text:
    NORTH MICHIGAN WATER CO. v. CITY OF ESCANABA.
    1. Municipal Corporations — Franchises—Public Utilities.
    Where a city of the fourth class, under its special charter, had no power to grant an exclusive waterworks franchise, it did not, by adopting a resolution declaring it expedient for waterworks to be constructed but inexpedient for the city to construct them, preclude itself from later constructing the waterworks itself and make it necessary, in case it desired to operate its own system, to purchase the works of the company that, under franchise, had been supplying it with water, even though by the adoption of the resolution the waterworks act (Act No. 113, Laws 1869), under which the water company was incorporated, but which gave the company no exclusive rights in express terms, became a part of the city charter.
    2. Same — Escanaba Charter.
    The special charter of the city of Escanaba (Act No. 245, Local Acts 1883) expressly prohibited the city from granting exclusive franchises.
    3. Samé — Public Utilities — Statutes.
    Act No. 215, Pub. Acts 1895, chap. 26, § 1 (1 Comp. Laws 1915, | 2872), providing that cities of the fourth class may construct, or purchase waterworks, is not limited in operation to cities having no water system.
    4. Same — Franchises—Implied Contracts.
    The mere granting of a franchise by a city does not amount to an implied contract on the part of the city that it will do nothing to impair the value of the franchise or that it will not grant a rival franchise to a competing company or enter into competition itself in reference to the subject of the franchise.
    5. Same.
    The waterworks act did not give to a company, incorporated under its provisions, any exclusive rights in express terms, and none can be implied.
    6. Same.
    A franchise granted by a cftty to a waterworks company for a period expressly fixed at thirty years construed as not being perpetual.

      7. Same — Power to Borrow — Limitations—Statutes.
    Under Act No. 210, Pub. Acts 1915, § 4b (1 Comp. Laws 1915, § 3307), which prohibits a city from increasing by charter amendment, the amount which it may borrow by more than 2 per cent, of its assessed- property valuation at any one time, a city of the fourth class which, by char- ' ter amendment under the home-rule act, has reduced its borrowing rate for the purchase or construction of waterworks from 5 per cent, to 2 per cent., cannot, by a single amendment, restore the former rate.

    8. Appeal and Error — Constitutional Law — Scope oe Review.
    Constitutional questions will not be considered nor passed upon, on appeal, when other decisive questions are raised by the record which dispose of the case.
    Cross-appeals from Delta; Flannigan, J.
    Submitted October 2, 1917.
    (Docket No. 1.)
    Decided December 27, 1917.
    Rehearing denied April 25, 1918.
    Bill by the North Michigan Water Company against the city of Escanaba and others to restrain the construction and maintenance of a municipal waterworks system. From the decree rendered, all parties appeal.
    Modified and affirmed.

      A. H. Ryall and James Frost (Ralph W. Rymer, of counsel), for plaintiff.

      Henry R. Dotsch (Thomas J. Riley and Lucking, H elf man, Lucking & Hanlon, of counsel), for defendants.

      On effect of limitation of municipal indebtedness upon the acquisition of a water supply or sewer system, see notes in 59 L. R. A. 604; 37 L. R. A. (N. S.) 1058.

   Stone, J.

The plaintiff is a corporation organized and existing under the laws of the State of Delaware and has been duly admitted to carry on business in this State, and owns and operates the only waterworks plant and system in the city of Escanaba. The defendant city of Escanaba is a municipal corporation, organized under the fourth-class city act. The facts in the case are not in dispute, but many interesting legal questions are involved in the case.

The history of such water system, and of the steps which have been taken by the parties, are so well and concisely stated by the learned circuit judge who heard the case at the circuit, that we insert a portion of it here:

“The city of Escanaba was incorporated March 28, 1883, under the provisions of Local Act 245 of that year.
• “It was authorized under Public Act 5 of 1870, if not also under Local Act 245 of 1883, as it claims, to construct waterworks for the purpose of supplying itself, and its inhabitants with water. It elected not to do so and instead, on June 10,1886, granted a franchise for that purpose to C. H. Keeler and H. E. Lamb and their assigns. The duration of the franchise was fixbd at 30 years with the right reserved by the city to purchase the works at the end of 20 years by payment of the value thereof, not exceeding, however, a sum sufficient to install a similar plant, to be ascertained by appraisement to be made by three competent hydraulic engineers, to be appointed as in the franchise provided. The franchise specified substantially the plant to be put in under it and contained, generally, the grants and agreements commonly found in franchises for the installation of waterworks, including provisions for the extension of the plant as ordered by the city, for fire hydrant rental to be paid by the city and for water rates to be paid by the inhabitants.
“September 30, 1886, a resolution was passed by the council, declaring it expedient to have waterworks constructed for the purpose of supplying the city and its inhabitants with water, but inexpedient for the city to construct the same. Following the adoption of that resolution and on or about October 4, 1886, the Escanaba Waterworks Company was organized under Act No. 113, Laws of 1869 (3 Comp. Laws 1915, § 11282 et seq.), commonly known as the waterworks act. Immediately upon its organization it commenced, and in due course completed, a waterworks system in Escanaba.
“March. 28, 1898, under commissioner’s deed on foreclosure of mortgage, all and singular the rights, franchises, privileges, and property of the Escanaba Waterworks Company, passed to certain trustees who conveyed the same June 28, 1898, to.the Escanaba Waterworks Company, a West Virginia corporation. April 15, 1912, the rights and property of the last-named company passed, also under a commissioner’s deed on foreclosure of mortgage, to a trustee who conveyed the same, September 12, 1913, to the complainant, a corporation under the laws of the State of Delaware. j
“The plant of the plaintiff, and the real and personal property owned by it used in connection with the operation of the plant, is valuable, and is assessed upon the last assessment roll of the city at $220,000. That the mesne conveyances mentioned were effectual to convey to and vest in the complainant all the property, rights, franchises, and privileges possessed by the Escanaba Waterworks Company, is not questioned.
“A written assignment of the Keeler and Lamb franchise to the Escanaba Waterworks Company was not introduced. If it ever existed it could not be found. The answer asserts the assignment was made and accepted. The bill admits it was at one time held by the complainant’s predecessor. If the question whether the assignment was made and accepted becomes a material one, its execution and acceptance may fairly be presumed from the conduct of the parties. From the time of its organization the Escanaba Waterworks - Company proceeded as if acting under the franchise. It built a water system substantially as therein stipulated, and it and its successors, including the plaintiff, charged and collected a hydrant rental and water rates and made extensions from time to time, as ordered by the city, under its provisions, until its expiration June 10, 1916.
“Previous to the termination of the Keeler and Lamb franchise the city authorities concluded it would be advisable for the city upon the termination of the franchise, to purchase and operate the plaintiff’s plant, if it was purchasable upon terms which they considered just and reasonable and, if not, to construct and operate a new system. For such contemplated purchase or construction they thereupon set about providing ways and means.
“January 1, 1896, Escanaba became subject to Act No. 215, Pub. Acts 1895, known as the fourth-class city act. It is provided by section 14 of chapter 33 of the fourth-class city act, that, whenever any city of the fourth class shall have a population of more than 10,000 it shall be reincorporated as a city of the third class, ‘at the time and in the manner provided by law for the incorporation of cities of the third class.9 Before and at the time of the adoption of the charter amendments referred to later, its population exceeded 10,000, and it is suggested because of that fact that Escanaba automatically became a city of the third class, without authority to longer operate under, or to exercise, the rights and. powers of cities of the fourth class. The suggestion is without mérit. No law for the incorporation of cities of the third class having beeii passed, the defendant continued under, and was entitled to exercise, all the rights and powers granted by the fourth-class city act, among which was the right to purchase or construct new, and to maintain and extend, waterworks for supplying water for the ordinary and extraordinary uses, of itself and its inhabitants, and the power to borrow on its credit and issue its bonds for any sum of money necessary in the purchase, construction, and maintenance of such works, not exceeding 5 per cent, of its assessed valuation.
“For some reason which, evidently, they have since discovered was unsound, the city authorities preferred to obligate the city for not more than 2 per cent, of its assessed valuation, and for the remaining cost of the purchase or construction to issue bonds, for the payment of which the city would not be liable, and secured only by a mortgage of the works and the revenues thereof, with suitable provision for a 20-year franchise to run to the purchaser .in the event of a foreclosure and sale under the mortgage, and so, at a special election held February 14, 1916, called and held in conformity with the provisions of the so-called home-rule act, being Act No. 279, Pub. Acts 1909, as amended (1 Comp. Laws 1915, § 3804 et seq.), section 3 of chapter 26 of the defendant’s charter was amended to read as follows:
‘’'‘Sec. 3. It shall he lawful for any such city, for the purpose of acquiring, operating, constructing, or purchasing a waterworks system for said city, to borrow money on the credit of the city in- a sum not to exceed two per centum of the assessed value of all the real and personal property of the city, as shown by the last assessment roll, and the city may also, for the purpose of acquiring, operating, constructing or purchasing such waterworks system, issue mortgage bonds therefor, beyond the general limit of bonded indebtedness prescribed by law: Provided, That such mortgage bonds issued beyond the general limits of bonded indebtedness prescribed by law, shall not impose any liability upon such city, but shall be secured only upon the property and revenues of such waterworks system, including a franchise, stating the terms upon which, in ease of foreclosure, the purchaser may operate the same, which franchise in no case shall extend for a longer period than twenty years from the date of the sale of such waterworks system, and franchise on foreclosure. Seventy-five per cent, of the net earnings of such waterworks system shall be kept and set aside as and for a sinking fund for the payment of the mortgage bonds at maturity and the interest thereon. The council shall have the; power to fix the time and place of the payment of the principal and interest of the debt contracted under the provisions of this section and to issue the bonds as herein provided, but the rate of interest shall not exceed six per centum per annum: Provided, That the total amount expended for acquiring, operating, constructing or purchasing such waterworks system shall not exceed the estimate of expenses provided for in section four of this chapter.’
“Subsequently it was found desirable to restore, if possible, the city’s borrowing power for waterworks to the limit permitted by the fourth-class city act, and accordingly, at a special election held October 4, 1916, an amendment in the exact words’ of section 3, chapter 26. of the fourth-class city act (1 Comp. Laws 1915, § 3167), was passed in substitution for the amendment of February 14, 1916.
“In the meantime the plaintiff was notified of the intention of the city to operate a water system from and after the expiration of the Keeler and Lamb franchise, and negotiations looking to a purchase of the plaintiffs plant were opened. The city authorities caused plans for, and an estimate of the cost of, a new plant to be made, and also employed one J. E. Byrns, a resident engineer, and later Prof. H. E. Riggs, of the engineering department of the University of Michigan, to make an examination of the plaintiff’s plant and an appraisal of its value. The Riggs’ appraisal amounted to $229,866. The Byrns’ appraisal was about $1,000 less. The city authorities offered, subject to the approval of the electors, to purchase the plaintiff’s plant and pay therefor the amount of the Riggs’ appraisal. Refusing to sell at the Riggs’ appraisal, the plaintiff offered to sell at $375,000, or at a price, whether more or less than $375,000, to be fixed by arbitration as provided by the Keeler and Lamb franchise or by the waterworks act, at the election of the city. The city declined the plaintiffs offer. Unfortunately for all concerned further amicable effort to reach an understanding seems to have been abandoned at this point. The common council directed the city attorney to prepare the necessary resolutions appointing a special election to authorize borrowing $400,000 (representing approximately 5 per cent, of the total valuation of all property of the city on the current assessment roll) to be used in the construction of a new water system. This action, which was taken November 21, 1916, was followed, December 2, 1916, by the commencement of this suit.
“Briefly stated the plaintiff’s claims are first, that under the provisions of the waterworks act it is entitled to the exclusive and perpetual right to operate a water system in Escanaba, subject only to the right of the city to acquire the same by purchase as provided in the act; and, second, that the amendment of the defendant’s charter restoring its bonding limit for waterworks to 5 per cent, of its assessed valuation is in conflict with subdivision 5 of section 4 of the home-rule act (1 Comp. Laws 1915, § 3307), and therefore void; and void also because adopted at an election held without authority of law.
“The bill of complaint avers, in substance, that the attempt of the city to construct and operate a water system in competition with the plaintiff’s, is in violation of its contractual rights, franchise, and privileges; and that, if the city is authorized to construct and operate waterworks, its attempt to provide for the payment of the cost thereof by borrowing on the credit of the city and issuing liability bonds in excess of 2 per cent, of its assessed value, is in violation of the plaintiff’s rights as a taxpayer.
“The waterworks act does not-expressly limit the time during which a corporation organized under it may operate its works. It is said the time is limited by the corporate life of the company fixed by its articles of association, which, in the case of the Escanaba Waterworks Company, was 30 years. That the period of operation is not controlled by the corporated life of the company would seem to be the rule. The mere acceptance of an assignment of the Keeler and Lamb franchise, coupled with the operation of the plant agreeable to its provisions, would not have the effect to limit the period of operation as stated in the franchise, and the proofs are not sufficient to raise any question of equitable estoppel.
“But, as related to this case, all questions concerning the duration of the plaintiff’s right to operate are academic. The question whether the plaintiff is possessed of a perpetual right to operate its works, or of the right to operate the same for any additional time, is not involved in this case. The city has made no attempt to oust the plaintiff from its streets or alleys or to interfere with the continuance of its operations. Its attempt is limited to the installation of a new water system, without interference with, or obstruction of, the plaintiff’s operations in any way. The question is not whether the plaintiff has the right to further operate, but whether it has an exclusive right to operate.
“The resolution of inexpediency passed by the common council was not effective to confer on the Escanaba Waterworks Company, or its successors, an exclusive right to operate, because the grant by the city to any person or corporation of exclusive rights was expressly forbidden by its charter. Local Acts 1883, p. 366 (Act No. 245, chap. 11, § 1, subd. 34). The rights, franchises, and privileges now possessed by the plaintiff are the same, no different or greater than such as were conferred on its predecessor, the Escanaba Waterworks Company, by the waterworks act. This proposition is conceded by the plaintiff, and for the existence' of the exclusive right which it claims reliance is had solely on the provisions of the waterworks act.
“The waterworks act does not, in express terms, grant to a corporation organized under it the exclusive right to operate waterworks in the city where it installs a plant. Cases have been cited and have been considered, which hold the grant of an exclusive right to operate a public utility may be implied. These cases are few and their reasoning unsatisfactory. The correct rule, supported by the great weight of authority and harmonizing with sound reason, is that where a franchise granted by a municipality, or where a legislative act providing for the organization of corporations to construct and operate a public utility, does not, in express terms, grant an exclusive right to operate a utility of the character provided for in the franchise or act, the law will not by implication raise an exclusive right against the public. Skaneateles Waterworks Co. v. Skaneateles, 161 N. Y. 154 (55 N. E. 562, 46 L. R. A. 687); Skaneateles Water Co. v. Skaneateles, 184 U. S. 354 (22 Sup. Ct. 400); City of Joplin v. Light Co., 191 U. S. 150 (24 Sup. Ct. 43); Bienville Water Supply Co. v. Mobile, 175 U. S. 109 (20 Sup. Ct. 40); Long Island Water Supply Co. v. Brooklyn, 166 U. S. 685 (17 Sup. Ct. 718); Detroit Citizens’ Street R. Co. v. City of Detroit, 110 Mich. 384 (68 N. W. 304, 35 L. R. A. 859, 64 Am. St. Rep. 350); Detroit Citizens’ Street R. Co. v. City of Detroit, 171 U. S. 48 (18 Sup. Ct. 732). And see Ludington Water-Supply Co. v. City of Ludington, 119 Mich. 480 (78 N. W. 558), where, speaking of the rights conferred on a corporation organized under the waterworks act, it is said: ‘No exclusive rights were conferred upon the plaintiff.’
“Asserting the validity of the charter amendment increasing the liability bonding limit of the city for waterworks to 5 per cent, of assessed value, it is-claimed by the city that, inasmuch as its rights , and powers under the fourth-class city act were continued by section 2 of the home rule act until ‘otherwise provided by law,’ such rights and powers continued to exist notwithstanding a piecemeal amendment of the charter modifying the same, until otherwise provided by a law passed by the legislature, and that, no law having been passed by the legislature modifying the borrowing power- of cities of the fourth class, the re-, strictions and limitations upon the borrowing power of the defendants are to be found only in the fourth-class city act, and that therefore the city is at liberty to shift its bonding limits for waterworks, or other purposes up and down from time to time, within - the limits allowed by the fourth-class- city act, regardless of any restrictions or limitations on the borrowing power of cities found in the home-rule act; and that, in any event, the 5 per cent, amendment is not in con- - fl-ict with the home-rule act in view of the proviso which was added to subdivision 6 of section 4 in 1913, which reads:
“ ‘Provided, That the cities now incorporated as fourth-class cities may, while so incorporated, incur indebtedness up to the limits contained in -the act of incorporation.’ ”

At the hearing below a decree was entered to the effect that the election of October 4, 1916, was null and void; that the city be enjoined from issuing any bonds, or borrowing any money on the general credit of the city in a sum exceeding 2 per cent, of the assessed valuation of all real and personal property in said city as shown by the last assessment roll, for the purpose of acquiring, operating, constructing, or purchasing a waterworks system for said city; it was decreed that the plaintiff had no exclusive right to operate or maintain a waterworks system in said city, and that the city has the right to acquire, operate, construct, or purchase and maintain a waterworks system and may issue bonds, and borrow money-therefor, within the limits prescribed by law. Both parties have appealed from this decree. We have had the benefit, not only of able oral arguments by learned counsel, -but also of exhaustive briefs.

Counsel for plaintiff in their brief discuss the propositions involved under three general questions: (1) Has the city exhausted any right which it ever had to construct its own waterworks system? (2) Has the plaintiff a perpetual franchise? (3) Are the charter amendments valid?

1. It is urged by plaintiff’s counsel that the city, by adopting the resolution of September 30, 1886, which resulted in the organization of the original company, exhausted the rights of the city to build a plant of its own, and restricted itself to acquiring a plant through the method prescribed by the waterworks act. The substance of that resolution of the city council was:

“That it is expedient to have constructed works, for the purpose of supplying said city and its inhabitants with water, but that it is inexpedient for the city, under the power granted in its charter, to build such works itself.”

Counsel at great length make an analysis of the waterworks act, and urge that if the city now wishes to own and operate its own plant, it must do so in accordance with the provisions of that act, that is, buy the plaintiff’s plant; that having passed the resolution it is precluded for all time from building a plant of its own, under the provisions of law contained in the fourth-class city statute, because by passing such a resolution it exhausted its power in the premises. Counsel cite Ludington Water-Supply Co. v. City of Ludington, 119 Mich. 480 (78 N. W. 558), and Menominee Water Co. v. City of Menominee, 124 Mich. 386 (83 N. W. 127). Both of these cases had to do with hydrant rentals, and there is nothing in either of them that is decisive of the questions here involved. Granting what is claimed that by the adoption of the resolution, the waterworks act became a part of the city charter, there is nothing of exclusive right in its provisions. At the time of the adoption of the Keeler-Lamb franchise, and at the time of the incorporation of the original company, the city of Escanaba had no power to grant an exclusive franchise. Its special charter provided that:

“No exclusive rights, privileges or permits shall be granted by the council to any person or persons, or to any corporation, for any purpose whatever.” Act No. 245, Local Acts 1883, chap. 11, § 1, subd. 34.

It is equally clear that the waterworks act, under which the original company was incorporated, gave no exclusive rights in express terms, and none can be implied. Counsel for plaintiff fail to show where that act takes from the city its right to construct its own waterworks, or water system, after the passage of the permissive resolution. Can it be that because of the passage of the resolution, the city may not, 30 years later, proceed to construct its own waterworks? We find nothing in the statutes cited to prevent it.

On January 1, 1896, the city of Escanaba became a city of the fourth class under the provisions of Act No. 215, Pub. Acts 1895 (1 Comp. Laws, §§ 2956-3371, 1 Comp. Laws 1915, §§ 2872-3294). By section 1 of chapter 26 of that act it was provided that:

“Any city incorporated or reincorporated under the provisions of this act shall have authority to purchase or construct new and to maintain and extend existing waterworks, for the introduction of water into such city, and supplying the same and the inhabitants thereof with pure and wholesome water for the ordinary and extraordinary uses of the inhabitants thereof, the extinguishment of fires and for such other purposes as the council may prescribe.”

There is nothing in this section, as contended by counsel, to limit its provisions to cities having no water system. Section 3 of the same chapter authorizes a bond issue up to 5 per cent, of the assessed value of all the property in the city to raise money “for the purpose of purchasing, constructing, or extending waterworks.”

It is urged by plaintiff’s counsel that the action of the city amounted to a contract. Conceding that it did, there was nothing of exclusive right in its terms. It is also claimed that the rights of the water company came from the State, and. not from the city franchise. It is also said':

“The plaintiff does not base its claim on the Lamb and Keeler franchise, but asserts the rights arising from the waterworks act, thereby claiming its rights directly from the State, and not from the city, and bringing itself within the rules established by this court in Michigan Telephone Co. v. City of St. Joseph, 121 Mich. 502 (80 N. W. 383, 47 L. R. A. 87, 80 Am. St. Rep. 520); Michigan Telephone Co. v. City of Benton Harbor, 121 Mich. 512 (80 N. W. 386, 47 L. R. A. 104); City of Lansing v. Michigan Power Co., 183 Mich. 400 (150 N. W. 250).”

This position is hardly consistent with the claim that there was a contract with the city. It should be borne in mind that we are here dealing with a local matter, and not with companies like the telephone company where franchises are granted by the State. An examination of the respective statutes will show that telephone companies do not need permission from a city to use streets and waters. Nor does the telephone act (Act No. 129, Pub. Acts 1883, 2 Comp. Laws 1915, § 8788 et seq.) make it the duty of the city to grant the company the use of the streets; the State itself gives the company the grant, and no action is required by the city. This is also true of the statute involved in the Michigan Power Co. Case. An examination of the waterworks act shows that the original company received its right to exist from the State, but only after the city council had passed the resolution. It also received certain corporate powers in section 6 of the act (Act No. 113, Laws 1869), viz.:

“To lay water pipes in and through the streets * * * of said city * .* * with the consent of the municipal authorities of the city * * * under such reasonable regulations as they may prescribe.”

So far as any franchise grant is concerned, it was expressly provided in said act that said grant should come from the city, as will appear by an examination of section 15 of the act.

In the instant case it appears that no new or independent ordinance was passed. The ordinance of June 10, 1886, had granted the Keeler-Lamb franchise, which had apparently been assigned to the original company, and had thus made an additional ordinance unnecessary, at least in the minds of the parties. We do not think that the cases last above cited are controlling of this case.

It is asserted by plaintiff’s counsel that certain Pennsylvania and New Jersey cases hold that similar grants prevent the city from constructing competitive plants. We are referred to Atlantic City Waterworks Co. v. Atlantic City, 39. N. J. Eq. 367. In that case the complainants were incorporated under a general statute to supply Atlantic City, the defendant, with water. They afterwards contracted with the city for that purpose, and thereby accepted the provisions of certain ordinances regulating the mode of supplying the water, both for public and private purposes. They received in return exemption from municipal taxation, and also the exclusive privilege of furnishing water to the city and its inhabitants. They constructed their works at a large expense, and supplied the water, as required by their contract, satisfactorily. It was held that, whether or not the city’s grant of the exclusive privilege of furnishing water was ultra vires and void as creating a monopoly, the city had exhausted its power as to providing a water supply, and that the complainants’ franchise was exclusive. It will be noted that in that case the city was restrained from granting a franchise to third persons, when it was at the time under an express contract with the complainants wherein the city agreed that it would not grant to any other persons the right to lay water pipes beneath the surface of the streets, etc.

The force of this decision was much affected by the subsequent case of Atlantic City Waterworks Co. v. Consumers’ Water Co., 44 N. J. Eq. 427 (15 Atl. 581), wherein it is said:

“The covenant is now a nullity, and must, for that reason, be laid out of view in the further consideration of the case. But were it still in force, or rather was the question as to its validity still undetermined, it would not help the complainant, for it is entirely clear, as I think, that unless the statute of 1876 is private and special, authorizing the formation of but a single corporation in any one of the places to which it applies, it is not within the power of the governing body of any municipality, embraced by the statute, to prevent or defeat the formation of a second corporation, by attempting to grant an exclusive right in the streets to the first, or by covenanting with the first that no like right,shall be subsequently granted. A corporation formed under this act does not derive its right to lay its pipes in the public ways from the municipality where it is located, but that right is given by the statute itself.”

We think the New Jersey statute is thus distinguished from the Michigan waterworks act. The leading Pennsylvania case cited by plaintiff’s counsel is White v. City of Meadville, 177 Pa. 643 (35 Atl. 694, 34 L. R. A. 567). Reference to this case will show that the Pennsylvania statute differs from the Michigan act. In the White Case there was another exclusive grant, or right which distinguishes the case. Counsel also refer to the later case of Pennsylvania

Water Co. v. City of Pittsburg, 226 Pa. 624 (75 Atl. 945), as adhering to the White Case. The Pittsburg Case was heard by seven justices. Three of the justices dissented from the majority opinion. We invite attention to the dissenting opinion of Justice Mestrezat in which he refers to the Skaneateles Case. We think that the better doctrine is that the mere granting of a franchise does not amount to an implied contract cn the part of the grantor, that it will do nothing to impair its value, or that it will not grant a rival franchise to a competing company, or enter into competition itself in reference to the subject of the franchise. Skaneateles Water Co. v. Skaneateles, supra; City of Joplin v. Light Co., supra.

We do not doubt that the waterworks act became a part of the charter of Escanaba, but it does not follow that there is anything in that act giving the plaintiff or its assignors exclusive rights. We agree with counsel for defendants that if a legislative act providing for the incorporation of a waterworks company gives no exclusive franchise in express terms, the law will raise no grant thereof by implication. In addition to the cases cited by the circuit judge upon this subject, counsel for defendants cite Charles River Bridge Co. v. Warren Bridge, 11 Pet. (U. S.) 420, 549.

In the Skaneateles Case, in the New York Court of Appeals, Chief Justice Parker said:

“It is probable that the legislature mistakenly assumed that such authorities would not act unjustly or oppressively, but would recognize the property rights of others. Be that as it may, the right to determine whether the property of an existing waterworks* corporation should be taken or not, is clearly submitted to the determination of the local authorities. The refusal of the defendant, therefore, to acquire the plaintiff’s property by proceedings in invitum does not tend to support the plaintiff’s claim for an injunction. The defendant has done precisely what the statute authorizes, and all that remains for the court to determine is whether the act was within .the legislative power, or void because in contravention of the organic law.”

He then discussed the nature of the rights acquired by the plaintiff, and the authorities, including the Charles River Bridge Case, and said of that case:

“The majority of the court agreed that the contract between the State and the plaintiff was not exclusive, and that an agreement not to authorize the erection of another bridge, could not be implied by reason of the settled rules of construction of statutes adopted under the system of jurisprudence which we have derived from the English law, viz., that public grants are to be construed strictly so as to prevent rights froth being taken from the public, or given to a corporation, beyond those which the words of the grant, by their ordinary construction, convey.” (Citing cases.)

We are of the opinion that the court below reached the right conclusion upon this subject.

2., Has the plaintiff a perpetual franchise ? The circuit judge thought this question was not material. We think that the status of the plaintiff is involved in the case. In support of the claim that the rights of the plaintiff acquired from the State through the waterworks act are perpetual, counsel for plaintiff cite and discuss the following cases: City of Lansing v. Michigan Power Co., supra; People v. O’Brien, 111 N. Y. 1 (18 N. E. 692, 2 L. R. A. 255, 7 Am. St. Rep. 684); City of Owensboro v. Telephone Co., 230 U. S. 58 (33 Sup. Ct. 988); Michigan Telephone Co. v. City of St. Joseph, supra; Boise Water Co. v. Boise City, 230 U. S. 84 (33 Sup. Ct. 997).

We do not think that the position of plaintiff finds support in any of the Michigan cases cited. In the Michigan Power Co. Case we declined to consider the question. Upon this branch of the case defendants’ counsel cite the following statutes and cases: The Waterworks Act (Act No. 113, Laws 1869, 3 Comp. Laws 1915, § 11282 et seq.); St. Clair County Turnrpike Co. v. Illinois, 96 U. S. 63, 68; Wyandotte Electric-Light Co. v. City of Wyandotte, 124 Mich. 43 (82 N. W. 821); City of Lansing v. Michigan Power Co., supra; Michigan Constitution of 1850, art. 15, § 10; Act No. 82, Pub. Acts 1901 (3 Comp. Laws. 1915, § 11300, 11301); Rockwith v. State Boad Bridge Co., 145 Mich. 455 (108 N. W. 785); City of Detroit v. Railway, 172 Mich. 136 (137 N. W. 645). Within reasonable space, we cannot discuss all of these cases. They have all been examined.

Counsel for plaintiff rely upon the Owensboro Case, and suggest that it overruled St. Clair County Turnpike Co. v. Illinois. In this we think counsel are mistaken. The facts in the cases were different. In the Owensboro Case the ordinance constituting the franchise began as follows:

“That the Cumberland Telephone Company, its successors and assigns, is authorized and hereby granted the right to erect and maintain upon the public streets and alleys of said city any number of telephone poles,” etc.

Justice Lurton, in the opinion, refers to this fact and said:

“The grant by ordinance to an incorporated telephone company, its successors and assigns, of the right to occupy the streets and alleys of a city with its poles and wires for the necessary conduct of a public telephone business, is a grant of a property right in perpetuity, unless limited in duration by the grant itself, or as a consequence of some limitation imposed by the general law of the State, or by the corporate powers of the city making the grant.” (Citing cases.)

Referring to the St. Clair County Turnpike Co. Case, Justice Lurton said:

“The case * * * has been cited and relied upon as deciding that a grant to a corporation is limited in duration, to the life of the grantee. If the case is to be regarded as holding the wide doctrine for which it has been cited, it is in conflict with the cases cited above. But it does not go so far as claimed. The grant there involved was of the right to extend an existing turnpike over a certain dyke and county bridge, and to maintain a tollgate upon the extension. The company to which this additional right was given had been incorporated for a term of 25 years. The grant was to the particular company by name, and was not to its assigns or successors. This court likened such a grant to a grant at common law to a natural person without words of restriction, * * * ‘creates only an estate for the life of the grantee; for he can hold the property no longer than he himself exists.’ The grant here involved was to the corporate grantee, its assigns and successors, and falls under the principle of the cases above cited.”

In the Boise City Case the ordinance read:

“H. B. Eastman and B. M. Eastman, and their successors in interest,” etc.

In the instant case there were no words of grant in the act, and the powers conferred were not conferred upon the successors and assigns of the company. The act says, in section 6 (3 Comp. Laws 1915, § 11287), “Any corporation formed under this act shall have power to introduce water.” The life of the original corporation, under the act, was 30 years; and the franchise granted to Lamb and Keeler, was to remain in force and effect 30 years. We invite attention to the language of the court in St. Clair County Turnpike Co. Case, supra, which we think has not been modified by subsequent cases. There Justice Bradley said:

“It cannot be presumed that it was intended to be a perpetual grant; for the company itself had but a limited period of existence.”

In the Wyandotte Case Justice Geant, speaking for this court, said:

“An incorporation under this act, a petition to the city to erect poles and wires, or for a franchise for that purpose, and the grant of the same by the city, would make a contract binding for the life of the corporation. It would be immaterial that no time for the existence of the right or the franchise was specified. The grant in such case would be limited to the period of existence fixed by the charter. If a railroad company were organized for a period of 30 years, and a party, natural or corporate, should grant it a right, of way without specifying the time of user, the grant would be for the lifetime of the corporation. The law would imply that both parties contracted with reference to its period of existence. The same rule is applicable here.” (Citing the St. Clair County Turnpike Co. Case.)

Plaintiff’s counsel urge the point that a corporation may take a franchise for a period longer than its own corporate existence, and refers to the City of Detroit v. Railway Co., 184 U. S. 368 (22 Sup. Ct. 410). We do not question that proposition, but say that in this case no franchise was given for a longer period than the corporate existence. See Rockwith v. State Road Bridge Co., supra.

At the time of the giving of the franchise, and the incorporation of the original company in 1886, article 15, § 10, of the Constitution of 1850, read as follows:

“No corporation, except for municipal purposes, or for the construction of railroads, plank roads and canals, shall be created for a longer time than thirty years.”

In 1889 this section of the Constitution was amended so that the legislature might provide for general laws applicable to any corporations, for one or more extensions of the term of such corporations, while such term was running, and not exceeding 30 years for each extension. It was not until 1901 that any provision was made for the renewal of the charter of water companies, when Act No. 82 of the Public Acts of that year was passed (3 Comp. Laws 1915, §§ 11300, 11301). It permitted a renewal of the charter of a water company for an additional period of 30 years, but contained the following:

“Provided, further, That nothing herein contained shall be construed as extending any franchise granted by any municipality for a period of years longer than the original grant.”

The record discloses a certificate of the secretary of State of the reincorporation of the original company on June 3, 1916, filed June 20, 1916, continuing its corporate existence for 30 years from October 4, 1916. Also an assignment of said company to the plaintiff, dated June 3, 1916.

Without quoting further from the authorities cited by counsel, we must conclude that the rights of the original company to conduct waterworks were not perpetual, and expired with its charter; and the rights of the plaintiff are no greater than were those of the original company. This would dispose of the case were it not that the plaintiff is here also as a taxpayer, which makes it necessary to consider the remaining question.

3. Are the charter amendments valid? The learned circuit judge found, and we think correctly, that:

“Cities under the fourth-class city act are entitled to borrow money and issue bonds up to 5 per cent, of assessed value for waterworks, 5 per cent, for lighting works, 3 per cent, for sewers, 2 per cent, for public buildings, and, in addition, certain amounts for street improvement.”

The amendment at special election of February 14, 1916, called and held in conformity with the provisions of the so-called home-rule act, was to the effect that the city might bond to the extent of 2 per cent, of its assessed value for the purpose of a water system. To that extent its charter had been amended. That amendment was, in our opinion, valid. That was the situation on October 4, 1916. On that day it attempted to again amend its charter so as to permit it to bond for 5 per cent, for that purpose. This attempted amendment was void, as it made a single increase in excess of 2 per cent, of 'the assessed value of the real and personal property of the city. In other words; by adding together the sums for which the city of Escanaba, under its fourth-class city charter, could go into debt, a limit of-indebtedness appears. It was a city in which the amount of money which could be borrowed was limited by law. By amendment it lowered it 3 per cent., making the limit for each specified, purpose. It then, by the special election of October 4, 1916, attempted to increase the amount 3 per cent. This is forbidden by section 4, subd. b, of Act No. 210 of the Public Acts of 1915 (1 Comp. Laws 1915, § 3307), because it was a single increase exceeding 2 per cent, of the assessed value of the real and personal property in the city.

This leads us to the same conclusion upon this branch of the case as that reached by the court below. The trial court held that the proviso at the close of section 4, subd. 6, was unconstitutional. It reads as follows:

“Provided, That the cities now incorporated as fourth-class cities may while so incorporated incur indebtedness up to the limits contained in the act of incorporation.”

We have repeatedly held that constitutional questions will not be considered or passed upon when other decisive questions are raised by the record which dispose of the case. People v. Quider, 172 Mich. 280, and cases cited on page 289 (137 N. W. 546).

The plaintiff claims that the language of the decree is too broad. We do not think this is so. The decree below as herein modified is affirmed.

Both parties have appealed. Under the circumstances, neither party will recover, as against the other, any costs in this court, except that each shall pay one-half of the expense of printing the record.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere, and Fellows, JJ., concurred. Brooke, J., did not sit.


source: Caselaw Access Project

author: Stone, J.

license: Public Domain

text:
    KUNZIE v. NIBBELINK.
    1. Contracts — Public Policy — Estates of Decedents — Partition.,
    A contract between tbe beirs of an estate for an amicable settlement and equal division of tbe estate in order to avoid litigation is not void as against public policy.
    2. Same — Oral Contracts — Frauds, Statute op.
    An oral contract among beirs for tbe amicable division of án estate, including both personalty and realty, in order to avoid tbe contesting of a will, is not void under tbe statute of frauds.
    3. Same — Consideration.
    Tbe consideration for an agreement among beirs of an estate for tbe division of tbe estate, in order to avoid litigation and trouble, fails where contests of tbe will are made by some of tbe beirs.
    4. Same — Construction—Intent.
    A contract must be construed so as to effectuate tbe intent of tbe parties when it was made, and, to ascertain tbe intent of the parties, it should be so construed in tbe light of tbe circumstances existing at tbe time it was made.
    5. Same.
    Where several promises are made for an entire consideration, the promises do not become severable, and tbe party insisting upon parts of an entire contract must abide by it in its entirety.
    Error to Kent; Barton, J., presiding.
    Submitted October 12, 1917.
    (Docket No. 109.)
    Decided December 27, 1917.
    Assumpsit by Henrietta Kunzie against William Nibbelink on a contract for the division of property devised by will. Judgment for plaintiff. Defendant brings error.
    Reversed, and no new trial ordered.

      Taggart & Kingston, .for appellant.

      Smedley & Linsey, for appellee.
   Stone, J.

This is one of a number of cases commenced by.plaintiff to recover moneys under an alleged oral agreement to divide equally the estate of Henry J. Nibbelink, deceased, between 10 of the 11 heirs of deceased to avoid litigation and contest and keep the estate out of court. Plaintiff and defendant are the daughter and son of said deceased.

Henry J. Nibbelink was a resident of Grandville, Kent county, who died on December 12, 1915, leaving four daughters and seven sons, all adults.” He left a will, and two codicils. Immediately after the funeral, which took place on December 17, 1915, and on the same day, a meeting of all of the 11 children was had at the home of Mrs. Elizabeth Medema, one of the daughters. It is claimed that at this time the will had hot been read, and the children were not acquainted with its terms. It was also claimed by the plaintiff that at this meeting an oral agreement was entered into, by and between 10 of the 11 heirs, to equally divide their shares regardless of the will, so that the estate would be kept out of the courts.

The claim of the plaintiff, as set forth in the declaration, was as follows:

“And whereas-on, to wit, the said 17th day of December, 1915, at the meeting held as aforesaid, a contract and agreement was then and there entered into by and between all of the above-named heirs, with the exception of Henry J. Nibbelink, Jr., and it was then and there agreed by, and on the part of all ten heirs of said deceased, in order to avoid litigation and trouble, that whatever part of said estate by reason of said will should come to them, the ten heirs of said deceased, the same would be equally divided by and between them, so that the said plaintiff would receive one-tenth of that portion of said estate, which would come to the ten of said heirs.”

It is then alleged that the defendant did then and there promise and agree to pay said.plaintiff his share or portion that would be due her from him; that said plaintiff for and in consideration of the agreement to pay her a portion of said estate, as aforesaid, agreed and promised not to contest the probating of said last will and testament, but agreed to allow the same to go to probate, and agreed not to make any contest in court. It is also alleged that the will was probated, and that the plaintiff filed no objection to the same, and made no contest thereof, and carried out in all respects her part of said agreement; but that the defendant, although he had received a part of said estate, and the balance coming to him under the will was about to be paid and distributed to him, and although he had been requested to perform said agreement, had refused to abide by it, to plaintiff’s damage, etc.

The plea was the general issue, with notice of certain special matters, among others, that the said alleged agreement was void as in violation of public policy; that the same was also void as in violation of the statute of frauds of the State of Michigan, as it would be an attempt to dispose of property, both real and personal, by oral contract in violation of said statute, and that said estate consisted in a large part of real estate; also, that the contract was without consideration, or, if the facts set up in the first instance should be held to be anything that in law would be construed as a consideration, then the same has wholly failed; and further that, if there was any contract, it was agreed that the same should be joined in by each and all of the several parties interested in the said estate, to the end that no contest should be made over said will, and such understanding, if any there was, to be based on such mutual agreement entered into, and was to be kept by each and all of the several parties named in said declaration; and, on the assumption and with the understanding that there was no complete agreement, three separate and distinct contests were entered into by three of the several parties, to wit, Dena Dykhuisen, Anna Van Earrowe, and Elizabeth Medema; that the said alleged contract was a joint contract and not a several one; and that any consideration there might have been for the same failed for the reason stated.

Upon the trial of the case there was a sharp conflict-in the evidence as to whether the agreement claimed by the plaintiff was ever entered into by the ten children. The plaintiff gave evidence tending to support her claim. Six of the sons, including the defendant, all of whom were present at the said meeting, testified that no agreement was made between the ten children on the occasion. It appears from the testimony that it was stated at the meeting that the deceased in his mind, as expressed by the witnesses, “had been off for a long time,” and the plaintiff was permitted to testify that had it not been for such agreement • she would have contested the will. It appeared that four of the children filed contests and objections to the probate of the will in the probate court, and that'Mrs. Medema, having been defeated in the probate court upon her contest, appealed to the circuit court, where the codicil of October 1, 1915, was set aside and held void. By the terms of the codicil Mrs. Medema was to receive $5 only, whereas by the terms of the original will she did receive $6,864.40. It appears that the plaintiff did not make any contest. The estate consisted of the following: Mortgages aggregating $7,-450. Land contracts aggregating $24,139. Real estate appraised at $9,325. .By the terms of the will the other three daughters, including the plaintiff, were given the sum of $5 each, the remainder of the estate being given to the sons and the said daughter Elizabeth Medema.

At the close of the plaintiff’s case defendant moved for a directed verdict of no cause of action for the following reasons:

(1) Because there was no binding contract shown by the evidence.

(2) Because any alleged contract would be void under the statute of frauds as involving both real and personal property, and personal property in excess of $50 in value.

(3) Because there was no completed contract shown, but a mere talk pro arid con that there should be a contract thereafter between the parties.

(5) Because the contest instituted in itself constituted a repudiation and breach of any alleged agreement if there was one, and barred later suit on said agreement.

(7) Because the consideration of the contract, if there was such a contract, was that the estate should be kept out of the courts, and a filing of a contest or objections to the will by any of the parties, to the alleged agreement canceled and rendered the alleged contract void because of failure of consideration.

(10) Because the alleged agreement was a joint agreement by and between all of the parties to it, and a breach by any one party constituted an annulment of the contract.

This motion was overruled by the trial court, and exception duly taken, and evidence was offered and received on behalf of the defendant.

At the close of the evidence, the defendant presented a large number of,requests to charge; among others were the following:

“(4) The undisputed evidence shows that the consideration for the alleged contract, if in fact there was such, failed, as the estate was contested in court. ¥
“(5) The undisputed evidence shows that the alleged contract was joint and not several. No suit would lie by plaintiff alone against this defendant, and your verdict must therefore be for the defendant.”
“(19) The evidence shows that the consideration, if any, in the alleged contract for the agreement by defendant of his interest in said estate, was that the estate of Henry J. Nibbelink, deceased, should be kept out of court, and any will that he might have left should not be contested; and that such alleged agreement not to contest any such will was the consideration in the promise alleged to have been made by said defendant and the other parties alleged to have been joined in the contract. The undisputed evidence showing that contests were instituted to prevent the probate of the will of Henry J. Nibbelink, deceased, you are therefore instructed that the consideration in such alleged contract failed, and the alleged contract therefore cannot be made the basis of an action. Your verdict must therefore be for defendant, no cause of action.”

Other requests to charge invoked the statute of frauds. These requests were all refused, and the case was submitted to the jury, resulting in a verdict and judgment for the plaintiff of $218.65.

The defendant has brought the case here for review', and by appropriate assignments of error the questions raised by said motion and requests to charge are presented.

In our opinion this case should be disposed of upon the ground of the failure of consideration. We recognize and are mindful of the rule of law stated in our opinions, and well expressed in Conklin v. Conklin, 165 Mich. 571, at page 580 (131 N. W. 154, at page 158), as follows:

“We have no doubt that all of the parties in interest in the estate may dispose of the estate by agreement contrary to the terms of the will, and individual legatees may deal with their legacies as they see fit; and persons having interests in the estate, sufficient to entitle them to contest the will, may make valid agreements to forbear a contest. In fact, the law favors such contracts, when made in good faith.”

See, also, Layer v. Layer, 184 Mich. 663 (151 N. W. 759); Sellers v. Perry, 191 Mich. 619 (158 N. W. 144).

In the light of these authorities, we cannot say that the contract claimed. by the plaintiff was void as against public policy, nor do we think that the alleged contract was void under the statute of frauds as claimed by the defendant. Treating the allegéd- contract as valid in the first instance, we are of the opinion that when it appeared, as it did, by the undisputed testimony, that a contest was made and litigation launched by a number of the heirs and legatees, the consideration for said agreement totally failed.

It is elementary that a contract must be construed so as to effectuate the intent of the parties when it was made; and, to ascertain the intent of the parties, a contract should be construed in the light of the circumstances existing at the time it was made.

All of the witnesses agree that the sole object of the conference was to reach an agreement whereby thé will of the deceased should not be contested, and that the estate should be kept out of the courts and litigation avoided. Earlier in the history of the family there had been extended litigation where, as one wit-; ness expressed it, “it all went to the lawyers,” and it was to avoid litigation and contest that the agreement was made, if it ever was made. Here was a mutual contract made by and between ten of the heirs, the agreement on the part of the defendant being dependent upon the agreement upon the part of the other nine that there should be no contest and no litigation. This was the consideration for defendant’s promise. Where several promises are made for an entire consideration, the promises do not become severable. The party insisting upon parts of . an entire contract must abide by it in its entirety. Baldwin v. Fletcher, 48 Mich. 604 (12 N. W. 873).

Here the consideration was the agreement of each for the agreement of every other that the matter would be kept out of the courts, and, this not being done, the consideration failed. To show that this breach was a substantial one, it is only necessary to refer to the record. ' By the codicil of October 1, 1915, Mrs. Medema was to have $5. By reason of her successful litigation and contest she got $6,864.40 and was awarded costs out of the estate. This amount was taken opt of the fund that was to be the basis of the division.

We agree with the position of counsel for the defendant wherein they say:

“If there was any consideration, it was the agreement of each for the agreement of every other, that the matter would be kept out of the courts, and, this not being done, the consideration, if any, failed. It seems to us that this proposition is too clear for argument, and apparently has' been too clear to be the subject of litigation heretofore, for the decisions, so far-as we have examined them, are barren of authority upon this point. The consideration, if any there was, at first, failed when the contests were started, and the estate brought into litigation. * * * Any action, which would bring on the litigation sought to be avoided, would be a clear violation of the contract, whether by one or many, and would result in the total failure of the consideration. * * * The breaching of this' contract by the brother and three sisters of the plaintiff was, in legal effect, the breach of the contract by plaintiff herself, as to this defendant. It has before been held by this court that he who first commits a substantial breach of a contract cannot thereafter maintain an action against the other contracting party for failure to perform. Jones v. Berkey, 181 Mich. 472 (148 N. W. 375).”

The trial court erred in not directing a verdict for the defendant, upon the ground of the failure of the consideration.

The judgment is reversed, with costs to the defendant, and no new trial will be granted.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere,. Brooke, and Fellows, JJ., concurred.


text:
    AMERICAN VARNISH CO. v. GLOBE FURNITURE CO.
    1. Sales — Warranties—Breach of Express Warranty — Trial.
    If an action for the purchase price of varnish, In which a counterclaim for breach of express warranty is made, is tried on the theory of an express warranty, an Implied warranty is excluded.
    2. Same — Breach of Warranty — Damages—Recoupment—Statutes.
    Under the uniform sales act (Act No. 100, Pub. Acts 1913, § 69, 3 Comp. Laws 1915, § 11900), providing that where there is a breach of warranty by the seller, the buyer may, at his election, accept or keep the goods, and set up the breach of warranty by way of recoupment in diminution or extinction of the price, the defendant, in an action to recover the purchase price of varnish, may recoup damages for breach of warranty in that the varnish does not stick.
    3. Same — Breach of Warranty — Evidence—Question for Jury.
    Evidence Jield, to present jury questions as to whether there was an express warranty that the varnish would not stick and whether suck warranty applied not only to tke original order, but also to subsequent ones.
    Error to Wayne; Barton, J., presiding.
    Submitted October 5, 1917.
    (Docket No. 38.)
    Decided December 27, 1917.
    Assumpsit by the American Varnish Company against the Globe Furniture Company for goods sold and delivered. Judgment for plaintiff on a directed verdict. Defendant brings error.
    Reversed.

      Merriam, Yerkes & Simons and Karl B. Goddard, for appellant.

      Millis, Griffin, Seely & Streeter, for appellees.
   Stone, J.

Plaintiff is an Illinois corporation engaged in the manufacture of varnish of various brands, and for various purposes; its principal place of business being at Chicago. Defendant is a domestic corporation, engaged, since 1873, in the manufacture of furniture, principally church pews, with its plant at Northville. It is the claim of defendant that in the summer of 1909 one Charles A. Peters, a salesman of the plaintiff, after several visits to and conversations with Robert C. Yerkes, an officer of the defendant, induced defendant to discontinue the use of the brand of famish which it was then using in the manufacture of its church pews, and to use a brand of varnish manufactured and sold by plaintiff under the trade-name of “granite coach varnish.”

It was the claim of defendant that one feature of the inducement was an express guaranty and warranty made by plaintiff, through its said salesman, that this brand of varnish would not stick, and that it would dry quickly and become hard, and that it was suitable for use by defendant in finishing church furniture which was being built and installed by defendant; that the brand was one with which the defendant was not familiar, and one which had never been used on church pew's, so far as known. In fact one of plaintiff’s witnesses who looked after the shipping and testing of varnishes for the plaintiff testified that he did not know of any of its varnish being shipped for use on church pews other than to the defendant; that as a result of this inducement the defendant ordered various amounts of such varnish from the plaintiff during the years 1909, 1910, and 1911, ■ from time to time, as its requirements demanded, and as. was its custom; that the initial order was made in August, 1909, and most of the others were taken by said Peters, but a few of them were sent direct to plaintiff’s office in Chicago; and that this continued until the early part of January, 1911, during which time plaintiff’s granite coach varnish was used exclusively- by the defendant in its church pew manufacture. It was the further claim of the defendant that its church pews, finished with plaintiff’s granite coach varnish, were,' during this period, sent out to its customers in various parts of the United States, notably North Carolina, Ohio, -Oklahoma, Nebraska, Indiana, New York, Texas, and Michigan; that the varnish was applied to its product by defendant, during said period, by what it claimed was the standard method of application which had been in use by defendant for 25 years; that the varnish appeared hard and in good condition when shipped and after installation in the various churches, until the hot summer weather of the year 1910, and again in 1911, set in, at which time every job that had been sent out with plaintiff’s varnish on it had softened up, and the varnish became so sticky that the clothes of persons sitting in the pews stuck to the seats and' backs; that defendant immediately notified the plaintiff as complaints came in from the various churches, and that plaintiff’s salesman, Peters, hired men and received supplies from plaintiff with which, in the fall of 1910 and 1911, he attempted to refinish and repair some of the work; that defendant also sent men to various places from October, 1910, to June, 1913, at various times in attempts to rectify such trouble; that in the fall of 1910, after a talk' with said Peters and investigation of different jobs sent out, defendant came to the conclusion that the varnish was not adapted to use on church pews where the surface was large, and on the advice of said plaintiff’s salesman discontinued the use of granite coach varnish on such work, and never used any more on the backs of seats and pews, although one drum was used thereafter on sanitary work. • It appeared that at the time of the discontinuance of the use of granite coach varnish by defendant on pew backs and seats a part of the varnish, to wit, that which had been delivered prior to January 18, 1910, had been paid for by. the defendant and the balance, as shown by plaintiff’s bill of particulars, had not been paid for, and defendant refused to pay for the same on the ground that the varnish had been warranted by plaintiff to be adaptable to use on church furniture, and that it would not stick or print as set out in the notice under the plea, and that there had been a breach of such warranty resulting in damages in a greater amount than the plaintiff’s claim. Plaintiff brought suit in assumpsit to recover the purchase price of the varnish then unpaid for, after allowing certain credits.

Upon the trial a large amount of testimony was taken in support of the claims of the respective parties. The plaintiff’s claim was that no warranty was given, and that the terms of sale were the same as printed at the top of each invoice, which contained these words:

“We cannot be responsible for unsatisfactory re-suits, but will make an allowance from invoice price on all unsatisfactory goods returned to us.”

The defendant’s notice under the general issue claimed recoupment on the ground of express warranty of fitness for the purpose for which the varnish was sold as above stated, and that the defendant was unable to collect the purchase price of its church furniture, and was put to great expense, to wit, $700, in attempts to refinish the work after installation in various parts of the country. At the close of the testimony the trial court directed a verdict for the plaintiff, and against the defendant, for the full amount of the plaintiff’s claim, mainly on the ground that recoupment would not lie because defendant was seeking to recoup out of a different contract than that sued upon. Judgment was directed for the plaintiff in the sum of $403.95 damages and costs of suit.

The defendant had requested the court to charge the jury as follows:

“(1) It is the claim of the defendant in this case that the varnish purchased by them from the American Varnish Company was applied by the employees of the defendant in precisely the same manner that they had always applied it, and by the same men under the direction of the same foreman, and that the method employed by them was the standard or usual method of applying varnish to seats and pews. I charge you that, if you find this to be true, that the defendant was under no obligations to show what the defect, if any, in the varnish was, provided, of course, that you find the varnish was sold to the defendant under a warranty that it would not print, or was suitable to be used by the defendant in the manufacture of church furniture, or both. * * *
“(2) If you find from the testimony in this case that the American Varnish Company, through its agent, Mia Peters, made a guaranty or warranty to the defendant that the granite coach varnish which he was selling to defendant would not stick, or print, and was of a quality suitable to be used by defendant in the varnishing of church furniture such as manufactured by defendant, I charge you that such a warranty is an express warranty to that effect.
“(6) It is the claim of the plaintiff in this case that the words: ‘We cannot be responsible for unsatisfactory results, but will make allowance at invoice price on all unsatisfactory goods returned to us. All remittances must be made direct , to the house. Agents are not -allowed to adjust accounts’ — printed at the top of each invoice which was sent to the defendant when a shipment of varnish was made, made in each case a new contract between the parties, and that it is on these contracts that they bring this suit. I charge you that the invoice is no part of the cop-tract made between the parties to this case for the purchase and sale of varnish, and that whatever contract was made for that purpose between the parties was made before the invoices were received by the defendant.”

Of course, under the circumstances, none of these requests was given. There was a motion for a new trial, based upon the following grounds: (1) Because the court erred in directing a verdict in favor of the plaintiff and against the defendant. (2) Because the court erred in refusing to submit to the jury the question of fact as to whether or not the varnish for which suit was brought was purchased and sold under 'the contract as claimed by the defendant, with an express warranty that the varnish would not stick, nor print, and was suitable for the purpose of being applied to church seats and pews, or, as claimed by the plaintiff under the statement printed upon each invoice of varnish as delivered, “We cannot be responsible,” etc. And, further, because the court refused to give defendant’s requests to charge.

This motion for a new trial was denied. Reasons for such denial were seasonably filed, and exception duly entered. The trial court, in denying the motion for a new trial, used the following language:'

“It appeared also to the court from the testimony that the items which the plaintiff seeks to recover are* separate and independent transactions and have no relation to the orders previously obtained and paid for, and that if the representative of the plaintiff company gave to the defendant company an express warranty with respect to goods purchased from the plaintiff company by defendant company, it was established by the testimony that the warranty so made applied only to varnish which the defendant had previously bought from the plaintiff and paid for, and that under the testimony there was no express warranty with respect to the varnish for which plaintiff is suing.
“That defendant, if it had any claim for damages at all, was not entitled to recoup them in this action, because they could do so only on the theory that there was a violation of the terms of a contract, different from that upon which the plaintiff was suing.”

The defendant has appealed, and the assignments of error present the question whether the trial court erred in directing a verdict for the plaintiff, and in refusing to submit to the jury the question whether there had been an express warranty, and, if so, whether or not such warranty covered all the shipments which had been made to the defendant by the plaintiff from time to time. The defendant also takes the position, by its assignments of error, that if there was no express contract, there was an implied contract of fitness for the purpose for which the varnish was sold, and that the court erred in not submitting that question to the jury, as requested.

We will say, in passing, that the pleadings and evidence on the part ,of the defendant in the case were directed to an express warranty, and the case was tried upon the theory of an express warranty. We • think that under these circumstances an implied warranty was excluded. This court has frequently held, that an express warranty excludes an implied warranty. An express warranty having been claimed by the defendant, no other warranty can be implied. McGraw v. Fletcher, 35 Mich. 104; Monroe v. Hickox, Mull & Hill Co., 144 Mich. 30 (107 N. W. 719).

It is the contention of the appellant that recoupment would lie in this case, and that the defendant was not setting up “another and different contract” from the one declared upon. It is urged that it cannot be that every dispute of the slightest detail of plaintiff’s claim in the same transaction amounts to the setting up of a different contract so as to preclude recoupment. It is said that the action of the trial court was controlled by the case of Sharpless Separator Co. v. Brown, 174 Mich. 16 (140 N. W. 528), where this court announced the familiar doctrine that recoupment must arise out of and be based on the contract declared on and approved by plaintiff. We do not think that this case announced any new doctrine. There the plaintiff sued in assumpsit to recover the purchase price of a cream separator sold and delivered to defendant on his written order. The defendant resisted the claim on the ground that the sale was, a conditional one, depending on the separator doing certain work, and claimed damages for the failure of the separator to do such work. As the testimony was in conflict as to what the contract was, the trial court submitted the question to the jury to determine whether the sale was absolute or conditional. This court held that if the defendant was permitted to recoup it would-have to be against the contract which plaintiff sued on, and not against the contract which he set up in opposition to the plaintiff. This holding, in view of the verdict for defendant on his claim for damages, resulted in this court’s affirming upon condition that defendant remit the amount of his damages, and ruled that if the damages by way of recoupment were thus remitted the judgment for the defendant should stand, as the jury had found the contract to be as claimed by defendant, and the plaintiff had thus failed to make a case. In other words, the plaintiff there had declared upon an absolute contract of sale. It turned out by the verdict of the jury that there was no absolute contract, but a conditional sale only. Therefore the defendant was in no position to recoup his damages for the plaintiff had failed to prove an absolute sale.

In the instant case the plaintiff was seeking to recover for goods sold and delivered to the defendant. The defendant insisted that as a part of the contract of sale the plaintiff had warranted the articles in the particulars specified. We think there is a broad distinction between a conditional sale, and a sale with a warranty. In our opinion the trial court should have submitted to the jury the question whether there was an express warranty in the sale of the articles, for recovery of the price of which the suit was brought. Mr. Mechem has well said in his work on Sales, at section 1231:

“Warranty is to be distinguished from condition; condition is a statement or promise which forms the basis of the contract, and a breach of it entitles the party relying upon it to treat the contract at an end. Warranty, on the other hand, is a collateral or subsidiary promise, the breach of which does not ordinarily terminate the contract, but gives rise merely for an action for damages.”

Again, at section 1218:

“The distinction in legal effect is important. Nonperformance of the condition, unless waived, prevents the buyer’s liability from attaching, it justifies him in rejecting the goods, repudiating the contract and treating it at an end. The proof of warranty, however, has no such effect; the buyer’s liability attaches, he may not usually reject the goods or rescind the contract, and he must find his remedy in an action for damages for injury caused him by the breach.”

To« insert a warranty into a sale is merely to add a collateral or subsidiary promise to the same contract. Thus the uniform sales act of 1913 (Act No. 100, Pub. Acts 1913, § 69, 3 Comp. Laws 1915, § 11900), is merely declaratory of the common law when it provides :

“Where there is a breach of warranty by the seller, the buyer may, at his election:
“(a) Accept or keep the goods and set up against the seller the breach of warranty by way of recoupment in diminution or extinction of the price."

We gather from the language of the trial court in overruling the motion for a new trial that it was of the opinion that the warranty, if any, did not apply to each order or shipment of the varnish. A perusal of this record satisfies us that this became a question of fact for the jury under all the circumstances in the case, and that the court should have submitted to the jury the questions first: Whether there was an express warranty in the first instance; and, secondly, if so, whether that warranty applied to the subsequent orders as well as to the first one. It goes without saying that if each order was an independent and distinct contract, then the court was right in saying that no recoupment could be allowed because not based on the contract sued upon. We think that this begged the entire question, which under the evidence became a question of fact, to be submitted to the jury under proper instructions, and that the court erred in directing a verdict for the plaintiff. Other questions, discussed by counsel, presented questions of fact which should not have been disposed of as questions of law.

The judgment of the circuit court is therefore reversed, and a new trial granted, with costs to the defendant.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere, Brooke, and Fellows, JJ., concurred.


text:
      In re BURNHAM’S ESTATE. BRACKETT’S ESTATE v. BURNHAM’S ESTATE.
    1. Husband and Wife — Estates of Decedents — Claims by Wife —Evidence—Instructions.
    In an action by a husband as executor of his wife’s estate on a claim against an estate for board, room, etc., furnished decedent, an instruction that it was the claim of plaintiff that plaintiff’s wife was the owner of the claim by reason of an arrangement made between them, that the only evidence thereof was the evidence of the husband that he said to his wife that “whatever she earned was hers,” and that such words could not be extended beyond what she earned, which might include washing, ironing and mending, but not board and lodging if the evidence showed that the husband as head of the family supplied them, and as there was no evidence showing what the wife earned, she could not recover, was improperly refused.

    2. Executors and Administrators — Disallowance of Claims— Appeals.
    An appeal from the decision of the commissioners of claims in the probate court disallowing a claim to the circuit court is in time where the report of commissioners is filed with the probate court March 16th and a claim for appeal is filed April 5th in the probate court.
    3. Husband and Wife — Estates of Decedents — Claims by Wife —Estoppel.
    A wife is not estopped from presenting a claim for her own services and earnings against an estate by the fact that she assists her 'husband in making out his claim against the estate for board, room, repair of clothing, etc., which* is not presented to the commissioners.
    Error to Kalamazoo; Weimer, J.
    Submitted October 16, 1917.
    (Docket No. 140.)
    Decided December 27, 1917.

      Anna C. Brackett presented a claim against the estate of Chauncey Burnham, deceased, for services rendered. The claim was disallowed by the commissioners, and claimant appealed to the circuit court. On the death of claimant, the appeal was prosecuted in the name of William A. Brackett, executor. Judgment for claimant, defendant brings error.
    Reversed.

      Lincoln H. Titus, for appellant.

      Alfred S. Frost and Corwin & Norcross, for appellee.

      As to right of married woman to maintain action for board or lodging of, or services rendered to, a third person living in the home, see note in 46 L. R. A. (N. S.) 665.

   Stone, J.

This case involves a claim made by Anna C. Brackett, wife of William A. Brackett of the village of East Grand Rapids, against the estate of Chauncey Burnham, deceased, for board, room, laundry, repairing clothing, etc., furnished for said Chauncey Burn-ham, who was an uncle of William A. Brackett. Chauncey Burnham died intestate on January 12, 1915, at the home of a distant relative in the county of Kalamazoo, and his estate is being administered in the probate court of that county.

At first a claim against said estate was made out by William A. Brackett and sent to the administrator, aggregating $1,525, as follows:

Board and room from March 29, 1907, to March 22, 1908, 34 weeks, at $4 per week.......... $136
Board and room from March 22, 1908, to November 21, 1914, making 347 weeks, at $4 per week.... 1,388
August 30, 1911, repairing watch................. 1

This account was made out in the handwriting of Anna C. Brackett, in the name of her husband, and duly sworn to by the latter. It also appeared that this claim was never presented to the commissioners on claims in said estate.

In July, 1915, Anna C. Brackett filed a claim in her own individual right and name against the said estate, with the commissioners on claims, as follows:

To board, room, repairing clothing, etc., from March 29, 1906, to November 21, 1914, 7 years, 7 months, 22 days, at $5 per week.... $1,975 84
To cash paid for repairing watch............ 150
$1,977 34

Upon the hearing this claim was disallowed by the commissioners on claims. The report of the commissioners was filed with the probate court on March 16, 1916. Thereupon, on the 5th day of April, 1916, Anna C. Brackett filed a claim for appeal with the probate court of said county from the decision of the commissioners on claims to the circuit court for said county.

On the 16th day of November, 1916, Anna C. Brackett departed this life testate, leaving her husband, said William A. Brackett, sole legatee of her estate. Her last will and testament was duly probated in the probate court for the county of Kent, and the said William A. Brackett was made executor. The death of Anna C. Brackett having been suggested of record, an order was entered by the court ordering the case to proceed in the name of the executor, who was allowed to prosecute the appeal. The case was tried by a jury, and a recovery had for the claimant amounting to $1,727.65. The defendant estate brings the case to this court by writ of error, claiming that certain errors were committed by the court at the trial.

Upon the trial of the case in the court below, said William A. Brackett was sworn as a witness in his own behalf. Upon his direct examination the following question was asked:

“Q. I understand from the testimony of the other witnesses here that Chauncey came to your place some time in 1907, and remained there for a number of years. Did you have any conversation with your wife in the presence of Mr. Burnham with regard to his remaining at your house?
“A. I did.
“Defendant's Counsel: Just a moment. I object to that for the reason that they are now attempting to prove an assignment.
“Claimant’s Counsel: That is not the object at all.”

A colloquy here occurred between court and counsel, whereupon a new question was asked upon the announcement of counsel for claimant that all he wanted to get was just the conversation between the witness and his wife. Whereupon the following occurred:

“Q. Did you ever have any conversation with your wife?
“A. I did.
“Q. In the presence of Mr. Burnham with regard to Mr. Burnham’s living at your house?
“Defendant’s Counsel: Objected to as being incompetent and immaterial.
“A. I did.
“The Court: Wait a moment. On what ground?
“Defendant’s Counsel: They are trying to prove indirectly what they cannot directly. Mrs. Brackett is dead. She could not testify to that if she had been living, could she?
“Claimant’s Counsel: What difference would it make about her being dead as to the question whether he had^any conversation with her while she was living?
“Defendant’s Counsel: That would be no more than an assignment of his interest in the claim.
“Claimant’s Counsel: It is not an assignment of an interest. He never had any claim.
“The Court: It is their theory that there was no assignment because there was nothing to assign. It was hers in the beginning.
“Defendant’s Counsel: If he made this arrangement with his wife, he made an assignment of whatever claim he had. I object to it for the reason that there is no allegation in the claim filed in the probate court that she claims in any other capacity except her individual capacity, which she must do if she is the assignee. The Supreme Court has said ‘the husband is the head of the house.’ That is a matter of fact.
“The Court: That is what he is trying to show with reference to this transaction. The husband was the head of the house, but he delegated his authority as the head of the house to his wife in the beginning.
“Defendant’s Counsel: Then he made an assignment of whatever he put into that place to, her. If he lurnished the material for the house to her, he must have assigned any right to her that he might have in the claim whether it had been contracted or not.
“The Court: It is not a question'of who owned the house, but of her rights as a married woman. It seems to me that is rather a waiver of his marital rights. It seems to me it is not an assignment. It seems to me it is a waiver that he would be estopped now perhaps to assign the right to his wife as husband. You may take it.
“Claimant’s Counsel: You may state what the'talk was between yourself and wife with regard to Mr. Burnham boarding there.
“A. I spoke to her about it, not in his presence, that if she wanted to take him she could take him, and whátever she earned was hers.
“Defendant’s Counsel: I move to have this answer stricken out as incompetent and immaterial in proving the claim here against the estate.
“The Court: Motion denied.”

It further appeared that, during the time said Chauncey 'Burnham boarded at the Brackett home, William A. Brackett lived in his own home and was a grocer, and furnished the house with supplies from his grocery.

Among others, defendant’s counsel presented the following request to charge, which was refused:

' “It is the claim t»f the plaintiff here that the wife of William A. Brackett, Anna C. Brackett, is the owner of this claim by reason of the arrangement made between them, but the only evidence upon this proposition is found in the testimony given by William A. Brackett in which he claims to have said to his wife ‘whatever she earned was hers.’ I charge you that this language cannot be extended beyond what she ‘earned,’ which might include washing, ironing, and mending, if you find any such services were performed by Anna C. Brackett; but it cannot be extended to mean board and lodging, if the evidence shows the head of the family, William A. Brackett, her husband, supplied these. ..There is no evidence showing what the claimant, Anna C.'Brackett, earned, and she is not entitled to recover in this action, anc^ your verdict must be no cause of action.”

A careful reading of this record satisfies us that this case was tried and submitted to the jury upon a wrong theory. It is clear to us that the above-quoted testimony of William A. Brackett only related to the personal earnings of the wife, Anna C. Brackett, and the recovery should have been limited to such personal services of the wife. There was no evidence in the case of the value of those services, independently and separately from the value of the board and room. It is true that Brackett testified that the conversation was not in the presence of Burnham, and therefore not equally within his knowledge. But it related only to her earnings, and did not relate to board and room. The language of this court in Stackable v. Stackable’s Estate, 65 Mich. 515, at page 518 (32 N. W. 808, at page 810), is appropriate here:

“It is clear that, without some assignment, this claim for board would belong to the husband and not to the wife. He was the head of the household, and furnishing the family supplies. There had to be some agreement on his part with his wife that she should receive the pay for the board.”

This court has spoken so often on this subject that there ought to be no difficulty in understanding the rule which we have laid down. A reference to the following cases is sufficient to show what has been decided: Stackable v. Stackable’s Estate, supra; Slack v. Norton, 111 Mich. 213 (69 N. W. 497); Ashley v. Smith’s Estate, 152 Mich. 197 (115 N. W. 1052); In re Van Dyke’s Estate, 171 Mich. 195 (137 N. W. 79); In re De Spelder’s Estate, 181 Mich. 153 (147 N. W. 589); Maynard v. Schrumpf's Estate, 192 Mich. 494 (158 N. W. 845); Eaton v. Mudge, 197 Mich. 604 (164 N. W. 463).

We think the case should have been submitted to the jury upon the claim of Anna C. Brackett for her own services only. We find in the record no evidence of any right in her or ,her estate to recover for board and room. These items belonged to the husband, and there is no testimony in this record that he ever permitted her to claim for more than for her services, or “whatever she earned,” contained in the expression that, “If she wanted to take him, she could take him and whatever she earned was hers.”

It will be noticed that in Slack v. Norton, supra, this court, at page 216 of 111 Mich., at page 498 of 69 N. W., said:

“In the present case, the wife was permitted by her husband to keep boarders, furnished the provisions herself, and with which it is apparent the husband had nothing to do.”

There was no such evidence in the instant case. Here, she was to have whatever she earned.

In Eaton v. Mudge, supra, Justice Bird clearly pointed out the distinction to be made between the personal earnings of the wife, and board, the latter of which, in the absence of an assignment, belongs to the husband.

There are numerous other assignments of error, all of which have had attention, but none of which, in our opinion, presents any matter of reversible error.

It is true that evidence of the value of the board should have been excluded, for the reason that the item did not belong to the claimant; but that question is disposed of in what we have already said.

We think that the appeal was taken in time; and that the wife was not, as matter of law, estopped from presenting her claim for services and earnings, because she assisted the husband in making out his claim. The request to charge, above quoted, should have been given, and error was assigned on the refusal. It was not given in substance, even, but the charge was inconsistent with such request.

For the errors pointed out, the judgment of the court below is reversed, with costs to appellant, and a new trial is granted.

Kuhn, C. J., and Ostrander, Bird, Moore, Steere, Brooke, and Fellows, JJ., concurred.