text:
    William J. Van Wert v. School-District No. 8 of the Township of Adams.

      Schools and school-districts — Assumpsit—Claim of director.

      Assumpsit will lie in favor of the director of a school-district on a disputed claim against the district, the moderator and assessor having declined to pass upon the same as an entirety under How. Stat. § 5073, subd. 7, which provides that “ it shall be the duty of the director of each school-district to keep an accurate account of all expenses incurred by him as director, and such account shall be audited by the moderator and assessor, and on their written order shall be paid out of any money provided for the purpose.” -
    Error to Hillsdale. (Lane, J.) Argued April 13, 1894. Decided May 18, 1894.

      Assumpsit. Plaintiff brings error..
    Reversed.
    The facts are stated in the opinion.

      W. J. Sampson and Guy M. Chester, for appellant.

      Bailey & Janes, for defendant.
   Hooker, J.

The plaintiff was director of the defendant school-district, and had a disputed claim against such district. In an action of assumpsit for the recovery of such claim, a verdict for the defendant was rendered by direction of the court, upon the ground that the action would not lie. The charge indicates that the moderator and .assessor of the district were willing to audit a portion of the account, but were unwilling to allow another portion, .and declined to pass upon the claim. The court thought mandamus, and not assumpsit, the proper remedy.

The evidence clearly showed a disputed claim. How. •Stat. § 5073, subd. 7, provides that the director shall “keep an accurate account of all' expenses incurred by him as director,0 and such account shall be audited by the moderator and assessor, and on their written order shall be paid out of any money provided for the purpose.” Had this account been audited to the satisfaction of the plaintiff by the moderator and assessor, the amount would have become a liquidated demand, and, under innumerable decisions, assumpsit would not lie against the district. The remedy would be by mandamus, to compel the necessary action to cause it to be paid. The same can be said of a claim which is in the form of a -judgment. If it were liquidated, it could not be collected by execution, but only by official action, which mandamus alone can compel. People v. Board of Supervisors, 3 Mich. 478; Township of Dayton v. Rounds, 27 Id. 82; Just v. Township of Wise, 42 Id. 573; People v. Board of Auditors, 13 Id. 233; Township of Marathon v. Oregon, 8 Id. 378; McArthur v. Township of Duncan, 34 Id. 27; McBride v. City of Grand Rapids, 47 Id. 236. But it was not a liquidated demand, and the defendant's contention must rest upon the proposition that the determination of the moderator and assessor is final, and that this claim can be liquidated in no other way than by them.

School districts, like townships and counties, are subdivisions of the State, and, under many authorities, these are not subject to action unless permitted by statute. But How. Stat. § 5039, gives them the capacity to sue and be sued. Is this provision limited by the statute providing that the moderator and assessor shall audit the claims .of the director? The school law does not in terms provide for the auditing of bills against the district, either by the board or any officer. It does, however, authorize such board to make necessary contracts, and authorizes payment by the board, and the director draws and signs, the moderator countersigns, and the assessor pays orders for' sums due from the district. Plainly it is contemplated that the school board will pass upon — i. e., audit — the claims for which they draw orders. In the case of the director the law recognizes the impropriety of' his acting upon his own claim; hence the provision that it shall be audited by the other members of the school board, and that the moderator shall draw the order. Stockwell v. Township Board, 22 Mich. 341; Kennedy v. Gies, 25 Id. 83. We think that it was not intended that the action of the moderator and assessor should be final upon such claims, and that the action of the whole board upon other claims should not be. The director might submit to such action, and, under several authorities, might so conduct himself as to be bound thereby. Perry v. Village of Cheboygan, 55 Mich. 250; Davey v. City of Big Rapids, 85 Id. 56.

The case of Wilkinson v. Township of Long Rapids, 74 Mich. 63, is analogous to the present case. During the prevalence of scarlet fever the board of health employed a physician at public expense. In assumpsit brought by the physician against the township, it was shown that the township board had allowed $25 upon his claim. The Court held that he was entitled to the reasonable worth of his services, and that, by receiving the order for $25, he was not precluded from suing for the balance, as he did not accept it in full payment. It was further said:

“ 'The decision of the township hoard, unlike that of the hoard of supervisors, is not final and conclusive upon the claimant or upon the courts.”

By How. Stat. § 746, it is provided that—

The township board shall meet annually on the Tuesday next preceding the annual township meeting to be held in such township, for the purpose of auditing and settling all claims against the township; and they shall state on each account the amount allowed by them; and the amounts allowed by .them shall be paid by the treasurer, on the order of the board, signed by their clerk, and countersigned by the chairman of the board.”

Here is a statute expressly providing, not only that the board shall audit, but that they shall settle, all claims against tiie township; yet, as shown, it has been held that adverse action by the board does not preclude the recovery of the reasonable value of services, lawfully contracted, in an action of assumpsit against the township.

The decisions in the cases of People v. Board of Auditors, 13 Mich. 233, and People v. Board of Supervisors, 26 Id. 422, do not apply, as claims against counties stand upon a different footing, by virtue of article 10, § 10,. of the Constitution.

This claim not being liquidated, no mandamus could issue, and assumpsit is the proper remedy.

Judgment reversed, and new trial ordered.

The other Justices concurred.


source: Caselaw Access Project

author: Hookkr, J.

license: Public Domain

text:
    Eugene Costigan and Melinda Costigan v. Allen Howard, David H. Preston, and George C. Green.

      ■Chattel mortgage — Usury—Bill to enjoin foreclosure — 'Parties— Teudei• — Decree—Disclaimer—Costs.
    1. Where mortgagors file a bill to restrain the foreclosure of a chattel mortgage, and for its surrender to them on payment of the sum admitted by the bill to be due thereon, and which the complainants claim to have tendered to the assignee of the mortgage, and the court finds that the mortgage, so far as it had ever been a valid lien, was discharged by the tender, a decree should be made for the surrender of the. mortgage upon payment of the amount of the tender.

      2. Where a bill is filed by mortgagors to restrain the foreclosure by an assignee of a chattel mortgage which they claim is usurious and fraudulent, and for its surrender and discharge, and the court finds in their favor as to the usurious and fraudulent character of the .mortgage, and the mortgagees, who are joined as co-defendants with the assignee, assert, as does the assignee, that he is a bona fide purchaser of the mortgage and accompanying note, which issue is found against them by the court, the mortgagees cannot escape the payment . of costs upon the ground that they disclaimed any interest in the securities; citing Laprad v. Shenoood, 79 Mich. 523.
    Appeal from Wayne. (Iiosmer, J.) Argued April 13, 1894. Decided May 18, 1894.
    Bill to restrain the foreclosure of a chattel mortgage. Defendants appeal.
    Decree modified and affirmed.
    The facts are stated in the opinion.

      George R. Shaw (James II. Pound, of counsel), for complainants.

      Flbridge F. Bacon, for defendant Green.

      II. P. Davoclc, for defendants Howard and Preston.
   Hookkr, J.

The complainants’ bill asks that the defendants be restrained from foreclosing a ’chattel mortgage given by complainant Eugene Costigan, upon behalf of his wife, Melinda Costigan, and himself, to defendant Preston. They allege a tender of the amount remaining due, viz., $55.72, and ask a decree that upon payment of that sum the mortgage and note be delivered up.

The defendants answer severally; Preston and Green by the same solicitor. All assert the giving of the mortgage, and its non-pajunent, and deny that the complainants are entitled to any relief. All assert a bona fide conveyance of the note and mortgage to defendant Green from defendant Preston. Howard and Preston deny any interest in the mortgage. All of the answers are signed and verified by the respective defendants.

Complainants’ evidence discloses tlie taking of a mortgage"for $167, and later another for $129, and still later, after payment in part, a new mortgage for $225. The first, was given September 10, 1888, the second, April i, 1889, and the third, April 9, 1890. The consideration for the first mortgage was a loan of $125, followed soon after by a further loan of $30, and a bonus of $12. No further consideration clearly appears for the other mortgages, complainants asserting that they received no more money, and that they signed them under the representation that they were the amounts due for interest and bonus. It further showed payment of the money received, with interest at 10 per cent., except the sum of $55.72, and that a tender was made' before suit of $60.

The defendant Green testified to a conversation with complainant Eugene Costigan to the effect that the $225 mortgage was all right, and that he did not want to talk about it in the presence of his wife, but would call and see him about it; that witness was a lawyer, and knew the complainant -was a married man, and knew his wife could not join her husband in giving a note without an adequate consideration; that he did' not rely upon the note, but did upon the mortgage. On cross-examination he said that he paid for the mortgage $215, which he had had in his safe for a year or two. His office adjoined that of Howard, who executed the assignment as attorney in fact of Preston, who was a resident of Canada. He contradicts the witness Shaw as to the tender.

Upon the undisputed testimony the mortgage was grossly usurious and fraudulent. Defendants Howard and Preston were not called upon the part of defendant Green, although he and Preston appear by the same counsel. We are cited to no testimony of his, and we find none, which shows him to be a purchaser in good faith. He says he paid $215 in cash, before maturity, but he is apparently careful not to say that he understood or believed it to be an honest“and valid debt.

The circuit judge, who saw the witnesses, found that the mortgage, so far as it had ever been a valid lien, was discharged by the tender; that Green was 2101 a bona fide purchaser; and decreed that the mortgage be discharged. We have no disposition to disturb the finding of, the circuit judge, which accords with our view of the testimony, but we think the decree went too far. Had this been a proceeding to foreclose the mortgage, it would have been proper to deny relief upon the ground that the same was discharged by the tender. The mortgagors, however, are here seeking relief, admitting an indebtedness of $55.72, and offering to pay it as a condition of relief, in accordance with the rule that “he who seeks equity must do equity.”

It is co2itended that the bill should have been dismissed as to the other defendants, with ’costs, upo2r the ground that they disclaimed any interest in the mortgage and note. We think the language of Mr. Justice Campbell in the case of Laprad v. Sherwood, 79 Mich. 523, is applicable to this case:

“ The opinion directed the dismissal to be with costs to complaina2its against Sherwood; but, for S02ne unexplained reason, the decree dismisses the bill, and is silent entirely about costs.
“The course taken below led to the exclusion of much testimony which, under the proper practice, the court should, and probably would, have admitted. It also allowed Sherwood an opportunity of swearing to facts which no one was alive to dispute, and which, as a party defenda2rt, he could not have sworn to. The whole case made by the bill rested on allegations of wrong-doing in Avhich he was the active party, and for which he was undoubtedly liable. If the mortgages should be held good because he has so manipulated them as to get them into hands where they would be valid, he could not escape the consequences of his wrong, and should be compelled to make it good. No one can disclaim so as to avoid responsibility for wrongdoing. ^ ^ ^ # #
“The decree should be reversed, and relief granted to complainants as prayed. Costs of both courts must be .awarded to them against Sherwood.”

Tine decree of the circuit court will be affirmed, with the modification that complainants pay or allow to be set off against costs recovered by them the sum of $55.72. Defendant Green will recover costs of this Court. Complainants will recover costs against the other defendants.

The other Justices conoirrred.


author: Grant, J.

text:
    The Western Wheel Scraper Company v. Lewis D. Locklin et al.

      Bills and notes — Several liability of makers.

    An agreement by which 20 of the residents of certain road districts promise to pay to the order of a corporation, engaged in the manufacture and sale of machines for grading and repairing highways, a specified sum at a given date as the first payment for a road grader, which they have purchased of the payee, in proportion to the road tax in said road districts on lands then owned and occupied by them, creates a separate, and not a joint, liability on their part.
    Error to Montcalm. (Smith, J.) Submitted on briefs April 13, 1894. Decided May 18, 1894.

      Assumpsit. Plaintiff brings error.
    Affirmed.
    The facts are stated in the opinion.

      George H. Cagicin (FitzGerald <& Barry, of counsel), for appellant.

      J. O. Blanchard (Vosper Bros., of counsel), for defendants.
   Grant, J.

The plaintiff is an Illinois corporation, engaged in manufacturing and selling road scrapers and other machines for grading and repairing highways. The defendants are, respectively, residents of three different road districts of the township of Crystal. Plaintiff sold and delivered to the defendants one of its machines for the sum of 1235, to he paid in five annual installments of 147 each. Five promissory notes were given. This suit is based upon the first note, which was signed by each and all of the defendants, and reads as follows:

“Western Wheel Scraper Co.’s Contract for Districts.
“847.00. Aug. 12, 1889.
“June 1, after date, we, residents of districts Nos: 1, 11, and 6, in Crystal township, Montcalm county, Mich., promise to pay to the order of Western Wheel Scraper Co. 847, with interest at 6 per cent, per annum after May 1, 1890, at the Carson City Savings Bank, Carson City, Mich., for value received, first, payment for one Western Beversible Boad Grader, to be paid by'us in proportion to road tax in above-mentioned districts on lands and property which we now own and occupy in said districts, on which we now pay road tax.”

The sole question is whether this note imposes a joint or a several liability. We think that but one construction can be placed upon this instrument. Bach maker thereby agreed to pay the amount found due in proportion to his road tax. Plaintiff’s counsel argue that it is unreasonable and incredible that a business corporation should assume the determination of the amount due ^from each maker, and contemplate the bringing of 20 suits to collect the amount. . If this be true, it would seem equally unreasonable and incredible that each maker contemplated his individual liability for the entire amount, and the bringing of 19 other suits to enforce contribution. There is no ambiguity on the face of the instrument. It creates a separate, and not a joint, liability.

Judgment affirmed.

The other Justices concurred.


author: Long, J.

text:
    Robert McMillan and Isabella G. McMillan, Administratrix, etc., v. George P. Felcher and Rebecca L. Felcher.
    [See 97 Mich. 633.]

      Summary proceedings — Appeal—Bond—Judgment.
    Where, in summary proceedings to recover the possession of lands, the defendants appeal from a judgment for the restitution of the premises, and are ordered by the circuit court to give an additional bond to that approved by the commissioner, and fail to comply with such order, the court has authority to dismiss the appeal, and by so doing the judgment appealed from will stand affirmed, but, there having been no hearing on the merits in the circuit court, no judgment of ouster can be entered.
    Error to Wayne. (Brevoort, J.) Submitted on briefs April 13, 1894. Decided May 18, 1894.
    Summary proceedings to recover the possession of land. Defendants bring error.
    Judgment for restitution of premises reversed, and order dismissing the appeal from circuit court commissioner affirmed.
    The facts are stated in the opinion.

      T. S. Tarsney and W. W. Wicker, for appellants.

      Gray & Gray, for complainants.
   Long, J.

This proceeding was commenced before a circuit court commissioner to recover possession of certain premises situate in the city of Detroit. The commissioner made an order adjudging the complainants entitled to the restitution of the premises. An appeal was taken from this order to the circuit. A bond was given by the defendants on the appeal, in the sum of $6,000, conditioned to pay the rent and the costs of suit, as required by How. Stat. § 8307, and was duly approved by the commissioner. The appeal was regularly filed in the circuit court, whereupon a motion was made by complainants5 counsel that the defendants be required to give a further and additional bond under that section of the statute. This motion came on to be heard in the circuit court, and on .December 4, 1893, an order nisi was entered that a further bond be given on or before December 11, 1893, or, in default thereof, that the-appeal be dismissed, and judgment entered for the restitution of the premises. The bond was not given as required by this order, and on December 12 the court entered a final order dismissing the appeal, and judgment was entered therein fqr the restitution of the promises. From this order and judgment defendants appeal to this Court.

It is claimed by defendants that the circuit court exceeded its authority in the entry of this judgment for the restitution of the premises; that the only order which the court could make was one dismissing the appeal, as complainants would only be entitled to judgment of restitution upon a hearing upon the merits. The section of ¿he statute under which the appeal is taken provides that an appeal from the commissioner may be taken to the circuit court for the same county within the same time, in the same manner, etc., and the same proceedings shall be had therein, as nearly as may be, and with the like effect, as in cases of appeals from judgments rendered before justices of the peace. It is further provided that, if the complainant shall obtain restitution of the premises, he may sue and recover on the bond on appeal, or bring his action against the defendant under section 24 of the act. Under that section he may recover all damages to which he may be entitled. In the present case no hearing was had on the merits. Tim defendants were required to give a further bond. They failed to do this, and the appeal was dismissed out of that court. This the court had authority to do, and by the dismissal the judgment before the commissioner stood affirmed. There being no hearing on the merits in the circuit court, no judgment of ouster could be entered.

That part of the judgment directing restitution of the premises will be reversed. The order dismissing the appeal will be allowed to stand. Defendants will recover their costs of this Court.

The other Justices concurred.


text:
    The Auditor General v. Clarence W. Sessions, Trustee, etc.

      Taxes — Board of review — Unauthorized increase of assessment.

    "Where a city charter provides that the board of review, during the first five days of its session, may change the values of property, and that after the expiration of that time it shall not increase any assessment, an increase made after the five days will void the assessment, and the taxes levied thereunder; citing Common Council v. Smith, 99 Mich. 507.

      Appeal from Muskegon. (Dickerman, J.) Submitted on briefs April 4, 1894. Decided May 18, 1894.
    Petition for sale of lands delinquent for taxes under Act No. 195, Laws of 1889. Defendant appeals.
    Decree< reversed, and new decree entered for complainant.
    The facts are stated in the opinion.

      D. T. Chamberlain, Prosecuting Attorney, for complainant.

      Sessions, Niskern & Hassell, for defendant.
   Long, J.

A petition was filed by the Auditor General in the circuit court for the county of Muskegon, asking a decree and order of sale of lands situate in that county delinquent for the taxes assessed thereon for the year 1890. Among the lands described in the petition were those in controversy here. The defendant appeared in the -cause, and asked — for various reasons, which will be hereafter stated — that no decree of sale be made against said lands.

It appeared upon the hearing, and is not disputed, that the assessor for that year, on the second Mondajr in April, placed upon the assessment roll, and assessed to Alexander Eodgers, the owner thereof, the following descriptions of land:

•“Block 352, Smalley’s survey of the city of Muskegon.$1,000
■" S. W. i of S. E. i, sec. 25, T. 10 N., R. 17 W........ 4,500.”

It appears that some time during the spring of 1890 the •above-described property was purchased from Eodgers by the defendant, and the lands were platted by him into what is known as “Highland Park Addition to the City •of Muskegon." The plat was executed and acknowledged by the defendant and by the surveyor April 1, 1890, was Approved by the common council by resolution adopted April 15, was examined and approved by tbe Auditor General May 2, and was recorded in the office of the register of deeds for Muskegon county May 14. The plat contained 10 blocks with 18 lots in each block, and 5 blocks with 8 lots in each block. The assessor for that year assessed this property to the defendant, describing it as the Highland Park Addition, blocks 1 to 15, inclusive," with a valuation upon each block as an entirety, the whole property aggregating the sum of $5,500, the same amount as when assessed under the former descriptions, thus assessing it twice. The board of review of the city of Muskegon convened on the 2d day’of June, 1890, the date fixed by section 2, tit. 10, of the charter. On the 9th the defendant appeared before it, and filed a written protest against the double assessment, and asked to have the latter one stricken from the roll. Instead of so doing, and leaving the property assessed as it was originally by the assessor, the board struck out the first assessment, and left the last to stand, so that the property stood assessed as blocks in Highland Park addition to the city of Muskegon. The board also on that day raised the valuation from $5,500, as fixed by the assessor, to $11,000. This was done by doubling the valuation on each block.

It was claimed in the court below, and is claimed here, that the property, as left to stand upon the assessment roll by the board of review, had no place there, for the reason that at the time of the assessment the plat had' not been approved, and had no validity under the provisions of the city charter, as it requires the approval of the common council declared by resolution, which shall be indorsed thereon by the recorder under the corporate seal of the city, and provides that no such plat and dedication shall be valid or be recorded in the office of the register of deeds for the county of Muskegon until it shall have been indorsed by the recorder in manner aforesaid.” Title 15, § 9, of the charter (Act No. 304, Local 'Acts of 1889).

We need not pass upon this question in the present proceedings, for another objection appears, which is fatal to the assessment aud the tax thereunder. Section 2, tit. 10, of the charter, provides that the board of review shall meet on the first Monday in June, of each year; and, during the first five days of its session, it may add to the roll the names of persons and descriptions of property, and may change the values of property. The section further provides that—

“After the expiration of the first five days of its session, said board shall not add to said roll the names of any persons, nor the description of any property, nor shall it increase any assessment thereon.”

The board, in this case, had been in session seven days when it doubled the assessment upon this, property, contrary to the provisions of the charter. The assessment is therefore invalidated under the rule laid down by this Court in Common Council v. Smith, 99 Mich. 507.

The court below overruled all these objections, holding the assessment valid. That decree, so far as it affects the rights of this defendant and this property, will be reversed, and a decree entered here in favor of defendant, setting aside the tax upon these premises, as described by blocks. But a decree will be entered here holding the tax valid, as originally assessed, and to be enforced in a proper proceeding, uuless defendant shall pay the same, with interest thereon, from the time said tax became a lien. The record will be remanded.

The other Justices concurred.


author: Montgomery, J.

text:
    Thomas D. Stimson v. The Muskegon Booming Company et al.

      Constitutional law — Booming companies — Rates of charges — Class legislation.

    1. The power of the Legislature to regulate tolls or rates of fare to be charged by corporations which have devoted their property to a public use has been settled in this State in Wellman v. Railway Co., 83 Mich. 592, as well as by the Supreme Court of the United States in Munn v. Illinois, 94 U. S. 113; Ruggles v. Illinois, 108 Id. 526; Raihvay Co. v. Minnesota, 134 Id. 418; Railway Co. v. Wellman, 143 Id. 339.
    2. It is not within the power of the Legislature, under section 1, art. 15, of the Constitution, which provides that corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes, to confer upon one corporation rights which, under precisely similar circumstances, it denies to another, or to confer greater rights and privileges upon one corporation than are conferred upon another.
    3. Section 21 of Act No. 80, Laws of 1883 (3 How. Stat. § 3923a), which provides for the distribution among the patrons of log-running companies of surplus receipts after deducting actual and necessary expenses, as specified in said section, and a certain dividend to be paid to stockholders, subject, however, to certain conditions and provisions therein set forth, is unconstitutional, as class legislation.
    Appeal from Muskegon. (Dickerman, J.) Argued October 4, 1893. Decided May 22, 1894.
    Bill to compel the distribution of the surplus profits of a log-running corporation among its patrons, pursuant to 3 How. Stat. § 3923a. Complainant appeals.
    Decree affirmed.
    The facts are stated in the opinion.

      Smiley, Smith <£• Stevens, for complainant.

      Smith, Nims, Hoyt é Brio in (Uhl & Crane, of counsel), for defendants.
   Montgomery, J.

The defendant corporation is a booming company organized March 9, 1864, under Act No. 16, Laws of 1864. It has continued business until the present time. In 1883 the Legislature passed a law amending the act, and adding a new section thereto. The questions in this case arise upon this amendatory act. Section 21 reads as follows:

“The board of directora of said corporation shall have the right, on or before the first day of May each season, to fix a uniform and reasonable price per thousand feet for the running, driving, booming, assorting, rafting, towing, and delivery of all logs, timber, lumber, and other floatables which may be delivered to such corporation in that season, sufficient in amount to insure the payment, in the aggregate, of all the expenses of such running, driving, booming, rafting, towing, and delivery, of the necessary expenses of repairing booms, buildings, and other corporate property, and for all other necessary and proper costs and expenses of conducting the company’s business for that season, including all damages necessarily paid for overflowing lands along the stream, and a reasonable salary for the officers of such corporation, and of a profit n\ addition thereto of not less than 12 per cent, upon the capital stock of the company.
“If the owner of any logs shall put or run the same into that part of any navigable river, creek, or stream in or along which any such corporation drives, runs, or booms logs, or shall have any logs therein, and shall not make adequate provision and put on sufficient force for running and driving the same, or for breaking jambs, the same shall be deemed as delivered to such corporation, under the provisions of this act.
“ On or before the 15th day of January, next ensuing, the entire receipts and expénditures of the corporation for the season’s business shall be accurately ascertained, and the entire excess or surplus of receipts, which remain after deducting the actual and necessary expenses hereinbefore specified, and 12 per cent, upon the capital stock of the corporation as a dividend to its stockholders, shall belong to, and be paid over on demand to, the several persons, companies, and corporations who contributed to the payment thereof, in the proportion which the payment of each of the persons, companies, and corporations shall bear to the entire amount paid said corporation: Provided, liotvever, that if, ■in any year, any company suffers losses, or is compelled to pay damages incurred in its business, or fails to make sufficient collections so that no dividend can be declared and paid, or a less dividend than 12 per cent., then in that case such company shall be at liberty to retain from the profits of the next or subsequent years such sum or sums as shall be sufficient to enable them to make up such loss or damage, and declare and pay dividends in such amounts as to make the average dividends equal to, but not to exceed, 12 per cent, each year: And provided further, that the above restriction to 12 per cent, dividends shall not apply to corporations which have not as yet declared and paid, since their organization, dividends, or accumulated surplus, in the aggregate equal in amount to the actual paid up capital stock of such corporation, together with interest thereon at 12 per cent, per annum from the date when such capital stock was paid in, until dividends have been declared or paid, or surplus fund earned, sufficient in amount to equal such actually paid up capital stock, with said interest thereon. But no such corporation shall hereafter declare or pay as dividends, or retain as surplus, or any other form, more than 24 per cont. upon the actual paid up capital stock of such corporation, but the whole excess of receipts from the business of the corporation, after deducting the expenses hereinbefore enumerated, and a sum not exceeding 24 per cent, for dividends or surplus, shall be paid over to the several persons, firms, or corporations entitled thereto, as hereinbefore provided; and as soon as any such corporation shall have paid in dividends, or acquired as surplus, an amount which, added to the dividends heretofore declared, shall equal in the aggregate the actual paid up capital stock of the corporation, with said interest thereon at 12 per cent., its dividends shall thereafter be limited to 12 per cent, upon the capital stock, as herein-before provided, and such corporation shall, in all things, be subject to the limitations and conditions hereinbefore imposed. No corporation formed under this act shall hereafter increase its capital stock, except for cash or its equivalent, actually paid into such corporation 'by the persons or parties to whom such increased capital stock shall be issued. And provided further, that if any boom company now organized and doing business shall sell, assign, or transfer its stock, property, franchises, and effects to any other person, persons, company, or corporation, then, in such case, the successors or assigns of such boom company shall be subject to all the provisions of this act, the same as though no such transfer- or sale had taken place, and shall in no case retain a larger dividend than the old company could charge under this act.
“Approved May 10, 1883.”

The complainant is owner of one share of the stock of the defendant company. He is also a patron, and files this bill to restrain the company from using some of its earnings in the purchase from its owners of some of the shares of stock of .the company, and to compel a distribution of such earnings among its patrons, under section 21. This section is assailed by counsel for the defendant as unconstitutional.

The power of the Legislature to regulate tolls or rates of fare to be charged by corporations which have devoted their property to a public use has been settled in this State in Wellman v. Railway Co., 83 Mich. 592, as well as by the Supreme Court of the United States in Munn v. Illinois, 94 U. S. 113; Ruggles v. Illinois, 108 Id. 526; Railway Co. v. Minnesota, 134 Id. 418; and Railway Co. v. Wellman, 143 Id. 339. I do not think it necessary, in this case, to determine whether the business of this corporation is of a class which justifies the exercise of the power to regulate, or whether the Legislature may, under the power to amend the law under which the defendant is incorporated, impose as a condition to the exercise of its franchise the adoption of specified reasonable rates of charges for services, as, in my opinion, the act under consideration cannot be construed as a legitimate exercise of either power. This is not a case where, as in Walcott v. People, 17 Mich. 68, the power of taxation is involved. In such a case the tax might be based upon the earnings. Nor is it a case where, as in Wellman v. Railway Co., the earnings of the company are considered as a basis for determining the reasonableness of certain fixed rates, to be Imposed upon all persons alike. In this case the rate of toll is not made to depend upon the question of what have been the earnings the previous years, but the attempt is to divide the profits of the business among the q:,a'brons. We do not decide that under certain conditions, if this were the extent to which the act went, it might not be upheld as but another means of fixing a reasonable toll. But it is to be noticed that the right of the patrons to share in the profits of the business does not depend "upon whether such profit was made by performing Work for the particular patron, but all who patronize the company are entitled to share pro rata in certain of the profits of the company. The act ■contains further provisions that if the company has sustained losses in previous years, or has not made profits equal in amount to the paid up capital stock, with 12 per cent, interest per annum thereon, it may charge a sum sufficient to yield a profit of 24 per cent, on its capital stock; and, as a consequence, one company is permitted to receive from its patrons, a rate of toll sufficient to equal a profit of 24 per cent., while another, doing business upon the same stream, which has been more prudent in former years, or more economical in its management, is permitted to realize only 12 per cent. This is class legislation. It is not a regulation oE tolls. It may in one case amount to a compulsory division of profits, while in case of another ■company such division is not required.

Section 1 of article 15 of the Constitution provides that corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes. . It is not possible that under this section it was intended that the Legislature could, by general act, confer upon one corporation rights which, under precisely similar circumstances, it denies to another, or greater rights and privileges upon one than are conferred upon another. It will not do to say that the past prosperity of the company organized under the law is a sufficient reason for denying to such corporation the privileges which are vested in another. This ds, in effect, to deprive the company of rights because, by its thrift and good management, it has been prosperous.

I think the act cannot be upheld, and that the decree dismissing the bill should be affirmed.

The other Justices concurred.

       3 How. Stat. § 3923a.


text:
    James K. Burnham et al. v. Joseph H. Dillon, Thomas Dillon, Charles L. Messmore, and George W. Thayer, Assignee.
    [See post, 359.]

      Assignment for benefit of creditors — Fraudulent preference& — Bill by general creditors — Pleading—Appointment of receiver.

    1. Tlie objection tliat a bill is multifarious should be taken by demurrer, that the court may pass upon it before the expense of reference and testimony is incurred.
    2. If, instead of taking this course, the* defendants only by their answer reserve the privilege of making the objection at the hearing, when such expense has been incurred, and when the court is put to the trouble of a full discussion of the case, they cannot complain if the court disregards their objection, unless the nature of the case is such that justice cannot be done to the parties upon the pleadings and evidence as then presented; citing Payne v. Avery, 21 Mich. 538.
    3. .An objection that general creditors of an insolvent debtor, who has made an assignment for the benefit of his creditors, are not authorized, on the refusal of the assignee, to file a bill to set aside an alleged fraudulent chattel mortgage executed by the assignor prior to and in anticipation of the assignment, will not be regarded as fatal when raised for the first time after all of the testimony has been taken, and with all of the pai'ties before the court who could be brought in had the bill been filed by the assignee; citing Root v. Potter, 59 Mich. 498, 504.
    4. The contention that the fact that the assignee of the mortgage was in possession of the mortgaged property under his security, and hence the general assignee might have maintained an action at law, should bar complainants’ remedy, is untenable.
    5. The assignee with notice of a fraudulent chattel mortgage given in anticipation of a general assignment by the mortgagor of his property for the benefit of creditors is in no way concerned with the avails of the mortgaged property, and cannot, on appeal from the final decree made in a suit brought to set aside said mortgage, in which the appointment of a receiver by the circuit judge at chambers is confirmed, object to such appointment as beyond the power of the circuit judge to make, no appeal having- been taken therefrom.
    6. How. Stat. § 8744, which provides that in case there shall be any fraud in the matter of an assignment for the benefit of creditors, or in the execution of the trust, or if the assignee shall fail to comply with any of the provisions of the assignment^act, or fail to execute said trust promptly and faithfully, any person interested therein may file a bill, etc., and the court may appoint a receiver; and 3 How. Stat. § 8749, which provides that the court may, on the application of the assignee or any person interested, make all necessary and proper orders for the management and disposition of the assigned property, the recovery of all property claimed by third persons, and to prevent any fraudulent transfer or change in the property or effects of the assignor, etc., — authorize the filing of a bill by general creditors of the assignor, in which the assignee and fraudulent mortgagee are joined as defendants, to set aside a chattel mortgage given in anticipation of the assignment and in fraud of creditors, when the assignee refuses to file such a bill. (Per Montgomery, J.)
    Appeal from Sanilac. (Beach, J.) Argued January 31, 1894. Decided May 22, 1894.
    Bill to set aside a chattel mortgage and for the appointment of a receiver. Defendant Messmore appeals.
    Decree affirmed.
    The facts are stated in the opinion.

      Slomcm & Dujjie, for complainants.

      Elbridge F. Bacon, for appellant.
   Montgomery, J.

The complainants filed a bill in the circuit court for the county of Sanilac, in chancery, alleging that on the 8th day of February, 1892, defendant Joseph II. Dillon was engaged in the mercantile business in Minden City, in said county, and was indebted to the complainants in the sum of $600 for goods sold and delivered to him in said business, and that proof of the claim of the complainants had been filed Avith the clerk of the court, as required .by laAv; that, on said 8th day of February, Joseph II. Dillon's assets did not exceed $2,000, and that his obligations for merchandise purchased within the preceding six months were more than $8,000, and that the said Dillon was on the said day, and had been for a long time previous thereto, to wit, six months, insolvent, and well known to himself to be so; that Thomas Dillon, a brother of Joseph, had for several months preceding the 8th of February been assisting him as a clerk or salesman in carrying on said business, and was familiar with his affairs; that, on the 8th day of February, Joseph H. Dillon executed a chattel mortgage to Thomas upon his stock and fixtures in the sum of $1,045.99; that Thomas Dillon knew that Joseph was insolvent; that the mortgage was without consideration, and was given for the purpose of hindering, delaying, and defrauding creditors, and was made in contemplation of the assignment hereinafter mentioned, and for the purpose of creating a preference thereunder in violation of the assignment law; that the entire stock in trade was covered by this mortgage, and would not sell for sufficient to pay the same; that on-February 10, 1892, the mortgage was assigned by Thomas Dillon to the defendant Charles L. Messmore without consideration; that Messmore, at the time he received the assignment, knew that Joseph H. Dillon was insolvent, that he contemplated making an assignment, and that the mortgage was given for fraudulent purposes, and was a preference. It was also alleged that Messmore did not pay value for the mortgage, and was not a Iona fide purchaser.

The bill further alleged that, on February 11, Joseph H. Dillon went through the form of making an assignment for the benefit of creditors to George W. Thayer, and that the assignment was only partially perfected; that Joseph H. Dillon had other property and assets, to the amount of $2,000, which were not included in the assignment, and which were withheld and secreted by said defendant Joseph H. Dillon; that the assignee, Thayer, was an intimate friend of Joseph H. Dillon, and was not disposed to take any measures on behalf of Dillon’s creditors to attack the mortgage or obtain possession of the property withheld and secreted; that he had yielded up the possession of said property to Charles L. Messmore, and that thé said Messmore had advertised the said property and stock for sale at public auction; that the goods were delivered to the defendant Messmore in pursuance of the fraudulent purpose stated; that Thayer.knew that the mortgage given to Thomas Dillon was not a valid claim, and was fraudulent, and yet refused, as assignee, to execute his trust or prevent the sale of the property as aforesaid, or take any steps to reach and obtain the property withheld and secreted by said Dillon, or in any way contest the validity of the chattel mortgage.

The bill grayed for an injunction and the appointment of a receiver, that the mortgage in the hands of Mess-more be declared fraudulent, and that the defendant Joseph H. Dillon be compelled to account for and turn over to the receiver the property withheld and secreted by him. The bill was filed by leave of the court.

The answers consisted of denials of fraud, and alleged that the mortgage was ujion good consideration, and valid. Defendant Messmore further asserted that he was a Iona fide purchaser without any notice of fraud, and that he had paid value for the mortgage.

The court granted the relief prayed in the bill, and declared the mortgage in the hands of Messmore void. Messmore alone appeals.

The defendant insists that there were legal objections to the granting of the relief under the bill:

1. That the complainants were only general creditors of Joseph. H. Dillon, without judgment or lien, and therefore not authorized to file the bill.
2. That the bill is multifarious.
3. That, inasmuch as the defendant Messmore was in possession of the goods under his mortgage, the assignee had an adequate remedy at law.
4. That the receiver was appointed by a judge at chambers, and such appointment could only be made by the court. '

The answer to the first contention may be found in the assignment law. Section 8744, Hoav. Stat., provides that—

In case there shall be any fraud in the matter of said assignment or in the execution of said trust, or if the assignee shall fail to comply with any of the provisions of this act, or fail or neglect to promptly and faithfully execute said trust, any person interested therein may file his bill in the circuit court in chancery of the proper county for the enforcement of said trust, and the court, in its discretion, may appoint a receiver therein.”

Section 8749, 3 How. Stat., provides that—

The circuit court in chancery * * * may, on the application of the assignee or any person interested, make all necessary and proper orders for the management and disposition of the assigned property, * * * the recovery of all property claimed by third persons, and to prevent any fraudulent transfer or change in the property or effects of the assignor, or the alloAvance or payment of any unjust or fraudulent claim out of his estate.”

We think these statutes give sufficient authority to maintain the bill. The creditors of the assignor, through the assignee, have acquired rights in the projmrty assigned in the nature of a lien; and while the law confers upon the assignee the right to recover property, or equities in property, which might be recovered by any of the creditors of said assignor, the case here presented is one in which the assignee refused to perform the duty, and in which it was necessary to invoke the aid of the court of chancery to compel him to act. For myself I can see no reason why, in such a case, the creditors may not proceed by a bill joining the assignee and fraudulent transferee. However this majr be if the question be raised at the first opportunity, it will not be regarded as fatal after all the testimony has been taken, and with all the parties before the court who could be brought in had the suit been by the assignee. See Root v. Potter, 59 Mich. 498.

As to the claim of multifariousness, the language of Mr. Justice Cooley in Payne v. Avery, 21 Mich. 538, is peculiarly applicable to the facts of this case:

“Where advantage of multifariousness is desired to be taken by defendants, the desirable practice is for them to present the objection by demurrer, that the court may pass upon it before expense of reference and testimony is incurred. IP, instead of taking this course, they only by their answer reserve the privilege of making the objection at the hearing, when the expenses are already incurred, and when the court is put to the trouble of a full discussion of the case, they cannot complain if the court disregards their objection, unless the nature of the case is such" that justice cannot.be done to the parties upon the pleadings and evidence as then presented. At that stage of the case, the court, instead of the party, is to take the objection of multifariousness; and while it may refuse to render a decree upon multifarious subjects of litigation, in respect to which complete justice cannot be done, it will not, on the other hand, sua sponie take the objection of multifariousness, when it would be merely technical, and when the object for which the parties have incurred their expense, and for which the court has been put to the trouble of a hearing and examination, can be substantially accomplished on the record as it stands."

See, also, Snook v. Pearsall, 95 Mich. 534; Wales v. Newbould, 9 Id. 81.

The contention that the fact that Messmore was in possession of the goods, and hence the "assignee might have maintained an action at law, should bar complainants’ remedy, is not sound. The complainants had no such right, and it was necessary to implead the assignee with Messmore, to bring the proper parties before the court.

The objection as to the appointment of a receiver is not available to the defendant. No appeal was taken from this order, and the court, by the final decree, confirmed the appointment of a receiver and the sale of the goods; and if the court was correct in determining that the mortgage was fraudulent, and that Messmore was not a Iona fide purchaser, he is in no way concerned with the avails of the goods.

The testimony was taken in open court, and the record is voluminous. A review of the testimony would not be profitable; but a careful examination convinces us that the circuit judge’s conclusion that the mortgage from Joseph H. Dillon to his brother Avas fraudulent, and made with a purpose of defeating the rights of creditors, is fully sustained. Nor are we prepared to hold that he Avas mistaken in finding the defendant Messmore not a good-faith purchaser, or entitled to protection to any extent whatever. The evidence' shows that, when he made the purchase of the mortgage, he gave a non-negotiable memorandum ' of deposit for $900, — the alleged consideration; that no money Avas paid until some days after, when it is claimed that he paid $100, and indorsed it upon the deposit slip. But before he made this payment he was informed that the creditors claimed that the mortgage was fraudulent as to them, and proposed to attack it, and he in terms asserted the validity of the mortgage, and claimed to have purchased it in good faith. Under these circumstances, and, further, in vieAV of the knowledge of Dillon’s circumstances Avhich he had previously had, Aye do not think he is entitled to protection as a Iona fide purchaser.

The decree will be affirmed, with costs.

The other Justices concurred.

       See supplemental opinion, post, 359.


text:
    James K. Burnham et al. v. Joseph H. Dillon, Thomas Dillon, Charles L. Messmore, and George W. Thayer, Assignee.
    [See ante, 352.]

      Assignment for benefit of creditors — Appointment of receiver— Secretion of property — Decree—Appeal—Sale—Exemptions.
    1. While the appointment at chambers of" a receiver in a suit brought to set aside an alleged fraudulent chattel mortgage, executed by an insolvent debtor in anticipation of an assignment of his property for the benefit of creditors, is. irregular, ■ the objection is not available to the assignor on his appeal from the final decree in the case, made upon a full hearing, and in which the appointment is confirmed.
    2. Conceding that in such a case the assignor could ignore subsequent court orders adjudging that he had in his possession certain goods which passed by the assignment, and which should have been delivered either to the assignee or to the receiver, in so far as they required him to deliver said goods-to the receiver, because of the irregularity of his appointment, yet, so far as the action of the court-went in determining the fact of the possession of the goods by the assignor, the orders were valid, and should be sustained, if the evidence warranted the conclusion of the circuit judge upon the question of fact; and where, in such a case, the final decree confirms the court orders, and requires the assignor to deliver the goods named to the receiver, whatever proceedings may be taken against the assignor must be taken upon the foot of that decree.
    8. Where the order for the appointment of the receiver, after reciting that it has been represented to the court by the solicitor for the defendants that the property, the sale of which under the mortgage has been enjoined, is depreciating in value, and should be sold forthwith under the order and direction of the court, and the proceeds thereof held to abide the further order of the court, authorizes the sale of the property by the receiver, and no objection is made by the assignor to such sale being made pursuant to said order, and the final decree in effect affirms the sale, and treats the proceeds thereof as a trust fund in the hands of the receiver, the assignor cannot avail himself of the irregularity in making such order.
    4. Where an insolvent debtor who has made an assignment of his property for the benefit of creditors, on his examination touching the alleged secreting and disposal of certain property which he did not turn over to the assignee, admits his possession of the property, he must clearly account for the same to the satisfaction of the court; otherwise he will be held to have it still in his possession, and to be able to hand it over to his assignee.
    5. Where the final decree in an assignment case provides for a distribution of the funds in the hands of the receiver arising from the sale of the assigned property in disregard of the right of the assignor to exemptions, the decree will be so modified on appeal as to permit him to apply for an allowance for exemptions, notwithstanding the claim therefor was .not made at the hearing below.
    Appeal front Sanilac. (Beach, J.) Argued January 31, 1894. Decided July 10, 1894.
    Bill to set aside a chattel mortgage and for the appointment of a receiver. Defendant Joseph H. Dillon appeals.
    Decree modified and affirmed.
    The facts are stated in the opinion, and at page 352, mile.

      Sloman &' Duffie, for complainants.

      William A. Mills (A1. G. Babcock, of counsel), for appellant.
   Montgomery, J.

An opinion was handed down in this ' case at the last term (ante, 352), in which it was stated that defendant Messmore alone had appealed. The printed record fails to show an appeal by defendant Joseph II. Dillon, but an inspection of the original record discloses that such an appeal was in fact taken; and, as both parties desire that the appeal should be disposed of on the briefs filed, we shall proceed to consider it.

In the former opinion, we held that there was ample testimony to show a fraudulent scheme between the defendant Joseph H. Dillon and his brothers to defraud creditors. We shall therefore confine our further consideration of the case to the other questions raised which affect the rights of the defendant Joseph H. Dillon.

It is assumed by defendant that appeals have been taken from the order of the circuit judge of March M, 1892, appointing a receiver; from the orders of the court of April 18, requiring the defendant Joseph II. Dillon to #appear before the court at a later date and submit to examination, and of April 30 and July 9, adjudging the defendant Joseph II. Dillon to be in possession of certain goods, and requiring him to deliver the same to the receiver; and from the final decree, which contained a confirmation of the appointment of the receiver, and also a confirmation of the orders requiring the defendant Joseph H. Dillon to deliver certain goods in his possession to the receiver.

As was said in the former opinion, the objection as to the appointment of the receiver is not available to the defendant. The final decree confirmed the appointment of the receiver. While the appointment of the receiver by an order at chambers was irregular, this order of the court, •confirming the appointment, was made upon full hearing, and, we think, should be allowed to stand.

So far as the orders adjudging that the defendant had in his possession certain goods which passed by the assignment, and Avhich, in any view of the ease, should have been delivered either to the assignee or to the receiver, are concerned, these orders were court orders; and if it is conceded that the defendant could ignore these orders, because of the irregularity in the appointment of the receiver, yet, so far as the action of the court went in determining the fact of the possession-of the goods by the defendant Dillon, they were valid, and should be sustained, if the evidence warranted the conclusion of the circuit judge upon the question of fact. No attempt has been made to punish the defendant for contempt. The final decree has now confirmed the orders, and requires defendant to deliver the goods named to the receiver, and whatever proceedings may be taken against the defendant must be upon the foot of this decree.

It is contended, however, that the evidence is insufficient to show that the goods in question were in the possession of the defendant Joseph H. Dillon. The testimony is not altogether clear upon this point. The facts appear that», the assignment was made on the 11th of February,«1892; that on the 24th of January, 1892, defendant received into his stock goods to the amount of $522, purchased of Heavenrich Bros., and between that date and the date of the assignment three other consignments — two of $26.50 each, and one of $14.50 — from the same source, making a total of $589.50; and that a very few days before the failure he received $118.38 worth of goods from H. A. Newland & Co. Immediately after the assignment, replevin was brought by each of these creditors. Heavenrich Bros, succeeded in recovering $181.75 worth at cost price, and Newland & Co. recovered $44.13 at cost price. We are satisfied that the defendant has also shown that $65.50 worth of the Heavenrich goods were sold out of the stock. It is insisted, however, by the defendant, that his testimony shows that all these goods were sold. He is not able to state to whom they were sold, and fails to render any satisfactory account of the proceeds. There was evidence tending to show that a portion of the Newland & Co. goods were secreted, under a bed. occupied by defendant Dillon’s little bojr, in the original packages. As was said in Re Salkey, 11 N. B. R. 423, where a bankrupt, on examination, admits the possession of property, he must clearly account for the same to the satisfaction of the court; otherwise, he- will be held to have it still in his possession, and to be able to hand it over to his assignee. We think the defendant Dillon was properly held to this rule in the present case.

As to the power to compel the defendant to turn this property over to the receiver, see High, Rec. § 168.

Complaint is also made that the order for sale was unauthorized because made at chambers.. But the order contains the following recital:

“Inasmuch as it has been represented to this court by the solicitor for the defendants that the goods and chattels Avhich the defendant Messmore has heretofore been enjoined from selling or intermeddling with are de}3reciating in value, and should be sold forthwith, under the order and direction of this court, and the proceeds thereof to abide the further order of this court.”

It does not appear that any objection was taken at any time to the sale being made in pursuance of this order. The decree in effect affirms the sale, and treats the proceeds of the sale as a trust fund in -the hands of the receiver. We do not think the irregularity can avail the defendant.

It is further urged that the decree provides for a distribution of the funds in the hands of the receiver in disregard of the right of defendant to exemptions. It does not appear that this claim was made upon the-hearing, but the decree will be so far modified as to permit the defendant to apply for an allowance for exemptions.

We also think the circuit judge was in error in fixing the amount of goods in the hands of defendant Joseph H.' Dillon, which, 'by the terms of the order, he was required to turn over. We think the evidence shows the disposition of $65.50 worth of the Heavem'ich goods in addition, to the amount recovered by replevin. The amount, therefore, which the defendant will be required to turn over will be fixed at $416.50.

As thus modified, the decree of the court below will be affirmed. The defendant Joseph Tí. Dillon will be entitled to recover the cost of printing his brief, and the usual solicitor’s' fee in this Court, and the cause will be remanded for further proceedings.

The other Justices concurred.


text:
    Joseph F. Richardson et al. v. Charles W. Richardson et al.
    [See 83 Midi, 653.]

      Trust — Fraud—Attorney and client — Executors and administrators —Accounting.

    A husband willed all of his property to hisi wife, and after the will had been admitted to probate his brothers and sisters, through one of their number who had been constituted their attorney in fact for that purpose, employed a firm of attorneys to contest the will, and agreed to pay them for their services a certain percentage of the amount realized from the contest. One of said attorneys and the attorney in fact effected a settlement with the widow of the claims of the contestants against the estate, and the attorney was paid the percentage agreed upon. After receiving the money, said attorney, without the knowledge or consent of his copartner, and- acting in the'interest of the attorney in fact, who had received the sum paid by the widow on the settlement, obtained releases from a portion of the contestants of their claims against the estate, they all supposing that the negotiations were being had " between themselves and the widow, and none of them having any knowledge, nor being informed by the attorney, that their attorney in -fact had already effected a settlement in their behalf, although the attorney knew that the attorney in fact held powers of attorney from all but one of the contestants, and was acting for them, and had no agreement entitling him to any more than his proportionate share of the sum received on such settlement. After the death of the attorney in fact, his executors discounted a note for $10,000, being a part of the sum received on said settlement by their testator, after being informed of the intention of the solicitor for the contestants from whoih releases had been secured, as aforesaid, to make them parties to a bill which he contemplated filing in behalf of said contestants to secure a proper distribution of the moneys received by the attorney in fact on said settlement, and allowed the proceeds to remain in the bank where the discount was effected for a full year, at a loss of $600 to the estate which they represented. And in a suit so brought it is held:
    a — That, so far as the original fund is traceable and recoverable, it should be first applied to the satisfaction of the complainants’ demands.
    b — That the attorney must be held to have acted in his individual capacity, and not for the firm, in securing said releases, and that his conduct, for which his copartner was in no way responsible, did not impair the right of the firm to said fee, it appearing that up to and including the time of its payment said attorney had in good faith acted for all of the contestants under the contract made with him, but that he is liable to the contestants from whom he obtained releases for the remainder of their proportionate share of the money realized upon the original settlement.
    c — That the executors of the attorney in fact are properly made parties to the bill, and are liable to the complainants for the proceeds of the $10,000 note which was in the possession of their testator in his lifetime, charged with the trust, and which came into their hands as executors; and that their final accounting in probate court will not defeat this claim, said trust fund being no part of the estate, and the complainants not being bound to follow it in proceedings in probate court, and the executors, having knowledge of the facts, being bound to exert themselves affirmatively in the protection of the trust fund, until discharged of the trust, instead of assenting to measures calculated to conceal it; citing Perry, Trusts, § 364; Fulton v. Whitney, 5 Hun, 16.
    Appeal from Wayne. (Reilly, J.) Argued November 3, 1893. Decided May 22, 1894.

      Bill for an accounting. Complainants, and defendants George William Moore, McBae, and Greeley appeal.
    Decree modified and affirmed.
    The facts are stated in the opinion, and in 83 Mich. 653.

      James H. Pound (J. D. Turnbull, of counsel), for complainants.

      Edioin F. Conely, for appellant Moore.

      McDonell é Hall and Hatch & Cooley, for appellants McBae and Greeley.
   Montgomery, J.

This case was before the Court at the October term, 1890, and is reported in 83 Mich., at page 653. It is unnecessary to restate the facts or pleadings, except so far as is necessary to a determination of additional questions presented by the present appeal. Since the former hearing, the bill has been amended by making the representatives of George Bichardson, deceased, parties, and a decree rendered at the circuit for the sum of 130,000, and interest since September 1, 1886, against George William Moore, Charles W. Bichardson, Elizabeth Bichardson, and Bobert J. Kelley; and in the sum of $10,000, and interest since January 1, 188?, against Chaides B. Greeley and Donald McBae, who were executors of the will of George Bichardson; and in the sum of $2,000 each, with interest, against Jane' Nye and Benjamin F. Starbird, legatees named in the will of George Bichardson, — the decree containing a provision, however, that any sums collected of Greeley and McBae, or of Jane Nye or Benjamin F. Starbird, shall be credited on the decree of $30,000 against the Bichardsons, Moore, and Kelley, the theory upon which the decree proceeds being that the complainants, are entitled to, and should, follow the trust fund so far as practicable, but that, failing in realizing the full sum diverted, the complainants are entitled to judgment against all who participated in the diversion of the fund.

.The complainants appeal from t'he decree, claiming— First, that the court erred in not charging against the defendants Moore the portion of the fee paid to them out •of that portion of the estate belonging to complainants; And, second, that the decree should have run. as well against George Whitney Moore as against the other defendAnts. The defendants George William Moore and Greeley and McRae also appeal. Their several contentions will be noted later.

George Whitney Moore would, of course, be liable for the conduct of his partner in the business for which the partnership of- Moore & Moore was employed, viz., the settlement of the claim of the heirs against the estate of ■Charles W. Richardson, deceased. This settlement was Accomplished, and the fee agreed to be paid to Moore & Moore was actually paid, before any steps were taken* which resulted in the fraudulent settlement with the heirs. The relation of Moore & Moore to this estate thereupon •ceased. It does not appear that George William Moore, from that time on, was acting in behalf of his firm. There was no contract relation between the firm and George Richardson, who had the power of attorney from his brothers and sisters. According to the testimony of George William Moore, he was acting in the capacity of a friend of George Richardson, rather than that of an employed attorney. There is nothing in the case to show that George Whitney Moore knew of the transaction at the time, or that he ratified it or received any benefit from it. Under these circumstances we think it should be held that George William Moore was acting in his individual capacity, and not as a representative of his firm.

Nor do we think the complainants are entitled to recover of Moore & Moore the amount paid them as feSs. It appears very satisfactorily that, up to tbe time these fees were paid, George William Moore had in good faith acted for all the parties concerned in the contest, including the complainants. The proceeds of the settlement came into the hands of George Richardson as attorney in fact for the complainants, and the percentage which passed into the hands of George William Moore had been earned. He could properly have ended his connection with the case there, and, had he done so, would not have been chargeable with any wrong against the complainants, and there could be no reasonable ground for urging that he had not faithfully served their interests and earned the compensation paid him. To hold that by reason of any subsequent misconduct, growing out of a misapprehension of his duties to his client, or for whatever cause, he became chargeable with this sum, would be to enforce a forfeiture of property already acquired, and in the nature of a penalty for subsequent alleged misconduct. We think the complainants are not entitled to complain of the decree in this respect.

We proceed to a consideration of the questions raised by the appeals of the defendants. It is urged that by reason of the conveyance of a one-half interest in their claim by each of the complainants Albert Richardson and Joseph Richardson, which conveyances were held valid by the former opinion, these complainants are .not entitled to the same relief as their co-complainants. This is undoubtedly true. In the distribution of the fund realized, they would only be entitled to share to the extent of their remaining interest as heirs. This is a matter which, however, concerns the complainants aloné, and can be provided for by the decree.

It is objected that the bill is multifarious. But if multifarious now, for the reasons urged, it was open to the same objection at the former hearing. It may be further said that the better practice would have been to raise the question by demurrer to the bill, and have brought it up for consideration by the court below before the testimony had been taken. The objection cannot now avail. See Payne v. Avery, 21 Mich. 538; Wales v. Newbould, 9 Id. 81; Snook v. Pearsall, 95 Id. 534; and Burnham v. Dillon, ante, 352.

This brings us to a consideration of the question of whether the acts of George William Moore are such as render him liable, jointly with George Richardson’s representatives, for a diversion of the fund. From the testimony in the record it appears that the circuit judge, who saw the witnesses, must have found substantially the following state of facts: After George Richardson had received the sum of $120,000 from Diana Richardson, one-half of which he received as the representative of the complainants, and had signed releases in behalf of, and as attornej" in fact for, complainants, and after he had jiaid Mr. Moore his agreed compensation, leaving in Mr. Richardson’s hands $45,000 belonging to the complainants and to Charles W. Richardson, who had purchased the equivalent of a one-sixth interest of Albert Richardson and Joseph Richardson,' Mr. Moore accompanied R. J. Kelley, and releases were obtained from all the heirs of the half-blood living in the vicinity of Alpena. These releases were made by complainants, and the settlements effected, each of the complainants supposing that the negotiations were between themselves and Diana Richardson, and none of them having knowledge, or being informed by Moore, that their agent, George Richardson, had already effected a settlement in their behalf; and this, notwithstanding the fact that Mr. Moore knew that George Richardson held powers of attorney from all but one of the heirs, and was acting for them, and had no agreement entitling him (George Bichardson) to any more than his proportionate share of the proceeds. The circuit judge must also have found that in the adjustment with Eben Bichardson at Worcester, Mass., the defendant Moore plainly left Mr. Bichardson to understand that no settlement had yet been effected, and that the sum of $1,500 was all that Diana Bichardson was willing to pay to him in compromise of the contest. There is an abundance of testimony in the record to establish this state of facts. Indeed, it is so strongly supported that it would be an arbitrary exercise of power to override the decision of the trial judge on the facts. This being so, it is too clear for argument that Mr. Moore failed of his duty to those 'whose interests he had so lately represented, and that he owed the duty to see that they were not misled to their prejudice by reason of lacking information which they were entitled to receive at his hands. It will not do to say that he was employed by George Bichardson alone. At this very time, $12,500, paid out of funds belonging to the heirs of the half-blood, was in his possession; and it cannot be doubted that, even though he might have considered his service at an end when the avails of the compromise were in the hands of George Bichardson, yet he did not see fit to stop there, and by his conduct, if not by his words, left the complainants to infer that no settlement had yet been effected, and that he and George Bichardson were still acting in their interests. It is due to Mr. Moore to say that his failure to measure fully the extent of his obligations to these parties evidently arose from the fact that he was possessed of the belief that George Bichardson had, by abandoning the purpose of attempting to maintain a subsequent will, entitled himself to equities superior to those.of the brothers and sisters of the half-blood. But we are bound to say that we cannot regard this as a legal justification for the course of .Mr. Moore in the matter.

It is strongly insisted that, inasmuch as the fund found its way into George Richardson’s hands, and inasmuch as he became accountable to the heirs of the half-blood, they, notwithstanding the fraud, had the right to receive the fund from George Richardson and therefore they have not been damaged by any act to which George William Moore was a party. The Court, at the former hearing, said:

"We have examined the proofs, and find that a great fraud has been committed upon these complainants, by which they have been deprived of their rightful share of the money and notes received by George Richardson upon the settlement with Diana. * * * But it appears to ns from all the facts in the case that the complainants should pursue the fund, and reach the same, if possible, received by George Richardson, and which he held in trust for complainants, and that his representatives are necessarily parties to the bill, and that all the parties engaged in the alleged fraudulent design to cheat them out of such notes and money should be made parties.”

It is evident that, so far as the fund is traceable and recoverable, it should be first applied to the satisfaction of complainants’ demands. This is equitable. But it cannot be doubted that the pretended settlement has been one of the means employed to withhold from complainants their due, and that those concerned in employing these means were jointly concerned in a tortious wrong against the complainants’ substantial rights. But for the pretended settlement, there can be no doubt that the complainants would have had their money before the death of George Richardson. It was a measure employed to withhold from them what was theirs, and this amounted to a conversion. It is unnecessaiy to cite authorities that all concerned in a tort of that character are equally liable. Indeed, it is plainly implied from the holding in the former case that the defendants are liable to complainants here.

A question of more difficulty is whether defendants McRae and Greeley are liable to complainants for the proceeds of the note of $10,000, which was in the possession of George Richardson in his lifetime, charged with the trust, and which came into their hands as executors. We are satisfied from the testimony that these defendants knew that the complainants claimed that the fund belonged to them. Mr. Turnbull, who acted for the complainants, testifies that defendant McRae was fully informed of all the facts, and was also told that he (Mr. Turnbull) intended to include the names of the executors in the' bill of complaint which he then contemplated filing in the interest of complainants. Greeley was also informed of .this purpose, and, some time after, discounted the note of $10,000, making the large discount of $1,000 for a single year, and allowed the jmoceeds to remain in the same bank where the discount was effected for a full year, thus losing to the estate $600. He testifies that this action was taken at the request of, or on consent of, the distributees, and further testifies that they wanted the note discounted and the amount put in cash. He is then ásked:

“ Q. Why did they say they wanted it discounted?
“A. I don’t remember what they said. I don’t remember whether there was anything. Afterwards, — after this was discounted, — there was talk of this trouble coming up, but I don’t remember whether it was before or after the note was discounted. * * *
Q. And at the request of the legatees you discounted a perfectly good nóte, and stood $1,000 discount, without any explanation from the legatees why they wanted it; is that true? »
“A. Well, there might have been some explanation why they wanted it done, but they wanted it. The substance of it was they wanted it put into the estate as cash. They were to stand their proportional part of the discount. * :Ü *
“ Q. Wasn’t it that they understood some of the heirs were going to take proceedings to reclaim that money that they claimed they had been defrauded out of?
“A. It might have been. I don't know whether it was or not. I cannot remember. I don't remember the reason that they gave at that time."

In Perry, Trusts, § 344, it is said:

“ In the United States, the heirs or executors will take the trust property, and they must- settle the accounts of the testator in relation to the trust. They must also see that the property is protected and preserved, but they are not under any obligation to execute the trust."

In Schouler, Ex'rs, § 244, it is said:

If the representative- takes possession of personal property which was in possession of his decedent at the time of his decease, but to which another has title, his exercise of .dominion is at his own peril; and, if he sells the property as his decedent's, he is individually liable in trover to the true owner for its value."

See, also, Rowley v. Fair, 104 Ind. 189; Bloxham v. Crane, 19 Fla. 163. In equity, a payment over of this .fund, in good faith and without notice, may afford protection to the exfecutor. See Mulford v. Mulford, 40 N. J. Eq. 163. The defendants have not so discharged their duty. They knew the facts, and must be held to have acted at their peril.

Nor does the final accounting by the executors defeat this claim. The trust fund was no part of the estate, and the complainants were not bound to follow the fund in proceedings in probate court. The defendants, with knowledge of the facts, were bound to exert themselves affirmatively in the protection of the trust fund, until discharged of the trust, instead of assenting to measures calculated to conceal it. As is well stated in Perry, Trusts, § ^6.4:

An executor, in proving the will, and in accepting the office from his immediate testator, accepts not only all the trusts imposed by the immediate will -under which he acts, but also all the.trusts in respect to the assets, which come to his hands, with which his immediate testator was charged; and he must execute those trusts until he is relieved by a new appointment in the probate court, and a settlement and payment over of the. assets."

See, also, Fulton v. Whitney, 5 Hun, 16.

In furtherance of the direction given in the former opinion, the decree will be so modified as to make the original fund primarily liable for the satisfaction of complainants’ demand. To the extent that Charles W. Richardson, Elizabeth Richardson, Jane Nye, and Benjamin E. Starbird had the benefit of these funds, they should be required to refund the amount received, with interest, and executions will issue against them for this purpose. Complainants will also be entitled to executions against McRae and Greeley for the sum of $10,000, and interest from January 1, 1887, and against defendants R. J. Kelley and George William Moore for the full sum of $30,000 and interest. These various executions, however, will be available to complainants only for the purpose of realizing the sum of $30,000’ and interest, with costs. Either o'f the defendants Moore or R. J. Kelley who may,, under this decree, be compelled to make payment of any sum, will be entitled to the process of this Court, or other appropriate proceeding, to compel repayment by those who have had the benefit of the fund, provided that McRae and Greeley shall in no event be charged with more than $10,000, with interest. These last-named defendants will in turn be entitled to take process or proceedings to compel repayment by the distributees.

The other Justices concurred.


text:
    Isaac McCrea v. Fred J. Russell, Circuit Judge of Muskegon County.

      Attachment — Malpractice—Sufficiency of affidavit.

    1. How. Stat. §§ 8025a-8025d, as amended by Act No. 89, Laws of 1893, which provide for the commencement of actions of tort against non-residents by attachment, should be strictly construed, and the facts required to be stated in the affidavit for the writ must be set out upon the knowledge of the affiant, and with reasonable certainty; the principle involved not being different than that announced in Howell v. Circuit Judge, 88 Mich. 381, in which case Act No. 149, Laws of 1889, which authorizes the issuance of a writ of attachment before the maturity of the debt, was construed.
    2. Where, in a suit under the statute first cited, the gist of the action is the alleged negligent failure of the defendant, a physician, to remove the plaintiff’s left eye, which had been injured, and which the defendant was treating, before the right eye had become so far diseased as to render its removal also necessary, an affidavit which, after stating how and when the injury was received, the employment of the defendant, and frequent suggestions to him by the plaintiff, in view of the inflammation in both eyes and the increasing impairment of the vision of the right eye, of the advisability of the removal of the injured eye, avers that on or about a certain date the plaintiff, after consultation with other physicians and surgeons, became of the opinion that it was necessary to remove the left eye, in order to save the right eye, is insufficient, as, conceding that the plaintiff was possessed of sufficient skill to express, an opinion upon the subject, the affidavit shows that he did not- do so, but relied upon the unsworn statements of other physicians, the precise nature of which does not appear.

      Mandamus. Argued January 30, 1894. Denied May 22, 1894.
    Relator applied lor mandamus to compel respondent to vacate an order quashing a writ of attachment. The facts are stated in the opinion.

      .Brown & Lovelace, for relator.

      Bunker & Carpenter, for respondent.
   Montgomery, J.

This is an application for a mandamus to require the respondent to set aside an order quashing a writ of attachment. The writ was issued in an action of tort against a non-resident defendant, and the circuit judge was of opinion that the affidavit was insuffi'eient.

The action was against a physician, for malpractice. The affidavit stated, in substance, that the facts upon which the cause of action was based were as follows: That on the 28th of February, 1890, while deponent was engaged in splitting wood, a sliver penetrated the ball of his left eye, and destroyed the sight of the eye; that plaintiff employed defendant to treat him, and stated to him the facts as to the cause of the injury to the eye, and that defendant commenced treating plaintiff for the injury, and continued to treat him until the 15th of July, 2890; that shortly after the date of the injury a severe inflammation set in, and continued during all the time that defendant treated the plaintiff; that, within a few days after the defendant began the treatment, the plaintiff’s right eye, through sympathetic action with the injured eye, became weak and affected, which fact was communicated by the plaintiff to the defendant; that such weakness continued from day to day until about ’the 1st of May,- at which time severe inflammation set in in said right eye, and that the vision of the right eye became impaired, .all of which facts were communicated by plaintiff to said -defendant.

The affidavit further states:

“That deponent mentioned to said defendant that it ■might be advisable to remove the said left eye, in order to save the sight of said right eye, but that said defendant stated to deponent that such action was not necessary to save the sight of said right eye; that after said 1st day of May the inflammation in both of said eyes continued, and the vision of said right eye became more and more impaired, and deponent suffered great pain in said right eye, and at divers times between said 1st of May, 1890, and the 1st of July, 1890, while said inflammation continued in both eyes, the deponent suggested to said defendant the propriety of removing said left eye, in order to save and protect the sight of said right eye, but that each time said defendant said that it was not necessary so to do in order to save and protect the sight of said right eye; that said inflammation in each of said eyes grew worse from day to day; * * * that on or about the 15th of July, 1890, this deponent, after consultation with other physicians and surgeons, became of the opinion that it was necessary to remove said left eye, in order to save the said right eye; and thereupon this deponent left said defendant, and would be treated by him no longer, but consulted another physician and surgeon, and had said left eye removed, but that the inflammation of said right eye had continued so long, and become so great, by reason of the neglect of said “ defendant to remove said left eye at the proper time, as he should have done, that said operation would not and did not restore said sight to said right eye, but that said right eye became and was wholly blind, and that afterwards this deponent was compelled to and did have said right eye removed.”

It is then further stated that the defendant conducted himself in an ignorant, unskillful, and negligent manner, and did not and would not use due care, skill, and diligence in and about the treatment of said right eye, and negligently and carelessly failed to remove said left eye, in order to save and protect the sight of said right eye.

The statute authorizing the issuing of a writ of attachment in actions of tort provides, in section 2, that—

“An affidavit shall be annexed to said writ before its execution, and before the order prescribing the amount of property that may be attached as provided by section three of this act, which shall be made by the plaintiff in such action, or by some other person by him authorized so to do who shall- have a knowledge of the facts stated therein, and which affidavit shall fully state and describe the cause of action, also that the defendant is a non-resident,” etc. Laws of 1893, p. 94.

This statute should be strictly construed, and the facts required by the statute to be stated in, the affidavit must be set out upon the knowledge of the affiant, and with reasonable certainty. The principle is not different than that involved in Howell v. Circuit Judge, 88 Mich. 361.

A statute of New York requiring that in actions upon contract, before attachment shall issue, the nature of the action shall be stated, has been construed by the courts of that state; and it has been held that a mere recital of facts, without, a direct statement of the existence of such facts, is insufficient, and that, in an action for a breach of an agreement, it must be shown by positive statements, 'and not by way of recital, what the agreement is, and it must be shown with equal directness in what respect there has been a failure of performance. Manton v. Poole, 67 Barb. 331. See, also, Pomeroy v. Ricketts, 27 Hun, 242. The same principle is involved, precisely, as in cases where an affidavit is required before an arrest is authorized, in which case the affidavit must contain a complete statement of facts sufficient to show the plaintiff entitled to recover if the facts are undisputed, and this statement must be upon the personal knowledge of the affiant. See Sheridan v. Briggs, 53 Mich. 569.

The gist of the action in the present case was the negligent failure of the defendant to remove the infected left eye before the right eye became so far diseased as to render it necessary that that, also, should be removed, and to make a prima facie case it was necessary to show that this condition arose after the employment of the physician, and that the removal of the eye at some time after the defendant was employed would have been effective to prevent loss of the right eye. In other words, it was necessary to show in the affidavit the facts which constituted negligence on the part of the defendant, before a cause of action is stated. The only manner in which the plaintiff has attempted to do this is by stating that—

On or about the 15th of July, 1890, this deponent, after consultation with other physicians and surgeons, became of the opinion that it was necéssary to remove said left eye, in order to save the said right eye/'’

Even if plaintiff possessed sufficient skill to express an opinion upon this subject, the affidavit shows that he did not do so, but relied upon the unsworn statements of other physicians, the precise nature of which does not appear.

We think the circuit judge was right in holding the affidavit not sufficient, under the statute, and the writ will be denied.

The other Justices concurred.

      Act No. 154, Laws of 1883 (How. Stat. § 8025a et sea.), j.s amended by Act No. 89, Laws of 1893.