text:
    PARK BUILDING CO. v. GEORGE P. YOST FUR CO.
    1. Landlord and Tenant — Lease—Construction.
    Where a lease is susceptible of more than one construction, that most favorable to the lessee must prevail.

    2. Property — Past-Due Rent Personalty.
    Rent past due, held, to be personal property.
    3. Contracts — Construction—General Words After Specific.
    Where no intention to the contrary appears, general words used after specific terms are to be confined to things ejusdem, generis with the things previously specified.
    4. Taxation — Federal Income Tax Upon Rentals Not a Tax Upon the Property.
    Lessor’s income tax, as applied to leased property, held, not a tax “levied upon said premises,” but in its process and assessment a direct personal tax against him.
    5. Landlord and Tenant — Lease—Tenant’s Covenant to Pay Taxes Does Not Include Lessor’s Income Tax.
    A lease providing that the lessee should pay all taxes of every nature and kind whatsoever, levied upon said premises, specifying the same in apt and appropriate terms, and further providing that it was the intent to insure . to lessor a net rental, but containing no reference whatever to lessor’s Federal income tax, construed, and held, not to be the intent of the parties that the lessee should pay the lessor’s Federal income tax based upon said rental.
    Error to Wayne; Tappan (Harvey), J., presiding.
    Submitted October 16, 1919.
    (Docket No. 61.)
    Decided December 22, 1919.
    Assumpsit) in justice’s court by the Park Building Company against the George P. Yost Fur Company for the amount of a Federal income tax paid upon •rentals received from defendant. There was judgment for defendant, and plaintiff appealed to the circuit court. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Stellwagen, MacKay & Wade, for appellant.

      Clark, Emmons, Bryant & Klein, for appellee.

      On construction and effect of covenants in lease, sublease, or assignment of lease as to payment of taxes and assessments, see note in L. R. A. 1915a, 334.

   Steere, J.

The facts in this case are undisputed and stipulated. The Park Building Company is, and was for some time before commencement of this action, owner of lot 14 and the north 20 feet of lot 13, section 8, Governor & Judges’ plan of the city of Detroit, and had leased said premises to Edward C. Van Husan for a term of 99 years. It was organized as a corporation for the sole purpose of owning and leasing this property and had no other assets or source of income except the rentals therefrom. On the 23d of February, 1916, Van Husan sub-leased the premises to defendant George P. Yost Fur Company for a term of 91 years and 8 months, beginning April 1, 1916, and Van Husan assigned his sub-lease from defendant to the Park Building Company.

The United States government assessed for the year 1916 an income tax against the Park Building Co. upon the income derived from the annual rental paid to it by the defendant lessee of said property, which was paid. But three-fourths of this income tax, amounting to $99.31, is directly involved here as the lease had been in effect but three-quarters of that year, but succeeding annual assessments are necessarily indirectly involved. The case was commenced in justice’s court to recover the amount of income tax paid by plaintiff and claimed due from defendant under the lease for 1916, whence it was carried to the circuit court of Wayne county by appeal, and plaintiff now appeals from an adverse decision against it in the circuit court-,

The sub-lease of February 23,'1916, from Van Husan to defendant and assigned by him to plaintiff, is the instrument under consideration. The question involved is whether said lease contemplates, and by fair construction of its provision requires defendant shall pay such Federal income taxes as may be assessed against its landlord upon the rentals received from it thereunder. The lease provides for a monthly rental of $1,750 for a portion of its duration and an annual rental thereafter of $25,800 for the remaining 82 years of the term, at all times payable in advance on the first day of each month in equal monthly installments. It is an elaborate, carefully drawn instrument, with numerous provisions which need not be detailed, that relating to taxes being the one directly involved which is as follows:

“Taxes: As a further consideration for the leasing and demising, aforesaid, the said party of the second part further covenants, promises and agrees to bear, pay and discharge, in addition to said rent reserved, all rates, taxes, charges for revenue and otherwise, assessments ana levies, general and special, ordinary and extraordinary of every name, nature and kind whatsoever, including water rates, which may be taxed, charged, assessed, levied or imposed upon said premises, and upon any and all buildings and improvements thereon and any personal tax levied or assessed upon said party of the first part, which may be assessed, levied or imposed upon the leasehold estate hereby created and upon the reversionary estate in said premises during the term hereby granted and so long thereafter as said party of the second part, its successors, representatives and assigns, shall occupy said demised premises; the intent hereof being to insure to said party of the first part a net rental hereunder, not chargeable with any burdens by way of taxes, or otherwise, resulting in the diminution of the same.
“And it is further understood, covenanted and agreed by and between the parties hereto, that the said party of the second part shall pay, on execution of this lease, its pro rata, share of the city taxes for 1915-1916, and also the State and county taxes for 1915-1916, which may be levied upon said premises. And the party of the second part further covenants and agrees to obtain and deliver to the said party of the first part within thirty (30) days after such taxes shall respectively become due and payable, duplicate tax receipts of all taxes and assessments paid on said premises of every kind and nature whatsoever; and all such taxes and all such receipts shall be paid and made out in the name of the said party of the first part, or his heirs or assigns; and that the said duplicate tax receipts shall be promptly sent by mail to said party of the first part or to such agent or depository as he may designate in writing.”

The lease contains a further provision that the party of the first part may at any time during the term of said lease pay any due and unpaid taxes, assessments, water rates or other charges “upon said premises,” such payments to be a claim against the lessee as additional rent. Upon construction of the above-quoted sections relative to payment of taxes, plaintiff particularly stresses the provision that the intent is “to insure to said party of the first part a net rental hereunder, not chargeable with any burdens by way of taxes, or otherwise, resulting in the diminution of the same,” and urges that in comprehensive explanation of what immediately precedes and follows, this general statement makes plain by fair construction of the tax clause taken in its entirety that the contracting parties to this lease contemplated and agreed the lessee should during the life of the lease pay all income taxes which might be assessed against the lessor on account of rentals received.

It is the contention of defendant that where more than one construction is possible that most favorable to the lessee should prevail, and by fair construction the generalizing words in the tax clause are but explanatory of and confined to such taxes and charges as relate to and may be directly imposed upon the preceding named estates, free of which the rental shall be net; and does not contemplate by fair intendment any personal income tax which may be imposed upon the lessor after he has received the stipulated net rental from the lessee, free of all taxes, rates, charges, etc., which are assessed, levied or imposed as a burden on the leased premises themselves. ,

Pertinent to that inquiry it may be noted that at the time the lease was entered into there was a Federal statute providing for an income tax, though not the same as now in force. The lease nowhere makes any direct reference to a personal income tax. The tax section in detail and with apt phraseology takes cognizance of and requires that the lessee shall pay all taxes upon four estates in the property, directly named as follows: “said premises” — “all buildings and improvements thereon” — “the leasehold estate hereby created” — and “the reversionary estate in said premises during the term hereby granted,” and the lessor with detailed effort to make certain from the beginning prompt payment by the lessee of the taxes so specified, provided in the second paragraph of the tax clause that the second party should forthwith pay its pro rata share, for the balance of that tax year, of the city taxes, and the State and county taxes for 1915-1916, “which may be levied upon said premises.” And within 30 days after said taxes become due obtain and deliver to said first party duplicate tax receipts “of all taxes and assessments paid on said premises of every kind and nature,” to be paid and made out in the name of the first party, his heirs or assigns, with no suggestion indicating an intent that the tenant should pay any portion of the personal income tax which might be assessed or levied against the lessor for 1916 or later.

In their briefs counsel for the respective parties agree that upon the precise issue presented no decisions of any Federal court or of this court are to be found directly in point, and but few cases can be found in other States where leases have been so worded as to give rise to litigation over whether the lessee is obligated to pay the lessor’s income tax upon the rent which he receives. Counsel cite and discuss at some length three decisions of the Massachusetts supreme court where the question has arisen over the wording of lease covenants of questioned phraseology, none of which are identical with each other or the case at bar, but are urged as more or less analogous and illuminating.

In Suter v. Jordan Marsh Co., 225 Mass. 34 (113 N. E. 580), decided September, 1916, the court had under consideration a covenant in a lease by which the lessee agreed to pay “all taxes and assessments whatsoever, except betterment taxes, which may be levied for or in respect of the leased premises, or any part thereof, or upon or in respect of the rent payable hereunder by the lessee, howsoever and to whomsoever assessed.” The court held that such covenant required the lessee to pay a United States income tax imposed upon the rent against the lessor, saying:

“The only payment which the United States had a right to exact under the law was a tax at a specified percentage upon the rent reserved for a stated period of time. That exaction is called in the act of congress a ‘tax.’ It is in its nature a tax. But by the terms of the lease, defendant has obligated itself to pay ‘all taxes and assessments * * * upon or in respect of the rent * * * howsoever and to whomsoever assessed.’ ”

In Codman v. American Piano Co., 229 Mass. 285 (118 N. E. 344), decided January 14, 1918, that court had before it for consideration a lease containing the following:

“And the lessee further covenants and agrees with the lessor to pay punctually within fourteen (14) days from the times when they become due and payable all taxes and assessments whatsoever which may be payable for or in respect of the leased premises during the term thereof, except assessments for betterments hereinafter arranged for.”

Pointing out the distinction that in the Suter Case the covenant not only expressly required the lessee to pay the taxes upon the leased premises but also upon or in respect to the rent payable under'the lease, the court in an interesting discussion of the subject said in part:

“In other words, the agreement of the parties as expressed in the lease is to govern and control their respective rights in view of the language employed. * * * The legal signification (of the covenant last quoted) clearly is that the taxes are those which relate solely to the premises themselves and not to the rent reserved which, when due, is a separate and independent estate. * * * The words used by the parties cannot fairly be extended by us beyond their natural and ordinary meaning, and therefore the defendant cannot be held liable for taxes which the covenant neither by express words nor reasonable implication obliged him to pay.”

In Kimpall v. Cotting, 229 Mass. 541 (118 N. E. 866), decided February 28, 1918, the question again arose over the covenant in a lease providing:

“The lessees covenant and agree to pay and discharge any taxes or excises which during the term may on any assessment day be lawfully levied or assessed to either the lessors or the lessees upon or against the rent payable hereunder for or in respect of the period between such assessment day and the last prior assessment day, or for or in respect of the period between the first of such assessment days and one calendar year prior thereto, whether levied or assessed upon the same as rental or income, but not for any other taxes or excises in respect thereof.”

Analyzing this covenant the court points out that it relates exclusively to the payment of taxes levied, upon the rent reserved by the lease whether levied against the lessors or the lessees, making no difference within the scope of the covenant whether the burden is imposed by law upon the one or the other. Referring to the expression “any assessment day,” the court notes it as manifest from the words following in the covenant that it was the intent of the parties to impose the obligation upon the lessees whether the tax was levied as a property or an income tax, and it being provided by express words that the lessees should be liable for the tax levied upon the rent “whether as rental or as income,” finds it clearly the intent of the parties that the words “assessment day” did not refer immutably to a single date “but were designed to include whatever period, not exceeding that elapsing between two successive assessment days, might be established by any tax law thereafter enacted as the measurement of the income.” And concludes that there being no express limitation to the one or the other by words of the covenant it was plainly the intent of the parties to include both State and Federal taxes. Referring to the two preceding cases upon the subject the court said that the instant case though not governed by the Suter Case was of similar import, but readily distinguishable from the Codman Case.

It is scarcely necessary to note that back of the question of interpretation or construction of the disputed tax clause in the lease no restraining Federal or State laws are involved. While as between the government and the lessor he alone was held accountable- for and obliged to pay his income tax from whatever source derived, as between themselves the contracting parties were at liberty to agree as positively and in as direct terms as they saw fit to adopt that the lessee should pay all or any particular part of the Federal income tax of the lessor, his heirs or assigns, throughout the generations it was provided this lease should run. If that was what the contracting parties had in mind and agreed it must be conceded, as defendant contends, that the phraseology adopted was not the most appropriate vehicle of thought to express such agreement, which by a few simple and direct words could have been made plain and certain beyond any peradventure. But aside from that reflection and however unhappy the wording for the purpose, the inquiry here is whether by reasonable construction such is its legal import, fairly disclosing that the minds of the parties met upon that proposition.

It is undisputed that the question involved turns on construction of the concluding sentence in the first paragraph of the tax clause, relative to net rental. Deferring to the combined contentions of counsel for the respective parties it would seem to be susceptible of more than one construction, which, however, each is inclined to deny. Clearly it does not impose upon the lessee in any direct language payment of all taxes levied upon or in respect to the rent howsoever or to whomsoever assessed, as in the Suter Case, nor those levied and assessed upon rent payable, whether as rental or income, as in the Kimball Case. Neither does it in like direct and express terms confine the lessee’s burden to taxes payable for or in respect of the leased premises, as in the Codman Case. Defendant contends such is the manifest meaning of the tax clause as a whole and it should be so construed, while plaintiff argues to the contrary.

We do not think it can be said with certainty that the meaning of the language in controversy is absolutely without ambiguity or the intent so aptly expressed as to be beyond doubt and forbid construction. It is a recognized rule of construction that where more than one meaning is permissible that most favorable to the lessee must prevail; Pere Marquette R. Co. v. Wabash R. Co., 141 Mich. 215. Rent past due has been held to be personal property; Burden v. Thayer, 3 Metc. (Mass.) 76, and certainly is such after paid to the lessor. Under the lease in question it was payable monthly in advance. Nowhere in the lease is any mention made, by name or synonym, of any income or other personal tax to be paid by either party. The income tax imposed on the landlord is not computed or assessed against him until the end of each year, upon the actual income he received during that year. The stipulated rent for that year, payable monthly in advance by the terms of the lease, would have all reached his hands and become his money, a then net rental to him free from all taxes and charges assessed or levied against the premises leased. What plaintiff' proposes and contends for is to include by construction of the general provision under consideration a subject not included in it by name or directly indicating expression.

Were those words unqualified by anything in the lease which preceded or followed them the omnibus language used might more readily yield to plaintiff’s interpretation. But it is a long settled rule of construction, which had become a legal maxim even before the days of Broom, that words of specification draw into the same class any general terms or words presumably super-added to attain the end without further prolixity. In this tax clause the conveyancer was liberally prolix in details and words of specification relative to the kinds of taxes the lessee must pay and upon what imposed, immediately preceding the general terms with which the last sentence in the paragraph concluded; and in a second paragraph, as it were an afterthought, the subject is again treated in added detail with words of specification further defining the lessee’s obligations to pay taxes “upon said premises.” This rule, though perhaps most frequently found in cases involving construction of statutes, is of general application. In Brooks v. Cook, 44 Mich. 617, Justice Cooley thus defines it:

“But it is a sensible and. well understood rule of construction that when after an enumeration, the statute employs some general.term to embrace other cases, the other cases must be understood to be cases of the same general character, sort or kind with those named.”

The case of Hawkins v. Railroad Co., 17 Mich. 57, which involved the construction of a contract, is there cited. Justice Campbell, writing the opinion in the Hawkins Case, said:

“The rule is usually applicable, that where no intention to the contrary appears, general words used after specific terms are to be confined to things ejusdem generis with the things previously specified.”

Counsel for plaintiff contend the intention of the parties that the concluding words of the paragraph should not be qualified by what went before, and they should be regarded as “a new, separate and distinct idea,” is made evident by the fact that a semicolon is inserted between what precedes and the general concluding clause. While not prepared to discuss the subtle principles of punctuation to any degree of nicety, we note it stated in the Century dictionary that the semicolon, mentioned as “a Latin delicacy which the obtuse English typographer resisted,” is a punctuation point “used to mark the division of a sentence somewhat more independent than that marked by a comma,” and it may be stated as a matter of common knowledge that the full stop or end of a completed sentence is marked in printing or writing by a period. Whatever distinction there may be between a comma and a semicolon, it remains that the concluding words in question are a part of the lengthy specifying sentence preceding them.

Plaintiff further contends that even if we accept the narrow and strained construction defendant urges, limiting the general language to meaning rentals should not be diminished by any kind of tax assessed upon the premises, nevertheless a tax upon rent payable is a direct tax, and in effect a tax upon the premises from which the rent is derived; and if, as must be conceded, the lessee is holden for all taxes on the leased premises he is necessarily required to pay the income tax on the rent payable. In support of this proposition counsel cite and argue from the somewhat celebrated case of Pollock v. Trust Co., 157 U. S. 429 (15 Sup. Ct. Rep. 673), reported on rehearing in 158 U. S. 601 (15 Sup. Ct. Rep. 912), in which the Federal income tax of 1894 was held unconstitutional by a bare majority of the court. The reported case with its rehearing, consisting of some 340 printed pages, is an extremely interesting and instructive promulgation of legal thought, learning and debate, in which however the justices who sat in the case were scarcely more successful in agreeing among themselves than were the attorneys who argued it. It is there said in the majority opinion:

“An annual tax upon the annual value or annual user of real estate appears to us the same in substance as an annual tax on the real estate, which would be paid out of the rent or income.”

This was said in a lengthy discussion of whether an income tax on rentals was á direct tax within the meaning of the Federal Constitution and therefore invalid because not levied in accordance with the constitutional rule of apportionment. On the rehearing it was said of this holding:

“The question thus limited was whether such taxation was direct or not, in the meaning of the Constitution, * * * that a tax upon the realty and a tax upon the receipts therefrom were alike direct.”

We are not impressed that these views, limited in application to the constitutionality of the income tax apportionment, are of controlling significance here. The court was only considering the distinction between direct and indirect taxes in its relation to the case decided without reference to its bearing upon, or application to, other and different cases. Whether direct or indirect, the lessor’s income tax as applied to this leased property is not a tax “levied upon said premises,” or on any of the four estates named in the lease, but is in its process of levy and assessment a direct personal tax against him, inseparable from him and his annual income, beginning and ending with him. The Pollock Case was cited and unsuccessfully insisted upon as controlling in the Codman Case. The court there aptly offered the postulate that:

“In construing the covenant it is plain that taxation upon real estate means one thing, and taxation upon income means another.”

Without extending this opinion to further review that case, it may be said we regard its discussion of the question persuasive and well in point here.

The tone and tenor of this contract throughout is directed with careful description to the leased premises, the taxes thereon and rental therefor which the lessee must pay during the long life of the lease extending into succeeding generations. To that end and extent the intent of the parties is made plain to a certainty by clear expression with appropriate names and descriptive terms, which by recognized rule of construction limit general words and terms super-added to the same general character or kind as the things previously specified. They contain no suggestion that in addition to all taxes on the premises and nominated rent the lessee must also pay his landlord’s personal income tax, a matter of greater moment and easier description than certain of the requirements clearly and distinctly specified. It is not an unreasonable presumption that had the contracting parties had in mind, agreed upon, or intended to impose payment of the landlord’s income tax on the lessee, they would have expressed the intent in equally clear and positive language with appropriate descriptive terms, which they could readily. have done without multiplying words.

In the reflected light of the matters dealt with in detail with descriptive terms and the context surrounding the generalizing language under consideration, we are constrained to agree with the following conclusion of the trial court:

“In addition to the foregoing, it is also my conclusion that it cannot be held that the minds of the contracting parties met upon the proposition that the lessee should pay the landlord’s income tax.”

The judgment is affirmed.

Bird, C. J., and Sharpe, Moore, Brooke, Fellows, Stone, and Kuhn, JJ., concurred.


source: Caselaw Access Project

author: Fellows, J.

license: Public Domain

text:
    OSCAR DANIELS CO. v. CITY OF SAULT STE. MARIE.
    1. Appeal and Error — Exceptions—Necessity—Review.
    Where, in a case tried before the court without a jury, there was no request-for special findings, no findings made, and no exceptions taken, under Circuit Court Rule No. 45 there is nothing for the Supreme Court to review.
    2. Same — Evidence—Sufficiency—Exceptions—Review.
    Where no exceptions are taken to any of the findings, and it is not assigned as error, or contended, that the facts found do not support the conclusions of law, assignments of error in the admission and rejection of testimony and the sufficiency of the evidence to support particular findings cannot he reviewed.
    3. Same — Stipulated Facts Presentinq Question of Law — Review. ,
    Although the practice in conformity with Circuit Court Rule No. 45 was not followed, where the stipulated facts present a single principal question of law, the Supreme Court may consider the contention made in substance and effect in the assignments of error and argued in- the briefs, whether they support the conclusion of law — the judgment.
    4. States — Jurisdiction of State Over Ceded Territory — Statutes.
    The jurisdiction over the St. Mary’s Falls ship canal ceded to the United States by the State of Michigan in Act No. 17, Pub. Acts 1881, construed, and held, to he less than exclusive; the purpose being to confer upon the United States exclusive power to control the canal, and any buildings and works connected therewith for the purposes of operation.
    5. Same — Taxation of Private Personalty on Ceded Territory —Validity.
    The jurisdiction ceded by said act being less than exclusive, and the ceded territory not being out of the State so far as the operation of its tax laws are concerned, a tax levied upon private personal property thereon within the limits of the city of Sault Ste. Marie, by said city, although employed in contract construction work for the United States government, held, valid.

      Error to Chippewa; Fead (Louis H.), J.
    Submitted April 24, 1919.
    (Docket No. 107.)
    Decided December 23, 1919.
    Assumpsit by the Oscar Daniels Company against the city of Sault Ste. Marie for taxes paid under protest. Judgment for plaintiff. Defendant brings error.
    Reversed.

      H. W. Runnels and F. T. McDonald, for appellant.

      Davidson & Hudson, for appellee.
    This cause was tried by the court without a jury and resulted in a judgment for the plaintiff. No findings were requested or were made. No exceptions were taken to the conclusions arrived at by the court. No points of law were presented by either party as upon requests to charge in jury trials. Circuit Court Rule No. 45. There was a stipulation of facts, upon the offer of which plaintiff rested. Defendant proceeded then to introduce certain testimony not contradicting the facts embraced in the stipulation and not apparently used by the court in reaching a conclusion. Defendant raises the questions argued by assignments of error which, in substance and effect, say that the facts do not support the judgment. The stipuletion of facts is:
    “The facts in the above entitled cause being largely matters of record in the office of the United States engineer at Sault Ste. Marie and the office of the city treasurer at Sault Ste. Marie, Michigan, all being readily susceptible of proof and there being no material dispute between the respective parties hereto as to those facts, the same are stipulated and agreed between the respective parties hereto, as follows, to wit:
    “1. That the plaintiff is an Illinois corporation, having its office and principal place of business in the city of Chicago, county of Cook, Illinois.
    “2. That the plaintiff is engaged in the contracting business for profit and gain and during the years 1916 and 1917 was engaged in the excavation for and construction. of a lock to be known as the Fourth Lock at the Falls of St. Mary’s river under and by virtue of a contract entered into by said plaintiff with the United States government for profit and gain.
    “3. That for the purpose of the said excavating and construction work the plaintiff brought to the place of operation certain steam shovels, locomotives, cars and other equipment, lumber, cement, trap rocks and other material, and erected certain warehouses, tracks and temporary buildings, all of which have been used solely in connection with the erection of the Fourth Lock at Sault Ste. Marie, Michigan.

      “4. That the said personal property was of the value of $35,000.00 or thereabouts and it has been used and kept only upon land ceded by the State of Michigan to the United States government by Act No. 17 of Public Acts of Michigan, session of 1881.
    “5. That the city of Sault Ste. Marie has. assessed, levied and attempted to collect State, county and municipal taxes upon the within named personal property of the Oscar Daniels. Company property for the years 1916 and 1917, which the plaintiff has. refused to pay until compelled to do so. i
    “6. That on December 1, 1916, the treasurer of the defendant, the city of Sault Ste. Marie, made its usual demand for payment of personal taxes for the year 1916, informing the plaintiff as follows:
    “ ‘The above tax is now due and payable on or before January 9th, 1917.’
    “And thereafter on May 11th, 1917, made another similar demand upon the plaintiff for the personal taxes for 1916 with the accrued interest added thereto.
    “7. That in December, 1917, the treasurer of the defendant, the city of Sault Ste. Marie, made a similar demand upon the plaintiff for the taxes of 1917; both these demands were ignored by the plaintiff who neglected to pay its taxes for the respective years of 1916 and 1917, and said plaintiff did not pay its taxes until April 30th, 1918.
    “8. On February 15th, the defendant, by Herbert W. Runnels, Esq., its city attorney, made a demand upon the plaintiff for the taxes, of 1916 and 1917 and threatened seizure unless the taxes were paid within ten days following the letter, a copy of which being hereto attached and marked Exhibit ‘A/ and at about that time the city attorney conferred with the attorneys for the plaintiff, advising them that unless the taxes were paid he was directed by the city commission to enforce the collection by seizure of the personal property and he was informed by the plaintiff, through its attorneys, that the company would only pay upon compulsion.
    . “9. On March 26th, the plaintiff was formally notified by the defendant, through its city attorney, that a levy and seizure of the personal property of the plaintiff would be made on the 30th of March, A. D. 1918, a copy of which letter being hereto attached and marked Exhibit ‘B.’
    “10. That on April 20th, 1918, the defendant, by George S. Wescott, its treasurer, made a formal demand for payment of taxes as follows:
    For 1916 ......................................$947.37
    For 1917 ...................................... 874.81
    “And upon said demand the plaintiff still refused to pay the taxes.
    “11. That after demand and refusal on, to wit, the 22d day of April, the city treasurer levied upon the personal property of plaintiff for the purpose of sale of same, duly posted proper notice that the same would be sold on public sale at the time and place specified in gai(J ’
    “12. That on April 30th, 1918, the plaintiff paid to the defendant at the office of its city treasurer the sum of $947.37 for the taxes for the year 1916, and
    “The sum of .$874.81 for the taxes for the year 1917, receiving a receipt therefor, a copy of which is hereto attached and marked Exhibit ‘C,’ this payment being made under protest in writing, said protest specifying the reasons for the several refusals on the part of the plaintiff to pay said taxes, copy of which protest is hereto attached and marked Exhibit ‘D.’
    “13. That all the facts applying to either of the years for which taxes were assessed as set forth in this stipulation apply to the other year and the action for the recovery of each of the several years is consolidated into one action by previous agreement between counsel, for the purpose of avoiding multiplicity of litigation.
    “14. That the city of Sault Ste. Marie is a regularly organized municipal corporation being organized under and by virtue of the laws of the State of Michigan, and that the officers assessing the taxes for the respective years, 1916 and 1917, were regularly and duly elected officers of the city of Sault Ste. Marie, and were properly engaged in the duties of their respective offices.
    “15. That the geographical limits of the State of Michigan, as set forth in the Constitution, extend north and west in St. Mary's river along the boundary line between the United States and Canada to a point where said boundary line last touches Lake Superior and includes within its limits the land upon which the plaintiffs personal property was situated at the time of the seizure.
    “16. That the geographical limits of the village of Sault Ste. Marie as set forth in the charter of the village of Sault Ste. Marie as incorporated in 1879 and of the city of Sault Ste. Marie as incorporated in 1887, and in chapter 1, section 1 of the city charter, as adopted June 26th, 1917, extend north and west along the international boundary line between the United States and Canada and includes within its limits the land upon which the plaintiffs personal property was situated at the time of its assessment and also at the time of its seizure.
    “17. That at the time of the assessment of the taxes for the years 1916 and 1917, in this stipulation set forth, there wa.s property of the plaintiff engaged in the excavating for and construction of the Fourth Lock, and not otherwise, and upon the land ceded as set forth in paragraph 4 herein, sufficient to justify the levy of said taxes at the time of the assessment, to wit, the second Monday in April of each of the years 1916 and 1917.
    “18. That the assessment, review, apportionment and all the various steps taken in levying taxes within the city of Sault Ste. Marie for the years 1916 and 1917 were regular and in conformity with the statutes of the State of Michigan and the charter of the city of Sault Ste. Marie; that the .only question in dispute relative to the proceedings in the tax against the plaintiff for the years 1916 and 1917 in the above entitled cause is the right or jurisdiction of the city of Sault Ste. Marie to assess for taxation personal property of the said Oscar Daniels Company, located within the limits of the territory ceded by the State of Michigan to the United States by Act No. 17 of the Public Acts of 1881.
    “19. That the said tax was assessed for and apportioned to the several State, county, and municipal funds, as follows: 1917 — State tax, $66.77; county tax, $174.58; city tax, $245.00; school tax, $231.00; one mill school tax, $35.00; county road tax, $72.94.
    “1916 — State tax, $55.75; county tax, $142.00; city tax, $310.00; school tax, $272.95; one mill tax, $25.00; county road tax, $40.50; that to the above taxes was added as provided for in the statutes of the State of Michigan and, the charter of the city of Sault Ste. Marie, a collection fee of 4 per cent, and interest at the rate of 1 per cent per month from March 1st, 1917, in case of the 1916 tax, and from March 1st, 1918, in the matter of the 1917 tax.”
    The protest accompanying the payment of the said taxes reads as follows:
    “To the Mayor and Commissioners of Sault Ste. Marie, Michigan.
    “To George S. Wescott, Treasurer of Sault Ste. Marie, Michigan.
    “The certain personal property of the Oscar Daniels Company has been seized for the taxes of 1916 and 1917 in the following amounts:
    1916........$947.73 1917....____$874.81
    “Having made a seizure, which he claims is under and by virtue of section 1815 of chapter 28 of Howell’s Annotated Statutes, second edition [1 Comp. Laws 1915, | 4043], and having posted certain notices of sale of said personal property preparatory to making sale' thereof under the statute.
    “The city treasurer threatens to sell said personal property in an amount sufficient to satisfy the said taxes for 1916 and 1917, to wit: the sum of $1,822.54 together with necessary expense and legal charges therefor.

      “In order to avoid the sale of said property of the Oscar Daniels Company and in order to protect said property from seizure and sale by the city treasurer, the said Oscar Daniels Company hereby presents the sum of $947.74 in payment of the taxes of 1916 and the sum of $874.81 in payment of the taxes for 1917, it being understood, however, that such tender and payment is made under protest and the Oscar Daniels Company hereby protests against the assessment, levy, seizure and threatened sale of said personal property for the following reasons, to wit:
    “1. That the said Oscar Daniels Company is not a citizen or resident of Sault Ste. Marie, Chippewa county, Michigan.
    “2. That the property upon which said assessment was levied was not at the time of the respective assessments of 1916 and 1917 within the city of Sault Ste. Marie, Michigan, nor within the jurisdiction of the city of Sault Ste. Marie, Michigan, nor within the jurisdiction of the State of Michigan for the purpose of the assessment of said taxes.
    “3. For the further reason that the Oscar Daniels Company is and was at the time of the assessment of said taxes against its personal property a contractor engaged in the construction of the Fourth Lock for the United States government and said personal property of the Oscar Daniels Company was in use in the construction and erection of the said Fourth Lock being erected by the Oscar Daniels Company as contractor for the United States Government, and said personal property was situated on lands and territory ceded to the United States by the State of Michigan under and by virtue of Act No. 17 of Public Acts of 1881, and that while said property was within what is loosely termed as the geographical limits of the State of Michigan, it was nevertheless upon the property ceded by the State to the Federal government for the erection of the locks and other Federal eventualities.
    “4. For the further reason that neither the city of Sault Ste. Marie nor the county of Chippewa, nor the State of Michigan, have any right to assess taxes upon the property of a contractor so engaged in the erection of locks or other government instrumentalities upon the territory ceded by the State of Michigan to the United States government under and by virtue of Act No. 17 of Public Acts of 1881. For that reason the assessment, of said taxes by the city assessor and by the city of Sault Ste. Marie, the levy and collection is illegal, said personal property being beyond the jurisdiction of the assessing officers of the city of Sault Ste. Marie for any purposes whatever.
    “5. For the further reason that the said property is not and never has been within the jurisdiction of the city of Sault Ste. Marie, the county of Chippewa, or State of Michigan.”
    It was also admitted that the plaintiff had not been admitted to do business in Michigan.
    Upon the principal point in dispute, the court in the opinion said:
    “This is a suit brought by plaintiff to recover taxes paid by it to defendant under protest. The facts are practically all stipulated. The principal question is whether the property of the plaintiff was subject to taxation iii the city of Sault Ste. Marie, it being located upon and used in the construction of the Fourth Lock of the government canal, jurisdiction over which was ceded by the State to the Federal government by Act No. 17, Public Acts of 1881.
    “The taxing power of the State is limited to persons and property within and subject to its jurisdiction. The State cannot tax tangible personal property unless (1) the party taxed is a resident of the State or (2) the property taxed has .an actual situs within the State. 37 Cyc. p. 718.
    “The plaintiff is a foreign corporation and a nonresident of the State, except so far as its location in constructing such lock may change the situation. The proposition of whether the property taxed has a situs within the State depends upon the effect of Act No. 17, Public Acts 1881.
    “Jurisdiction over property within a State may be acquired by the Federal government in two ways: First, by the purchase of property, with the consent of the legislature of the State, for certain specified purposes, as provided by article I, section 8, of the Constitution of the United States, and second, by cession of the jurisdiction by the State. When the constitutional provision is invoked and the proper conditions are fulfilled, the Federal government has exclusive sovereignty over the territory by virtue of such provision. It has no application to this case. The State, however, may cede jurisdiction to the United States over property, otherwise acquired than under the constitutional provision, and may 'grant it full political and legislative sovereignty, or make such reservations, as it pleases, not inconsistent with the free and effective use of the land for governmental purposes. How broad the cession may be is for the State to determine and the Federal government acquires jurisdiction solely from the cession, not at all from the Constitution, in such cases. Fort Leavenworth R. Co. v. Lowe, 114 U. S. 525 (5 Sup. Ct. Rep. 995); Chicago, etc., R. Co. v. McGlinn, 114 U. S. 542 (5 Sup. Ct. Rep. 1005).
    “The cession in question has been before this court and before the Supreme Court of this State in Willis v. Oscar Daniels Co., 200 Mich. 19. The various propositions presented by defendant herein to limit the effect of the cession were presented in that case. It is there hold that Act No. 17, Public Acts 1881, operated to cede to the United States exclusive jurisdiction over the land upon which the plaintiff’s property was situated, except for the purpose of serving process. The cession is complete except as to the express reservation. Practically speaking, the property is not a part of the State of Michigan or the city of Sault Ste. Marie.
    “Consequently the dry has no legal right to assess taxes against the property of the plaintiff so situated.
    “Defendant contends, however, that the cession does not invalidate the taxes because there was a tax law in operation over the property upon which plaintiff’s goods were situated, in and prior to 1881, and such law continues to operate until congress acts. This position is untenable.
    “1. Because the taxes in question were not levied under the law of 1881, or prior thereto, but were levied under the law of 1891 and amendments.
    “2. Because a tax law is not a municipal law ‘intended for the protection of private rights,’ which continues in force until abrogated or changed by the new sovereign or government, as stated in Chicago, etc., R. Co. v. McGlinn, supra. It is there said that the principle which controls as to laws in existence at the time of the cession is the same in cases of cession from the State to the Federal government as from one nation to another. Taxation is an essential and inherent attribute of sovereignty and an act thereof. 37 Cyc. p. 715. It is evident that the reservation of the right to continue to levy taxes upon property ceded by one sovereignty to another would need to be express in order to obtain.
    “It is true that the property of Federal agencies may be taxed by the States. The property of the plaintiff would not be exempt merely because of its contract with the United States. It is the fact that it is not working and holding property within the jurisdiction of the State which relieves it from taxation in this instance.” * * *
    The act referred to in the stipulation and the opinion reads:
    “An act to authorize the board of control to transfer the Saint Mary’s Falls ship, canal, with the property belonging to the same, to the United States.
    “Whereas, congress at its last session included in the river and harbor bill the following:
    “For improving and operating Saint Mary’s river and Saint Mary’s Falls canal, two hundred and fifty thousand dollars. ‘And the secretary of war is hereby authorized to accept on behalf of the United States from the State of Michigan the Saint Mary’s canal and the public works thereon: Provided, Such transfer shall, be so made as to leave the United States free from any and all debts, claims or liability of any character whatsoever, and said canal after such transfer shall be free for public use: And provided further, That after such transfer the secretary of war be and hereby is authorized to draw from time to time his warrant on the secretary of the treasury to pay the actual expenses of operating and keeping said canal in repair’; therefore,
    “Section 1. The People of the State of Michigan enact, That the board of control of the Saint Mary’s Falls ship canal be and hereby is authorized and directed to transfer the said canal and the public works thereon, with all its appurtenances and all the right and title of the State of Michigan in and to the same, to the United States, in accordance with [the] provisions of the above .mentioned clause: Provided, That this cession is upon the express condition that the State of Michigan shall so far retain concurrent jurisdiction with the United States over the Saint Mary’s Falls ship canal, and in and over all lands acquired or hereafter acquired for its use; that any civil or criminal process issued by any court of competent jurisdiction, or officers having authority of law to issue such process, and all orders made by such court, or any judicial officer duly empowered to make such orders, and necessary /to be served upon any such person, may be executed upon said Saint Mary’s Falls ship canal, its lands, and in the buildings that may be erected thereon, in the same way and manner as if jurisdiction had not been ceded as aforesaid.
    “Sec. 2. The board of control of the Saint Mary’s Falls ship canal are hereby authorized and empowered, at any time when they may deem it proper, to transfer all material belonging to said canal, and to pay over to the United States all moneys remaining in the canal fund, excepting so much as may be necessary to put the said canal in repair for its acceptance in accordance with the act above recited: Provided, Such transfer of material and payment of moneys shall be in consideration of the construction, by the United States, of a suitable dry dock, to be operated in connection with the Saint Mary’s Falls ship canal for the use of disabled vessels.
    “This act is ordered to take immediate effect.
    “Approved March 3, 1881.”
    Appellant contends that the tax was rightfully laid, and, if not, that plaintiff, not having been admitted to do business in the State, is not in position to sue for recovery of the tax, and, finally, that in no event can there be recovered a greater amount than the city tax.
   Fellows, J.

(after stating the facts). Although not raised by counsel for appellee, the first question presented by the record is whether there is anything before the court for its determination. It has been held that where no request for special findings is made and no findings in fact made and no exception taken, there is nothing to review. Nichol v. Ward, 156 Mich. 136; Wilson v. Hugus, 163 Mich. 577.

And it has been repeatedly held that where no exceptions are taken to any of the findings and it is not-assigned as error, or contended, that the facts found do not support the conclusions of law, assignments of' error in the admission and rejection of testimony and', the sufficiency of the evidence to support particular findings cannot be reviewed. See cases cited in note to section 4, Rule No. 45, in Searl’s Michigan Court Rules. We have concluded that as the facts have been stipulated and, as stipulated, they present a single principal question of law, we may consider the contention made in substance and effect in the assignments of error and argued in the briefs, whether they support the conclusion of law — the judgment.

Upon the main proposition as to whether the tax was rightfully laid, we are to consider whether the jurisdiction of the State extended for that purpose to any personal property situated and used on the ceded lands. If the territory is beyond the jurisdiction of the State and within the exclusive jurisdiction of Congress, as the trial court held, then the judgment is right. The i oint, it is said by appellee, is directly ruled by Willis v. Oscar Daniels Co., 200 Mich. 19, where a construction was placed upon the proviso to the act of 1881 to the effect that—

“The jurisdiction reserved was for the purpose of providing there should be no neutral territory where civil and criminal process might not be served.”

And it must be admitted that the opinion of the circuit court in that case, quoted from at length in the opinion of this court, denies jurisdiction of the State over the ceded territory. But this court did not adopt the opinion of the trial judge in that case; and, as will be pointed out, the opinion of this court does not, of necessity, deny all jurisdiction of the State in ceded territory. The question there before the court was the right of the State to regulate the relations, rights and liabilities of-employees and employers engaged in the construction of governmental works — in their performance of the functions of the Federal government. The language there used must be limited, in its application, to the case then before the court. Here the question involved is whether the State surrendered its sovereign power of taxation. The case must turn upon the construction of the grant made by the State to the United States.

In Fort Leavenworth R. Co. v. Lowe, 114 U. S. 525 (5 Sup. Ct. Rep. 995), and in Chicago, etc., R. Co. v. McGlinn, 114 U. S. 542 (5 Sup. Ct. Rep. 1005), the principles affecting a construction of the grant were exhaustively considered by the Supreme Court of the United States, with conclusions which, applied here, require, we think, a reversal of the judgment. As a fact in both cases, it appeared that the State of Kansas ceded to the United States exclusive jurisdiction over and within the territory known as the Fort Leavenworth reservation in that State, the title to which was in the United States, saving the right of the State to serve civil and criminal process within said reservation and saving further to said State the right to tax railroad, bridge and other corporations, their franchise and property, on said reservation. The State levied a tax on the track, right of way, franchises, road bed, telegraph line and instruments connected therewith on the reservation, the tax was paid under protest, and the suit was brought to recover the money so paid. It was the contention of the railroad company that the act of cession operated under the Constitution of the United States to vest in the United States exclusive jurisdiction over the reservation and that the last saving clause, being inconsistent with that result, should be rejected. This contention the court rejected, holding—

“that a building on a tract of land owned by the United States used as a fort, or for other public purposes of the Federal government, is exempted, as an instrumentality of the government, from any such control or interference by the State as will defeat or embarrass its effective use for those purposes. But, in order that the United States may possess exclusive legislative power over the tract, except as may be necessary to the use of the building thereon as such instrumentality, they must have acquired the tract by purchase, with the consent of the State. (Art. I, § 8, subd. 17.) This is the only mode prescribed by the Federal Constitution for their acquisition of exclusive .legislative power over it. When such legislative power is acquired in any other way, as by an express act ceding it, its cession may be accompanied with any conditions not inconsistent with the effective use of the property for the public purposes intended.”

Vide opinion in Chicago, etc., R. Co. v. McGlinn, supra. And in the second case it was held that a law of Kansas, passed before the cession of the reservation, making a railroad company whose right of way was unfenced liable for the value of stock killed by its trains upon such right of way, remained in force after the cession of the reservation, it having been contended, to defeat a judgment of the State court given for the value of cattle killed, that the act became inoperative within the limits of the reservation after the act of cession to the United States of exclusive jurisdiction over it.

In the case at bar there is not, in terms, as there was in the case of the Fort Leavenworth reservation, a cession to the United States of exclusive jurisdiction and, as the cession was not made upon purchase by the United States and consent of the State thereto, there is no implication of a cession of exclusive jurisdiction except as the implication may be raised upon the proviso, which, however, reserves no legislative jurisdiction. And the'jurisdiction expressly reserved may be accounted for upon the theory that for whatever reason the cession was made it was sufficient to confer exclusive jurisdiction in the United States to control the canal, any buildings and works connected with it, and with its operation for the purposes of its operation. There was no occasion for the State to cede exclusive jurisdiction to the United States, no apparent reason for denying to the State such jurisdiction, legislative and other, as did not interfere with the control by the United States of the property transferred for the purposes of the transfer.

We construe the grant itself as a cession of less than exclusive jurisdiction, and the proviso as it was construed in Willis v. Oscar Daniels Co., supra. In this view, the ceded territory is not out of the State of Michigan so far as the operation of its tax laws is concerned, but is within the State. The tax levy in question was properly made, and the tax was a lawful one.

Willis v. Oscar Daniels Co., supra, may, and should, rest upon the ground that the State legislation sought there to be enforced affected the United States in a matter over which it had exclusive jurisdiction, namely, the building of a lock in the ceded territory.

The matter and language of this opinion are largely those of the late Justice Ostrander which are now formulated into this opinion of the court.

The judgment is reversed and a new trial granted, with costs to appellant.

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


author: Stone, J.

text:
    KROLIK v. KACZMAREK.
    1. Fraudulent Conveyances — Bulk Sales Law — Purpose.
    The purpose of the “Bulk Sales Law” (2 Comp. Laws 1915, §§ 6346-6348) being to protect creditors,' a sale made in violation thereof is void only as to creditors; being valid as between the seller and buyer.
    2. Equity — Fraudulent Conveyances — Bulk Sales Law, Sale in Violation oe Equities Between Buyer and Seller — “Clean Hands.”
    ■Where the sale of a stock of goods sold in violation of the “Bulk Sales Law” failed by reason of the same bAng taken to satisfy the creditors, the seller could not hide behind ■ the statute and thus avoid liability to the buyer, and the court of equity will not permit the seller in such case to retain the purchase price; the doctrine of “clean hands” having no application.
    On remedy of creditors where sale is made in violation of bulk sales law, see notes in 39 L. R. A. (N. S.) 374, and .L. R. A. 1916B, 974.
    Appeal from Wayne; Tappan (Harvey), J., presiding.
    Submitted June 3, 1919.
    (Docket No. 21.)
    Decided December 23, 1919.
    Bill by Henry A. Krolik and others, copartners as A. Krolik & Company, against Joseph Kaczmarek and Valentine Adamaszek to set aside a sale of goods in violation of the bulk sales law. Defendant Adamaszek filed a cross-bill to set aside the assignment of a land contract and for the cancellation of a note. From a decree granting the prayer of the cross-bill, defendant Kaczmarek appeals.
    Affirmed.

      Sol. Blumrosen, for appellant.

      L. C. Turek, for appellee.
   Stone, J.

This case presents a controversy between the defendants upon an issue presented by the cross-bill of the appellee against the appellant. On April 13,1917, the appellant was the owner of a stock of goods and fixtures located in a store at 485 Forest avenue east in the city of Detroit. The appellee and his wife owned an equity in a certain land contract covering land and premises described in the pleadings and decree herein. The appellant, a few days before the above date, agreed with appellee to exchange said stock of merchandise and fixtures for the equity which appellee and his wife had in said land contract. An inventory was made of the stock of merchandise and fixtures, and a balance was struck by which the appellee gave to the appellant a sixty-day promissory note for the sum of $541, and appellee and his wife transferred by assignment their equity in the land contract to appellant.

The appellant executed, on said April 13, 1917, a bill of sale of said stock of merchandise and fixtures to said appellee, which contained the following provision:

^ “And the said party of the first part, for himself, his heirs, executors and administrators, does covenant and agree to and with the said party of the second part, his executors, administrators and assigns, to warrant and defend the sale hereby made of said property, goods and chattels, unto the said party of the second part, his executors, administrators and assigns, against all and every person or persons whatsoever, and agrees to pay all debts to whomsoever they may be due, up to this day, on said stock, and which debts amount to about $960.00.”

In this sale and transaction the parties thereto wholly ignored, and did .not in any respect comply with the terms of the statute known as the “bulk sales law” (2 Comp. Laws 1915, §§ 6346-6348). The appellee took possession of the stock of goods and fixtures, and handled the same until this suit was instituted. The appellant took possession of the said real estate. At the time of the said sale and exchange, the appellant was indebted to Henry A. Krolik & Company, plaintiffs* herein, in the»- amount of $430.

On May 8, 1917, the plaintiffs instituted this suit and filed their bill of complaint, because of the violation of the “bulk sales law” by defendants, and a receiver was appointed. All parties, as appears by the record, conceded that the claim of the plaintiffs was well founded, and. other creditors of the appellant joined in the suit, and debts were proved aggregating approximately $1,100. There was a sale of the stock, by the receiver.

At first a default was entered against the appelleefor failure to answer the bill of complaint. Later, and after the sale by the receiver, the default was set. aside and appellee was given the right to file a cross-bill against the appellant. In his cross-bill appellee demanded and prayed for the return of his equity in the land contract and cancellation of the said note. Appellant answered the cross-bill of appellee, among other things, denying that the latter was entitled to any relief. At the hearing and at the conclusion of the testimony, the court, by its decree, among other' things, ordered the said promissory note to be canceled and to be delivered to the court for cancellation,, and also ordered the assignment of the land contract to be canceled, and declared null and void, and directed the appellant to re-assign said land contract to appellee upon payment of $220.98.

From such parts of the decree as are above recited,, and as affect the appellant, he has appealed. So it appears that this appeal affects only the appellant and appellee, and no attempt is here made to affect the standing of the plaintiffs in the case.

The learned circuit judge seems to have been of the opinion that the appellant wasi responsible for the condition of the parties, and he sought to place them in statu quo. The only question possessing any merit that is presented by the appellant as a reason for reversal is that the case is controlled by the case of Farrar v. Lonsby Lumber & Coal Co., 149 Mich. 118, and that the parties having acted in violation of law, the appellee does not come into court with clean hands and hence cannot prevail. It should be borne in mind that the instant case presents a situation of the entire failure of consideration for the sale. The whole trend of our decisions, as well as the decisions of other courts construing statutes similar to our bulk sales law, is to the effect that the purpose of this and similar acts is to protect creditors; and that a sale made in violation of the statute is void only as to creditors. Spurr v. Travis, 145 Mich. 721 (9 Ann. Cas. 250); Musselman Grocer Co. v. Kidd, Dater & Trice Co., 151 Mich. 478; Squire v. Tellier, 185 Mass. 18 (69 N. E. 312).

Such sale as between the seller and buyer is valid; and if the seller has been guilty of any fraud to the injury of the buyer, or if there has been an entire failure of the consideration, the seller cannot hide behind the statute and thus avoid liability to the purchaser.

What was held in Farrar v. Lonsby Lumber & Coal Co., supra, is that a sale void as to creditors cannot, as between the parties, be made to operate to give the vendee a lien for the money he has paid. The remedy sought in that case was against the property (or the proceeds of it) sold in violation of the bulk sales law. In the case at bar, the remedy sought by the vendee in no way affects the rights of creditors of the seller of the goods, but is aimed at a recovery from the seller of the property given in exchange for the goods.

Here, confessedly, is a void sale as to creditors of a stock of goods and the vendee gave the vendor a note and a land contract in payment. Creditors of the vendor have successfully attacked the sale. The vendee gets nothing. The goods, or their value, go to pay the vendor’s debts, and he also profits by the note and. land contract which he received from the vendee. Assuming that in this proceeding, all parties being before the court, the court has power to settle and adjust all rights, it seems to us inequitable to deny to appellee what the court below gave him, cancellation of his assignment of the land contract and return of his promissory note. The question lies wholly between the vendor and the vendee, affects creditors not at all, and the doctrine that one must come into a court of equity with clean hands in order to obtain relief has, in our opinion, no application. As we have said, it would be most inequitable to permit the vendor to retain the purchase price of the stock of goods while subjecting the stock to the payment of his debts.

The decree below is affirmed, with costs to the appellee.

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

The late Justice Ostrander took no part in this decision.


text:
    VYSE v. RICHARDS.
    1. Dismissal and Nonsuit — Plea in Bab Not Available on Motion to Dismiss.
    Demurrers, pleas in abatement, and pleas to the jurisdiction having been abolished by 3 Comp. Daws 1915, § 12456, their function is now performed by a motion to dismiss, but it does not perform tbe function of a plea in ’bar, and defenses which formerly required a plea in bar cannot be made under tbe summary proceeding of a motion to dismiss.
    2. Same — Dimitation oe Actions Not Available on Motion to Dismiss.
    The defense of the statute of limitations, being a bar to tbe action, must he pleaded in order to he available, and cannot be raised by a motion to dismiss in the nature of a demurrer.
    3. Same — Res Judicata Not Available on Motion to Dismiss.
    The defense of former adjudication, or res judicata, must he pleaded in bar and cannot be raised by motion to dismiss.
    Appeal from Wayne; Hart (Burton L.), J., presiding.
    Submitted October 30, 1919.
    (Docket No. 37.)
    Decided December 23, 1919.
    Bill by Charles Vyse and others against Mary A. Richards and another to impress a trust upon real estate and for an accounting. From an order overruling a motion to dismiss, defendants appeal.
    Affirmed.

      Hollis Harshmm and Howard H. Campbell, for plaintiffs.

      Marion Kuhn (William E. Henze, of counsel), for defendants.

      Briefly stated the facts alleged in the bill are these: In the year 1902 sums aggregating $15,960 were by Charles L. Fish placed in the hands of defendant Mary A. Richards in trust for Tillie A. Vyse, a considerable portion to be invested in real estate; that in 1903 some $12,100 of this fund was devoted to the purchase of real estate but the title thereto was taken in the names of defendants Mary A. Richards and Maud A. Kuhn, mother and sister of said Tillie A. Vyse; that said Tillie A. Vyse lived in Cleveland, Ohio, had entire confidence in her mother and sister, was inexperienced in business, and believed that the terms of the trust had been performed. It is alleged that the title to the real estate was so taken in the names of defendants in order to defraud her; that in 1905 certain litigation was begun in the Wayne circuit court, in chancery, against said Tillie A. Vyse, Mary A. Richards, and Maud A. Kuhn; that in furtherance of the scheme to defraud, the mother and sister lulled said Tillie A. Vyse to inactivity in said litigation, and assured her that her rights would be protected; that in 1909 defendants attempted to obtain from said. Tillie A. Vyse when she was ill a release of her interest in said real estate; that she then learned for the first time that the title was not in her; that said Tillie A. Vyse died in 1910, and that plaintiffs are her heirs at law; that the litigation above referred to was pending at “her death and extended over a period of years; and that due to such litigation, and to avoid family trouble, plaintiffs withheld suit. The language of the bill in some regards is quite general; the date when the litigation was concluded or its character do not appear from it. The bill seeks to impress the trust upon the real estate and prays for an accounting.
    The answer denies the equities of the bill; specifically denies all charges of fraud; as to the litigation commenced in 1905, it alleges that said Tillie A. Vyse had full knowledge thereof, appeared by separate counsel, that a decree was taken therein in favor of the complainant, the administrator of the estate of said Charles L. Fish, deceased, for upwards of $26,000, and that defendants paid $21,500 in settlement thereof. Fc was apparently patent to the pleader that the questions here sought to be raised could not be determined from an examination of the bill alone. By some 27 exhibits attached to the answer defendants show the pleadings, proceedings, affidavits and other papers giving a complete record of the Fish case and its final settlement, together with definite dates. With this answer defendants filed a motion to dismiss. To review an order overruling the motion to dismiss, this appeal was allowed.
   Fellows, J.

(after stating the facts). In this court it is urged on behalf of the defendants, and the questions raised by the motion to dismiss are: (1) that the cause of action is barred by the statute of limitations; and (2) that the decree in the case brought by the administrator of the estate of Charles L. Fish, deceased, against these defendants and Tillie A. Vyse is res adjudicata. Plaintiffs insist that these questions may not be raised on this record by motion to dismiss.

By section 4, chapter 14, Act No. 314, Pub. Acts 1915 (3 Comp. Laws 1915, § 12456), demurrers, pleas in abatement, and pleas to the jurisdiction, are abolished and a motion to dismiss is substituted. In the recent case of Pagenkoff v. Insurance Co., 197 Mich. 166, this court had this section of the statute under consideration. We there pointed out that the motion to dismiss now performs the function of a demurrer, a.plea in abatement, and a plea to the jurisdiction, but that it does not perform the function of a plea in bar, and that defenses which formerly required a plea in bar cannot be made under the summary proceeding of a motion to dismiss; and in Gunn v. Gunn, 205 Mich. 198, we declined to consider on a motion to dismiss in the nature of a demurrer anything but the allegations of the bill itself. In the instant case the motion to dismiss performs the function of a demurrer under the former practice.

Under the repeated decisions of this court the statute of limitations must be pleaded and the defense cannot be raised by demurrer. Whitworth v. Pelton, 81 Mich. 98; Shank v. Woodworth, 111 Mich. 642; Renackowsky v. Board of Water Com’rs, 122 Mich. 613; First National Bank v. Steel, 136 Mich. 588; Township of Forest v. American Bonding Co., 180 Mich. 90. The defense is a bar to the action and should be so pleaded in order to be available. Likewise this court has also held that the defense of former adjudication, the question of res adjudícala must be pleaded in bar and cannot be raised by motion to dismiss. Attorney General v. Railway Co., 149 Mich. 122, citing Briggs v. Milburn, 40 Mich. 512. See, also, Pagenkoff v. Insurance Co., supra; Porter v. Leache, 56 Mich. 40.

The chancellor was right in denying defendants’ motion to dismiss. His order is affirmed, with costs to the plaintiffs.

Bird, C. J., and Sharpe, Moore, Steere, Brooke, Stone, and Kuhn, JJ., concurred.


text:
    MORRIS v. ALEXANDER.
    1. Fixtures — Evidence—Intention—Admissibility.
    In replevin to recover possession of certain garage tools and machinery claimed by plaintiff to be fixtures and to have passed to him by deed from defendant mortgagor to save foreclosure of real estate mortgage, testimony that the articles were not permanently attached to the real estate, that they could be, and were, removed without injury to the building, that they were installed by defendant for the purpose of carrying on his trade with no intent to make them permanent fixtures, that they were not specially designed for use in this particular building but were adapted for use in any building, held, admissible and for the consideration of the jury as to whether they were fixtures.
    2. Same — Judicial Notice — Question for Jury.
    While in some cases the court may take judicial notice that articles are so attached as to become a part of the realty, it cannot be said upon this record, as matter of law, that the articles here involved are fixtures, and the trial court properly submitted the case to the jury.
    Error to Sanilac; Beach (Watson), J.
    Submitted October 22, 1919.
    (Docket No. 118.)
    Decided December 23, 1919.
    Beplevin by Hugh Morris against Joseph Alexander for the possession of certain tools and machinery. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      C. F. Gates and Fred A. Farr, for appellant.

      W. H. Burgess, for appellee.
    Defendant was the village blacksmith at Sandusky until the advent of the automobile when he put into his shop the necessary tools and appliances and thereafter conducted a garage. Plaintiff held a mortgage on the shop and other property. Defendant being unable to pay the mortgage he executed a deed of the premises to the plaintiff for a consideration of $150, the estimated cost of foreclosure. The premises were described in the deed by lot numbers and no mention was made of the shop or garage, or of the machinery therein. After the execution of the deed, defendant removed from the garage certain tools and machinery used by him in the conduct of his trade, and this action of replevin was brought by the plaintiff to recover their possession. They are enumerated in the writ and declaration as follows:
    “One swedge block; one anvil; one lathe, 11-inch swing, 5 feet over all; one vise, disconnected; one tool bench and cabinet, with vise attached; one air compressor or pump; one emery arbor and stand; one countershaft outfit for lathe; one countershaft which connects with emery arbor; one 1%-inch line shaft with 5 pulleys, 2 hangers and 3 boxings attached; eight pieces of iron piping which connect air compressor or pump with hose and air gauge; one bellows or blower, including the Tue-iron used in connection therewith; one vulcanizer, complete; one power drive belt, which extends from engine; one drive belt, which connects air compressor or pump with line shaft; three drive belts which extend from lathe; and two drive belts which connect said emery arbor with line shaft.”
    The case was submitted to the jury, resulting in a verdict for the defendant, upon which verdict judgment was entered. Plaintiff brings the case here, and in the brief of his counsel claims that error was committed by the trial judge in the following particulars:
    “(1) By the court’s holding that the secret workings of the grantor’s mind could affect the question as to what was fixtures.
    “(2) By the holding that if such fixtures could be of use in any other building they could be removed.

      “ (3) By the holding that they would not be fixtures unless constructed for the particular building.
    “(4) For the court holding, in substance, that no property manufactured for general use could become a fixture.
    “(5) In the court not directing a verdict for the plaintiff.”
   Fellows, J.

(after stating the facts). The question involved in the case was whether the enumerated articles were fixtures and passed to plaintiff under the deed. There were no requests with reference to any of the specified articles; it was claimed, by the plaintiff that he was entitled to all of them except the vuleanizer, which was conceded to belong to defendant, and plaintiff’s counsel asked for a directed verdict as to all of them except the vulcanizer. We have given the grounds stated by plaintiff’s counsel in their brief upon which plaintiff seeks a reversal, but what the record discloses is that the trial judge permitted evidence to be received tending to show the intent of the defendant when the articles were installed, whether they were constructed for this particular building or were adaptable for use in any building, whether they could be removed without injury to the building, and permitted the jury to consider such testimony in reaching a conclusion upon the ultimate question of whether they were or were not fixtures. There was testimony tending to show that the articles were not permanently attached to the real estate, that they all could be, and were, removed without injury to the building, that they were installed by defendant for the purpose of carrying on his trade and with no intent to make •them a permanent fixture and a part of the real estate; that they were not specially designed for use in this particular building but were adapted for use in any building, and were in common use in garages. The trial judge was not in error in receiving this testimony or in permitting its consideration by the jury. Robertson v. Corsett, 39 Mich. 777; Wheeler v. Bedell, 40 Mich. 693; Ferris v. Quimby, 41 Mich. 202; Scudder v. Anderson, 54 Mich. 122; Manwaring v. Jenison, 61 Mich. 117; Lansing Iron & Engine Works v. Wilbur, 111 Mich. 413; Aldine Manfg. Co. v. Barnard, 84 Mich. 632. In the last-cited case it was said:

“It is true that there is no universal test whereby the character of what is claimed to be a fixture can be determined in the abstract; that neither the mode of annexation nor the manner of use is in all cases conclusive; yet these considerations are frequently of much importance in arriving at the intention of the parties, which is the real test. It is now well settled in this State that whether an article attached to the freehold becomes a fixture depends largely upon the intention of the parties.”

In Robertson v. Corsett, supra, it was said by this court:

“No single article of this machinery Was made expressly for use in the building where it was placed, and not elsewhere; all of it was equally capable of beneficial use on being removed to and set up in some other building. It might therefore become a part of the real estate when affixed to it, if such was the intent, or it might remain personal estate if an understanding to that effect was clearly indicated or fairly deducible from the circumstances.”

Ruling Case Law (Vol. 11), p. 1,059, after stating that the general tendency of the modern decisions, both English and American, is against the common-law doctrine that mode of annexation is the criterion, says:

“This has led to the formulation and recognition of three general tests which may be applied in determining a particular case, namely, first, annexation to the_ realty, either actual or constructive; second, adaptation or application to the use or purpose to which that part of the realty to which it is connected is appropriated; and third, intention to make the article a permanent accession to the freehold.”

And in the same work, at page 1,092 of the same volume, it is further said:

“Generally, the question whether or not a particular article 'is a chattel or fixture is a mixed question of law and fact, though when the facts are admitted or undisputed the question of law only remains. When the particular case involves a consideration of the tests of the mode of annexation, the purpose or use to which the article is to be put, and the intention, this takes the case to the trier of the facts.”

But one case is cited by plaintiff’s counsel in their brief, that of Wickes Bros. v. Hill, 115 Mich. 333. The property involved in that case was an engine, boiler, shafting and other articles necessary for the equipment of a shingle mill, and the following excerpt from the opinion in that case is made much of by counsel:

“We may take judicial notice of the fact that some of such machinery as was here sold is usually attached so as to become a part of the realty, and a deed of the realty carries with it the title to the machinery.”

And it is insisted that upon the authority of that case we should take judicial notice that the articles here involved are fixtures and so hold as a matter of law. While we may take judicial notice that such articles as were involved in the Wickes Bros. Case are usually so attached as to become a part of the realty, we do not take judicial notice that they are always so attached. In Schellenberg v. Lighting Co., 130 Mich. 439 (57 L. R. A. 632), a chancery case, we held Under the facts of that particular case that certain boilers were not fixtures. We cannot say upon this record, as matter of law, that the articles here involved are fixtures. The trial judge properly submitted the case to the jury. As was said by this court in Scudder v. Anderson, supra:

“The court below could not, as matter of law, hold any of the property in dispute as necessarily fixtures. At best, it was of ambiguous capacity, and might or might not be so regarded.”

The judgment is affirmed.

Bird, C. J., and Sharpe, Moore, Steere, Brooke, Stone, and Kuhn, JJ., concurred.


text:
    JONES v. TITUS.
    1. Mortgages — Foreclosure—Fraud—Burden of Proof.
    In a suit to set aside a mortgage, to restrain its foreclosure, and to hold It invalid in the hands of defendant, assignee, for fraud in its inception, where defendant, by cross-bill, •seeks affirmative relief by way of foreclosure, the burden is upon him to show dona Sides in the assignment.
    2. Same — Indorsee of Note Equitable Owner of Mortgage.
    When a note given with a mortgage was indorsed over to a third party it carried with it the equitable title to the mortgage.
    3. Names — Assumed Name — Statutes.
    A bank cashier, assignee of a mortgage in his own name, was not precluded from foreclosing same by Act No. 101, Pub. Acts 1907 (2 Comp. Laws 1915, § 6349 et'seq.), requiring any person or persons doing business under an assumed name to file a certificate, etc., because the bank, to facilitate its bookkeeping, had devised a system of handling past-due paper by assigning it to the cashier as “Trustee for Trust Mortgage Syndicate,” where the testimony shows that this name was used only as a memorandum, apparently for the purpose of carrying the account and to prevent the “charging off” of these items.
    4. Mortgages — Fraud—Assignee—Bona Fides.
    The finding of the court below that the bank, assignee of the mortgage, was a holder in good faith and entitled to foreclosure, held, supported by the record, although it is disclosed that plaintiff was defrauded in the transaction involving the making of the mortgage.
    Appeal from Grand Traverse; Mayne (Frederick 'W.), J.
    Submitted October 14, 1919.
    (Docket No. 40.)
    Decided December 23, 1919.
    Rehearing denied April 10, 1920.
    Bill by Elnora Jones against Leon F. Titus and another to set aside a mortgage on the ground of fraud. Defendant Titus filed a cross-bill for the foreclosure of the mortgage. From a decree for defendants, plaintiff appeals.
    Affirmed.

      Edward N. Barnard (E. A. Maher, of counsel), for plaintiff.

      Patchin & Duncan, for defendants.
   Fellows, J.

November 22, 1913, the plaintiff, Elnora Jones, and her son, Orvis Grant Jones, entered into an agreement with one George B. Updegrove by the terms of which they purchased from Updegrove the formula and exclusive right to manufacture and sell in the District of Columbia and the State of Maryland a certain preparation called “Earthquake,” said to be used for cleaning carpets, rugs and other fabrics. The purchase price was $10,000; $3,000 to be paid on the execution of the agreement, and the balance when their profits on the sale of “Earthquake” had amounted to the sum of $70,000. The plaintiff then owned two pieces of real estate in Traverse City;' upon one of them was a mortgage for $500. To make the payment of $3,000, plaintiff executed a mortgage to Updegrove for $1,500 upon one of the pieces, and upon the other a mortgage to Updegrove for $2,000, Updegrove agreeing to pay, and paying, the $500 mortgage thereon. It had been represented to plaintiff and her son that “Earthquake” was a new and patented preparation; much had been claimed for it by Updegrove; it was represented that the territory they bought had not been worked; that it was “virgin territory,” and that much money could be made by the sale of the preparation. Plaintiff and her son went to the territory they had purchased and remained there a few months. It was the old story. The territory had been worked before; under other names the same preparation had been marketed; those who had bought it never bought again; as plaintiff expressed it, Updegrove “sold me nothing but a soft soap formula.”

On December 2, 1913, Updegrove applied to the defendant Leon F. Titus, cashier and executive officer of the defendant First National Bank of Traverse City, for a loan of $1,500, offering the. Jones mortgage for $2,000 as collateral. He had before that cashed several checks drawn on his own bank, but had had no other business dealings with the Traverse City bank. The abstract was examined, the security was known to Mr. Titus, it was ample, the loan was made, and the Jones note was indorsed over to the bank, and it and the mortgage were left as collateral to secure the loan. One thousand dollars was drawn by Updegrove that day and the balance later. The note was due in four months. It was not paid when due, and on April 6, 1914,'Updegrove executed a formal assignment of the mortgage to the bank, and a request was made by him, and granted, for an extension of time. It would appear that the interest for the four months-was at this time paid.

Upon Mrs. Jones’ return to Traverse City she learned that Updegrove had sold the $1,500 mortgage to one Strickler, but she did not learn of the transfer of the $2,000 mortgage to the bank as collateral to the loan of $1,500. On May 2, 1914, she filed a bill in the circuit court for the county of Grand Traverse, in chancery, against Updegrove, setting up the transaction with him, the fraud perpetrated on her, the fact of the transfer of the mortgage to Strickler, that he had purchased it for a full consideration and in good faith, and asked an injunction against Updegrove to restrain him from disposing of the $2,000 mortgage. Before the case was heard the transaction between Updegrove and the bank came to plaintiff’s knowledge, and, while the case was pending, and on November 27, 1914, she paid to the bank $120, the annual interest on her mortgage held by the bank as collateral to the Updegrove loan. She obtained and took a decree against Updegrove for the amount she would have to pay to Strickler and to the bank to obtain discharge of her mortgages, less the amount paid by Updegrove to discharge the $500 mortgage. This decree was dated October 1, 1915. Neither the bank nor Mr. Titus was made party to this suit.

The Updegrove note to the bank for $1,500 was not paid and the collateral, the Jones note and mortgage, was put up and sold; it was bid in by Mr. Titus, and on February 12, 1916, the bank executed an assignment of it to him in his individual name.

On April 23,1917, this bill was filed. By it plaintiff seeks to set aside the mortgage given by her to Upde- • grove for $2,000, to restrain its foreclosure, and for a decree holding it-invalid in the hands of defendants. By way of cross-bill, in his answer defendant Titus, seeks foreclosure of the mortgage only to the extent of the amount of the loan to Updegrove with its accrued interest. The trial judge, who heard the case, found that the bank and Mr. Titus took this mortgage as collateral to the Updegrove loan in good fáith; that Mr. Titus, who acted for the bank in the transaction, had no * knowledge or notice of plaintiff’s equities, and a decree was entered dismissing plaintiff’s bill and for foreclosure of the mortgage. A careful reading of this record satisfies us that the trial judgé was quite right. There is ample evidence that Mrs. Jones has been defrauded by Updegrove. As defendant Titus is here seeking affirmative relief by way of foreclosure of the mortgage, the burden is upon him to show bona fides in the transaction. This we are satisfied he has done. He testified unequivocally to facts showing good faith in the transaction; all the books and records of the bank called for by plaintiff’s counsel were produced and they corroborated his testimony, and upon this record there is nothing to refute it. Indeed, plaintiff’s counsel insists that Mr. Titus was not sufficiently active and vigorous in attempting to discover Updegrove’s fraud before he accepted the note and mortgage as collateral. Had plaintiff, before she executed these mortgages, exercised a tithe of the vigor to discover the fraud of Updegrove her counsel now insists the bank should have exercised before it made this loan in a regular business way upon ample security, it is highly improbable there would have been any occasion for this litigation. There is nothing upon this record that would justify us in concluding that this collateral was not taken by the bank in the ordinary course of business, nothing to indicate bad faith, nothing to impeach this paper in the hands of the bank, or of Mr. Titus. We do not overlook plaintiff’s claim that when the mortgage and note were deposited as collateral a formal assignment of the mortgage was not executed, nor the intimation that when the formal assignment was made it was dated back. When the Jones note was indorsed over to the bank, it carried with it the equitable title to the mortgage (John Schweyer & Co. v. Mellon, 196 Mich. 590); and there is no testimony in this record and nothing from which we could infer that the formal assignment was executed at any other date than the one it bears and the one all the witnesses testify was the actual date of its execution.

But it is urged by plaintiff’s counsel that Mr. Titus dealt with this mortgage under an assumed name, that of “Trustee for Trust Mortgage Syndicate” in violation of Act No. 101, Public Acts of 1907 (2 Comp. Laws 1915, § 6349 et seq.), and therefore cannot enforce it under repeated decisions of this court. The bank held among its assets certain past due real estate mortgages. It devised a system of its own for hand-’ ling this past due paper and to facilitate its bookkeeping. The cashier gave to the bank a note with these past due mortgages as collateral signed by him as “trustee for trust mortgage syndicate.” The testimony shows that this name was used only as a memorandum, apparently for the purpose of carrying the account, and possibly with the idea of preventing the “charging off” of these items. Without commending this plan of carrying past due paper as live assets, we do not perceive that the statute in question inhibited Mr. Titus, who took an assignment of this mortgage in his own name, and not in the name of, or as trustee for the trust mortgage syndicate, from foreclosing it. Rossello v. Trella, 206 Mich. 20.

While this record discloses that plaintiff was defrauded by Updegrove, against whom she has a decree, there is no testimony tending in any way to establish that defendants were a party to such fraud, and no testimony justifying the conclusion that they had any knowledge or notice of such fraud when they made the loan to Updegrove, or that the transaction smacks in any degree of bad faith on their part. Nor is any reason shown why they, or either of them, should be required to assume any portion of plaintiff’s loss from her unfortunate investment.

The decree of the court below will be affirmed, with costs to defendants.

Bird, C. J., and Sharpe, Moore, Steere, Brooke, Stone, and Kuhn, JJ., concurred.