text:
    CLARE COUNTY SAVINGS BANK v. FEATHERLY.
    1. Bills and Notes — Evidence — Parol Agreement to Vary Terms op Writing — Collateral Contract.
    While parol evidence is inadmissible to vary or contradict a valid written contract, as a promissory note, it is not incompetent to show in defense of an action against an accommodation indorser that the payee agreed to look after the insurance, and keep it in force upon the maker’s stock of goods and fixtures, but failed to see that it was kept in force: the agreement did not contradict or vary the terms of the note; it was a distinct collateral undertaking although a part of the same transaction.

    2. Same — Parol Evidence — Recoupment—Banks.
    The rule admitting evidence of a collateral agreement is especially applicable where such agreement operates as an inducement for entering into the contract, and defendant is entitled to recoup his damages for breach of the collateral undertaking in an action by the payee, a bank, against him on the note.
    3. Same — Directed Verdict.
    It became a question of fact whether such arrangement was made, upon plaintiff’s testimony, disputed by defendant, that he signed the note on the express condition that the payee should look after the insurance and hold the policy as security for the debt.

      4. Same — Waiver op Condition.
    The indorser did not waive the alleged condition where he knew of the fact that the insured property had been moved, but had no knowledge that consent had not been seoured from the insurer.
    5. Same — Requests to Charge — Instructions.
    The court rightly declined to instruct the jury as requested by defendant, that if the indorser desired to be protected by the insurance it was his duty to see that it was kept in force, since his oontract with defendant relieved him of the duty.
    Error to Charlevoix; Mayne, J.
    Submitted October 16, 1912.
    (Docket No. 116.)
    Decided December 17, 1912.
    Assumpsit by the Clare County Savings Bank against Gerald Featherly, Blanche Featherly, and Frank Coleman upon a promissory note. Judgment for plaintiff as to two defendants, but in favor of defendant Coleman. Plaintiff brings error.
    Affirmed.

      C. W. Perry, for appellant.

      Harris & Buegsegger, for appellees.

       For the general rule that parol evidence is not admissible to vary, add to, or alter a written contract, see note in 17 L. R. A. 270.

   Stone, J.

The plaintiff sued the defendants to recover the balance due upon a promissory note bearing date December 20, 1909, wherein the defendants promised to pay to the plaintiff, or order, six months after date, the sum of $700, with interest at the rate of seven per cent, per annum. The note was signed by the three defendants. There had been indorsed as paid upon the note the sum of $469.40 on May 17, 1911. Default after personal service was regularly entered as to the defendants Gerald L. Featherly and Blanche Featherly. The defendant Frank Coleman pleaded the general issue and gave notice that he would prove thereunder that he signed the note as surety only, for the other defendants, with the knowledge of the plaintiff, and that he only did so because the other defendants had given a chattel mortgage to the plaintiff on a stock of merchandise and fixtures at Clare, Mich., to secure the payment of said note, and that the other defendants and the plaintiff had the stock of merchandise and fixtures insured against loss or damage by fire and payable to plaintiff, as its interest might appear, and, at the time this defendant Coleman executed and delivered said note as surety, the plaintiff agreed with him that it would keep its mortgage and insurance as aforesaid on said property in force and effect and in its possession and control for the protection of the plaintiff, as well as of this defendant, until the payment of said note; that the amount of said chattel mortgage was #700, and the amount' of said insurance was above the amount of the note sued upon in this case. Yet the plaintiff, well knowing the premises, did not keep said insurance against loss and damage by fire and lightning on said stock of merchandise and fixtures in force and effect, but expressly permitted said stock of merchandise and fixtures to be removed to other premises not covered by said policy of insurance, although it had said policy of insurance in its possession and control at all times, and agreed to keep the same in force and effect, and neglected to have said insurance transferred to the new location where said stock of merchandise and fixtures had been transferred, whereby said insurance became void and of no effect; and that thereafter, and while said insurance policy was in the custody and control of the plaintiff, the plaintiff had not caused the same to be transferred so as to cover such stock of merchandise and fixtures at such new location; that said stock of merchandise and fixtures was totally destroyed by fire under such circumstances that the amount of said insurance would hav'fe become available to the plaintiff, and would have been applied in full payment of the note herein sued on, had plaintiff caused such insurance to be transferred to such new location before such fire; and that, because said policy of insurance had not been transferred so as to cover said property in such new location, the insurance company which issued said policy denied liability, and only paid a small portion of the amount of said loss, and that because of the neglect, as aforesaid, of the plaintiff, this defendant has been damaged to a large amount, to wit, the amount sued upon in this cause, and plaintiff should therefore not recover.

The case came on for trial before a jury, and the plaintiff offered in evidence the promissory note and gave evidence as to the amount due thereon; and it being admitted that the defendants Gerald L. Featherly and Blanche Featherly received the money from the plaintiff for which said note was given, and that the defendant Frank Coleman signed said note for the purpose of securing the payment thereof to the plaintiff, it rested its case.

The defendant Coleman, to maintain and prove the issue on his part, produced the following evidence in substance: Gerald L. Featherly was sworn. He testified that the defendant Frank Coleman was his father-in-law, and that the witness was in the retail grocery business in Clare, Mich.; that the defendants Featherly got the $700 represented by the note, and that the negotiations occurred in the office of the plaintiff, and that Mr. Sutherland, the cashier, and Mr. Coleman were present at the time. The following occurred:

Q. What was said by Mr. Coleman about signing the note with you ?”

This was objected to by the plaintiff as immaterial for the reason that what was said was merged in the signing of the note. The objection being overruled, and an exception taken, the witness testified as follows:

A. Mr. Coleman — Mr. Sutherland and myself were present — made an agreement, as I understood them, that he would sign the note provided the bank would look after the interest of the stock of groceries and so forth, or Featherly & Co., rather, and specifying at that time that he would not sign the note under any other condition or consideration, and Sutherland stated that he would accept the terms and conditions, and that he would, look after this business, being as it was directly across the street. Mr. Sutherland stated that, in case anything should not be working as it should be at any time, he would notify Mr. Coleman immediately. Mr. Coleman stated that he would not sign the note or the papers unless Mr. Sutherland looked after the insurance papers along with the other interests of the business. There was an insurance on the stock at the time. The insurance was in favor of William Ryan, the man from whom I purchased the goods. * * * I did not see the policy, but knew the bank had an insurance policy on the stock. The value of the stock was between $1,100 and $1,200. I made proofs of loss.”

On cross-examination he testified as follows:

“There was an insurance policy on the stock at the time I bought it which run three or four months longer, and when that run out I took out a new policy and paid the premium. I arranged it with Mr. Maynard, the insurance agent.”

The witness testified that he had been notified that a settlement had been made of the insurance at $469.40. The defendants Featherly had given the president of the Clare County Savings Bank full power to settle the loss caused by the fire on December 22, 1910. He further testified that Mr. Coleman was at Clare at the time of the fire, and had been there three or four days; that he came there to see about the business, and was in the store where the goods were, and knew they had been moved from their former location; that Mr. Coleman was in Clare at the time the stock was bought and at the time just before the fire only. He made no objection to the goods being moved. On redirect examination the witness said:

“ I talked with Mr. Sutherland about moving the stock up the street. I asked him his opinion of moving the stock from the present location to the other building, and he said he thought it would be a better location and advised me to move, and gave me a verbal permit to do so. He was in the store a couple of times after the removal. The place we moved from was diagonally across the street corner from the bank. I had no talk with Mr. Sutherland after the removal about the stock or the moving. I asked him at the time I got the permit whether or not he would look after the other interests that were there to be looked after, and he said he would. The same morning of the fire, or the following morning, Mr. Sutherland said to me, ‘You didn’t have your insurance papers transferred,’ and I said, ‘I thought you were looking after those papers and business,’ and he said that he did not know that he had the insurance policy at all. He after-wards showed me the policy.”

The witness further testified that he spoke to Mr. Maynard, the insurance agent, about taking out the policy of insurance (renewal) that was on the goods at the time of the fire, and he said he would renew the insurance and would deliver the policy to the bank. "I paid him the premium.”

Defendant Coleman, being sworn in his own behalf, testified that he lived at Horton’s Bay in said county, and recalled being at Clare at the time he signed the note.

"Q. And before the signing of that note, or at the time of it, did you have any talk with the cashier of the bank ?
“A. Why, yes, sir.
“Q. Do you know who the cashier was; do you recognize him here in this room ?
“A. Yes, sir.
“Q. What is his name ?
“A. Mr. Sutherland.
"Q. Now state whether or not you made any conditions of signing this note or not.
“A. Yes.
“Q. State to the jury what they were.”

This was objected to on the ground that the writings were the best evidence, and the further objection that the conditions that counsel has stated, if imposed, would make Mr. Sutherland the agent of Mr. Coleman, making him the agent for both parties, which is not allowed. This objection was overruled, the court remarking to defendant’s counsel:

"As I understand it, you claim a special agreement at the time, under which this witness was to be protected ?
“A. Yes, sir.”

An exception being noted by plaintiff’s counsel, the witness answered as follows:

"Why, after the goods were sold, I and Mr. Featherly went over to the bank to make arrangements for the money, and we talked matters over with Mr. Sutherland. He said it would be all right. * * * If I would sign the note it would be all right, and I told him then that if he would hold the insurance papers as security on the goods, on this note and things, that I would sign the note, and that I would not sign it under any other conditions. Well, he said he would. * * *
“Q. What was said that they were to do with the insurance ?
“A. He was to hold the insurance policy over the goods and over this note in case of fire. He was to hold the insurance policy over that. I wouldn’t sign these papers under any other conditions.
“Q. In your talk with Mr. Sutherland, who was to look after the placing of the insurance in keeping it in force on the stock ?
'‘A. Mr. Sutherland.
“Q. Well, I know; but what did Mr. Sutherland say about it, and what did you do and say about it, rather ?
“A. I told him I would not sign the papers unless he would look after the business and let me know if anything went wrong, and he said he would, and I told him he must hold, the policy as security over the note and the goods, and he said he would. * * *
“ Q. What do you know about the moving of the stock from one store building to the other ?
“A. I did not know anything about it at all until after they were moved quite awhile.
“Q. Just before the fire you were down there to Clare ?
“A. Yes.
'‘Q. What talk did you have with Mr. Sutherland at that time about it ?
“A. Well, I went down there, and Gerald talked over the moving of the goods up to Boyne City, and I went down and saw Mr. Perry and Mr. Sutherland and talked the matter over with them, and they gave me an extension on the note for 60 days, I think it was, with the privilege of moving the goods to Boyne City, and the next morning I was going to start home and erect a house I had in Boyne City there, to put the goods in, and I got up the next morning and the thing was all lying in ruins.
"Q. Was anything said about the insurance at that time?
“A. No, sir; there was not.”

Albert E. Maynard was sworn on behalf of the defendant and testified that he was the insurance agent that negotiated the insurance on the goods in question and wrote the policy; that he transacted the business with Mr. Eeatherly, but could not remember whether he delivered the policy to him or not; that it was understood that the bank was to have the custody of it; that he made the policy payable to the bank according to instructions. It appeared that the whole amount of insurance that was obtained upon the policy was applied and indorsed upon the note in question. It further appeared that the insurance was settled by the plaintiff’s agent or attorney for the sum of $469.40.

At the close of the testimony, the plaintiff moved the court to direct a verdict for the plaintiff for the amount due upon the note. This was refused by the court, whereupon the plaintiff requested the court to charge the jury as follows:

‘,* First. That there is no evidence on the part of the defendant Coleman that releases him from the obligation to pay the full amount due upon the note.
Second. That his knowledge of the removal of the goods up to the time of the fire without objection, or without direction to the bank, was a waiver of any claims he might have upon the bank in the way of charging them with failure to perform their duty under his assumed agreement.
Third. That it was his duty primarily to look after the insurance of the goods himself, if he desired to be protected by the insurance.
Fourth. That he could not delegate that authority to the cashier of the bank, who was the representative of the other party to the contract, because it would make him the agent of both parties.”

The trial court submitted the case to the jury and stated the claim of the defendant Coleman to be as follows:

“ It is the claim of Mr. Coleman that it was the duty of the bank, under this special agreement, to notify him of this change in the location of the goods, and their duty to see that this insurance was kept' good — was kept alive— and that it was their duty to have this policy indorsed by the local agent and approved by the company with a permit to change the location of the goods from one building to another, or that a new policy was taken out, if that were necessary. * * * If you find in accordance with the claim of Mr. Coleman, then you will determine the amount that Mr. Coleman has lost by reason of the failure of the bank to keep its agreement with him; and, if you find that it amounts to the sum of $258.91, then you will bring in a verdict of no cause of action as to Mr. Coleman. I understand that it is admitted by counsel that the Featherlys are liable for this balance of $258.91.”

The jury returned a verdict for the plaintiff against the defendants Gerald L. Featherly and Blanche Featherly, and in favor of the defendant Coleman.

The plaintiff has brought the case here upon writ of error.

(1) Its first assignment of error is to the effect that the court erred in overruling plaintiff’s objection to the following question put to the witness Gerald L. Featherly:

“What was said by Mr. Coleman about signing the note with you ?”

(2) That the court erred in overruling the plaintiff’s objection to the following question put to the witness Frank Coleman:

“Now, at the time, state whether or not you made any conditions of signing this note; state what they were ? ”

(3) That the court erred in refusing to grant the motion of plaintiff to direct the jury to find a verdict against all of the defendants for the reason that there was no evidence on the part of the defendant Coleman tending to show that he was released from liability upon the note in question.

(4) The fourth, fifth, sixth, and seventh assignments respectively allege that the court erred in refusing to give each of plaintiff’s requests as hereinbefore set forth.

(5) The eighth assignment of error is to the effect that the court erred in its instruction to the jury as follows:

“But if the evidence preponderates in his favor, which means if you believe that evidence in preference to. the evidence which is opposed to it, or against it, then he has met this requirement of the law.”

The plaintiff and appellant has argued the case under the two leading questions: (1) Whether there was any testimony in the case to base a verdict upon in favor of the defendant Coleman; and (2) whether any failure on the part of the plaintiff to perform any duty claimed by defendant was not waived by his attending to the business after the goods were moved to a new location, and asking and consenting to an extension of the note, and not looking to the insurance company himself, while there upon the ground, if he wished to be protected.

Was there any testimony making a case for the jury ? We think the meritorious question in the case is whether the parol agreement claimed by the defendant Coleman to have been made with the plaintiff’s cashier, at the time the former signed the note, can be shown, or whether all such conversation or agreement was merged in the note itself. It is a general rule of law that parol evidence is inadmissible to vary or contradict a valid written contract ; therefore, if a bill or note be absolute upon its face, no evidence of a verbal agreement made at the same time qualifying its terms can be admitted. This doctrine is elementary and may be said to be fully covered by numerous decisions of this court. Phelps v. Abbott, 114 Mich. 88 (72 N. W. 3). Our first impression was that the case was governed by this doctrine, but a more thorough examination of the question has led us to the conclusion that the evidence offered and received of the claimed agreement that the bank would look after the insurance and keep it in force upon the stock of goods and fixtures was not an agreement in any manner to alter, contradict, or vary the terms of the promissory note, but that it falls within the class of cases which holds that it is not a violation of the rule to show by extrinsic evidence an entirely distinct and collateral contract, although being a part of the same transaction. 2 Jones on Evidence (1st Ed.), § 507, and cases there cited; Brent’s Ex’rs v. Bank of the Metropolis, 1 Pet. (U. S.) 89; Phillips v. Preston, 5 How. (U. S.) 278.

The doctrine is well stated in 21 Am. & Eng. Ene. Law (2d Ed.), p. 1094, as follows:

“Again, the parties to a written agreement, which is complete in itself, may at the time of its execution, or previously, have entered into a collateral parol agreement concerning some matter on which the written instrument is silent, and the rule does not preclude the proof of such collateral agreement, provided no attempt is made to vary or contradict the writing. Any independent fact or collateral parol agreement, whether contemporaneous with or preliminary to the main contract in writing, may be proved, provided it does not interfere with the terms of the written contract, though it may relate to the same subject-matter.”

Many cases are there cited.

The rule excluding parol evidence to vary or contradict a writing does not extend so far as to preclude the admission of extrinsic evidence to show prior or contemporaneous collateral parol agreements between the parties. The general rule admitting evidence of a collateral agreement is especially applicable where such agreement operates as an inducement for entering into the written agreement. 17 Cyc. p. 713 et seq.; American Building & Loan Ass’n v. Dahl, 54 Minn. 355 (56 N. W. 47). In the cited case it was held that evidence of an independent agreement, made by parol between sureties and the obligee in an idemnity bónd, at the time of the execution thereof, and as an inducement therefor, was competent and material on the part of the sureties and not tending to vary the terms of the bond itself. The court said:

“The agreement referred to, which the evidence in the case tended to establish, was a verbal one, and the plaintiff claims that evidence thereof was inadmissible, because tending to vary the terms of the written agreement or bond executed by the defendants. This objection, however, is clearly not well taken. * * * It [the agreement] did not tend to vary the terms of the bond, but shows the inducement and conditions upon which the defendants executed the same. It relates to the execution of the bond, and not to the terms or conditions appearing on the face thereof. The distinction is obvious, and decisive of the case ”— citing Brandt on Suretyship and Guaranty (2d Ed.), § 405.

See, also, Joyce on Defenses to Commercial Paper, § 323, and cases cited; Blackwood v. Brown, 34 Mich. 4; Fink v. Chambers, 95 Mich. 508 (55 N. W. 375); Buhl v. Mechanics’ Bank, 123 Mich. 591 (82 N. W. 282); Mt. Vernon Stone Co. v. Sheely & Co., 114 Iowa, 313 (86 N. W. 301); Hand v. Drug Co., 63 Minn. 539 (65 N. W. 1081); Germania Bank v. Osborne, 81 Minn. 272 (83 N. W. 1084).

We think it was perfectly competent for the defendant to require of the bank, as a condition of the signing of the note as surety for the other defendants, that the bank should undertake and promise to see that the insurance upon the stock and fixtures was continued in force. The policy was already in existence and in the possession of the bank, and we think that such a promise, if made by the bank as an inducement to the signing of the note by defendant Coleman,, was a legal, binding contract. Certainly it was to do a lawful thing for the protection of the defendant Coleman, and was based upon a sufficient consideration moving between the parties. This suit is between the original parties, and this defense is claimed by way of recoupment in the nonperformance of this oral agreement, which, it is true, was a collateral agreement, but one which related to the subject-matter with which the parties were dealing.

While the evidence is not as explicit as might be desired, yet, in our opinion, it was sufficient to carry the case to the jury.

The next question discussed is whether defendant Coleman waived his rights under the agreement. It is claimed that he had, because he was on the ground two or three days before the fire and made no objection to the bank for failure to perform its duty under the agreement. We have read this evidence with some care, and are unable to find that Mr. Coleman at this time had any knowledge or information that the insurance had not been properly looked after, and consent for the removal of the property obtained and indorsed upon the policy. It is elementary that a party cannot waive a right that he had no knowledge of. 29 Am. & Eng. Enc. Law (2d Ed.), pp. 1093, 1094.

We cannot agree with counsel for appellant in his third proposition, that the court erred in not giving the third request to charge. It is the claim of the defendant Coleman that he made a special agreement with the bank to look after the insurance and to see that the same was kept in force. Therefore Coleman’s primary duty to himself to look after this insurance, if any, was unimportant, if the agreement was made as he claims.

We find no error in the admission of the testimony. We have examined the other assignments of error, and are of opinion that they áre without merit; and, finding no reversible error in the record, the judgment of the circuit court is affirmed.

Moore, C. J., and Steers, McAlvay, Brooke, Kuhn, Ostrander, and Bird, JJ., concurred.


source: Caselaw Access Project

author: Steere, J.

license: Public Domain

text:
    SQUIRES v. MILLER.
    1. Intoxicating Liquors — Bonds—Damages—Civil-Damage Law —Penalty of Bond.
    In an action under the civil-damage statute for the death of plaintiff’s father, caused by an accident while he was intoxicated, the defendant surety company was not entitled to defeat the action on the ground that judgments of §3,000 and upwards, previously obtained against the principal and surety on the bond in suit, had been paid by such company, the liquor dealer contributing $2,000 in property towards the obligations: the surety remained bound to the extent of §2,000, the balance of the penalty named in the instrument after deducting the sums paid by the surety. 2 Comp. Laws, § 5398, 2 How. Stat. (2d Ed.), § 5074.
    2. Same.
    Such liquor dealer's bonds do not, however, permit a recovery in each case of the entire penalty stated; the total liability of the surety in successive cases arising under it does not exceed the penalty named.
    3. Same.
    The suit is based on the wrongful act, not on the bond, which is a joint and several obligation intended to secure the payment of any judgment obtained for violations of the statute. 2 Comp. Laws, § 5386, 2 How. Stat. (2d Ed.) § 5062.
    4. Same — Principal and Surety.
    The obligation is not purely contractual, but must be interpreted in the light of the provisions of law regulating the liquor trade: payment by the principal of a liability incurred under the law was not intended to release to the extent thereof the liability of the surety in another case arising during the period covered by the bond, which remains in force until the full amount has been discharged by the surety.
    Error to Ingham; Wiest, J.
    Submitted October 11, 1912.
    (Docket No. 32.)
    Decided December 17, 1912.
    Case by Leroy E. Squires, an infant, by his next friend, against Louis Miller and the Michigan Bonding & Surety Company, for unlawful sales of intoxicating liquor, resulting in the death of William A. Squires, plaintiff’s father. Judgment for defendant. Plaintiff brings error.
    Reversed.

      William M. Smith, for appellant.

      A. F. Bunting, for appellee.
   Steere, J.

This case involves the scope of a saloon keeper’s bond, given under section 5386, 2 Comp. Laws (2 How. Stat. [2d Ed.] § 5062), and his surety’s limit of liability thereon. It is one of a succession of actions brought by members of the family of William A. Squires, deceased, against Louis Miller, a saloon keeper engaged in the sale of intoxicating liquors in the city of Lansing, Mich., and his surety, the Michigan Bonding & Surety Company, to recover, under the appropriate Statute, damages resulting from the death of said Squires on March 5, 1909, while intoxicated by liquor obtained at said Miller’s place of business.

Deceased was a man in the habit of getting intoxicated, and while in that condition went upon the track of the Belt Line Railway in said city and was killed by a passing train. In three previous suits, arising out of the same state of facts, his wife and two of his minor children recovered and collected judgment from Miller and his surety aggregating $3,000.

Under said section 5386 the common council of the city of Lansing had determined and fixed the bonds of persons engaged in the sale of intoxicating liquors in said municipality, covering the year 1909, at the sum of $3,000. Miller had filed his bond, with the defendant bonding company as surety, in that sum. It followed the form set out in the statute, and had been duly approved.

Plaintiff, Leroy E. Squires, a minor son of said William A. Squires, now brings this suit by his mother, Hattie M. Squires, acting as his next friend, under section 5398, 2 Comp. Laws (2 How. Stat. [2d Ed.] § 5074), which provides, among other things:

“ Every wife, child, parent, guardian, husband or other person, who shall be injured in person or property, or means of support or otherwise, by any intoxicated person or by reason of the intoxication of any person, or by reason of the selling, giving or furnishing any spirituous, intoxicating, fermented or malt liquors, to any person, shall have a right of action in his or her own name, against any person or persons who shall, by selling or giving any intoxicating or malt liquor, have caused or contributed to the intoxication of such person or persons, or who have caused or contributed to such injury, and the principal and sureties to the bond hereinbefore mentioned shall be liable severally and jointly with the person or persons so selling, giving or furnishing,” etc.

Under this provision it has oeen held that, where the injuries arising from an illegal sale of intoxicating liquors are several, there may be separate actions for damages, and recovery in one will not bar a recovery in another; but the wife and minor children of a husband and father may each maintain an independent action for damages sustained. Friend v. Dunks, 37 Mich. 25; Rosecrants v. Shoemaker, 60 Mich. 4 (26 N. W. 794).

The declaration in this case is properly framed under the statute with full averments and allegations, correctly stating a cause of action. .

Defendant Miller pleaded the general issue. The defendant surety company also pleaded the general issue, and further gave notice in connection therewith, as a special ground of defense, that it had already paid the full penalty of Miller’s bond on which it was surety in satisfaction of previous judgments,' amounting to $3,000, whereby its obligation as surety upon said bond had been exhausted and fulfilled.

The issues of fact involved in this controversy had been thoroughly threshed over in the previous suits, and when this case came on for trial in the circuit court of Ingham county the parties, by theii; respective attorneys, simplified matters, so far as possible, by filing a stipulation in which all the material facts alleged in plaintiff’s declaration were admitted, and defendants’ conceded liability to the plaintiff was fixed at the sum of $500 and costs; the court being authorized to enter a judgment in favor of plaintiff for thp,t amount, unless one or both of defendants was relieved from that liability by reason of payment of the full sum of $3,000, which had been made to other plaintiffs in other suits before that date, as follows:

On a previous judgment recovered April 7, 1910, by Hattie M. Squires herself for--------------$1,449 60
On a previous judgment recovered June 4, 1910, by Hattie M. Squires, as next friend for Mildred E. Squires, a minor, for the sum of--.......... 1,250 00
On a previous judgment recovered by Hattie M. Squires, as next friend for Arlow A. Squires, a minor, on June 4, 1910, for.................... 300 84
Aggregating.................................$3,000 44

—the first two of said judgments having been rendered upon verdicts by juries, and the third under stipulation that plaintiff was entitled to recover said amount.

The stipulation also specified that of the $3,000 so before paid by defendants to other plaintiffs defendant Miller, the saloon keeper, had himself furnished $2,000 paid by him to defendant bonding company and by it to said plaintiffs; it being, however, provided that the stipulation should not be considered as an admission, either on the part of the plaintiff or defendant, as to how much of said judgments was paid by said Miller, the principal, and how much by the Michigan Bonding & Surety Company, defendant, but that as between Miller and the bonding company said bonding company had paid the whole of said amount, having before paying the same received from said Miller property of an agreed value of $2,000. By a supplemental stipulation it was agreed as follows:

“Paragraph 7. It is further stipulated and agreed by and among all the parties hereto that the property heretofore turned over by Louis Miller to the Michigan Bonding & Surety Company before the three judgments aggregating $3,000 were paid consisted of certain shares of the Lansing Brewing Company’s stock, certain shares of the Peerless Motor Company’s stock, and certain real estate, which was of the value of $2,000, so that said Miller in fact paid $2,000,of the three judgments that were paid and the Michigan Bonding & Surety Company paid the other $1,000. And the stipulation heretofore signed and filed herein is supplemented by the addition of this paragraph. which shall bind all the parties hereto.”

On these stipulated facts the case was argued and submitted to the trial court for its judgment.

That court held the bond was joint and several, and if the saloon beeper paid judgments for such damages to the amount of $3,000, being the penalty of the bond, the condition of said bond was met and the same was satisfied; that it therefore became immaterial who furnished the money to satisfy the bond; that the saloon keeper was responsible for damages found, regardless of the amount of his bond; that under Circuit Court Rule 27 judgment might be entered against him and the other defendant be released; that, the bond having been satisfied, the defendant bonding company was not liable in this action. Judgment was thereupon entered accordingly, in favor of said defendant bonding company, of no cause of action, and in favor of said plaintiff against said principal defendant Miller for $500, the stipulated amount of damages, from which judgment the action has been removed by plaintiff to this court for review on writ of error.

Plaintiff, by appropriate requests, asked the trial court to hold, as conclusions of law under the stipulated facts, that the payment by Miller of judgments recovered against him and his surety for damages resulting from his sales of intoxicating liquor in violation of law does not satisfy the bond to the amount of such payment, nor in any way release the surety of its obligation, which can only be discharged by it having borne the loss and paid judgments recovered for such damages to the full $3,000, that being the amount of its obligation as nominated in the bond; that, inasmuch as it is admitted “ said Miller in fact paid $2,000 of the three judgments that were paid, and the Michigan Bonding & Surety Company paid the other $1,000,” the bond for $3,000 yet remained in full force and effect to the amount of $2,000, and judgment should, also be entered in this case against the surety for the stipulated damages of $500, with costs.

It is pointed out that under somewhat similar statutes in other States authority is found for the proposition that, inasmuch as a liquor dealer’s bond is a public protection comprehending any criminal violation of the liquor law within a certain stated period of time, the surety is holden for all damages arising from violations of said law at any time during the period for which the bond is given; that successive fines may be imposed and collected in criminal prosecutions, and successive recoveries may be had in distinct actions by different parties, during the time covered —the amount of recovery being limited, however, in each case to the penalty stated in the bond. We do not gather from the language of our own statute that such was the legislative intent, and think the following language, in Merrinane v. Miller, 157 Mich. 279 (118 N. W. 11, 25 L. R. A. [N. S.] 585), is of general application, though used in a particular case where plaintiff had obtained a judgment exceeding the amount of the bond:

“ It is urged in the brief of plaintiff that the penalty of the bond does not limit the liability, but that the sureties on the bond are liable to any amount by virtue of their relation to the principal and that the liabilty is not limited to the penalty of the bond. We cannot assent to this view. We think that statute fixing the liability of the sureties must be read in connection with the provision requiring a bond and fixing the penalty thereof.”

The question which confronts us here is whether the surety’s liability is released or reduced in one case through previous payment by the principal of damages in another case. In this case a sum equal to the penalty of the bond had been previously paid for damages resulting from Miller’s violation of the law. He had paid two-thirds of that amount himself. Had he paid all of it, the principle involved would have been the same.

Was it the legislative intent that a bond given as hostage for his observance of the law for a period of one year should be satisfied and discharged, without the surety ever being required to pay anything, in case he at any time personally paid damages or fines to the amount of the bond? Under the strict rules of suretyship as applied to commercial paper, or to a bond given to a private party to indemnify him in a private matter, it could well be contended that, the principal having responded to the amount of the bond, the surety goes free.

This is not a bond primarily given to indemnify a private party, though by its terms private parties may avail themselves of its provisions. It is a public bond given to the Commonwealth as a condition precedent to engaging in the liquor traffic, a business which, as a matter of public policy, is regulated and restricted under the police power of the State; violations of the restrictions imposed being made criminal offenses.

Under the law a liquor dealer’s responsibility and liability are not confined to nor limited by the exact terms and amount of penalty in his bond. Throughout the year, and as often as he repeats them, violations of the statute lay him liable to criminal prosecutions, which involve fine or imprisonment, or both; and, irrespective of the limit laid in his bond, he is answerable for all damages suffered by any one as a consequence of his failure to comply with the penal provisions of the statute. If he is financially able to meet all such liabilities, the bond becomes of no practical importance. As a wise precaution and reasonable protection to the public, the legislature saw fit to require that an approved bond be filed of from $3,000 to $6,000, in the discretion of the proper municipal board. It is not unreasonable to presume that this was intended to be in addition to the dealer’s individual financial responsibility, and as a further protection.

Among other things, the principal, by the terms of the bond, promises, covenants, and agrees not to violate the law regulating the business in which he is about to engage; that he will not. sell to'minors, Indians, or intoxicated persons, nor to any person in the habit of getting intoxicated, nor to certain persons when forbidden in writing by a relative or official; and that he will pay all fines imposed and all damages adjudged to any one, whoever it may be, injured in person, property, or means of support, or otherwise, as a result of any such unlawful acts. The condition of the bond, in which his surety joins him, is that he “shall well and truly keep and perform all and singular the foregoing covenants and agreements and shall pay any judgment for actual or exemplary damages which may be recovered against him in any court of competent jurisdiction and all fines for violation of ” the act in question. It seems, clear that the penalty stated in the bond is intended as the limit of the surety’s liability, not the principal’s, nor for his benefit, except as it otherwise might be more difficult for him to obtain bondsmen. The surety, by the terms of the bond, joins the principal in his promises, and with him covenants that the said principal will faithfully observe the law and conduct his business in compliance with its provisions, in that aspect of .the undertaking standing with him and vouching for him, as well as becoming pecuniarily answerable for his delinquencies during the time and to the amount for which the bond is given.

In a suit to recover damages resulting from the liquor dealer’s criminal violation of the statute, the principal and surety may be proceeded against jointly or severally in a statutory action of trespass on the case, and not by a strict action in debt on the bond. The bond is not the foundation of the action, nor, standing alone, evidence of liability. It figures as security to enforce payment of any judgment obtained for injuries occasioned by violations of the statute. Those violations give the cause of action and are the basis of recovery, and the surety becomes responsible for all of them up to the limit of the penalty stated.

While, under the law of suretyship, a bond is, as a general rule, recognized to be purely a contract which, in its nature, when privately given without any qualifying laws, is to be strictly construed and not extended beyond the scope of the obligation according to its express terms, still a statutory bond to the public given for the observance of a law authorizing a business only permitted under specified conditions and regulated under the police power of the State, is not in the same sense strictly contractual in its nature. Its characteristics are also, and, perhaps, to a greater degree, statutory. It is to be read and construed and enforced in connection with and according to the statute pursuant to which it is given, and should be interpreted according to the purpose, intent, and meaning of the legislative enactment. Brockway v. Petted, 79 Mich. 620 (45 N. W. 61, 7 L. R. A. 740); Merrinane v. Miller, supra.

When, in that connection, we consider the wrongs sought to be remedied, the reason for and policy of the law, and the purpose of the bond, read in the light of the statute under which it is given, it can be deduced with reasonable certainty that it was the legislative intent that the penalty named should measure the surety’s individual liability for any breach of the law by the principal during the year the bond covers, which liability continues throughout that period, or until paid by the surety, in case of default on the part of the principal; that payment by the principal in the settlement of fines or claims for damages, with or without suit, where the surety has not been called upon to respond and has stood no loss, does not operate to release or reduce the bond; that it stands during the year for successive recoveries, in separate actions, until its full amount has been paid by the surety.

We cannot read into the bond and statute, considered together, any intent that payment in one case by the principal, whose liability is unlimited, shall operate in another case to release the surety, whose liability is limited; but all intendments of the law are to the contrary.

While the law is not concerned with the private relations between principal and surety, or the motives of the latter in assuming the obligation, it can be said in passing that this construction works no unreasonable hardship and involves no deterring uncertainties. The surety knows exactly what his limit of liability is and the risk he assumes. He simply obligates himself for the period of one year to pay all adjudicated fines and damages which the liquor dealer fails to pay, up to the amount of the penalty stated in the bond.

The judgment is reversed and the case remanded to the trial court, with directions to enter judgment in accordance with the foregoing conclusions.

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


text:
    CITY OF DETROIT v. DETROIT UNITED RAILWAY.

    1. Street Railways — Municipal Corporations — Fares—Franchises — Extension oe City Limits.
    Where respondent had franchises from the city of Detroit and from adjacent townships permitting it to charge five-cent fares in the city and the same amount over lines in the townships, a temporary agreement made after the city limits had been extended so as to include the township lines within the city, whereby both parties agreed upon the terms under which respondent could continue its operations pending judicial proceedings, and containing the words “under the same terms and conditions now prevailing in the city,” etc., was not conclusive of the rights of either party and the fact that respondent was collecting the disputed fares in both city and township when a modus operandi was agreed upon between the parties could not aid in construing its rights under franchises in question.
    2. Same.
    The franchise of the railway company in the city is to be construed with reference to the power of the legislature to extend the limits of the municipality, and construing it strictly as against the grantee, under the general rule of construction, the railway company is required to charge the rate of fare specified in its franchise throughout the city as enlarged.
    3. Same — Construction of Franchise.
    Nor did provisions in the franchise limiting the time in which certain lines should be completed, or restrictions as to streets, control the interpretation of the grant.
    4. Same — Constitutional Law.
    While respondent may have obtained by purchase all the rights owned by the corporations operating in the township, and such rights cannot be abridged by legislative action, the railway company under its franchise had by agreement placed itself in such a position that it could not enforce the rights against the other party to the contract.
    Certiorari to Wayne; Hosmer, J.
    Submitted October 15,1912.
    (Calendar No. 25,260.)
    Decided December 17, 1912.
    Mandamus by the city of Detroit against the Detroit United Bailway to compel respondent to accept passengers at certain rates and to reduce fares on certain portions of its lines. An order issuing the writ is reviewed by respondent on writ of certiorari.
    Affirmed.

      Brennan, Donnelly & Van De Mark (John G. Donnelly, Fred A. Baker, and Hinton E. Spalding, of counsel), for appellant.

      Richard I. Lawson (P. J. M. Hally, of counsel), for appellee.

       Removed by writ of error to Supreme Court of the United States, January 3, 1913.

   Steere, J.

This is a proceeding in certiorari, instituted to review the action of Wayne county circuit court in granting a writ of mandamus, at the instance of the city of Detroit, requiring the Detroit United Bailway to carry passengers for a single five cent fare at all times of the day, and during workingmen’s ticket hours for a single ticket, between the easterly limits of said city, near the so-called Alter Boad on Jefferson avenue, and the opposite northwesterly city limits on Grand Biver avenue; it being claimed by relator that respondent is obligated so to do under the provisions of certain ordinances. The case was heard upon petition and answer, and the material facts are practically undisputed.

A very clear and satisfactory statement of the case is found in the opinion of the trial judge which, supplemented by some additions from the briefs of counsel for respondent, we follow closely.

Respondent’s cars are operated between the points above mentioned connectedly, as a single line. The petition claims that extra fares or tickets are required of passengers when traveling on Grand River avenue between the present northwesterly city limits, which are about a mile beyond the city boulevard, and the old city limits, which were near the boulevard, and that a like extra charge is made for travel on Jefferson avenue between St. Jean avenue and said Alter Road. It appears from respondent’s answer, and is undisputed, that, although asserting a right to exact fare beyond the city boulevard on Grand River avenue, respondent does not do so; and that, still asserting its legal right to the extra fare, it is not collecting extra fares or extra tickets for travel on Jefferson avenue between St. Jean avenue and the Alter Road during workingmen’s ticket hours, but it admits that it does collect such fares for travel between those limits at other times. The tracks of respondent on Grand River and Jefferson avenues are connected and operated together, cars passing from one to the other through Griswold street; the route formerly having been through Woodward avenue, but later changed for the convenience of respondent and its patrons, and not in compliance with any obligation imposed upon it by ordinance or contract. Respondent is a corporation owning and controlling the electric railway lines in and adjacent to the city of Detroit having, as its name indicates, acquired and united into one organization various independent lines which had been incorporated and built from time to time under different franchises and operated independently throughout the city and its suburbs.

Respondent derives its right to operate in the city of Detroit through grants acquired from lines previously organized and subsequent ordinances and resolutions of the common council of the city as follows:

By an ordinance of May 1, 1868, the city of Detroit granted to a corporation known as the Grand River Street Railway Company the right to construct a line on certain streets, including Grand River avenue, to the intersection of the Michigan Southern Railway, the tracks of which were near the city boundary; and by section 3 of said ordinance gave the right to build a second track within five years after the first track was completed. By section 6 of said ordinance “ the rate of fare for any distance is not to exceed five cents in any one car or any one route named in this ordinance.” By section 8 the line on the Grand River avenue was to be completed to the easterly line of Woodbridge farm contemporaneously with the paving of the street, and from said farm line to the west line of the city limits whenever public necessity, as it might be determined by the common council, should demand.

An ordinance dated August 3, 1888, granted to said company the right to construct a single track on Grand River avenue from its then present terminus to the westerly city limits. Section 2 of said ordinance required that such extension should be completed before the street should be paved, under proceedings then pending before the common council, in default whereof said right should be forfeited.

An ordinance dated January 3, 1889, granted to said company the right to lay a double track through Grand River avenue from Woodward avenue to the city limits. This grant was made subject to the provisions of the grant of 1868, heretofore first mentioned. Section 4 of the latter ordinance provided that “the lines hereinbefore authorized shall be constructed and in operation within one year from the date of the passage of this ordinance. Section 3 required said company to stipulate to carry passengers for a five-cent fare from the westerly terminus of the Grand River avenue line to any point on Congress street east, and vice versa; also from any point on the line of said railway to any other point, and to sell tickets at eight for a quarter, good over the entire route of said company or any portion thereof, either way, within certain hours. At the time of the adoption of this ordinance of 1889, the westerly city limits were located just beyond the city boulevard, and the company extended its tracks to that point under said ordinance. Beyond the city limits, and on either side of Grand River avenue extended (called the Grand River Road), lay the township of Greenfield. This township in 1897 gave a franchise to the Grand River Electric Railway for extension of a line across the township, along said road “ to the present city limits of Detroit,” fixing the rate of fare at five cents, or six tickets for a quarter, with school tickets at ten for thirty cents, for any distance within said township. This line was built accordingly, connecting at the city limits with the city line near the boulevard; the incorporators bonding the road for $850,000. This amount is still outstanding.

By legislative acts of 1905 and 1907 the city limits were extended northwesterly on Grand River avenue, or road, for about one-half mile. Previous to this time respondent had become the owner of the city line on Grand River avenue in the city and also the connecting line extending through the township of Greenfield along the Grand River Road.

In November, 1862, the city by ordinance granted to a corporation known as the Detroit City Railway the right to construct lines on certain streets in said city, including Jefferson avenue. The routes of all such lines were to commence on Woodward avenue and run on their several courses to the city limits; the time for completing these various lines being fixed. The route along Jefferson avenue to the city limits was to be completed within six months after March 31, 1863. A deposit was required to be made as security for the completion of certain of the lines, to be forfeited on failure. It was also provided that the rate of fare should not exceed five cents on any Car or on any route named in the ordinance. In 1873 a section added to this ordinance authorized the construction of a second track along Jefferson avenue. In 1879, by ordinance, the rights and obligations under the ordinance of 1862 and amendments thereof were “extended and limited to 30 years from this date.” In 1889 a supplemental ordinance granted to the Detroit. City Railway the right, among other things, to extend a double track along Jefferson avenue from its then easterly terminus to the easterly city limits, fixing the time within which the same should be constructed; it being also provided that the additional lines should be operated as a part of the existing system of the Detroit City Railways, provided the company should agree in writing to carry passengers over certain lines to other points on specified lines for a single five-cent fare, and also to make arrangements for carrying passengers within specified hours over any of its lines within the city limits for a single fare, or on an eight for a quarter ticket with specified transfer rights.

In 1862 the city limits of Detroit on Jefferson avenue were at Mt. Elliott avenue. In 1885 they were extended to a point 200 feet east of Baldwin avenue, and so continued until said ordinance of 1889 was enacted. In 1891 the limits were extended to Hurlbut avenue, which was the easterly line of the township of Hamtramck. Previous to this time a route had been constructed on Jefferson avenue in Hamtramck township by the Hamtramck Street Railway Company, or by the Jefferson Avenue Railway, under grants providing that the city fare should include transportation in the township and vice versa. Prom Hurlbut avenue easterly to the Country Club in the township of Grosse Pointe, a line was constructed under a grant made by the township, or village, of Grosse Pointe to the village of Pairview. This line was purchased by respondent prior to an act passed in 1907, by which the territory from Hurlbut avenue east to a point near the Alter Road in the village of Pairview became a part of the city. These village and township grants contained provisions for an extra fare.

Prior to 1909 respondent had absorbed the various lines organized and constructed under the foregoing franchises and ordinances, by purchase, in accordance with the provisions of section 6448, 2 Comp. Laws, and acquired the rights conferred by such grants, including authority to collect fares “in the same manner and upon the same terms ” as the original organizations.

A question having arisen between the city and respondent as to the latter’s franchise rights being about to expire on certain streets, including a portion of Jefferson avenue, the matter was temporarily adjusted by an arrangement under which the common council of the city passed a resolution on October 26, 1909, granting respondent permission to continue operations after November 14,1909, from day to day, “under the same terms and conditions, except as to percentages on gross receipts now prevailing in the city of Detroit whether due to contract agreement or not.” The conditions of this resolution were accepted by the respondent with the statement that it did not waive, and conceded that the city of Detroit did not waive, any rights. At the time of this arrangement respondent was collecting the fares in controversy in this cause.

The'question presented for determination is whether or not, outside of workingmen’s ticket hours, the rights to charge extra fares acquired by respondent under the Greenfield and Grosse Points grants are abrogated within existing city limits by the foregoing arrangement of 1909, construed with the original city ordinances of 1862 and 1868, fixing the rate of fare within the city limits, and the two city ordinances of 1889 relative to the Grand River Street Railway Company and the Detroit City Railway Company. Apparently the parties hereto do not disagree as to their respective rights relative to rates of fare inside of or beyond the city limits, had those limits remained unchanged. The real contention arises over the effect of extending the city boundaries.

The subsequent agreement of 1909 was manifestly a temporary provision for a modus operandi from day to day, not intended as a final adjustment of any of their serious differences, and gives little aid in the solution of this problem. By it relator permitted respondent, on payment of a certain per diem, to continue operations "under the same terms and conditions, except as to percentages on gross receipts, now prevailing, in the city of Detroit, whether due to contract agreement or not,” and the proposition was accepted with the understanding, as declared by respondent, that neither party waived any of its rights, whatever they might be.

Relator contends that one of its rights, reserved and imposed by the terms and conditions of the various ordinances, franchises, and legislation heretofore referred to, gave to any passenger, upon payment of a five-cent fare, the privilege of a continuous ride, within the city limits, from any point on the lines of respondent’s railway to any other point on any of said lines; that the combined provisions relating to continuous rides, in the various grants which respondent had united, comprehended all territory within the limits of the city of Detroit, whenever and wherever located, and went with any extension of the municipal boundaries, or of respondent’s lines, within said boundaries.

Respondent contends that a proper construction of said grants restricts the five-cent fare rate to the city limits, and lines constructed, as they existed when the grants were made; and urges that its position is strengthened by the arrangement of 1909, for the reason that relator knew the railway company was then regularly collecting the fares now objected to and sanctioned the same as a part of the "prevailing terms and conditions”recognized and reserved by the agreement.

We are unable to adopt that view of the significance of the agreement. The word “prevailing” has no technical legal import. In the connection used it simply signifies that which is common, in operation or prevalent, while “terms” and “conditions” often used synonymously, when relating to legal rights, are technical words of well-defined legal meaning. As used in contracts generally, they mean the propositions, limitations, and exactions which comprise in whole or in part the agreement and govern the contracting parties, defining what they obligate themselves to do or not to do. As applied to a statute or ordinance giving a charter or franchise, they signify the boundary, limit, or extent of the grant. Railway Co. v. City, of Cincinnati, 1 Ohio Prob. R. 269-278. The act, or fact that respondent was collecting the disputed fares, when a status quo from day to day was agreed upon, could not be construed as a part of the “prevailing terms and conditions” mentioned in the agreement.

Counsel for relator broadly contend that the effect of any change in a municipal boundary is no longer an open question in this State, but that it was put to rest by the decision of this court in People v. Railway, 162 Mich. 460 (125 N. W. 700, 127 N. W. 748, 139 Am. St. Rep. 582).

Strong language of general application is there found. The direct question in that case was whether the requirements of paragraph “d,” section 4, of the ordinance of 1889, which ordinance is also here involved, compelling the respondent to carry passengers during workingmen’s ticket hours “ over any of its lines in said city for a single fare,” bound it to transport passengers to the easterly limits of Jefferson avenue, as extended subsequent to the adoption of said ordinance, notwithstanding the company was assignee of the earlier franchises granted by Groase Pointe township and the village of Fairview. In the original opinion handed down in that case this court, speaking through Justice Montgomery, said:

“We think it not unreasonable to hold that this mutual contract was made in view of the power of the legislature of the State to increase or diminish the territory within the city, and that neither the city nor the company contemplated that in case of an extension of the lines of the company within the city, either by purchase or acquisition from another company, an increased fare should be demanded ”— citing and reviewing Township of West Bloomfield v. Railway, 146 Mich. 198 (109 N. W. 258, 117 Am. St. Rep. 628), and Indiana R. Co. v. Hoffman, 161 Ind. 593 (69 N. E. 399).

The opinion concluded as follows:

“We construe the ordinance to include any street railway constructed or purchased by the defendant which shall be within the city of Detroit as the limits of said city may from time to time be fixed by the legislature.”

On a rehearing granted in the case the court declined to modify or recede from those views, and, in a supplemental opinion by Justice Stone, said:

“A further investigation of the questions involved satisfies us of the correctness of the reasoning and conclusion of Chief Justice Montgomery who wrote the former opinion in these cases (ante, 461 [162 Mich. 461, 125 N. W. 700, 127 N. W. 748, 139 Am. St. Rep. 582]), to which opinion reference is here made. He cited and followed the case of Indiana R. Co. v. Hoffman, 161 Ind. 593 [69 N. E. 399], decided by the Supreme Court of Indiana. That case is well reasoned, and is supported by the authorities therein cited, and we think it should be followed in these cases. It may be asserted as a general proposition, applicable here, that a municipal law or ordinance designed for a city at large operates throughout its actual boundaries, whatever they are, and is not affected by the fact that these are enlarged from time to time ”—

concluding with approval of the rule that the terms of a franchise, or grant, by a municipality, shall be construed strictly as against the grantee and as favorably to the grantor as its terms permit.

If is claimed in behalf of respondent that this case is not controlling; that the language then under consideration, relative to the fares, was different from that now before us; that the general rule announced by the court was not necessary to a disposition of the issue and is largely dictum; that the court did not have before it section 2 of the ordinance, which limits the time for construction of tracks authorized, indicating that the ordinance could not apply to tracks thereafter constructed, or, by extension of boundary, subsequently brought within the city limits; and that all the ordinances now before us, granting franchises on Jefferson and Grand River avenues, as well as other streets, required the lines to be built within a definite time, performance being insured by provisions for a bond or a forfeiture.

It is true that the case at bar and People v. Railway, supra, have distinguishing features; and it is possible the latter case might have been disposed of on other and narrower grounds, but those which the court announced were pertinent, were not dictum, were directly in line with the points made and questions presented, and asked to be determined, by counsel for the respective parties, as appears by their briefs. The then counsel for respondent contended that—

“ There is nothing in the street railway act nor in the contracts contained in any of the ordinances or grants mentioned from which it can be asserted that, as often as the State should change the boundaries, the contracts would be correspondingly annihilated or altered, or the contracts of one municipality substituted, in whole or in part, for that of the other.”

On the other hand, counsel for the city contended that in making these contracts—

“ It is to be presumed that the power of the legislature of the State was borne in mind, the power of increasing or diminishing territory from the given city, town, or village; when, within that ordinance, the words ‘city limits ’ were used, it was meant not only the city limits, as then established, but the city limits as they might be in the future.”

Authorities in support of both contentions were cited in that case and are cited here.

We think it can be said with certainty that, in a case where the question was pertinent and squarely presented in the briefs of counsel on both sides, argued and re-argued, this court, in harmony with Indiana R. Co. v. Hoffman, supra (161 Ind. 593 [69 N. E. 399]), and the authorities there citied, now supported by the more recent case of Peterson v. Power Co., 60 Wash. 406 (111 Pac. 338, 140 Am. St. Rep. 936), has unequivocally declared it a general rule in this State that city ordinances, designed for the city at large, operate throughout its boundaries, whatever changes may be made in them, and that grants by such ordinances, though accepted and amounting to contracts, are to be construed as made and accepted in contemplation of, and subject to, such rules, unless the contrary is clearly expressed.

It is further urged in behalf of respondent that, conceding such general rule of construction, the contrary intent appears in this case from the language of the grants limiting the time of construction, together with the streets on which and points to where the lines might be built; referring specifically to city limits as they then existed, thus negativing future extensions. Counsel say in their brief:

“ It is contrary to all reason to believe that in 1862 or 1868, or 1889, the city of Detroit made a grant fixing the rate of fare in territory which did not become a part of the city until 1907. Such a grant by implication is contrary to the fundamental principles of the construction of municipal grants ” — citing cases.

We think the language already quoted from People v. Railway, supra, intimates that some such belief might be entertained. Certain of the language used in the ordinances points to such a possibility and intimates an understanding that a growth of the city and development of its public utilities, to which the grants should apply, were anticipated.

In the original ordinance of 1862, to the Detroit City Railway, it was exclusively authorized to construct and operate lines—

“ On and through Jeff ergon, Michigan and Woodward avenues, Withered, Gratiot, Grand River and Brush or Beaubien streets, to Atwater street; and from Jefferson avenue at its intersection with Woodbridge street, to Third street; up Third street to Fort street and through Fort street to the western limits of the city; and through such other streets and avenues in said city as may, from time to time, be fixed and determined by vote of the common council of the said city of Detroit, and assented to, in writing, by said corporation.”

Provision was also made for connecting these various lines with Woodward avenue in such manner that each will furnish a continuous route through the heart of the city to and along Jefferson avenue. It was also provided that the railway down Gratiot street, or through Randolph street, Monroe avenue, and the Campus Martius may be continued as grantees may elect. The ordinance of 1868 to the Grand River Street Railway company contemplated extension of lines on other streets than those named, double tracking, etc., looking forward to development and expansion.

We do not regard the restrictions, in the ordinances, as to streets, city limits, and time of construction, as of controlling import. They do not negative the presumption that the parties contracted with the power of the legislature to change the city limits in view. The limit of time for completing the lines on certain streets was but a preliminary condition. The subsequent right and ability to operate the lines and collect fares only became absolute when the lines were constructed and the preliminary condition forever disposed of, and then there was no time limit involved, except the life of the franchises.

It is unquestionably the law, as a general proposition, that in purchasing the Greenfield and Fairview lines respondent acquired all rights originally granted by the franchises for such lines; and it is equally a general rule of law that those rights, once granted and accepted, could not be destroyed or abridged by subsequent general or local legislation. But it does not follow that respondent might not be in a position when those rights were purchased, by reason of other and previous contract obligations, so that as against certain parties and in certain localities all those rights could not be enjoyed or enforced by it.

The rights of the townships, which granted franchises for the lines respondent purchased, or of citizens of said townships, or of the holders of underlying bonds, or the validity of the franchises, are not involved here. It is only a question of whether respondent has, by contract with the city, obligated itself not to collect more than a five-cent fare in a certain zone where, were it not for such contract, it would be authorized so to do under said township franchises.

The court, in People v. Railway, supra, said of the ordinance of 1887 as an entirety that it should be construed as a mutual contract, made in view of and subject to the power of the legislature to change the city boundaries; the contracting parties being held to contemplate that an increased fare should not be demanded in case of an extension of the lines of the company within the city, either by purchase or acquisition from another company.

We do not think such construction is or should be limited to a single paragraph of the ordinance. It can with equal force be said of other parts of that ordinance, and of the others under consideration, that they are contracts to be construed as made in view of and contemplating expansion, and extension of application to territory which may by legislation be added to the city.

That contract and previous contracts, embodied in ordinances to which it is supplemental, define respondent’s right of existence in the city of Detroit. Its primary rights in the city territory are by city grant. It has united, built up, and developed as an entirety a street railway system within the city, extending to and beyond its limits. It has absorbed by purchase and made a part of that system the township lines in question with their grants, and as a result of such unification and practical combination, even though in name and form it may retain the original corporate organization of the subsidiary companies, it has made them, as to the city and within the city, an integral part of the whole, and subjected them to the restrictions contracted for in the original city ordinances, thus defining and limiting its own rights under the township grants, within city territory, as subordinate to and dominated by said city ordinances.

We are of opinion that the conclusions arrived at by the court below are correct, and its judgment is therefore affirmed.

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

       This section as amended in 1905 is found in 8 How. Stat. (2d Ed.) § 6997.


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    KEISTER v. DONOVAN.
    1. Logs and Logging — Justices oe the Peace — Log Liens— Attachment.
    Since statutory proceedings must be strictly followed, and a party making claims thereunder must prove that the court had jurisdiction, in garnishment proceedings, on a judgment rendered in attachment to enforce labor liens against timber products, it is necessary to make proof of the affidavit required by the statute as preliminary to the writ of attachment : a recital in the docket is not evidence that it was made. 3 Comp. Laws, § 10756, 5 How. Stat. (2d Ed.) § 13813.
    2. Same — Adjournment—Discontinuance.
    By adjourning the case on his own motion at an adjourned day subsequent to the day of return, the justice of the peace lost jurisdiction of log-lien proceedings.
    3. Garnishment — Log-Lien Act — Debtor and Creditor.
    Garnishment lies to collect a debt secured by a statutory lien upon timber products, although a judgment has been obtained under the log-lien statute.

      4. Same — Disclosure—Liens—Exemption.
    Where a garnishee disclosed that indebtedness as claimed by plaintiff existed between the garnishee and principal defendant, and claimed that liens for labor performed by several claimants on certain logs had been obtained, and notice thereof served on the garnishee, and where he did not pay the money into court, but defended the case, and it appeared that the alleged liens were invalid by reason of defective proceedings to enforce them and that the principal defendant, being an independent contractor hiring labor to do the work, was not entitled to any exemption, a judgment for plaintiff was sustained by the proofs.
    Error to Kent; Brown, J.
    Submitted October 18,1912.
    (Docket No. 149.)
    Decided December 17, 1912.
    Garnishment by Bruce N. Keister against Frank Donovan. Judgment for plaintiff. Defendant brings error.
    Affirmed.
    E JDoyle, for appellant.

      E. A. Maher, for appellee.
   Steere, J.

In this case defendant Donovan seeks to defeat a judgment obtained against him as garnishee defendant in a suit instituted by plaintiff against Samuel W. Matice, principal defendant, on the ground that the debt owed by said Donovan to said Matice, which it was sought to reach by garnishment, was a labor debt upon which claims of lien for labor had been filed. Plaintiff began a suit on April 6, 1911, in justice’s court, before T. H. Burch, a justice of the peace of Kent county, in an action of assumpsit upon a promissory note which he held against defendant Matice. On the same date, in the same court, in relation to the same matter, plaintiff also commenced an auxiliary garnishment proceeding against Donovan, as a debtor of said Matice. A summons against said Matice as principal defendant, and another summons against said Donovan as garnishee defendant, were issued at the same time, both returnable on April 18, 1911, and both were personally served on April 7,1911. On the return day, April 18, 1911, the case was called; all parties being present. Plaintiff orally declared on a promissory note executed by said Matice. The garnishee defendant, Donovan, then made and filed the following disclosure in writing, under oath:

“That at the time the garnishee was served on him there was $184.60 due on the contract. Liens to the amount of $161.34 for labor have been filed and served, so that there is $23.24 due above the labor claims due. S. W. Matice, the principal defendant, is a householder, and he worked personally on the job at manual labor all the time the lumber was being cut.”

Afterwards, and on the 23d day of May, 1911, to which date the case was adjourned, said Donovan filed an amended disclosure under oath, which is as follows:

“That there is $184.60 due on contract, and that labor liens have been filed for the whole ampunt thereof, and notice of the same served upon him forbidding him to pay any except those holding such liens. Such notice informs him that said liens have been filed with the county clerk.”

The following “examination of garnishee defendant,” under oath, was also filed on the same date:

Q. Donovan, garnishee defendant?
“A. Yes. Am not concerned with the original parties. I was owing Matice $184.60 when the garnishee was served on me. The principal defendant is Matice. This was for sawing lumber and ties. This was on a verbal contract under which I was to pay Matice $4 per thousand for sawing lumber and ties.”

On said 23d day of May, judgment was rendered against Matice, the principal defendant, in favor of the plaintiff for the sum of $155.06, with costs taxed at $8.73.

On May 25, 1911, summons to show cause why judgment should not be entered against him as garnishee defendant, under his disclosure, was issued to said Donovan, returnable on June 2, 1911, which summons was returned personally served. The parties appeared on the return day, and plaintiff declared orally in an action of trover for moneys and effects mentioned in the garnishee’s disclosure, also for moneys had and received. Defendant pleaded the general issue and gave notice of statutory liens. The case was heard, and judgment for plaintiff was rendered against said Donovan, as garnishee defendant, for the sum of $162.86, with costs taxed at $3.96. From this judgment defendant Donovan appealed to the circuit court of Kent county, where the case was tried before the court without a jury and judgment rendered in favor of plaintiff for the sum of $176.78, with costs to be taxed in favor of plaintiff. The case has now been removed to this court for review upon writ of error.

That portion of the findings of fact by the trial court in relation to defendant’s claim of lien, essential to an understanding of that issue, is as follows:

“ The consideration of the indebtedness from the garnishee defendant, Donovan, to the principal defendant, Matice, was the sawing of 46,015 feet of lumber and ties by Matice for Donovan at the price of $4 per thousand. On April 17,1911, there was filed in the office of the clerk of Kent county what purported to be claims of liens made on behalf of the garnishee defendant, Frank Donovan, and others, to an amount totaling $161.34, as follows:
Frank Donovan....................................$6 00
J. M. Sauders...................................... 29 75
Frank E. Matice____________________________ 30 00
E. V. Story............................ 3 00
James Corrigan................. 18 38
Frank Smith............... 24 50
Tom McGinnis.....................................18 23
Frank Woodard......... 31 50
“The claims so filed were verified by Matice, the principal defendant in the suit in which Donovan had been summoned as garnishee, as hereinbefore stated. They were all identical in terms except as to the names of those said to have liens, and the amounts said to be due to the several parties respectively. The claim in the name of Donovan was as follows:
“ ‘State of Michigan,
“ ‘ County of Kent.
ss.:
“ ‘The statement of lien made under oath of S. W. Matice for work and labor performed by Frank Donovan, in manufacturing, cutting, skidding, hauling and banking the following described property, to wit: about 46,015 feet of lumber and ties. That the last day’s work of said labor was done on the 11th day of April, A. D. 1911, and said labor was performed in the township of Grattan, county of Kent, State of Michigan, and that said described property is not situate in said township of Grattan, county of Kent, State of Michigan, and that there is now due said Frank Donovan for said work and labor, over and above all legal set-offs, the sum of §6 as near as may be, for which said sum a lien is claimed upon said described property. S. W. Matice.
“ ‘Subscribed and sworn to before me this 19th day of April, A. D. 1911.
“‘Olive M. Smith,
“ ‘Notary Public, Kent County, Mich.
“ ‘My commission expires Feb. 27, 1915.’
“No effort appears to have been made to enforce any of these alleged liens. On April 29, 1911, there was filed another claim of lien purporting to be made on behalf of said Matice, as follows:
“‘State of Michigan)
“‘County of Kent)
) ss:
“ ‘The statement of lien made under oath of E. J. Doyle for and on behalf of S. W. Matice for work and labor performed by said S. W. Matice in manufacturing, cutting, skidding, hauling, banking, and scaling the following described property, to wit, 46,015 feet of lumber and ties. That the last day’s work of said labor was done on the 11th day of April, A. D. 1911, and said labor was performed in the county of Kent and that said described property or a portion of the same is now situated in the county of Kent and State of Michigan, and that there is now due claimant, the said S. W. Matice, for said work and labor over and above all legal set-offs the sum of §184.60 as near as may be, for which said sum a lien is claimed upon said described property.
“ ‘E. J. Doyle,
“ ‘ Agent of Claimant.
“ ‘Subscribed and sworn to before me this 29th day of April, A. D. 1911.
.“ ‘Alberta Van Wyok,
“ ‘Notary Public, Kent County, Mich. “ ‘ Commission expires October 29th, 1913.’
“Certain proceedings were undertaken and had by S. W. Matice before John C. Loucks, a justice of the peace for the city of Grand Rapids, in the county of Kent, of which the file and docket entries in such proceedings were as follows:
“ ‘ State of Michigan.
“ ‘ The Justice Court for the City of Grand Rapids.
“ ‘S. W. Matice, Plaintiff,
“‘v.
“ ‘Frank Donovan, Defendant.
“‘1911, July 25. — Upon filing an affidavit of attachment under Public Acts No. 229 of 1887 (sections 10756-10770, C. L. 1897), in such case made and provided, returnable before me at my said office in the city of Grand Rapids, Kent county, Michigan, on Aug. 4th, 1911, at 9 a. m. * * *
“‘1911, Aug. 4. — Cause called at 9 a. m. at my said office in said city. Plaintiff present. Defendant not present. Cause adjourned on application of the plaintiff to Aug. 28th, 1911, at 9 a. m. at my said office in said city, at which time and place cause called. Plaintiff present. Defendant not present. Cause adjourned on motion of court to Aug. 29, 1911, at 9 a. m., at my said office in said city. At which time and place cause called. Plaintiff present. Defendant not present. Written declaration filed. E. J. Doyle sworn to his authority to appear for plaintiff and testified generally on plaintiff’s behalf.
“ ‘ 1911, Aug. 29. — Whereupon it is considered and adjudged by the court that said plaintiff do recover from said defendant the sum of $184.60 damages. And it is also found that the same is due for labor and services performed in manufacturing the ties described in the declaration, and is a lien upon the same. Together with costs of suit taxed at the sum of $4 and that said plaintiff have execution therefor.
Damages..............................................$184 60
Court costs.........................-................ 2 00
Officerfee........................................... 2 00
$188 60
“ ‘ John C. Louoks,
“ ‘Justice of the Peace.’ ”

The claims of lien, approximating $161, filed by Matice in behalf of eight persons, alleged to have worked for him on his contract with Donovan, are unimportant except as they may help to a better understanding of the history of this litigation. They are not shown to have been authorized or adopted by the lienors, and there is nothing to indicate that those parties united their claims and designated any one to enforce them. No steps were taken to that end within the limit of time for such action. They were offered in evidence by plaintiff as contradicting Matiee’s. claim of lien for the same labor, and defendant’s counsel objected to them as—

“Irrelevant, incompetent, and immaterial, * * * and for the reason that the lien contained in these claims was lost by reason of the claimant’s failure to commence their suit thereon within the time prescribed by statute.”

From all of which we are naturally led to infer that their filing was an inadvertence on the part of Matice, which he hastened to correct a few days later by procuring E. J. Doyle, as his agent, to swear to and file a claim of lien for Matice himself in a lump sum of #184.60, including the same labor as the previous claims, implying that Matice, and not the men for whom he had recently assumed to file liens supported by his oath, was the party who performed it. Matice prosecuted this claim to a purported judgment in his own favor against Donovan, who made no defense to it there, and now interposes it as a defense here. The docket entries in evidence signify that it is based upon attachment proceedings under the so-called “log-lien law.” The entries, standing alone, fail to disclose sufficient of the proceedings to show that the court had jurisdiction to render such judgment.

Not only must the statutory requirements in such proceedings be strictly complied with (Mathews v. Densmore, 43 Mich. 461 [5 N. W. 669]; Van Norman v. Jackson Circuit Judge, 45 Mich. 304 [7 N. W. 796]), but a party making claim under such special and exceptional proceedings must prove jurisdiction in the court to render judgment, for jurisdiction is not to be presumed in such cases. Proof of the judgment by the docket entry without proof of the affidavit which authorizes issuing the attachment would not establish a valid judgment. Goodrich v. Burdick, 26 Mich. 39.

“A recital of an affidavit in such proceedings is not evidence that such an affidavit was made.” Platt v. Stewart, 10 Mich. 260.

It also appears from the transcript of the docket that Donovan at no time appeared in the attachment ease in which he now. claims Matice has a lien judgment against him. On the return day, August 4, 1911, adjournment was had, on motion of plaintiff, to August 28th, and on the latter date the justice divested himself of jurisdiction by adjourning the case on his own motion to August 29th. This, in legal effect, was a discontinuance of the case. Segar v. Lumber Co , 81 Mich. 344 (45 N. W. 982); Adams & Ford Co. v. Cullen, 159 Mich. 669 (124 N. W. 549); Tiffany’s Justice’s Guide, § 297, and cases there cited. No other proceedings were instituted, to enforce the lien within the statutory period.

But, if the lien was alive and established by a valid judgment as claimed, it only made more secure the debt Donovan owed Matice and which plaintiff here sought to reach by proceedings in garnishment. A debt is none the less subject to garnishment because it is well secured by lien or otherwise and certain of collection. 14 Am. & Eng. Enc. Law (2d Ed.), p. 785; McGurren v. Garrity, 68 Cal. 566 (9 Pac. 839); Culver v. Parish, 21 Conn. 408; Greenman v. Fox, 54 Ind. 267; Dickinson v. Dickinson, 59 Vt. 678 (10 Atl. 821); Blaisdell v. Bowers, 40 Vt. 126 Hills v. Eliot, 12 Mass. 26 (7 Am. Dec. 26); Caldwell v. Stewart, 30 Iowa, 379. The provision of the statute that liens for labor on forest products “shall take precedence of all other claims or liens thereon ” does not render the lienor immune from his creditors. It simply gives his lien priority over all other claims or liens of other creditors of the owner of the property on which he has his lien.

Garnishee defendant, Donovan, did not deny owing the amount of plaintiff’s judgment to the principal defendant, Matice. He disclosed that he did owe it. In his disclosure entitled "examination of garnishee defendant,” he swore that he was owing Matice $184.60, when the garnishee summons was served on him, for sawing lumber and ties under a verbal contract by which he was to pay $4 per thousand. He also disclosed that labor liens had been filed of which he had been notified. He could have relieved himself from all further liability and anxiety by paying the money into court and taking a receipt from the justice therefor, whose duty it would then be to serve written notice on the adverse claimants, and the subsequent proceedings need interest Donovan no more. 1 Comp. Laws, § 1017 (5 How. Stat. [M Ed.] § 13434); Pecard v. Home & Co., 91 Mich. 346 (51 N. W. 891); Stone v. Dowling, 119 Mich. 476 (78 N. W. 549); Bryant v. Wilcox, 137 Mich. 669 (100 N. W. 918). He has, however, taken upon himself the burden of endeavoring to maintain an untenable claim of lien in Matice’s behalf for labor performed, mostly by others, but in part by Matice, the contractor, and by himself, the owner; to the latter extent apparently seeking to secure by a lien on his own property a debt owing to himself by himself. The claim that Matice was entitled to exemption to the extent of work performed by him does not appear to have been presented, or at least urged, in the trial court, and, even if it had been, there is no definite testimony furnishing any data from which the court could have made a finding as to amount or value. Matice was not a hired laborer working for wages, but an independent contractor, hiring laborers himself and engaged in carrying out a contract.

The findings of fact by the trial court are sustained by the testimony, and the result reached in his conclusions of law thereon is correct.

The judgment is affirmed.

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