the traffic between such points, and by which the earnings of the combining corporations are pooled and divided between them in stated proportions, is unlawful and invalid under the act of Congress known as the “Sherman Act.” 26 U. S. Stat. 209, chap. 647.

    6. Same.
    Nor does the fact that tne contract might be valid as to traffic between points in this State protect it from being declared invalid under the Federal statute.
    Appeal from Wayne; Brooke, J.
    Submitted January 18, 1905.
    (Docket No. 43.)
    Decided November 7, 1905.
    Bill by tbe White Star Line against the Star Line of Steamers, the Darius Cole Transportation Company, and the Red Star Line for an accounting. From a decree dismissing the bill, complainant appeals.
    Affirmed.

      Gray & Gray (Elliott G. Stevenson, of counsel), for complainant.

      IP. G. Harvey (John J. Speed, of counsel), for defendants.

      As to illegal combinations under modern anti-trust laws, see note to Whitwell v. Continental Tobacco Co. (C. C. A. 8th C.), 64 L. R. A. 689.

   McAlvay, J.

Complainant, a Michigan corporation, seeks of the three defendants, who are also Michigan corporations, by bill in chancery, contribution towards the expense of defending the claim and paying the judgment of one Nellie Young against the complainant company upon a liability which accrued at a time when complainant and defendants were engaged together under a contract in operating a line of steamers.

The contract entered into by the four corporations is as follows:

“Memorandum of agreement between the Star Line of Steamers, Red Star Line, the Darius Cole Transportation Company, and White Star Line, * * * for the purpose of forming and operating a line of steamers on the route between Toledo, Detroit, and Port Huron during the seasons of 1897, 1898, and 1899, three years:
‘ ‘ First. The steamers forming the line shall be the Greyhound, Darius Cole, Arundell, and City of Toledo.
Second. Each boat shall be fitted out in the spring ready for service and laid up in the fall of the year at the expense of the respective owners; and the owner or owners of each boat agree to assume its own marine and fire risks.
Third. The owners or managers of each boat will hire their own captains and engineers.
‘ ‘ Fourth. The steamers forming this line shall be run on the route between Toledo, Detroit, and Port Huron as deemed best for the interest of all concerned.
“Fifth. It is understood and agreed that the Arundell may be taken away not earlier than May 15th and returned not later than October 15th for the season of 1897, and the Idlewild substituted for that portion of the intervening time that she may be required by this pool.
“ It is further agreed that if the Idlewild is cut in two and shortened, that this same arrangement may apply for the seasons of 1898 and 1899. If she is not so shortened, the Arundell is to fill the entire seasons of 1898 and 1899 for the pool.
‘ ‘ Sixth. The said steamers will run from the docks at the foot of Griswold street, Detroit, and pay four thousand dollars ($4,000) per year dock rent to the Star Dockage & Warehouse Company, Limited, for the years from February 1, 1897, to February 1, 1900; this said dock includes the front of the Williams dock on west side of Griswold street; the said steamers also to pay six hundred and thirty-five dollars ($685) to the city of Detroit for repairs at foot of Griswold street this year.
“The Star Island dock and Tashmoo Park and dock will also be used for all of the steamers to this agreement, but any repairs to all said docks shall be borne by their respective owners.
“Said steamers to run from the docks at Toledo and Port Huron and intermediate ports, to be agreed upon by the managers of these steamers.
Seventh. Mr. C. F. Bielman shall be traffic manager of the lines of steamers named, to carry out the purpose of this agreement, and shall act as treasurer at Detroit, and have full charge of clerks and stewards on board of said steamers and of all the help necessary to do the shore business subject to the approval of the managers.
Eighth. The traffic manager shall receive all the earnings from each steamer and shall deposit these earnings in bank each week day to the credit of the Star-Cole and Red and White Star Lines steamers, and shall only be checked out by him on this company’s checks signed by him.
Ninth. The traffic manager shall pay from the gross earnings of the steamers all ordinary running expenses of the said steamers while running in this route incurred during the three years of 1897, 1898, 1899, and all the shore expenses for the years of 1897, 1898, 1899; and extraordinary expenses, such as breakdowns and accidents not exceeding five hundred ($500) dollars at any one time; the excess over that amount will be met by the steamer involved or causing the accident.
Tenth. All expenses shall be paid under this agreement at the end of each month, as far as possible.
Eleventh. The-traffic manager shall pay to the Red and White Star Lines fifty-four (54) per cent, and to the Star-Cole Lines forty-six (46) per cent, of the net earnings of all the steamers while running on this route, after their ordinary running expenses and all the shore expenses have been paid; divisions to be made at the end of each month as far as possible.
Twelfth. The masters and crews of these boats in the line will receive and obey instructions from the traffic manager as to matters appertaining to traffic and affected by this agreement.
Thirteenth. In all advertising matter or official paper of any kind issued by the traffic manager, the identity of the Star-Cole Lines be maintained and be equally prominent with that of the Red and White Star Lines.
Fourteenth. All the running and operating expenses mentioned in this agreement, it is understood and agreed, shall apply only while running on the route between Toledo, Detroit, and Port Huron for the pool.
“Fifteenth. If matters should arise under this agreement involving dispute or misunderstanding that cannot be adjusted by the presidents of these lines, they shall appoint an uninterested party, the decision of a majority of them shall be final and binding upon the parties to this agreement.
“Star Line of Steamers,
‘ ‘ By A. R. Lee, Prest.
“ Red Star Line,
“By A. A. Parker, Prest.
“The Darius Cole Transportation .Co.,
“By A. R. Lee, Prest.
“White Star Line,
“By A. A. Parker, Prest.”

For the seasons of 1897, 1898, and 1899 the parties operated under this contract according to its terms, made and distributed large net earnings, and at the termination thereof paid all known claims and practically closed up the business. On June 5, 1900, after this business had beon substantially closed, a claim for damages was by letter presented by her attorneys in behalf of said Nellie Young, on account of injuries received by her in falling through Smith’s dock at Algonac, where she had gone to meet a friend expected to arrive by the steamer City of Toledo on September 15, 1897. This letter was addressed to the Star-Cole Line, and was delivered to Mr. Lee and by him delivered to Mr. Bielman. The steamer City of Toledo was the property of complainant furnished and used by it in performing the contract herein set forth. The Star-Cole Line consisted of the defendants Star Line of Steamers and the Darius Cole Transportation Company, of each of which Mr. Lee was president. Mr. Bielman was secretary and traffic manager of complainant company, and under the contract was traffic manager and treasurer of the combination. The Smith dock at Algonac was the dock used by the steamers of the four companies while operating under the contract. The letter was given by Lee to Bielman for investigation. He could obtain no information relative to the matter and wrote to the attorneys for Mrs. Young, June 11, 1900, requesting an interview which was afterwards had, when all liability on the part of any of the companies was denied. Suit was commenced against complainant and the owner of the dock in September, 1900. The case was tried in the winter of 1902 and resulted in a verdict of $15,000 against complainant and the dock owner. After appealing the case to this court it was settled for $8,000; each defendant paying $4,000. Complainant contends that the defendants were equally liable with it under the contract, and were notified of the bringing of the suit, and were requested to defend the same; that they were also notified when the case was to be tried; and that they took no steps to participate in the trial. Defendants were not consulted with reference to the settlement and had no knowledge relative to it.

It further appears from the bill of complaint that the complainant in 1900 entered into an agreement with defendant Darius Cole Transportation Company to operate certain of its steamers, and under said agreement has in its hands and is obligated to pay said defendant $3,250, which it prays may be applied on the amount found due upon an accounting between the parties to-this suit.

Complainant’s right to recover is based upon the contract of February 23,1897, above set forth, and complainant prays contribution from these defendants upon Mrs. Young’s judgment and expenses of litigation paid by complainant, according to the proportion named in said agreement for the division of net earnings. Defendants insist that the agreement was not a partnership agreement, but was to create a monopoly, and was therefore contrary to public policy and the laws of the United States; that such agreement between these corporations, if construed to create a partnership, was ultra vires. Defendants also deny that there was any liability on the part of complainant to Mrs. Young, and deny they had sufficient notice of her suit to become bound by the judgment recovered by her.

The law appears well settled that corporations cannot enter into copartnerships with each other. From the agreement itself and the testimony in the case it does not appear that a copartnership was contemplated. It was a combination, designated in the writing as a pool, and by its terms did not, and could not, under the law create a copartnership.

Complainant claims that, by reason of their relations under this agreement, whether creating a copartnership or combination, their liability upon the Young judgment was mutual, and that the claimed notice of the suit was sufficient to require defendant to appear and defend the same. If it should be conceded that complainant’s contention upon this branch of the case is right, we are satisfied from the record that the holding of the learned circuit judge was correct, and that no sufficient notice was given of the pendency of the suit to make these defendants privies to that judgment, and no notice whatever was given of the abandonment of the appeal to this court, and of the settlement and payment, which also included all claim of the husband.

If this agreement should be held by this court to be ultra vires, and therefore illegal, it is claimed by complainant that the case comes within that line of decisions where, when the unlawful contract has been fully or partially performed by one party, equity will decree a proper accounting. Courts at law and in equity have attempted to do justice in these cases between parties so far as could be done consistently with adherence to law by permitting an accounting to be made, or that property or money parted with on the faith of the unlawful contract be recovered, or compensation be made for it. Such recovery, however, has not been maintained upon the unlawful contract, but upon an implied contract to make good, and in all cases without exception, in so far as such contracts have been executed and not executory, upon the equitable principle of holding a party to an accountability for benefits received. From an examination of these cases it appears that the recovery allowed was not based upon the unlawful contract, but upon a quantum meruit, disaffirming the contract and holding defendant liable for the value of benefit actually received.

In Day v. Buggy Co., 57 Mich. 146, this court sustained this doctrine, and allowed a recovery upon a quantum meruit for goods actually furnished under a contract ultra vires, but denied a recoupment by defendant under the contract which could not be enforced.

These parties were engaged in a public employment of carrying freight and passengers between Toledo, Ohio, and Port Huron, Mich. From the testimony of the principal witnesses for both parties, as appears in the record, we find that the purpose of combination or pool between these four corporations was to create a monopoly to control this traffic between these points in different States. As such it is clearly within the prohibition of the Federal statute entitled “ An act to protect trade and commerce against unlawful restraints and monopolies,” known as the “Sherman Act,” and is therefore unlawful and invalid (26 U. S. Stat. 209, chap. 647). It was not an agreement the execution of which incidentally restrained trade and prevented competition, and which might therefore be held to be in reasonable restraint of trade. Its purpose in its inception was to monopolize and control this traffic between those points. It cannot be held that, because this contract might possibly in some cases and under some conditions be held good as to traffic between points in the State of Michigan, it should be held in this case not contravening the Federal statute. For the purposes of this case we must construe the agreement in its •entirety.

The decree of the circuit court is affirmed, with costs.

Grant, Blair, Montgomery, and Ostrander, JJ., •concurred.


author: Ostrander, J.

text:
    GRAHAM v. CITY OF GRAND RAPIDS.
    Municipal Corporations — Contracts—Purchase op Machinery —Board op Public Works — Refusal to Accept.
    The charter of Grand Rapids requires the board of public works to keep a record of its proceedings and determinations, in which shall be shown the vote of each member on every question decided by the board, and further requires all contracts made by the board to be signed by the mayor and president of the board, after their approval by the board and common council. A proposition to equip the city pumping station with a smoke preventer contained a guaranty, and stated that the makers of the proposition would “install and remove at our own expense, if found unsatisfactory by you.” This proposition was accepted by the board of public works, which, after testing the apparatus, decided not to accept the same and requested its removal. Held, that the city’s decision not to accept the apparatus, on the ground of its unsatisfactory character, as disclosed by the record action of the board of public works, was conclusive, and was not subject to judicial review.
    Error to the superior court of Grand Rapids; Newnham, J.
    Submitted June 15,1905.
    (Docket No. 13.)
    Decided November 7, 1905.
    Assumpsit by William S. Graham against the city of Grand Rapids for goods sold and delivered. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error.
    Affirmed.
    The assignor of plaintiff sent to the common council of the city of Grand Rapids the following written proposition:
    “ Grand Rapids, Michigan, Sept. 30th, 1897. “To the Honorable, the Common Council,
    “ City.

      “Gentlemen: We respectfully submit a proposition for the equipment of your pumping station, the four boilers now in operation, with our smoke, cinder, and soot preventer, and refer you to your ordinancé committee, or to F. Raniville, where they can be seen in operation.
    “We guarantee to prevent smoke, soot, and cinders, to save fuel, enabling the use of a low grade of coal, instead of lump coal; to increase the boiler capacity; to furnish better draught, if desired; and to prevent the necessity of blowing out the flues so often, and to not injure your plant.
    “We will install our system in the city waterworks for the sum of six hundred dollars ($600).
    • “We will install and remove at our own expense, if found unsatisfactory by you.
    “Respectfully submitted,
    “Hovey & Co.”
    By the common council the communication was referred to the board of public works. On September 24th the board of public works referred it to its committee on supplies and repairs and its committee on ways and means, “ with power to make a trial as set forth in their proposition.” Hovey & Co. are known also as the Mills Smokeless Furnace Company. The device was installed in December, 1897. Later a demand for the price of the device was presented, and at a meeting of the board of public works, held February 25, 1898, the account was referred to the committee on supplies and repairs, “with instructions to make a thorough test of the apparatus.” Just when the device was removed by agents of the city does not appear. It was in use as late as April 10, 1898. A letter was written by the secretary of the board to Mr. Hovey June 11, 1898, notifying him to remove the apparatus. This letter Mr. Hovey testifies he did not receive. The record of the proceedings of the board shows that at the meeting of May 20, 1898—
    “The committee on supplies and repairs reported verbally that after careful tests made with the Mills smokeless furnaces that they would recommend that the bill presented by the Mills Smokeless Furnace Company he not paid and that the company be requested to remove their apparatus from the pumping station. On motion * * * the report was accepted and adopted.”

      The votes upon these various matters appear in the record. Testimony was offered by the plaintiff tending to prove that the device in question worked properly and satisfied the promises contained in the written proposition. In February, 1899, plaintiff filed with the controller of the city a statement of account, calling for $600 for the apparatus and for interest for one year at the rate of 6 per cent. The claim was examined by the common council and disallowed. Plaintiff brought this suit, and in his declaration averred a contract between the city and Hovey- by which Hovey was to equip four boilers of the pumping station with said device, which was to perform as stated in the proposition already set out, and be removed if it did not so perform, avers the installation, proper performance of the apparatus, acceptance of the apparatus on March 10, 1898, by one E. A. Bates, agent and employe of the city, and representing the board of public works of said city, which had the subject-matter in charge, and the consequent liability of the city and its promise in that behalf to pay the agreed price of the apparatus. In a second count it is averred that the apparatus was, by contract between the city and Hovey, installed for a three months’ trial, upon conditions set out as in the written proposition, that it performed according to the contract for the trial period, and the consequent liability and a promise to pay the purchase price. A fourth count avers a contract to equip the pumping station with the said apparatus for the sum of $600, performed by said Hovey, and consequent liability of the city. The declaration contains, also, the common counts in assumpsit. The declaration was filed January 6, 1904. The plea was the general issue. The case came on to be tried in the superior court of Grand Rapids before a jury, and a verdict and judgment for the defendant were entered by direction of the court. The ground of the ruling was that the charter of the city required contracts made by the board of public works to be in writing, signed by the president of the board and mayor of the city. There was testimony offered tending to show that the device performed according to the terms of the guaranty. Appellant has assigned 62 errors, based upon rulings which excluded testimony offered on the part of the plaintiff, the refusal to charge the jury as requested, and the charge as given.

      Elvin Swarthout, for appellant.

      Moses Taggart, for appellee.
   Ostrander, J.

(after stating the facts). The proposition to the city is to equip boilers, and contains an express guaranty of results. It is also an offer to install and remove the device, “if found unsatisfactory by you.” The device was installed, and later was ordered to be removed. No term of trial was agreed upon. Section 31, tit. 9, of the charter (Act No. 374, Local Acts 1897) requires the board of public works to keep a record of its proceedings and determinations, and that “ therein shall be shown the vote of each member voting upon every question brought before and decided by said board.” Section 30 of title 9 of the charter reads, so far as applicable here:

“All contracts made by the board of public works shall be in the name of the city of Grand Rapids and be signed by the mayor of said city and the president of said board after the same shall have been approved by the board and the common council of said city.”

Without determining whether, by estoppel or otherwise, the city can be held liable upon a contract not in writing, we are of opinion that the judgment should be affirmed, for the reason that the evidence which we can consider, viz., the record action of the board of public works, shows that the device was found to be unsatisfactory. It cannot be said either that plaintiff’s assignor or the city relied entirely upon the warranty made, or that a trial of the apparatus would have been permitted, except upon the promise to remove “if found unsatisfactory by you.” On the contrary, we think it should be said, all of the circumstances, including the nature of the appliance, being considered, that neither the plaintiff’s assignor nor the city contemplated that the question of satisfaction might be left, at any time or in any event, to the judgment of judicial triers. The case is ruled by Walter A. Wood Reaping & Mowing Machine Co. v. Smith, 50 Mich. 565.

Judgment affirmed.

McAlvay, Grant, Montgomery, and Hooker, JJ., concurred.


author: Hooker, J.

text:
    O’BRIEN v. DUNN IRON MINING CO.

    Contracts — Action to Enforce — Privity—Corporations.
    Defendant corporation is not privy to, and is not liable on, a contract made by an individual with another corporation and its stockholders for the sale to him of all the latter’s shares, though made for the purpose of enabling defendant to lawfully acquire the other corporation’s property, and accompanied by a declaration of trust by the individual in favor of defendant’s shareholders.
    Error to Gogebic; Haire, J.
    Submitted June 21, 1905.
    (Docket No. 40.)
    Decided November 7, 1905.
    Assumpsit by Michael P. O’Brien, George A. Curry and Charles M. Humphrey against the Dunn Iron Mining Company on a contract for the sale of a mining lease. There was judgment for plaintiffs, and defendant brings error.
    Reversed.

      8. 8. Cooper (James G. Flanders, of counsel), for appellant.

      James C. Wood (Charles M. Humphrey, of counsel), for appellees.

      Rehearing denied June 4, 1906.

   Hooker, J.

The plaintiffs were stockholders in a corporation, called the “Palms Ore Company.” The property of that corporation consisted of a lease of certain mineral lands, and the machinery, etc., with which it conducted a mining business. It also had a quantity of iron ore which it had taken from its mine. The defendant was a mining corporation organized under the law of Wisconsin. The latter was desirous of acquiring the mine and other property belonging to the former, and negotiations were had, between its president, Ferdinand Schlesinger, and the plaintiffs, who were the only stockholders of the Palms Ore Company, and who managed its affairs. These negotiations appear to have assumed the form of an attempt to purchase the stock of the plaintiffs, in the Palms Ore Company, and the parties agreed upon terms therefor. On September 3, 1895, three contracts were reduced to writing, representing the agreement. Under its organic law the Dunn Iron Mining Company was prohibited from acquiring stock in other corporations. Hugo Schlesinger was not a party to the negotiations, and was not mentioned until after the terms of the arrangement were settled and were being written. It was then stated that the defendant could not purchase the stock, and that for personal reasons Ferdinand Schlesinger was unwilling to sign the contracts. It was suggested by him that he would get his brother, Hugo Schlesinger, to sign it for him, and the contracts were drawn, with Hugo Schlesinger as a party. The contracts were taken from Milwaukee to Chicago, and, upon a written request from Ferdinand, Hugo signed them without reading them, saying he did not care to read them, as his brother had given him instructions to sign all papers presented to him. The contracts are lengthy, and we will endeavor to state their substance, rather than to incorporate copies.

The first was dated September 8, 1895, and purported to be made by and between the Palms Ore Company, party of the first part, the plaintiffs as party of the second part, and Hugo Schlesinger of Chicago, party of the third part. It provided: “ That, whereas,” the first party is owner of certain leasehold rights and interests (describing them), together with certain machinery, etc., under and by virtue of a lease, made May 20, 1895, between the trustees of Francis' Palms, deceased, and the Palms Ore Company (a copy being attached); and “whereas,” parties of the second part are owners of all the stock of the Palms Ore Company, and the third party desires to purchase all of said stock, and operate the mine of said company: Now, therefore, in consideration of $1.00 received and mutual agreements made by each party, it was agreed that the third party should pay $12,500 upon the execution of the agreement, $5,000 as soon as he should have shipped 40,000 tons of ore from the mine, and a sum equal to 50 cents for each ton of ore shipped by him during the season of 1895 in excess of 40,000, payment to be made on or before December 1, 1895. On December 15, he was to pay $7,500, said $5,000 to be paid whether 40,000 tons be shipped or not. Following the foregoing were provisions for the payment of royalties, or the surrender of the mine to party of the first part, and to obtain advances, subject to certain restrictions and limitations. It further provided that, whenever payments aggregating $240,000 should be made, the entire capital stock should be delivered. Other provisions were contained in this writing, but we see no occasion to refer to them. The lease referred to (or a copy) was attached.

The second writing, made and executed contemporaneously with the one described, was signed By the plaintiffs and, being short, is given verbatim :

“ In consideration of one dollar ($1) and other valuable considerations to us in hand paid, we, the undersigned, Michael P. O’Brien, George A. Curry and Charles M. Humphrey, of the city of Ironwood, Michigan, do hereby agree that, in case Hugo Schlesinger, of Chicago, Illinois, shall pay us one hundred thousand dollars ($100,000) on or before the 15th day of December, 1895, we will transfer, assign, and set over unto said Hugo Schlesinger the entire capital stock of the Palms Ore Company, a Michigan corporation, the same being of the par value of fifty thousand dollars ($50,000).
“All amounts which said Schlesinger shall pay or shall have paid under a contract dated the third day of September, 1895, by and between the Palms Ore Company, as the first party, Michael P. O’Brien, George A. Curry and Charles M. Humphrey, as the second party, and Hugo Schlesinger, as the third party, unto the Palms Ore Company are to be considered as part payment of said one hundred thousand dollars and upon payment of said $100,000 as aforesaid, on or before the 15th day of December, 1895, the said contract of September 3, 1895, shall be considered completely fulfilled on his part.
“ Dated September 3, 1895.
“Michael P. O’Brien.
“George A. Curry.
“ Charles M. Humphrey.”

At the same time a third contract was made by and between the Milwaukee Trust Company, of the first part, the Palms Ore Company, the plaintiffs, and Hugo Schlesinger, all of the second part, to the effect that “whereas, the parties of the second part ” had entered into two agreements before mentioned, and the plaintiffs had deposited the certificates of stock referred to, assigned in blank, “now, therefore,” if Hugo Schlesinger shall pay to the party of the first part, for and on account of said agreements, the sum of $100,000 on or before December 15, 1895, the first party shall deliver said certificates to him; that if Hugo Schleslinger shall pay $240,000 on or before December 15, 1906, it shall deliver said certificates to him. Then followed some provisions for the redelivery of the stock to the plaintiffs in case of Hugo Schlesinger’s failure to perform his agreement.

On September 4th Hugo Schlesinger executed and delivered to the owners of the stock of the Dunn Iron Mining Company the following declaration of trust:

“ In consideration of one dollar and other valuable considerations to me in hand paid, I, Hugo Schlesinger, of the city of Chicago and State of Illinois, hereby state, declare, and acknowledge that all benefit and advantage derivable from me under a contract dated the 3d day of September, 1895, between the Palms Ore Company, as the first party, Michael P. O’Brien, George A. Curry, and Charles M. Humphrey, as the second party, and myself, as the third party, together with all benefit and advantage derivable by me under a contract dated September 3d, 1895, between myself and said O’Brien, Curry, and Humphrey, regarding the sale of stock in the Palms Ore Company to me, together with both of said contracts, are held by me for the benefit of and in trust for the owners of the stock of the Dunn Iron Mining Company in the several proportions which the stock in the said Dunn Iron Mining Company is held by the said stockholders respectively; and I hereby agree to transfer and set over at any time, upon request, all of said contracts, and all of my interest therein, the said cestui que trust and beneficiaries paying to me all sums which I may pay or be obligated for under said contracts.
“ Witness my hand and seal this 4th day of September, 1895.
“Hugo Schlesinger.”

Hugo Schlesinger appears to have allowed the Dunn Iron Mining Company to take possession of the mine, which it operated upon its own- account. It made all payments which were made under the contract and on or before December 15,1905, it caused to be paid the full sum of $100,000, stipulated, and the stock of the Palms Ore Company was transferred to Hugo Schlesinger. Thereupon the original lease was surrendered to the trustees of the Palms estate who executed a new lease to the Dunn Iron Mining Company. It will be seen that by these proceedings the Dunn Iron Mining Company succeeded in acquiring all of the property of the Palms Ore Company, as it was doubtless contemplated by all of the parties that it should do. It is claimed, however, by the plaintiffs, that they have not been paid all of the sums stipulated by contract 1, and this action was brought against the Dunn Iron Mining Company to recover a balance claimed to be due for royalties and expenses of mining the 15,000 tons of ore. A set-off, consisting of alleged overpayment, was claimed by the defendant, and the judge, who tried the cause without a jury, rendered a substantial judgment for the plaintiff, upon which defendant has taken a writ of error.

It is contended that the Dunn Iron Mining Company could not lawfully purchase the stock of the Palms Ore Company, and it is claimed that a contract to do so would be absolutely void and unenforceable if made. This, if true, would obviate the necessity of discussing the questions of the agency of Hugo Schlesinger, and ratification and estoppel; for, if the Dunn Company had no power to make' this contract, it could no more make it through an agent than through its officers, and it could not give vitality, by ratification, to a contract that it had not power to make, nor could it, by conduct, estop itself to deny its liability upon a contract which it was powerless to make. These seem to be self-evident propositions. We find it unnecessary to determine whether such a contract, if it had been made by the Dunn Company, would have been void or voidable, or whether the statute in question applies to the purchase by one corporation of the entire property of another corporation, in the accomplishment of which, and as a convenient method, all of the stock of the selling corporation is purchased by the buying corporation. The parties understood that the Dunn Iron Mining Company could not make this contract, and would not attempt it, and while it is plain that it was endeavoring to obtain benefits from the contracts, it was endeavoring to do it by legal methods, and without concealment. It arranged with Hugo Schlesinger to contract for this stock, and when he acquired it he canceled the lease, and a new lease was made to the Dunn Iron Mining Company, executed by the trustees of the Palms estate. That this program was prearranged is probable, and plaintiffs must have known that their contract was with Hugo Schlesinger, and not with the Dunn Iron Mining Company. This is not a case of undisclosed principal, but a case where all understoood that the Dunn Company was not making these contracts, because it could not, and that Hugo Schlesinger was making them to accommodate the Dunn Iron Mining Company, as a means of enabling it to lawfully acquire the lease and property of the Palms Ore Company. Why the parties chose to take this course, instead of making a purchase and sale of the property and lease, we do not know, and it is unimportant. There were probably good and sufficient reasons for it. It is enough that they did not choose to do that. Plaintiffs chose to sell their stock to Schlesinger, and, under these contracts, there is no privity between them and the Dunn Iron Mining Company which will support this action. Under the circumstances, there is a manifest propriety in omitting to determine the question relating to a construction of the contract until other parties shall be before the court, or a different showing made as to defendant’s connection with the case.

The judgment is reversed, and a new trial ordered.

MoAlvay, Blair, Montgomery, and Ostrander, JJ., concurred.


author: Blair, J. Montgomery, J.

text:
      In re DUFF
    •Criminal Law — Indeterminate Sentences — Fixing Maximum Sentence — Effect. ’
    Under the indeterminate sentence law of 1903 (Act No. 136), the fixing by the court of a maximum period of imprisonment on conviction of a crime for which a maximum is provided by law is a mere nullity, and the prisoner stands sentenced by virtue of the statute to the full maximum term provided by the statute denouncing' the crime. Montgomery and MoAlvay, JJ., dissenting.
    Habeas corpus proceedings by Harry Duff to obtain his release from imprisonment in the Detroit house of correction.
    Submitted June 20, 1905.
    (Calendar No. 21,164.)
    Petitioner remanded November 7, 1905.

      John W. McGrath and P. J. M. Hally, for petitioner.

      John E. Bird, Attorney General (George S. Law, of counsel), for respondent superintendent.
   Blair, J.

Petitioner was convicted in the recorder’s court of the city of Detroit of the crime of larceny of property exceeding the value of $25, and upon the 9th day of May, 1904, was sentenced to the Detroit house of correction for the period of not less than 6 months and not more than 15 months. The crime was committed upon the 26th day of March, 1904, which was subsequent to the time the indeterminate sentence law (Act No. 136, Pub. Acts 1903) became operative; and the sentence was imposed under that law. The commitment, under which petitioner was •placed in the custody of the superintendent of the Detroit house of correction, recites the judgment of the court as follows:

“And upon the said conviction the said court, at a session thereof held as aforesaid, did on the 9th day of May, A. D. 1904, adjudge and determine that the said Harry Duff should be committed to the Detroit house of correction, and therein safely kept and employed, according to the laws thereof, for the period of not less than six months and not more than fifteen months from and including this date.”

Petitioner now contends that with the good time he has earned while in prison, and with which he has been credited, the maximum term of imprisonment fixed by the court expired May 23, 1905, at which time he should have been released; that, not having been released by the superintendent at that time, he is entitled to his release in this proceeding, for the reason that the superintendent of the Detroit house of correction has no authority to detain him for a longer period than the maximum term stated in the commitment.

It was held by this court (In re Campbell, 138 Mich. 597) that the trial court had no authority, on a conviction for larceny under the indeterminate sentence act, to fix a maximum term of imprisonment, but that the statute must be referred to for the determination of such maximum term. In the case at bar, the trial judge did fix the minimum term of imprisonment, and, striking out the provision for a maximum term, the sentence was a lawful sentence. The fixing of a maximum term of imprisonment was unauthorized and void. It was mere surplusage, as much so as though the sentence had .provided what clothes the convict should wear, what food he should eat, or when he should be paroled. Rejecting the unauthorized and illegal surplusage, all of the elements of a strictly legal sentence remain. It is no more necessary to look beyond the sentence to determine its full extent and scope than in the Campbell Case, supra. In that case the sentence was to confinement in the Detroit house of correction for a period “not less than one year,” fixing no maximum term. It is necessary in all such cases to refer to the statute to determine the maximum term, since that is fixed by tbe statute and need not be referred to in the sentence at all. The sentence need only be consulted for the determination of the minimum term. A sentence under the indeterminate sentence law is to be interpreted in the light of the statutes upon which it is based, and the maximum punishment fixed by law should be read into and considered a part of the sentence and mittimus. People, ex rel. Bradley, v. Illinios State Reformatory, 148 Ill. 413 (23 L. R. A. 139); Miller v. State, 149 Ind. 607, 618 (40 L. R. A. 109). The unauthorized fixing of the maximum term in the sentence was without force or effect, and conferred no rights upon petitioner.

The petition is dismissed, and the prisoner remanded.

Moore, C. J., and Grant, Ostrander, and Hooker, JJ., concurred with Blair, J.

Montgomery, J.

(dissenting). In my opinion it should not be held that the actual sentence and commitment of the petitioner may be either amended or ignored by the prison authorities. We held in the Case of Campbell, 138 Mich. 597, that the statute providing for indeterminate sentence does not contemplate that the circuit court shall fix a maximum, except in cases where the statute creating or defining the offense provides for punishment ‘ ‘ for life or any term of years. ” It follows from this holding that the sentence in this case was erroneous. Does it follow that the State may attack such sentence collaterally and treat it as in effect and in law a wholly indeterminate sentence? I readily assent that the sentence is good up to the date of the expiration of the maximum fixed, but this by no means implies that an administrative officer can review the action of a court and set at naught a judgment solemnly pronounced. The indeterminate sentence act (Act No. 136, Pub. Acts 1903) contemplates that a sentence shall be pronounced by the court. It would not be contended that the prison authorities could, in the absence of any sentence, seize the convicted criminal and detain him for the period for which he might have been and should have been sentenced. Such a proceeding would fall far short of “ due process of law.” If this be granted, I fail to see how it can be asserted that the administrative officer may ignore the actual sentence pronounced, and substitute another, which in his. opinion (in this particular case in fact) ought to have been imposed.

The prisoner should be discharged..

McAlvay, J., concurred with Montgomery, J.


text:
    PAYMENT v. MURPHY.
    Tenancy in Common — Adverse Possession.
    Where the purchaser of real estate, at a sale under order of the probate court, took immediate and exclusive possession of the entire property, and neither he nor his grantees ever admitted a tenancy in common, but entered and occupied under a deed purporting to convey the entire interest in the property, their occupancy was adverse to the claim of a tenant in common, and, being continued for the statutory period, barred his rights.
    Appeal from Wayne; Rohnert, J.
    Submitted October 6, 1905.
    (Docket No. 76.)
    Decided November 7, 1905.
    Bill by Ella L. Payment against Simon J. Murphy for a partition of certain real estate. Defendant filed an answer in the nature of a cross-bill to quiet title. Prom a decree dismissing the bill, and granting the prayer of the cross-bill, complainant appeals.
    Affirmed.

      Galloway & Graham, for complainant.

      William H. Wetherbee, for defendant.
   Hooker, J.

The premises in controversy consist of a city lot, known as lot 48 of the Riopelle farm, in Detroit, and valuable buildings thereon. They were inherited by the complainant’s mother-in-law from her father, at an early day, and through her death were inherited by her children, the complainant’s husband, Richard C. Payment, and his two brothers, Clovis and Alfred. As early as 1862 their father, Michael G. Payment, was their guardian, and on July 21, 1862, he sold the premises, under an order made by the probate court of the county of Chippewa, to Dominique Riopelle, the highest bidder, for $3,200 cash. This sale was duly confirmed, and the guardian conveyed the premises by deed, August 2, 1862. Before this time Richard had reached his majority. Riopelle took immediate possession, and he and those claiming through him have had exclusive possession under claim of title from that time to the time this suit was commenced, at which time Murphy was in possession. He has since died, and the suit is now defended by his executors. There was a continuous possession for 42 years and upwards.

Defendant introduced the record of a quitclaim deed of the premises from Richard G. Payment to Dominique Riopelle, dated and recorded on March 1, 1864. The complainant claims title through a deed from Richard C. Payment, dated May 9, 1900. Richard C. Payment testified that he never executed the alleged deed to Riopelle. Under this state of the title the complainant filed a bill for partition, claiming to be a tenant in common with Murphy. The learned circuit judge found that complainant was not entitled to relief, and, in accordance with the prayer of the cross-bill, made a decree dismissing complainant’s bill and quieting defendant’s title. The facts justify his action. If it were true that Richard’s title was never lawfully conveyed, the occupáncy was nevertheless adverse. Riopelle and his grantees never admitted a tenancy in common, and entered and occupied under a conveyance inconsistent with the claim of only a two-thirds interest. Their occupancy being adverse, the statute of limitation has run, as under such a possession it may do, even against common owners of the title. 1 Am. & Eng. Enc. Law (1st Ed.), p. 232; 1 Cyc. p. 1072; Blackwood v. Van Vleit, 30 Mich. 118; Campau v. Dubois, 39 Mich. 274; Sands v. Davis, 40 Mich. 14; Watkins v. Green, 101 Mich. 493; Fuller v. Swensberg, 106 Mich. 317; La Fountain v. Dee, 110 Mich. 347; Weshgyl v. Schick, 113 Mich. 22.

The decree is affirmed, with costs.

Moore, C. J., and Grant, Blair, and Montgomery, JJ., concurred.


author: Blair, J.

text:
    BRAZEL v. THOMPSON SMITH’S SONS.

    1. Contracts — Consideration—Patent—Royalties.
    Where two Federal courts of equal rank and jurisdiction have rendered conflicting decrees with reference to the validity of a patent, the patent and the decree sustaining it afford a sufficient consideration for a subsequent contract for royalties entered into by the parties with full knowledge of the decree holding the patent invalid.

      S. Same — Royalties—Question eor Jury.
    Where, in an action for royalties on a patented article, plaintiff admitted that, after a decree holding the patent invalid, there was a serious dispute as to the terms of the contract, but did not admit that defendant had withdrawn from the contract prior to the making of certain sales for which royalties were claimed, as defendant testified, it was proper to leave the question to the jury and to charge that if defendant notified plaintiff, as claimed, that- he would not longer recognize the patent or the contract before the sales in question, plaintiff could not recover royalties thereon.
    8. Limitation op Actions — Aooount—Action on — Items.
    Where, in an action for royalties, there is evidence that certain charges are items of an open running account on which payments have been made within six years prior to the commencement of the suit, there is no error in refusing to charge that the items arising more than six years prior to the suit are barred.
    Error to Cheboygan; Emerick, J., presiding.
    Submitted October 10,1905.
    (Docket No. 28.)
    Decided November 7, 1905.
    Assumpsit by Peter B. Brazel against Thompson Smith’s Sons for royalties on a certain patent. There was judgment for plaintiff, and defendant brings error.
    Affirmed.

      Frost & Sprague, for appellant.

      C. S. Beilley, for appellee.

       Rehearing denied January S3, 1906.

   Blair, J.

On May 13, 1884, a patent bearing that date was issued by the government of the United States to the plaintiff, covering certain improvements in snow plows. On March 2,1885, plaintiff and defendant entered into a contract, whereby the defendant was granted the right to manufacture and sell snow plows covered by the patent in the territory embraced in the States of Michigan and Wisconsin, for a period of 10 years, in consideration of which, the defendant agreed to pay the plaintiff a royalty of $30 upon every machine sold within that territory, and a royalty of $40 upon each machine sold outside of that territory. On December 14, 1894, this contract, under which defendant had manufactured and sold snow plows up to that time, was extended by an indorsement upon the original contract — “to the limit of said within patent, and to include the whole of the United States except Minnesota,” etc. It having been brought to the attention of plaintiff that machines were being manufactured and sold which infringed his patent, the plaintiff brought suit to restrain the alleged infringement of said patents in the United States circuit court for the western district of Wisconsin. This case having been heard upon pleadings and proofs, a decree was entered by the court on the 25th day of October, 1898, whereby the plaintiff’s patents were held invalid, and his suit dismissed (Brazel v. Supply Co., 89 Fed. 584). After the decision annulling plaintiff’s patents, the defendant continued to manufacture and sell the snow plows, and to pay plaintiff the same royalty as before, at least up to August, 1901. Upon this latter date the parties had a discussion of the effect of the decision of the Federal court in Wisconsin, and defendant claims that an agreement was then made, whereby the defendant was to pay plaintiff $15 per plow for all plows manufactured and sold. The plaintiff, however, contends that such was not the agreement, but that $15 was to be received as a royalty only in case 100 township plows were sold, which, not having been accomplished, he was entitled to the original price agreed upon of $30.

In December, 1903, the parties having disagreed as to the terms of the agreement under which they were operating, and being unable to arrive at a satisfactory settlement, the plaintiff brought this action. The plaintiff’s claim, as finally presented to the jury, was made up of the following eight items:

“1. Balance per defendant’s statement, $88.25.
“2. Commission on plow sold at Manistique, $25.
“3. Royalty on 34 plows sold outside of Michigan and Wisconsin previous to December 14, 1894, at $10 each, $340.
“4. Royalty on plows sold in Minnesota after December 4,1894, 12 plows, at $10 each, $120.
“5. Amount charged to Brazel on caulk sharpener account, $338.77.
“6. 135 plows, royalty allowed at $15, which should have been $30 each, $2,025.
“7. 18 plows, manufactured since February 26, 1903, to December 14, 1903, at $30 each, $540.
“ 8. Three plows sold in Minnesota, balance not credited in account, at $25 each, $75.”

It is conceded that plaintiff was entitled to judgment for the first, second, and fifth items, amounting to $452.02, and the assignments of error relate solely to the action of the court with reference to the other items. The case was submitted to the jury, and.a verdict rendered for $1,037.75 in favor of the plaintiff. Defendant alleges:

First. Error in the refusal of the court to charge in accordance with his request to charge and his -theory of the case that the decree of the Federal court for the western district of Wisconsin, in chancery, having invalidated the plaintiff’s patent, he could not recover for any royalties accruing subsequent to that decree, because there was a complete eviction of defendant and an entire failure of consideration to support the contract thereafter.

Second. As to the item of $540, it is further claimed by defendant that these 18 plows were sold by defendant after November 1, 1903, and that no promise was ever made to pay these royalties, but that, on the contrary, defendant had notified plaintiff previous to the sale of these plows that his contract would not be recognized any further by defendant.

Third. Defendant also contends that the court erred in refusing to give its fourth request to charge, withdrawing from the consideration of the jury, as being barred by the statute of limitations, the item of $340, for plows sold outside of Michigan and Wisconsin, previous to December 14, 1894.

First. On the 6th day of June, 1889, a decree was rendered by the circuit court of the United States for the eastern district of Michigan covering the patents in this case, as follows:

“This case having come on to be finally heard upon the pleadings and proofs, and having been argued by the counsel for the respective parties, and the pleadings and proofs herein having been duly considered, it is hereby on this 6th day of June, 1889,ordered, adjudged, and decreed that the letters patent ref erred, to in the complainant’s bill, being letters patent of the United States granted unto Peter B. Brazel, on the 13th day of May, 1384, numbered 298,441, is a good and valid patent of the United States, and that said Peter B. Brazel was the first and original inventor of the improvements therein described and claimed therein, and that the said defendant, by the use of the snow plow described in the said pleadings and proofs, has employed the invention described and claimed by the first claim in said letters patent, and that the said defendant has infringed the said patent and upon the exclusive rights of the complainant under the same. And it is further ordered, adjudged, and decreed that the said Henry Pang-born, his clerks, attorneys, agents, servants, and workmen, be perpetually enjoined and restrained from, directly or indirectly, making, using, or selling to others any of the machines containing or embodying the invention described or claimed in said letters patent, numbered 298,-441.
“ And it is further ordered, adjudged, and decreed that the complainant is entitled to recover from the defendant the profits which he has received or made, and which have accrued to him from said infringement of the aforesaid letters patent, and also the damages which the complainant has sustained thereby. And it appearing to this court that the said complainant has waived his claim to profits and actual damages from said defendant, it is hereby ordered, adjudged, and decreed that he do recover from the said defendant the sum of six cents nominal damages in that behalf sustained.
“ And it is further ordered, adjudged, and decreed that the said complainant do recover of the said defendant his costs in this case to be taxed, and that the said complainant have execution therefor.”

From this decree an appeal was taken to the Supreme Court of the United States. On March 27, 1893, the appeal was dismissed for the reason that the parties had failed to print the transcript of the record.

The first claim of the patent of 1884, referred to by the Federal court in Michigan, as infringed by the defendant Pangborn, is stated by the Federal court in Wisconsin, as follows:

“ (1) The combination with the plow frame or main frame and the supporting runners of the adjustable plows, G, the adjustable pivoted wings, E, and hinged bars, F, substantially as and for the purpose set forth.”

The infringement of this claim seems to have been the only infringement of the 1884 patent before either court. In the answer in the Wisconsin case, the defendant sets up, in answer to the allegation of the bill, that ‘ ‘ the validity of said patent, number 298,441, was affirmed after severe contestation, viz., by a decree of the circuit court of the United States for the eastern district of Michigan,” etc.; that it was not bound by the decree because not a party or privy to the proceedings; and that “no construction was in such or any proceedings placed upon the claims of the said patents that would bring within its terms or make the said claims cover or include any device made or used by this defendant; that, on the contrary, the construction expressly given to the claims by the court in said proceedings expressly excludes the device used by the defendant, as also does the language of the claims themselves.” Judge Bunn, in rendering the decision of the Wisconsin court, at the conclusion of his opinion, uses the following language, which seems to recognize the decree of the Michigan court as correct so far as it went, viz.:

“I think the evidence shows that the complainant is not by any means a pioneer in the art of making snow plows, and should be limited to the specific construction shown in his patent. These the defendant does not use.”

If, however, it be conceded that defendant correctly interprets the decree of the circuit court for the western district of Wisconsin as overruling the decree of the circuit court for the eastern district of Michigan, still, we think the court correctly declined to instruct the jury that, because of that decree, there was a complete eviction of defendant, and no consideration for the subsequent dealings and agreements of the parties. Such dealings and agreements were made with full knowledge of the Wisconsin decree, and were valid, unless the effect of that decree was to entirely avoid them or deprive them of any consideration whatever. In determining this question, the decree of the Federal court in Michigan cannot be ignored. That decree proceeded from a court of equal rank and jurisdiction and was a final decree, so far as that court was concerned, establishing the validity of the plaintiff’s patents. Empire State Nail Co.v. American Solid Leather Button Co., 21 C. C. A. 152; Last Chance Mining Co. v. Tyler Mining Co., 157 U. S. 683.

In 3 Robinson on Patents, p. 588, § 1184, the rule in ease of conflicting judgments is stated, as follows:

“When conflicting judgments have been rendered, the court must follow those which, in view of all the tests of authority, appear to have the higher value, and if the question is still doubtful, and no other evidence is offered, it must decide in favor of the patent. For, though the patent unsupported by a judgment is not sufficient proof of its own validity for the purposes of an injunction, yet when sustained by judgments, it outweighs all other judgments of an equal value.”

See United States Stamping Co. v. King, 7 Fed. 860, 868.

Undoubtedly, the effect of the decree of the United States circuit court for the western district of Wisconsin was final within the territory over which its jurisdiction extended, and, in the absence of the prior decree of the United States circuit court for the eastern district of Michigan, it would have been of high persuasive and, perhaps, controlling force throughout the land. But the former court could not invalidate the decree of the latter court, save in its own territory, and notwithstanding its decree, the plaintiff’s patents remained valid within the territory, subject to the jurisdiction of the Federal court in Michigan, and unconcluded, save only in the territory of the Wisconsin court, until the questions at issue should be settled by the decision of the Supreme Court of the United States. It cannot be held, therefore, as a matter of law, that there was no consideration at all to support the agreements of the parties, and although the defendant might have lawfully withdrawn from its contract after the Wisconsin decree, having seen fit, with full knowledge of all the facts, to accept such consideration as remained as the basis for a contract, it is bound by its terms. In the cases cited by counsel foe defendant and appellant, the fact of conflicting decrees was not present, and the cases, therefore, do not apply.

Second. Defendant gave testimony that in September, 1903, it informed plaintiff that it would no longer recognize his patent or the contract, and claims that as the 18 plows referred to in the seventh item of plaintiff’s claim were sold after that notification, plaintiff was not entitled to recover for such plows, and the jury should 'have been so instructed. The judge submitted the question to the jury, instructing them that if they found that defendant did notify the plaintiff, as claimed, that he could not recover for this item. This we think was as favorable a charge as the defendant was entitled to. Defendant’s counsel say:

“ It is true the plaintiff denied that this language was used, but he testified to circumstances which themselves conclusively show defendant’s withdrawal from the contract. ”

We do not so read the record. While the plaintiff does admit that there was a serious dispute as to the terms of the contract, we do not think that it conclusively appears from his testimony that defendant had withdrawn from the contract prior to the sale of these plows. It was in September, 1903, that defendant claims to have notified plaintiff of its abandonment of the contract, and in October following, he wrote defendant a letter proposing an arbitration of their differences as to royalties. • Defendant Egbert Smith testified as follows:

“You intended then [September 14th] to go on with the contract ?
“A. There never would have been any dispute in the matter.
Q. I say you intended to go on with the contract ?
“A. Certainly, we would have gone on if this letter had not come up, when the man would not carry out his contract, why we simply set back — there was no use going on any further with it. * * *
Q. Now, Mr. Smith, why is it that you have continued to advertise this plow as the ‘ Brazel Patent Snow Plow ?’
“A. Because simply the name. That advertisement in that paper was put in under my direction in the Cheboygan Tribune, in which we advertised, since the commencement of this suit, sale of the ‘ Brazel Patent Snow Plow.’ ”

Third. The defendant’s fourth request to charge was as follows:

“You are instructed that the claim for $340 for plows sold outside of Michigan and Wisconsin, previous to December 14, 1894, being for matters arising more than six years previous to the commencement of this suit, is conclusively presumed to have been settled by the parties, and must not be considered by you in your verdict.”

There is evidence in the record from which the jury would be warranted in finding that these charges were part of the items of an open running account upon which payments had been made within the period of six years prior to the commencement of suit, and the trial judge did not err in refusing this request.

The judgment is affirmed.

Moore, C. J., and McAlvay, Grant, and Ostrander, JJ., concurred.