source: Caselaw Access Project

author: Stone, J. Per Curiam.

license: Public Domain

text:
    BOARD OF SUPERVISORS OF CHIPPEWA COUNTY v. BENNETT.
    1. Trial — Election oe Counts — Pleading—Declaration.
    The plaintiff, in an action upon a bond of a county treasurer, was not required to elect between the counts of the declaration which defendant claimed were inconsistent because it was alleged in the first count that the treasurer disregarded and neglected his duties in receiving as money certain worthless and dishonored checks from the city treasurer of the city of Sault Ste. Marie, the second count averring that at the expiration of his term he refused to pay over to his successor in office the amount of said checks, and the third count charging that he was indebted to the county in such sum and neglected to pay the same to the plaintiff board upon demand.
    2. Municipal Corporations — Bond—County Treasurer — Taxation.
    Where it appeared that the county treasurer accepted unpaid and past due checks from a city treasurer in the county, and it appeared that the city treasurer had received the checks from one of the taxpayers, whom he had advised that he would not issue tax receipts unless the checks were paid, that the taxpayer advised him later that he had arranged with the county treasurer to accept the checks, which were received as cash and held by the county officer, but were never paid, the board of supervisors was entitled to maintain an action on the official bond of the county treasurer; the lands being regularly returned for taxes and never having been charged back by the county treasurer.
    3. Same — Statutes—Checks—Public Officers.
    The effect of Act No. 228, Pub. Acts 1899 (1 How. Stat. [2d Ed.] | 889), which provides that checks received by tax officials shall not operate as payment unless they are paid in due course, was not to justify the county treasurer in accepting such past due paper against which there were no funds in the bank.
    4. Same — Stale Checks — Bills and Notes.
    The statute did not contemplate that the county treasurer might accept in settlement from a township or city treasurer a stale check, and, after payment had been refused, carry the same upon his books as cash for a period of two years or upwards: the official records are presumed, in law, to show the correct amount due the county at any time.
    5. Same — Treasurer—Liability—Estoppel.
    Having carried the checks as cash, and having accepted a renewal check which he carried through his entire term 185 Mich. — 35. of office on the county hooks as cash, the treasurer was chargeable with the amount thereof as so much cash, and was estopped from claiming that they were not cash, in the absence of any showing on his part or that of his sureties as to how much, if anything, he had received upon the paper.
    6. Pleading — Statute of Limitations — Defense, Notice of — Affirmative Defense — Laches.
    The alleged defense that the plaintiff board of supervisors were guilty of laches in failing to institute suit on the treasurer’s bond until after the statute of limitations barred any suit upon the original checks was an affirmative defense which should have been set up by a plea and notice under Circuit Court Rule 7B.
    7. Same — Negligence—Delay.
    Where the defendant' sureties were in equally good position as the county to obtain information as to the state of the treasurer’s books, they could not complain of the delay of the board of supervisors in failing to institute suit until after the statute of limitations had run against the checks.
    8. Same.
    A municipality is under no obligation to investigate the character or collectibility of negotiable paper which the treasurer may have taken in payment of taxes and carried upon his books as cash.
    ON REHEARING.
    9. Estoppel — State—Municipal Corporations.
    It is well settled doctrine in this State that governmental agencies may not be affected by laches or negligence of officials nor will it be held to be estopped from asserting rights against an officer by reason of any acts, omissions, or conduct of auditors, trustees, supervisors, or other public boards; mere nonaction of public officials will not operate as an estoppel.
    Error to Chippewa; Fead, J.
    Submitted January 16, 1915.
    (Docket No. 16.)
    Decided April 19, 1915.
    Rehearing denied July 23, 1915.
    Second rehearing denied December 22, 1915.
    Debt by the board of supervisors of the county of Chippewa against James T. Bennett and others upon defendant’s official bond. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      M. M. Larmonth (William P. Belden, of counsel), for appellants.

      Thomas J. Green (Roberts P. Hudson, of counsel), for appellee.
   Stone, J.

This is an action of debt against James T. Bennett, late county treasurer of Chippewa county, and his sureties upon his official bond, bearing date December 31, 1904.

The first count of the declaration describes and sets forth .the condition and breach of' condition, of the bond and the claim of the plaintiff in the following language:

“For that whereas the said defendants on, to wit, the 31st day of December, A. D. 1904, at Sault Ste. Marie, Chippewa county, Mich., by their certain writing obligatory, sealed with their seals, and to this, court now here shown, the date whereof is the day and year aforesaid, acknowledged themselves to be held and firmly bound unto the said plaintiff in the sum of seventy-five thousand ($75,000) dollars, for the payment of which well and truly to be made, the said defendants bound themselves by said writing obligatory. And the said plaintiff avers that the said writing obligatory was and is subject to a certain condition therein written whereby it is provided that if James T. Bennett, one of the defendants herein, who had been on the 8th day of November, A. D. 1904, elected to the office of treasurer of the county of Chippewa and State of Michigan, should as said treasurer and his deputy and all other persons employed in the said office of county treasurer faithfully and properly execute their respective trusts and if such treasurer should pay according to law all moneys which should come to his hands as county treasurer, and render a just and true account thereof whenever so required to do by the board of supervisors or by any provision of law, and deliver over to his successor in office or to any other person authorized by law to receive the same, all moneys, books, papers, and other things appertaining to or belonging to said office, then the obligation in said bond should be void, otherwise to remain in full force, said bond or writing obligatory together with the sureties named therein having been on the 15th day of January, A. D. 1905, approved by the board of supervisors of Chippewa county, Mich. And as an assignment of the breach of said writing obligatory, plaintiff avers that the said James T. Bennett, one of the defendants named herein, having duly qualified as treasurer of the county of Chippewa, Mich., and having entered into possession of said office on, to wit, the 1st day of January, A. D. 1905, did thereafter disregard and neglect the duties of said office in that he accepted and receipted for as money checks from the treasurer of the city of Sault Ste. Marie, Chippewa County, Mich., as a part of the moneys due the said county of Chippewa, from the said city of Sault Ste. Marie in a settlement made between the said city and county on, to wit, the 17th day of April, A. D. 1905, said checks aggregating the sum of four thousand sixty-six and 70/100 ($4,066.70) dollars, being signed by one Victor E. Metzger and bearing the indorsement of John F. Deadman as treasurer of the city of Sault Ste. Marie, which said checks were taken in lieu of lawful money of the United States in the amount called for on the face of said checks, which said money was then due to said county of Chippewa from said city of Sault Ste. Marie, and which checks bore dates several weeks prior to the date of their delivery to said James T. Bennett, and that although said checks were dishonored when presented at the bank for payment, the said Bennett did not give the city of Sault Ste. Marie or its treasurer notice of dishonor and protest and did not charge back to the city of Sault Ste. Marie the amount called for by said checks but did carry them as cash on his books until, to wit, the SOth day of June, A. D. 1906, when he surrendered said checks to Victor E. Metzger, the maker of same, and received in return one check for the total of the amount of the checks so surrendered, which said check was signed by Victor E. Metzger drawn on the Central Savings Bank of Sault Ste. Marie, Mich., and payable to J ames T. Bennett, county treasurer, and that thereafter the said James T. Bennett continued to and did carry said checks as cash on his books until the expiration of his term as county treasurer and that the county of Chippewa, Mich., had not received any money whatever for said check. And the said plaintiff avers that by reason of the said promises the said defendants became and were indebted to the said plaintiff in the sum of six thousand ($6,000.00) dollars. Yet said defendants though often requested have not paid the same or any part thereof to said plaintiff, but wholly neglect and refuse so to do. To the plaintiff’s damage of six thousand ($6,000.00) dollars and therefore it brings suit.”

The second count alleges that the said county treasurer, at the expiration of his term, neglected and refused to pay over to his successor in office the said sum of money which had come into his possession as such treasurer. The third count of the declaration alleges the indebtedness and the neglect to pay over to the plaintiff upon demand; and the fourth count is general in its language, and alleges the refusal of said county treasurer to pay over to his successor, the sum of $4,066.70, due the plaintiff.

The plea was the general issue.

Upon the trial of the case at the circuit the defendants offered no testimony, and, as is said by the defendants, there is little dispute about the facts in the case.

Defendant Bennett was elected county treasurer for his second term in November, 1904, and his term of office expired December 31, 1906. The bond, the substance of which is set forth in the first count of the declaration, was filed January 3, 1905, and was duly approved by the board of supervisors of said county. John F. Deadman was city treasurer of the city of Sault Ste. Marie in the winter and spring of 1905. At the final settlement between defendant Bennett, as county treasurer, and the said city treasurer, the latter indorsed and turned over to defendant Bennett, as county treasurer, in settlement of the State and county taxes, on or about April 17, 1905, two checks upon the Central Savings Bank of Sault Ste. Marie, signed by V. E. Metzger, one for $3,027.97, and the other for $1,038.73, as part payment of the moneys due from the city of Sault Ste. Marie to the county of Chippewa for State, county, and county road taxes. The said county treasurer, Bennett, gave the said Deadman, city treasurer, a receipt showing the payment of the amount of the State, county, and county road taxes. The said V. E. Metzger was then vice president of said bank, and was the owner of record of a quantity of real estate in Sault Ste. Marie, upon which there was due a considerable sum of money for city, State, county, and county road taxes, and he was also the agent of divers other parties owning 'real estate in said city, for whom he paid taxes; and he had given to the said city treasurer, some time in the month of January, the two checks above described for unpaid taxes of the year 1904, with the explanation that he (Metzger) did not have that much currency on hand in the bank at that time. Said city treasurer refused to turn over the tax receipts which he had made out, but kept them at the request of Metzger, until about April 17, 1905, when it became necessary to make return of the taxes to the county treasurer. Said city treasurer had telephoned the bank and had been informed that there were no funds to pay said checks. This had been done previous to April 17th. The checks not having been made good at that time, the said city treasurer threatened to return the taxes as delinquent. Upon the promise by Metzger that “he would fix it up with Mr. Bennett,” the county treasurer, he (Metzger) asked Bennett to take the checks over from the city treasurer as cash and hold them for a while, which the said defendant Bennett, as county treasurer, promised to do, and upon a statement made by defendant Bennett, to said city treasurer, Deadman, that “it was all right,” the said city treasurer paid the said county treasurer by these two checks, and three other checks upon banks in the city (which latter were ultimately deposited by defendant Bennett, and paid), the full amount due from the city to the county for State, county, and county road taxes, and received from the said county treasurer, Bennett, a receipt as for cash in full payment of the city’s indebtedness.

The evidence was. undisputed that, at the time these checks were turned over by said Metzger to said city treasurer, the latter understood that there was no. money in the bank to meet them, and when the said checks were turned over to the said Bennett,- county treasurer, it was understood, both by said Bennett, county treasurer, and said Metzger, that there was no money in the bank to meet them. Those checks were then between two and three months old. Upon the acceptance by said county treasurer of these checks, the city treasurer marked the items of taxes “paid,” and issued to said Metzger duplicate tax receipts.

Upon the trial of the case the evidence showed that it was impossible to determine the particular descriptions of land, the taxes upon which were intended to be paid by the “Metzger checks.” The books of the county treasurer showed that the items represented by these checks and carried as cash were marked “Metzger checks;” that they were carried as cash in the county treasurer’s office from the time of their receipt until the 25th day of May, 1905, when they were deposited in the Central Savings Bank and carried by that bank until the 21st of June, 1905, when they were returned to the county treasurer’s office, and the amount carried after that as cash on the county treasurer’s books until an audit by one Clark was made in October, 1910. It should be stated, however, that on or about June 30, 1906, the said two checks were taken up by Metzger, and a new check was given in their place to said Bennett, county treasurer, for the aggregate amount of $4,066.70. There was no evidence that defendant Bennett ever received any money on either of said checks,' or that at any time while the checks were in his possession there was money in the bank to meet them. The checks were never protested nor notice of dishonor given.

It was the claim of the plaintiff, upon the trial, that by reason of defendant Bennett accepting these checks and receipting for them as cash, and carrying them as such, he and his bondsmen became liable to the county for the amount of the checks and interest, as for money had and received as such county treasurer. On the other hand, it was the claim of defendants that they were only liable for such amounts of money as actually came into said Bennett’s hands, and that no notice of protest or dishonor was necessary, as both Deadman and Metzger knew there were no funds in the bank to meet the checks at the time they were given. It appeared in evidence that at the time these checks were given the real estate assessed to said Metzger carried an assessed valuation of $80,000. The record does not show that any notice was ever given the sureties on said Bennett’s bond that any claim was to be made against them by reason of the taking of the Metzger cheeks, and it was the claim of the defendants that they had no notice until after action had been barred upon the Metzger checks.

At the opening of the case, defendants objected to the introduction of any testimony under the first count in the declaration, for the reason that it did not state a cause of action, as there was no allegation in the declaration that at the time said Bennett went out of office the said plaintiff could not have charged back to the city of Sault Ste. Marie the amount of said checks; and it was the claim of defendants that the •declaration should allege, and the proofs must show, the loss of some right given by the statute to plaintiff before said defendants would be liable. Defendants also asked that plaintiff be required to elect under which count in the declaration it would proceed, as it was admitted that no other shortage was claimed except on the so-called Metzger checks. To this request the court remarked:

“I think the election should probably come when all the testimony is in, unless there is an entirely different transaction than that stated in the opening statement relied upon.”

To this ruling defendants excepted, and the matter was not again called to the attention of the court.

At the close of the plaintiff’s case, defendants’ counsel moved the court to direct a verdict for the defendants, for the reason that there was no allegation in the declaration which showed that the county had suffered pecuniary loss by reason of any act of defendant Bennett as county treasurer; that there was no proof that by reason of the taking of said checks by the county treasurer the county had lost any right on the 1st of January, 1907, to charge back the amount of the checks to the city; that there was no proof or attempt to prove any bad faith on the part of defendant Bennett in accepting said checks in settlement with the city treasurer; and that there was no showing by reason of such acceptance that the county had lost any right for the recovery of money due it from the city. This motion was overruled, and exception taken by defendants’ counsel. Certain requests to charge were presented by counsel for said defendants embodying the propositions urged in said motion. Other requests to charge were as follows:

“III. Under the laws of Michigan a county treasurer has a right to accept checks in his settlement with a township or city treasurer, and is not responsible for any loss which may be occasioned thereby, unless it is occasionéd through some fault or negligence of his own.
“IV. In this case it is undisputed that at the time of the giving of these checks the maker, Metzger, had large holdings of real estate in the city valued on the tax rolls at over $100,000, and was also vice president of the Central Savings Bank of this city, the bank upon which the checks in question were drawn, and it would not be negligence or improper conduct for the county treasurer to accept those checks even though he knew that at that time there was no money in the bank to meet them, but had a right to rely on Metzger’s statement that the funds would be there.
“V. I charge you that Mr. Bennett nor his bondsmen are not liable for any negligence or a failure of duty on the part of the board of supervisors in auditing the books of the county treasurer after the 1st day of January, 1907, and are not liable for any loss which may have accrued to the county because of their acts or failure to act, but could only be held liable for such damages as actually existed when Bennett turned over the office of the county treasurer to his successor, McDonald.
“VI. I charge you that, as Deadman and Metzger both knew that there were no funds in the bank to meet the check at the time it was delivered to Bennett, there was no necessity for protest or notice of dishonor and they will be deemed to have waived any such notice by reason of such knowledge.
“VII. The fact that Bennett took a new check from Metzger to himself as county treasurer in lieu of two checks will not relieve Metzger or Deadman from their responsibility unless you find that they were taken and it was intended that they should operate as a payment of the two checks already in Bennett’s possession.
“VIII. I charge you that neither Bennett nor his bondsmen are liable for any damages which may have accrued or loss to the county or city by reason of the failure of Deadman to return as delinquent the property of Metzger, as that is nothing he could do as county treasurer or under cover of his office.
“IX. I charge you that, the plaintiff having failed to establish the fact that they have suffered any loss by reason of the act of Bennett in taking those checks, then your verdict should be for the defendants, for no cause of action.”

Said requests to charge were refused.

In the course of its charge to the jury the court used the following language, upon which error is assigned :

“Now, the first question which logically presents itself is whether Mr. Bennett was'justified in receiving and accepting the two Metzger checks from Dr. Deadman in settlement of the taxes of the county. Now, I charge you- that he was under no obligation to receive those checks in payment of taxes; that he could, and would have been within his rights as county treasurer in so doing, if he had refused to accept those two checks and had demanded the cash. But we have a law which permits a public official to receive and accept checks in payment of taxes and other debts owed to the city or municipality for which he acts; such checks, however, not constituting payment unless paid on presentation.
“This statute would not be subject to such a construction as would enable the treasurer to accept any and all checks presented, without incurring any liability himself. If a check were presented which he knew to be worthless by reason of lack of funds in the bank upon which it was drawn, and the payment of which was known to him to be uncertain or doubtful, he would be deemed to have assumed a responsibility for such consequences as might ensue from his action. So, in this case, the question of Mr. Bennett’s good faith is material, and for you to determine.
“If you find that he honestly accepted the checks, in good faith, believing that they would be paid in due course of business, or within a reasonable time, he would be justified to that extent in accepting the checks under this statute. But if he accepted the checks in bad faith, held them, and continued to treat them as his own transaction, then he would be liable. That is to say, if he continued to treat them, and also the check which was afterwards given, as his own transaction, then he would be liable.
“Now, after receiving these checks, if you find that he received them in good faith, Mr. Bennett would not be entitled to rely upon the statute as a protection against entire inaction, but would be required to use reasonable diligence in protecting the county from loss. In a proper case, it would be his duty to at once present the checks and have notice of dishonor given the indorser in case they were not paid. But, as the undisputed evidence shows that Dr. Deadman knew at the time he delivered the checks to Mr. Bennett that there were no funds in the bank to pay them, it was not necessary to have notice of protest served upon Mr. Deadman to hold him as an indorser of the checks. But Mr. Bennett could have charged them back to the city treasurer and collected payment for them, regardless of the fact that he did not give notice of their nonpayment. * * *
“To sum up this controversy, gentlemen, I would say that Mr. Bennett was under obligation as an officer during his term of office to use reasonable care and diligence to protect the county from loss. He would have no right to take a check from Mr. Metzger and release the other checks bearing the indorsement of the city treasurer; but, if he did, and thus released the other checks, he and his bondsmen are liable to the county. The principal question is, with what intention and understanding was the second check taken, and, in considering this intention and understanding, you may take all the circumstances into consideration and say what the intention evidently was. Any secret intention which Mr. Bennett may have had contrary to the plain appearance of the circumstances would not release him, but the apparent and reasonable intentions, as shown by the acts, would be those which would control and which you would take into consideration.”

The trial having resulted in a verdict and judgment for the plaintiff, there was a motion for a new trial which, with the exception of the claimed error in the admitting of certain testimony, was substantially covered by the requests to charge and the motion for a directed verdict. This motion, for a new trial was denied and exception duly taken. The defendants have brought the case here upon writ of error, and, while there are many assignments of error, the defendants have grouped the same under the following heads:

(1) Erroneous rulings with reference to the scope of the declaration.

(2) Erroneous rulings as to the admissibility of evidence.

(3) Refusal to direct a verdict.

(4) Refusals of defendants’ requests to charge and errors in the charge.

(5) Denial of defendants’ motion for a new trial.

1. As we understand the propositions of appellants under the first head, they are embraced in the first and second assignments of error based upon defendants’ objection to the introduction of any evidence under the first count in the declaration, and their motion that the plaintiff be required to elect upon which count it would proceed.

The first count in the declaration, as set forth (before assigning the breach of the bond), states the condition thereof, as prescribed by the statute (section 2535, 1 Comp. Laws), which we call attention to without repeating the language of the count. As we read, this count of the declaration, it sets forth the facts: as the evidence tended to prove them: . The taking of the checks in lieu of money; their exchange for another check; carrying the checks as cash all of the time on the books of the county treasurer; and failure to account for the cash, with resultant loss to the plaintiff. And the fourth count alleges the negligence to turn over to his successor in office the said balance of $4,066.70 due the county as a result of said county treasurer’s failure to perform his duty. It is worthy of remark at the outset that the county treasurer’s bond, under the statute, is conditioned that such person and his deputy, and all persons employed in his office, shall faithfully and properly execute their respective duties and trusts, and that such treasurer shall pay according to law all moneys which shall come to his hands as treasurer, and will render a just and true account thereof, etc.

As to the ruling with reference to the election of counts, we think the court did not err- in refusing to require plaintiff to elect at the opening of the case. There was no such inconsistency between the counts, as rendered such election necessary. The court intimated that a motion might be made later, but counsel for defendants failed to again call the attention of the court to the matter. In our opinion the first count states a cause of action which, if supported by the evidence, would warrant a recovery in this case.

2. We have examined the record with much care, and are of opinion that no reversible error was committed in the admitting of evidence.

3. We are of opinion that the court did not err in refusing to direct a verdict for the defendants, and this brings us to the merits of the question involved. A reference- to the record discloses that the former city treasurer, Deadman, testified that he stated to Metzger that he would not give Metzger his tax receipts, but would return his delinquent taxes unless he (Metzger) cashed the checks; that Metzger asked him not to return the taxes delinquent, but wait until he could see County Treasurer Bennett; that Metzger later returned, saying that he had arranged it with Bennett, which statement defendant Bennett later confirmed. This testimony is absolutely uncontradicted by any witness. The record shows, and it is conceded by appellants, that Bennett did take the checks, receipted for them as cash, entered them on his books as cash and so carried them to the end of his term. Metzger testified:

“I asked Mm to take the checks over from the city treasurer as cash and hoM them for a while. He said he would.”

And defendant Bennett’s treatment of the checks subsequently clearly indicates that he was as good as his word and held the checks as his own personal obligation. The record shows that this man Bennett was just entering upon Ms second term as county treasurer. Metzger had been one of his sureties upon his former bond to the county. He knew his duties as county treasurer. It is inconceivable that defendant Bennett did not know that the result of his action was the surrender of the tax receipts by the city treasurer to Metzger, the marking “paid” upon the said rolls of the taxes for which the checks were given, for, with the said rolls in his possession, had there been any question about it, he could have effectually settled the question by an examination. Not only was Metzger’s property involved in that payment, but with those checks he had paid taxes on other people’s property for whom he was agent. Counsel for defendant claim that these checks might have been charged back to the city. Whose duty was it to furnish the information necessary to charge these checks back to the city, if it was not the duty of defendant Bennett? And who but he knew that these taxes had been returned as paid, and that he had received these overdue and dishonored checks as cash in lieu of the taxes due the county? Is it possible that, under our system, a county treasurer can, as the homely saying is, receive as cash, “cats and dogs,” or worthless paper, for taxes due the county, and carry the same upon his books for two years as cash (others interested being in ignorance of the fact) without incurring liability upon his bond? Counsel for defendants also urge that these unpaid taxes could have been charged, and may now be charged back to the city. Whose duty was it to call attention to, and attend to, that matter? The tax roll itself had shown these taxes paid. There is no question here about the regularity of the assessment of the taxes. They were not returned as delinquent. Nobody knew this better than the county treasurer. It appeared upon the trial that it was impossible to identify the lands for the payment on which these checks were given. To charge back these taxes upon the city at large would be unjust to the taxpayers, who paid their taxes.

Whose duty was it to call the attention of the board of supervisors to the matter of charged back or rejected taxes? The auditor general could not know of this irregularity from any report which had been made to him by the county treasurer. Under sections 3918, 3919, and 3920, 1 Comp. Laws, there is no machinery provided for the charging back of taxes in the condition shown by this record. It appears undisputed that Deadman, the city treasurer, did not know that these checks were unpaid until nearly six years after he had indorsed them over to the county treasurer. The final check seems to have been turned over by defendant Bennett to his successor in office as so much cash, but the successor did not receipt for the amount. All of this was unknown to the county or the plaintiff until 1910. ,

It is urged by appellants that the taking of these checks by County Treasurer Bennett in the first instance was justified by the provisions of Act No. 228, Pub. Acts 1899 (1 How. Stat. [2d Ed.] §889). We do not so understand the statute. The history of the enactment of this statute is well known to the profession. Questions had arisen as to the effect of the tender of a check or draft in the purchase of State tax lands, and the payment of taxes to county treasurers as incident thereto. See Moore v. Auditor General, 122 Mich. 599 (81 N. W. 561). That act provides that:

“Whenever any check or bank draft shall be tendered for the payment of any debt, taxes or other obligation due to the State or to any municipality therein, such check or draft shall operate as a payment made on the date said check or draft was received and accepted by the receiving officer, if it shall be paid on presentation without deduction for exchange or cost of collection: Provided, however, that no receiving officer shall be required to receive in payment of any debt, taxes or other obligation collectible or receivable by him any tender other than gold or silver coin of the United States, United States treasury notes, gold certificates, silver certificates, or national bank notes.”

There can be no question upon this record that, when County Treasurer Bennett entered the checks on the county treasurer’s books as cash, he knew there were no funds in the bank to pay them. The fact there were no funds in the bank was the real occasion and reason for his having accepted the checks in the first instance. When, a month later, he deposited them in the bank upon which they were drawn, and where they remained for a month and were then returned to him and again charged to him as county treasurer, his attention was certainly again called to the fact that these checks were dishonored, if not worthless paper.

There is nothing in the holding of this court in City of Sault Ste. Marie v. Rotten, 171 Mich. 265 (136 N. W. 1119), that justifies the conduct of defendant Bennett. In that mandamus proceeding, referring to the then county treasurer, this court said:

“The city treasurer had a right to accept the checks for taxes, but, if the same were not honored, it would not amount to payment. * * * Whether the respondent acted with diligence after accepting the checks, whether he presented them for payment within a reasonable time, and whether relator was given the proper notice of the dishonor of the checks, are questions which ought not to be gone into on this record.”

We think the charge of the court upon this subject was as favorable to the defendants as they could ask. It was never contemplated by the act in question that the county treasurer, in settlement with a township or city treasurer, could accept stale checks, and, after their payment had been refused on presentation, carry them upon his books as cash for a period of two years. See Staley v. Columbus Township, 36 Mich. 38.

The official books of the county treasurer are presumed to show the correct amount due from that officer to the county at all times. State Bank v. Chappelle, 40 Mich. 447.

The general provisions of the statute which make it the duty of the county treasurer to receive and properly account for the county moneys was not intended to cover all his official duties. This clearly appears from the requirements of his official bond, which, in addition to the condition that this officer should properly account for all moneys received by him officially, is also conditioned that the treasurer, his deputy, and all persons employed in his office, shall faithfully and properly execute their respective duties and trusts, clearly implying that there are official duties and trusts imposed upon the treasurer beside that of receiving and accounting for county moneys. He is an indispensable officer, charged with many duties. Attorney General v. Supervisors, 30 Mich. 388.

In our opinion defendant Bennett, having taken the checks for cash, having carried them, or the renewal check, throughout the balance of his term of office, nearly two years, on his books as cash, is chargeable with the amount as cash, and should be held estopped from claiming otherwise, especially in the absence of any showing from him or his sureties as to what or how much, if anything, he had received upon the checks, or any of them. Having received the checks as cash, he must be charged with them as cash. County of Montmorency v. Wiltse, 125 Mich. 47 (83 N. W. 1010); County of Montmorency v. Putnam, 127 Mich. 36 (86 N. W. 398); County of Montmorency v. Putnam, 135 Mich. 111-118 (97 N. W. 399).

It is further urged, in this connection, that the plaintiff has been guilty of laches in lying by, and not bringing this action until after the statute of limitations had run as to the Metzger checks. It already appears that the plea in this case was the general issue. No defense of the statute of limitations, or of laches, was interposed in the case. That this defense is not available to these defendants is apparent from an examination of Circuit Court Rule 76. Such defense would be an affirmative defense, and not available under the general issue. This rule has been applied by this court in many cases. Bryant v. Kenyon, 123 Mich. 151 (81 N. W. 1093); Wallbridge v. Tuller, 125 Mich. 218 (84 N. W. 133); Putze v. Insurance Co., 132 Mich. 670 (86 N. W. 814, 94 N. W. 191); R. K. Carter & Co. v. Weber, 138 Mich. 576 (101 N. W. 818); Scott v. Longwell, 139 Mich. 12 (102 N. W. 230, 5 Am. & Eng. Ann. Cas. 679); J. Richardson & Co. v. Noble, 143 Mich. 546 (107 N. W. 274), and other cases.

Upon this record it may be said that the defendants were as well informed in regard to the condition of defendant Bennett’s books as county treasurer, and his account with the county, as was the plaintiff itself, and had equal means of investigation.

We have examined the cases cited by defendants and think they can be readily distinguished from the instant case. The county having been damnified by the unlawful conduct of the said county treasurer, as above indicated and pointed out, it cannot be said that the sureties were released because of delay in discovering the default of the treasurer. City of Detroit v. Weber, 26 Mich. 284-293; Board of Education v. Andrews, 142 Mich. 484-487 (105 N. W. 1118); United States v. Hart, 95 U. S. 316.

We think the case of County of Montmorency v. Wiltse, above cited, clearly indicates that a municipality is not required to investigate the character or collectibility of any paper which the treasurer may take in the payment of taxes, and carry as cash.

We do not dwell upon the other assignments of error for the reason that we are of opinion that the trial court might well have directed a verdict for the plaintiff under the first count in the declaration, and that, if any errors were committed in the trial of the case, ■ such errors were harmless.

Finding no prejudicial error in the record, the judgment of the circuit court is affirmed.

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

on rehearing.

Per Curiam.

On motion for rehearing, Justice Steere taking no part in the case.

In this case the plea was the general issue. It was urged as a defense that plaintiff had been guilty of laches in delaying the bringing of suit until after the statute of limitations had run upon the checks, and that therefore plaintiff was estopped from recovery.

Aside from the question of pleading, there is an insuperable objection to the assertion of this claim by the defendants. This action is one virtually by the county in its governmental capacity, brought in the name of the board of supervisors because of the statute. Section 2466,1 Comp. Laws. Johr v. St. Clair Supervisors, 38 Mich. 532.

It is the well settled doctrine in this country, founded upon the most substantial dictates of reason and sound policy, that the government cannot be affected by the laches of its agents, or estopped from asserting its rights against an official servant, by the acts or omissions of auditors, trustees, supervisors, or other guardians of public rights. Board of Commissioners v. Dickey, 86 Minn. 31 (90 N. W. 775-779), citing Mechem, Pub. Officers, § 924, and cases cited; Seymour v. Van Slyck, 8 Wend. (N. Y.) 403-422; United States v. Kirkpatrick, 9 Wheat. (U. S.) 720; United States v. Van Zandt, 11 Wheat. (U. S.) 184; Gibbons v. United States, 8 Wall. (U. S.) 269-274. See, also, Lake Shore, etc., R. Co. v. People, 46 Mich. 193 (9 N. W. 249); City of Detroit v. Weber, 26 Mich. 284; People v. Supervisors of St. Clair County, 30 Mich. 388; Plumb v. City of Grand Rapids, 81 Mich. 381-394 (45 N. W. 1024); Day Land & Cattle Co. v. State, 68 Tex. 526 (4 S. W. 865); Conwell v. Voorhees, 13 Ohio, 523-533 (42 Am. Dec. 206).

Mere nonaction of corporate officers will not work an estoppel of the corporation. Board of Supervisors v. Lincoln, 81 Ill. 156. See cases cited in 16 Cyc. p. 782. Motion for rehearing denied.


author: Kuhn, J.

text:
    PEOPLE’S STATE BANK v. MILLER.
    1. Fbattd — Negotiable Instruments — Bills and Notes — Misrepresentations.
    Where defendant notified a firm of brokers to purchase certain stock which he did not pay for at the time, and where an officer of the brokerage firm later advised the defendant that they had purchased the stock and he thereupon paid a portion of the price by check, the false representation, in advising defendant that the stock had been purchased, amounted to fraud in procuring the check, under the negotiable instruments law, Act No. 265, Pub. Acts 1905, §57 (2 How. Stat. [2d Ed.] § 2728), and gave rise to a defense in defendant’s favor against the paper in the hands of a third party.
    2. Same — Check — Fraudulent Representations — Burden oe Prooe.
    ■ - Upon proof of a fraud of the brokerage firm in procuring defendant’s check, the burden of proof rested upon the plaintiff to prove that it acquired title in due course for a valuable consideration and in good faith. Sections 54-61, Act No. 265, Pub. Acts 1905.
    3. Bills and Notes — Checks—Principal and Agent — Evidence.
    Where the plaintiff bank had printed upon its pass book a notice to customers that in receiving checks and drafts, etc., for deposit, it acted as agent only and assumed no responsibility beyond carefulness in selecting its agents, that the amount of dishonored checks or drafts would be charged to the customer, plaintiff bank was not a holder in good faith but was agent for the collection; title to the paper remained in the depositor.

    4. Same — Banks and Banking — Negotiable Instruments.
    The fact that plaintiff permitted its patrons to check against the credit allowed upon paper deposited for collection did not preclude the bank from charging back the amount of the dishonored chsck; the title vested and remained in the depositor.
    5. Banks and Banking — Bona Fide Purchaser — Bills and Notes.
    Where there was evidence that defendant’s brokerage firm engaged in extensive “kiting” operations with the plaintiff bank, that its officials were familiar with the methods employed by the firm and permitted the same, having notice of its insolvency, and there was evidence that a large amount of paper deposited to the credit of the brokers was for the purpose of procuring a fictitious credit, evidence tending to show the real nature of the transactions was properly received as a defense to the action of plaintiff bank as holder in due course of a check deposited by the brokers who had obtained the paper by misrepresentation.

      6. Same — Negotiable Instruments — Bona Fide Holder.
    Where the plaintiff bank, through its assistant cashier, assented to the action of the brokerage firm in kiting checks and otherwise procuring fictitious credit upon its books, the contention that because plaintiff bank had made advances on the faith of the check received as a deposit for collection from the brokers, who had fraudulently procured the same from defendant, would not sustain an action in plaintiff’s favor as a holder in due course.
    Error to Wayne; Halley, J.
    Submitted January 6, 1915.
    (Docket No. 15.)
    Decided April 19, 1915.
    Rehearing denied July 23, 1915.
    Action by People’s State Bank against Guy A. Miller upon a dishonored check. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      Keena, Lightner, Oxtoby & Oxtoby, for appellant.

      Alex. J. GroesbecJc, for appellee.

       The question of the title of a bank to a check drawn on another bank, which has been credited to depositor is treated in notes in 7 L. R. A. (N. S.) 694 and 47 L. R. A. (N. S.) 552.

   Kuhn, J.

The defendant, who is a practicing attorney in the city of Detroit, in the year 1908 occasionally bought and sold stock through Cameron Currie & Co., a firm of brokers, whose business methods have been reviewed and passed upon by this court in the recent case of Austin v. Hayden, 171 Mich. 38 (137 N. W. 317). This firm of brokers were customers of the plaintiff bank, and for some years up to the date of their failure maintained with it a general deposit and checking account. On the 10th day of July, 1908, Mr. Miller gave an order to Cameron Currie & Co. to purchase for his account 100 shares of United States Steel common stock, but did not pay the brokers firm any money at that time. Mr. Miller, being advised by the firm that they had purchased the stock pursuant to this order, on the 15th day of July paid them $500, to be applied on the purchase price of the stock, which was $4,012.50. On that day Mr. Miller saw Mr. Case, who was a member of the brokers firm, and told him that he proposed borrowing the money at the Michigan Savings Bank to pay the balance on the stock, and asked him whether he would carry the transaction for a few days and have the certificate made out in his name, to be transferred on the books of the steel corporation, to which it is claimed Mr. Case agreed, and upon the 17th of July, 1908, at about 1 o’clock in the afternoon, Mr. Miller delivered to Mr. Case a check which read as follows:

“No. 400. Detroit, Mich., 7/17/1908.
“Michigan Savings Bank of Detroit:
“Pay to the order of Cameron Currie & Co. $3,526.37, three thousand five hundred twenty-six 37/100 dollars. Guy A. Miller.”
Written in red ink across the face of the check was “Payment stopped.” Indorsed on the face of the check was the following:
“Protested July 18, 1908, for nonpayment. James S. Park, Notary Public, Wayne Co., Mich.”

Indorsed on the back of the check was this:

“Pay to the order of the People’s State Bank, Detroit, Mich. Cameron Currie & Co.”

When he presented the check, Mr. Miller asked Mr. Case when the certificate made out in his name would be along, and Mr. Case replied that it had been ordered and would probably be there on the morning of the 18th of July, or certainly on the 20th. His check was deposited by Cameron Currie & Co. with the plaintiff bank during banking hours on the afternoon of July 17th. At about 8:30 o’clock on the morning of July 18th a receiver was appointed for and took possession of the affairs of Cameron Currie & Co. Mr. Miller, having learned that morning of the failure of the brokerage firm, upon inquiry at their office concerning the check he had given the day before, was informed that it had been deposited at the People’s State Bank. He thereupon went to the bank before it was open for business, and saw Mr. Lawson, who was the vice president of the bank, and told him of the circumstances under which he had given the check, and demanded its return to him. Mr. Lawson told him that the check had been cashed, and refused to surrender it to Mr. Miller, and Mr. Miller thereupon went to the Michigan Savings Bank and stopped payment on the check. An action in assumpsit was thereupon brought upon the check by the plaintiff, and the plea herein is the general issue, with notice that the check was given to the payee in payment for 100 shares of United States Steel Company stock; that the check was delivered to payee with instructions to use the same in full payment for said stock, and with the further instruction to secure a certificate for such stock and deliver the same to defendant; that such stock certificate was not procured by said payee and has not been delivered to defendant; that the failure to so procure and deliver said stock certificate, together with the taking of said check, constituted a fraud as between defendant and payee; that, at the time the check was indorsed by the payee to the plaintiff, payee was insolvent; that plaintiff at that time knew payee was insolvent, and had knowledge of the facts constituting a defense as between defendant and payee; that the plaintiff parted with no value whatever on the receipt of said check, and had knowledge or notice of such facts as to make its acceptance of the check a bad-faith and not a good-faith acceptance.

At the conclusion of the evidence the trial judge, reading the provisions of section 54 of the negotiable instruments law of this State (Act No. 265, Pub. Acts 1905, 2 How. Stat. [2d Ed.] §2725), charged the jury that the check is complete and regular upon its face; that the bank became a holder of the check before it became overdue; that there was no evidence that it had been previously dishonored; that the bank took it in good faith; that at the time it was negotiated with the bank it had no notice of any infirmity in the instrument or defect in the title of the person negotiating it; but that there was no affirmative evidence that the bank parted with value or gave any consideration for the check, and upon that ground the jury was directed to render its verdict for the defendant. . Judgment being entered thereon, the plaintiff brings the case here by writ of error.

The trial court found, and so instructed the jury, that, in taking the check under the circumstances under which it was taken, a fraud was perpetrated by Cameron Currie & Co. upon Mr. Miller, and that therefore the title to the check was defective. It is contended by appellant that this instruction to the jury was not warranted because there is no evidence of any infirmity or defect in the check in suit as between the defendant and Cameron Currie & Co.

Section 57 of the negotiable instruments law provides as follows :

“The title of a person who negotiates an instrument is defective within the meaning of this act when he obtained the instrument, or any signature thereto, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as -amount to a fraud.”

It conclusively appears in this case that Cameron Currie & Co. assumed to act as agents for Mr. Miller in buying the 100 shares of steel common stock, for which they were to be paid a commission; and also that they fraudulently stated to him that the stock had been ordered transferred to his name on the books of the steel corporation, whereas in fact it was not so transferred; and also that, at the time the check was delivered by them to the bank, they were insolvent, and had taken proceedings looking to the appointment of a receiver, the bill of complaint upon which the receiver was appointed having been signed and sworn to on the 17th day of July. It appears from the opinion of this court in Austin v. Hayden, supra, that they were hopelessly insolvent as far back as July, 1907, and that Hayden, Stone & Co. were held to be parties to the fraud of Cameron Currie & Co. in their dealings with their customers after June 23, 1908. We are therefore of the opinion that the trial judge was right in his conclusion that the transaction between Cameron Currie & Co. and Mr. Miller was a fraudulent one, and that the title to the check in them, by reason thereof, was defective.

On the trial of this cause, the plaintiff first introduced the check in evidence, and thereupon rested. The defendant thereupon proved the fraud of Cameron Currie & Co. in obtaining the check. By virtue of section 61 of the negotiable instruments law, the burden thereupon rested upon the plaintiff to prove that it acquired the title as a holder in due course, and it became incumbent upon it to show affirmatively that as a holder in due course, under the conditions enumerated in section 54 of said negotiable instruments law, it took the check in good faith and for value. Thompson v. Village of Mecosta, 127 Mich. 522 (86 N. W. 1044); Merchants’ National Bank v. Wadsworth, 166 Mich. 528, 531 (131 N. W. 1108).

On the 17th day of July, Cameron Currie & Co. made four separate deposits in the plaintiff bank, and the aggregate deposits of that day amounted to $75,968.78. In accordance with the bank’s business methods, the aggregate amount of the items deposited, as shown by the deposit slips when received by the teller of the bank, was credited by him in the passbook of the customer, on the top of the first leaf of which book was printed the following:

“Notice. — Checks on this bank will be credited conditionally. If not found good at the close of business they will be charged back to depositors, and the latter notified of the fact. Checks on other city banks will be carried over for presentation through the clearing house on the following day. This bank, in receiving check or draft on deposit or for collection, acts only as your agent, and, beyond carefulness in- selecting-agents at other points and in forwarding to them, assumes no responsibility. Should returns sent by collecting agents for said item be dishonored, the amount will be charged to account and the draft delivered to customers.”

It also appears that at the close of the business on July 16th the brokerage firm had a credit balance of $175.97, and from the books it appears that on the 17th of July checks of Cameron Currie & Co. drawn against their account were paid amounting to $74,963.11, leaving a balance to the credit of the firm on the books of the bank at the close of business on that day of $1,181.67. There is no question that in the instant case, in accordance with the terms of the contract entered into between the bank and the brokerage concern, checks were credited conditionally, and, if they were not found good at the close of business, they would be charged back to the depositor.

It seems to be a general rule that when checks or other commercial paper are deposited in a bank indorsed “for collection,” or where there is a definite-understanding that such is the purpose of the parties at the time of the deposit, the title to the paper remains in the depositor. See note to Fayette National Bank v. Summers, 105 Va. 689 (54 S. E. 862, 7 L. R. A. [N. S.] 694; 5 Cyc. p. 493. And the mere fact that the depositor is allowed to check against the credit does not change the import of the transaction, so as to preclude the bank from charging back the amount of credit if the check deposited is not paid. The bank may, as a matter of favor and convenience, permit checks to be drawn against it before payment; the depositor, in the event of nonpayment, being responsible for the sums drawn, not by reason of his indorsement, the check not having ceased to be his property, but for money paid. 3 Ruling Case Law (under title “Banks”), p. 522.

This case has some of the features of the case of In re State Bank, 56 Minn. 119 (57 N. W. 336, 45 Am. St. Rep. 454), in which case the supreme court of that State, in an opinion written by Mr. Justice Mitchell, said:

“But, after all, the question is one of the agreement of the parties, either express or implied, from the general course of business between them. There can be no doubt that, if a draft or other paper is delivered to a bank for collection, the mere fact that the indorsement of the owner is unrestricted will not, as between him and the bank, make the latter the owner of the property.
“Neither is it conclusive upon the question of ownership of the paper that before collection the amount of it is credited to the customer’s account, against which he has the privilege of drawing by check. It b.as been frequently held, with the approval of the best text-writers, that if paper is delivered by a customer to a bank for collection, or ‘for collection and credit,’ a credit of the amount to the customer before and in anticipation of collection will be deemed merely provisional, and the privilege of drawing against it merely gratuitous, and that the bank may cancel the credit or charge back the paper to the customer’s account, if it is not paid by the maker or drawee. Giles v. Perkins, 9 East. 12; Levi v. National Bank, 5 Dill. 104 [Fed. Cas. No. 8,289]; Balbach v. Frelinghuysen [C. C.], 15 Fed. 675. The right of banks to do this in case of the deposit of checks on other banks, without any special contract, is generally exercised and recognized. This is inconsistent with the idea that the title to the checks passes absolutely to the bank, and is only consistent with the theory that the bank is the agent of the customer for collection, notwithstanding the credit of the latter. 2 Morse, Banks, •§ 586; Hoffman v. Bank, 46 N. J. Law, 604.
“Of course, in all such cases the banker, like a factor, has a lien for advances made on the faith of the paper, and consequently the claim of the customer may be modified by the state of his account. No such question, however, arises in this case; the balance of the petitioners’ account, independent of these drafts, being in their favor at the time of the failure of the bank. The authorities on this subject are quite fully collated in Morse on Banking, § 578 et seq. See, also, Paley, Ag. 91, note; and Story, Ag. § 228, note 2.”

See, also, National Commercial Bank v. Miller, 77 Ala. 168 (54 Am. Rep. 50).

Under the contract here entered into between the bank and the brokerage concern, it is clear that the bank became the latter’s agent for collection of the checks, and could not, it is needless to suggest, be the owner of the paper at the same time.

It is contended, however, that, as the books of the bank disclosed that there was a credit of $175.97 at the beginning of business on July 17th, that the credit balance of the firm-at the close of business on that day was $1,181.67, and the check in question amounted to $3,526.57, it is conclusive that at least a portion of the amount of the check had been drawn against, and that the bank should have a lien for at least that amount on the proceeds of the check.

The transactions in Cameron Currie & Co.’s checking account on July 17th are thus tabulated in defendant’s brief:

Credit.
1. Balance .................... $175.97
2. Deposits: Checks on the ' First National Bank and National Bank of Commerce. These items are all a part of the kiting opera- ' tions of Currie & Co., and were upon accounts in which they had no money. , 7.000. 00 9,812.50 3.000. 00 10,000.00 2.000. 00 9.500.00 8,906.25 8.500.00
3. The check in suit............ 3,526.57
4. Two drafts on Hayden, Stone & Co., with collateral, which were later satisfied out of the same $6,500.00 5.500.00
5. Miscellaneous items 25.00 150.00 7.50 3.50 41.66 1.00 10.00 175.00 10.00 1.300.00
Total ................... $76,144.95 6,144.95
Debit.
1. Checks payable to People’s State Bank, which were a part of the kiting operations carried on through the National Bank of Commerce and the First National Bank, and which plaintiff received before clearing house hours — i. e., 11:30 a. m. — July 17th $6,175.00 5.000. 00 4,673.20 6.120.00 4.912.50 3,500.00 5.000. 00 6.512.50
2. Checks payable to People’s State • Bank, on which Fearnley testified he got cash, which was probably used to make good Currie’s account at the two national banks before clearing house. There is no direct testimony as to when these checks were paid 2,500.00 3.000. 00 2.000. 00
3. Other items paid through the ' clearing house July 17th, • and therefore certainly before 1 o’clock 70.05 37.50 300.00 3.50 221.25 142.46 112.50
4. Check to Matthew Finn, paid July 16, 1908, charged July 17th ...................... $5,109.35
5. Items regarding time of pay-' ment of which there is no testimony ► 9,000.00 103.75 190.00 366.25 12.50 1.00 9,899.80
Total $74,963.11 $74,963.11
Credit balance $1,181.84

It is claimed that the books of Cameron Currie & Co. show that their checking account with the bank was overdrawn on that day to the amount of $59,000. On that day, as appears by the summary above set forth, by far the larger part of the entries were mere paper transactions, and were part of what is known as check and draft kiting operations, which it appears had been continued for months previous to that time. Cameron Currie & Co., who, as has been stated, were insolvent on the 1st day of July, 1907, were enabled to continue in business by transactions which are spoken of in the opinion in Austin v. Hayden, 171 Mich. 38, 56 (137 N. W. 317, 324), supra, as follows:

“During the financial depression which occurred during the latter part of 1907 they were in sore straits and resorted to irregular and dishonest practices, which were followed, when emergencies arose, until their failure. They concealed and covered up their true condition by fraudulently hypothecating securities under their control, delaying delivery by specious excuses, by a system of having commercial paper afloat, called 'kiting paper,’ making overdrafts and wiring money at the last moment to cover them, and other similar expedients.”

A considerable part of these check and draft kiting operations were carried on through the plaintiff bank.

Against the objections of plaintiffs counsel, who contended that it was immaterial and irrelevant, a large amount of testimony was introduced bearing upon this practice of Cameron Currie & Co. Mr., McPherson, an expert accountant, described these kiting operations, so far as they are applicable to this case, as follows:

“Cameron Currie & Co. would deposit in the People’s State Bank checks drawn upon the National Bank of Commerce and the First National Bank. Those checks would go through clearings, and so far as I recall, until the morning of the 18th day of July, all such checks were honored by the bank upon which drawn. I mean paid by the bank upon which drawn. Currie & Co. would deposit in the First National Bank and the National Bank of Commerce drafts which they had obtained by purchase from the People’s State Bank, and for which they had given their checks to the People’s State Bank. That would make up a part of their deposits. The balance of their deposits would' be made up of regular transactions, checks from customers and drafts on various brokers. I determined that to the extent that the checks or that the drafts that were purchased from the People’s State Bank were deposited in either of the other two banks, to that extent, with all the knowledge I had before me, they were kiting transactions. * * * Generally speaking, by kiting checks I mean any method which produces a temporary credit by the exchange of checks or by the making of drafts where the money has been later forwarded to pay those drafts, or by depositing of checks where the money to meet the checks has been later deposited to meet the checks before they go through clearings. Transactions of that sort I would regard as kiting transactions.”

In an effort to establish the giving of value for the check in controversy, the plaintiff itself introduced a large number of drafts and checks which were largely made up of these kiting transactions; and it seems to us to have been perfectly proper to allow the defendant to show the real nature of these paper transactions, and that they in fact represented nothing but illegal transactions on a gigantic scale. Detroit National Bank v. Trust Co., 145 Mich. 656 (108 N. W. 1092, 116 Am. St. Rep. 319).

It is the contention of the defendant and appellee that these illegal transactions and the fictitious credit that was being given by the bank to Cameron Currie & Co. were known to the bank and permitted by it to continue. We think that such knowledge is conclusively shown by the testimony of Mr. Robert Mason, who was an assistant cashier of the bank, and whose duty it was, under a special assignment, to look after the account of Cameron Currie & Co. and see that they did not overdraw their account. With reference to the kiting operations, he testified in part as follows:

“Q. Who was it that turned this account over to you to handle — what officer of the People’s State Bank?
“A. Mr. Potter.
“Q. What position did he occupy?
“A. He. was vice president.
“Q. In short, Mr. Mason, Cameron Currie & Co., through the People’s State Bank, First National Bank, National Bank of Commerce, and Hayden, Stone & Co., for a year were engaged in what is commonly known among bankers as check kiting, were they not, and draft kiting?
“Mr. Keena: I will object to that as immaterial and irrelevant.
“The Co-urt: I will take an answer. Note an exception.
“A. I don’t know how long.
“Q. Well, for six months previous to July 17, 1908?
“A. I don’t remember how long.
“The Court: Under your plea you don’t go back any farther than six months, do you, if you go back that far. I have forgotten.
“Q. They were engaged in this practice on the 17th day of July, were they not?
“A. Yes, sir.
“Mr. Keena: That is objected to as immaterial. (Objection overruled. Plaintiff excepts.)
“Mr. Keena: All of this testimony is received under objection.
“The Court: Yes.
“Q. They were engaged in it on the 16th. day of July, were they not?
“A. I think so.
“Q. On the 15th?
“A. I guess so.
“Q. Well, it extended back.for a period of at least six months, did it not?
“A. I don’t remember how far back.
“Q. What does check kiting and draft kiting mean iii banking?
“A. Am I supposed to explain that?
“Q. Yes; just shortly, what does it mean?
“A. A man will draw a check upon a bank where he hasn’t any funds, and then next day, when the check comes in, he draws a check upon the bank that he originally deposited the first check in to take care of the first one, the second one not coming to the clearing house until the third day.
“Q. Then what?
“A. Then you deposit another one. It just kind of keeps up an endless chain. It is hard to explain it.
“Q. What is the effect of it; what is it done for?
“A. You get the use of money for a day.
“Q. Does it result in a fictitious credit appearing upon the books of the bank?
“A. I should say yes. * * *
“Q. You don’t mean to have it appear here that on the 17th day of July these unpaid checks and drafts that came into the bank afterwards, that those were the beginning of those transactions, do you? You don’t mean that?
“A.- That isn’t what I said.
“Q. You know that the history of those transactions dates back months, don’t you?
“A. I don’t remember how long.
“Q. It dates back from the time you had your talk with Case, doesn’t it?
“A. I don’t remember.
“Q. It commenced about that time, didn’t it, when Case had his talk with you?
“A. I don’t remember.
“Q. And stated to you that that is why he wanted to do it, didn’t he?
“A. Wanted to do what?
“Q. That the reason he asked you these favors or your bank these favors was that Hayden, Stone & Co. were having their books examined, and that he thought that they would put $250,000 into the business as capital.
“A. He made that statement to me; yes.
“Q. If it had not been for that statement, you would not have allowed this to go on, would you?
“A. No; I don’t think I would.
“Q. Why wouldn’t you have allowed it to go on?
‘‘A. Well, I wanted to know something about their affairs.
“Q. You would not allow any customer to do that, would you, excepting for some promise of that kind?
“A. No; not without any security. * * *
“Q. You say that Mr. Case stated to you that they were going to get additional capital of how much?
“A. I believe the amount was $250,000, according to my best recollection.
“Q. How long before the failure did you have a talk with him on that subject?
“A. It was some time previous.
“Q. Did he show you any communications he received with reference to it from Mr. Currie or anybody?
“A. I recall he showed me a telegram at one time.
“Q. When was that?
“A. It was some time previous to the failure. I don’t remember just when.
“Q. You don’t know how long?
“A. No, sir.
“Q. But did you have several conversations • with him when he would come in at different times?
“A. Oh, yes; almost every day.
“Q. When he would ask to have dishonored drafts taken up by new drafts, would you have a conversation with him about the additional capital? Would he tell you something about it?
“A. He mentioned that at various times.
“Q. I guess that is all.”

Cross-examination by Mr. Groesbeek:

“Q. But he never brought in the $250,000, did he?
“A. No, sir.
“Q. And it dragged along for months in that stage, that he was coming to you and talking to you about something that they were going to get; showed you a telegram?
“A. I won’t say months, Mr. Groesbeck. I couldn’t say exactly the time.
“Q. Well, Mr. Mason, you said here it was some time in the spring. Fix it by Decoration Day, say.
“A. Somewhere in that neighborhood I guess.
“Q. It was before Decoration Day, wasn’t it?
“A. Well, I could not state. It was around, that neighborhood some time, along in the spring.
“Q. You don’t know of any other concern that the People’s State Bank was loaning a hundred or one hundred sixty-two thousand dollars to upon a statement that somebody was going to put a couple of hundred thousand dollars in their business, do you?
“A. I don’t recall any.”

It thus conclusively appears: That Mr. Mason had knowledge of the kiting operations of Cameron Currie & Co. with the bank as early as Decoration Day of 1908, and that these operations were allowed to be continued by him as an officer of the bank because he had been told by Mr. Case that Hayden, Stone & Co. were auditing the books of Cameron Currie & Co. and expected to put $250,000 of additional capital into that business. That the bank, through Mr. Mason, well knew and understood that Cameron Currie & Co. were agents buying and selling for customers and owners generally on commission, there can be no question, and also that he had knowledge of the fraudulent credits extended to them, and the fact of their insolvency. The defendant put on as witnesses, with reference to the bank’s transactions with Cameron Currie & Co., certain of its clerks and tellers, but no officer of the bank took the stand who testified authoritatively to the real relations existing between the bank and Cameron Currie & Co.

After a careful examination of the record with reference to these various transactions, we are unable to say, from the proofs, what the real condition of this checking account was at the time of the deposit of the check, and are satisfied that a great amount of the transactions that entered into this checking account were not legitimate banking transactions, and were not carried on in the ordinary course of banking business; and that these transactions were consented to by the officer of the bank in charge of this account. We do not believe that, under these circumstances, it should be said, or that it can be said, that the bank (it having consented and permitted Cameron Currie & Co. to do business in this illegal way) was a bona, fide holder of this check for value, and therefore agree with the trial judge in holding that the plaintiff had not met the burden placed upon it to show this, and its case against the defendant must therefore fail.

Neither are we of the opinion that the defendant has by his conduct in the case of Austin v. Hayden, supra, in which he appeared as an intervener, es-topped himself from setting up fraud as a defense in this case. To so hold was not the purpose of this court in the opinion written by Mr. Justice Brooke in the case of Austin v. Hayden, 176 Mich. 331 (142 N. W. 563). While, under this opinion; Hayden, Stone & Co. might have defended this action, nevertheless it appears that they did not so defend and the defendant did.

We find no error, and the judgment is therefore affirmed.

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


author: Ostrander, J.

text:
    GROESBECK v. SHELDEN.
    1. Negligence — Landlord and Tenant — Master and Servant — Care Required — License.
    To a servant in the employ of a tenant of real estate, no duty was owing by an adjoining proprietor in tearing down a building standing on the boundary line of the premises, not to take away the supports of a shed or lean-to that fell a number of hours afterwards while plaintiff was within the structure, where all the parties in interest must have contemplated that the shed would fall, and plaintiff was not in the employ of the defendant who had control of the operation of pulling down the building, with license from both parties in interest.
    2. Same — Contributory Negligence.
    Nor was defendant chargeable with failure to warn plaintiff of the progress of the work which must have been observed by the injured servant.
    Error to Wayne; Hally, J.
    Submitted January 11, 1915.
    (Docket No. 59.)
    Decided April 19, 1915.
    Case by Louis Groesbeck against Henry D. Shelden and others for personal injuries. Judgment for defendant on a directed verdict. Plaintiff brings error.
    Affirmed.

      Alex. J. Groesbeck and Guy A. Miller, for appellant.

      Geer, Williams, Martin & Butler, for appellee Shelden.
    The relations of the parties are as follows: Defendant Shelden and Joseph L. Hudson, deceased, were proprietors whose lands adjoined — Hudson’s estate being east of the estate of Shelden. Defendant Girardin was tenant of Hudson, under what terms does not appear, and plaintiff, Groesbeck, was employed by Girardin upon and about the estate as man of all work. By an interchange of conveyances, the boundary line dividing the estates was changed, and as a consequence a large barn, which had been before a part of the Hudson estate, standing entirely upon Hudson’s land, thereafter stood partly upon the land of each proprietor. Ascertaining from Girardin that the building was not useful to him and that he had no desire to have it remain, Mr. Hudson proposed to Mr. Shelden that it be taken down and removed, and that he (Shelden) should demolish it. To this Mr. Shelden consented, and by his direction, and by men under his authority and control, but not under his personal supervison and oversight, the barn was taken down. The work of demolition began at the top of the building. Upon the easterly side of the barn were buildings, one of which projected beyond the north line of the barn; its roof, alongside of the barn, being supported, in part, by the barn — that is to say, it was a lean-to, and the side of the .barn was, so far as they were connected, its westerly side. The shed in question had been used as a stable for horses, and contained four box stalls, divided by three partitions running east and west. The large structure, which was demolished, was 40x80 feet in size; the boundary line of the estates passing through its longer axis. Its easterly side was 28 or 30 feet in height. The adjoining and connected shed, or horse barn, was 50x14 feet in size; its easterly side being 8 feet high, and its westerly side, next the large barn, 14 feet high. The easterly side of the barn, below the roof of the lean-to, was of planks. Horses were kept in the shed until Sunday morning preceding the occurrence out of which this suit arises. Plaintiif was absent from the place from Sunday morning (when the siding between the two structures had not been removed) until Tuesday night. He was not near the structure on Wednesday. On Thursday the large barn was demolished, practically down to its floor and sills. The siding and studding between it and the lean-to had been removed. No new or other supports for the roof of the shed had been introduced, and it stood with some 40 feet in length of the roof supported by a single post or standard about midway of the 40-foot section. The roof found some support north of the large barn in its side wall, and to the south end it was attached to another shed. Thursday afternoon, December 22, 1910, plaintiff went to the large barn. Two men were at work taking up the floor. He discovered, he says, a number of toe weights in the rubbish and began picking them up. There is a dispute of testimony as to what he was doing; but a portion of the roof of the shed fell, pinning him under it and injuring him.
    The duty which it is alleged was owed to plaintiff and was breached was—
    “to exercise ordinary care and prudence to render said premises, and especially the said farm building above described, reasonably safe for the purposes for which it was being used, and to maintain good and sufficient braces, joints, scantlings, partitions, and supports in the said building, so as not to render it unsafe, dangerous, or insecure in any particular, so that plaintiff as aforesaid, with due care and caution upon his part, might not be subjected to unreasonable or unnecessary hazard or danger; and, further, it became the duty of said defendants, and each and all of them, to notify and warn the plaintiff of any defects in the said building, and of any danger to which he might be subjected while in the use of the premises, and especially the building aforementioned, and that it was the duty of the said defendants to guard and protect the plaintiff while within the said building and in and about the premises from any hazard or danger made possible or caused by the taking away of the joists, scantlings, partitions, or other braces supporting the roof of said building, or in any manner rendering the premises unsafe, dangerous, or hazardous, so that the said building, and particularly the roof thereof, might collapse and injure plaintiff.”
    For breach of the duty it is alleged that defendants—
    “wrongfully and negligently suffered and permitted the said building to be and continue, and the same was then and there, so negligently, insufficiently, and defectively constructed, that is to say, the joists, braces, scantlings, partitions, and supports had been removed and displaced, and because of the said doings and acts of the defendants herein the said building was rendered unsafe, dangerous, insecure, and hazardous; and that the said defendants' and each and all of them failed to render the premises, and especially the farm building aforesaid, reasonably safe for the purposes for which it was being used, and failed to maintain good and sufficient braces, joists, partitions, and supports in said building, so as to render it unsafe or dangerous in any particular, so that the plaintiff, while therein and in the exercise of due care and caution upon his part, might not be subjected to unreasonable or unnecessary hazard or danger, and that said defendants “and each of them failed to warn the plaintiff of any defects in the said building and of any danger to which he might be subjected while in the use of the premises, and especially the building aforementioned; and that said defendants and each of them failed to guard and protect the plaintiff while within the said building or premises from any hazard or danger made possible or caused by the taking away of the joists, scantlings, partitions, or other braces supporting the roof of said building, or in any manner rendering the said building or premises unsafe, hazardous, and dangerous, so that the said building, and particularly the roof thereof, might collapse by reason thereof and injure the plaintiff— for all of which, and by reason of one or more of the foregoing acts of negligence of the said defendants, and by means of the premises, the plaintiff with all due care and caution, and without any fault or negligence on his part, then and there, upon the day and year aforesaid, in the common and regular discharge and performance of his duties, went into the said building and while in the act of picking some articles from the floor thereof the roof of said building, and particularly that part of the said roof immediately over the portion of the building in which plaintiff was engaged, collapsed and fell upon the plaintiff.”
    A verdict in favor of the estate of Mr. Hudson was directed, as also was one in favor of defendant Girardin, about which rulings no question is presented. A verdict in favor of defendant Shelden was directed, and this ruling plaintiff asks the court to review, asserting that Shelden owed him the duty averred, and that there was testimony tending to prove a breach of it.
    Appellee asserts, and made the grounds of the motion for a directed verdict:
    (1) There was a fatal variance between declaration and proofs, in that plaintiff’s testimony was to the effect that he was not in the shed, but was upon the floor of the large barn, when the roof of the shed fell.
    (2) That defendant Shelden had no control over the shed, the roof of which fell, nor had arranged or undertaken to do anything with reference thereto.
    (3) The danger was apparent, plaintiff assumed the risk, and by his conduct contributed to his injury.
    (4) Plaintiff was not in or about the shed by right, not by invitation, not in the performance of any duty.
    Upon the second ground the learned trial judge based the ruling, holding the others to be unsound.
    Appellant argues three propositions, which are:
    “I. Defendant Shelden, equally with Hudson, owed plaintiff the duty of refraining from taking away the necessary supports of the roof of the horse barn.
    “II. Shelden owed the same duty to do the work of removing the large barn carefully and in a manner free from negligence which was owed by Hudson.
    “HI. There was testimony in this case from which the jury would have been justified in finding that there was negligence on the part of defendant”
    —which propositions are again stated, in conclusion, as follows:

      “First. Defendant Hudson had the right only to cause the large barn to be taken down. This right was granted to him by Girardin and amounted to a license. For any exceeding of this license, or for any negligence in the manner of taking the large barn down, which resulted in injury to the property or the leasehold of the tenant Girardin, or to Girardin personally, or to any person rightfully upon the premises, Hudson was liable to the individual injured.

      “Second. Shelden was equally liable with Hudson, whether he be considered to have been a licensee, as Hudson was, or whether he was a contractor under Hudson for the removal of the large barn.

      “Third. The record is conclusive that this work was done negligently and in violation of the license granted by Girardin.”
    The plaintiff’s theory may be, not better, but otherwise, stated in this way: Hudson’s license from his tenant was the measure of his own and of Shelden’s rights in the premises, and extended no further than to permit demolition of the large barn. If in its demolition other and adjoining portions of the premises were necessarily disturbed, the duty, owed to the tenant and to his servants, was not to make the disturbed portions unsafe. And in argument it is said for appellant:
    “Hudson under the lease owed the duty to Girardin to respect the latter’s leasehold interest in the horse barn. He also owed the duty to do such work as he was permitted by his tenant to do on the premises in a careful manner, free from negligence. Shelden, in the dual capacity of grantee of part of the large barn subject to the lease, and of contractor under Hudson to remove the easterly half of the barn, stood in the same position as Hudson and owed the same duties. The moment anything was done under the license to remove the barn which impaired the other buildings, namely, the cow barn and the horse barn, a breach of duty occurred, and when coupled with injury to Girardin, or to his servants, there was a valid cause of action. This is particularly true where the interference with the leasehold was of the nature of a negligent destruction of necessary supports to buildings not included in the license, which interference was likely to result in injury to persons rightfully on the premises, as plaintiff was. The interference with parts of the leased premises not covered by the license from Girar din was a trespass, just as any exceeding by the possessor of a limited right on land of the limits of his right is a trespass.”
   Ostrander, J.

(after stating the facts). Defendant Shelden’s duty in the premises was not other or different from the duty which Mr. Hudson would have owed, had he, instead of Shelden, demolished the barn. The east half of the large barn, as well as the shed which fell, was on Mr. Hudson’s land, of which his tenant had possession. Suppose that Hudson had done the work. Between himself and his tenant contract relations existed; otherwise, Hudson could have done as he pleased with his own. For mere breach of any contract relation with the tenant, plaintiff cannot complain. If demolition of the shed had amounted to an eviction of his tenant, the remedy would belong to the tenant, whether what Hudson did was called a trespass or something else. Therefore I do not perceive the applicability to the case of decisions, many of which are cited in appellant’s brief, upholding the right of the tenant to damages for injuries to leased premises caused by the landlord or the licensee of the landlord or the tenant. Barman v. Spencer (Ind.) (49 N. E. 9, 44 L. R. A. 815), and Aldag v. Ott, 28 Ind. App. 542 (63 N. E. 480), also cited by appellant, belong to a line of cases in which decision rests upon a different principle. In each of them liability was predicated of an affirmative act of the landlord, who created upon the premises a dangerous situation— dangerous for any one who went upon the premises. After quoting from Aldag v. Ott, supra, the attorney for the appellant says that the same principle was applied in Peerless Manfg. Co. v. Bagley, 126 Mich. 225 (85 N. W. 568, 53 L. R. A. 285, 86 Am. St. Rep. 537), when it will be at once apparent, the decisions being examined, that an entirely different principle was applied.

There is another line of decisions, of which Corby v. Hill, 4 C. B. (N. S.) 556, Crane Elevator Co. v. Lippert, 63 Fed. 942 (11 C. C. A. 521), and Ella v. Boyce, 112 Mich. 552 (70 N. W. 1106), are examples, which are relied upon by appellant, which differ little, if any, in principle, from Barman v. Spencer, and Aldag v. Ott, but which also decide that one having a license to do something upon the premises of another may not, as licensee, do what the licensor himself had no right to do. In each of them, the person who created the nuisance was the defendant, and was held liable to the one who was injured. The principle applied in Corby v. Hill, supra, is thus stated by Cockburn, C. J., who said:

"It seems to me that the very case from which the learned counsel seeks to distinguish this is the case now before us. The proprietors of the soil held out an allurement whereby the plaintiff was induced to come upon the place in question: they held out this road to all persons having occasion to proceed to the asylum as the means of access thereto. * * * Having, so to speak, dedicated the way to such of the general public as might have occasion to use it for that purpose, and having held it out as a safe and convenient mode of access to the establishment, without any reservation, it was not competent for them to place thereon any obstruction calculated to render the road unsafe, and likely to cause injury to those persons to whom they held it out as a way along which they might safely go. If that be so, a third person could not acquire the right to do so under their license or permission.”

See, also, Morrison v. Carpenter, 179 Mich. 207 (146 N. W. 106), in which is applied the familiar rule that, having licensed one to use premises, the owner and licensor cannot thereafter, while the license continues, make the premises used by the licensee more dangerous to the user. Bennett v. Railroad Co., 102 U. S. 577.

In the case at bar there are no facts raising a duty on the part of Shelden (or Hudson) to Girardin, or to his servant, the plaintiff, to support the roof of the shed. Nothing was done not presumably contemplated by Hudson, Shelden, Girardin, and any and every one else who knew anything about the situation there. If the large barn was demolished, it would remove to that extent the westerly support for the shed which fell. Shelden did not know what Hudson or his tenant would thereafter do with the shed— whether it would be removed or repaired. Hudson and his tenant had not discussed the matter. Assuming that, nevertheless, Shelden having been the active agent in creating the situation, a duty would arise upon his part to discover that situation to any one rightfully using the premises, no breach of such a duty is made out. The condition remaining after the barn was removed was apparent, to plaintiff as well as to any one else who looked at the shed. The shed was not for use, nor was it contemplated by any one that it would be used, as it stood. Whatever of value it had contained had been removed to the tenant’s, and presumably to the owner’s, satisfaction. No trap was set for plaintiff, nor was he deceived or deluded by anything Shelden had done, or failed to do. Nothing could have been told him which his vision did not disclose to him. The principle, therefore, of the cases last mentioned, has no application. Plaintiff was most unfortunate, but it must be held that his injuries resulted from no breach of duty owed to him by Shelden.

It is not necessary to discuss the questions of variance, of plaintiff’s assumption of whatever risk there was, or of his contributory negligence. If the testimony of the tenant is believed, plaintiff was told to keep away from the particular portion of the premises. If the testimony of others is believed, plaintiff’s own conduct, after being warned, in using a crowbar under the shed, may have caused the roof to fall upon him.

The judgment is affirmed.

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


text:
    NORTH v. CITY OF BATTLE CREEK.
    1. Municipal Corporations — City Attorney — Public Officers — ■ Salary.
    Title to a public office cannot ordinarily be questioned collaterally in an action for tbe salary or emoluments of the office.
    2. Same — Defenses'—De Facto Official.
    The payment of salary to a de facto officer having legal indicia of title operates as a defense to a claim by the de jure officer against a public corporation.
    3. Same.
    Where a city adopted a charter under the new Constitution which by express terms continued the officers of the city in office, depriving the mayor of the power which he had under the pre-existing charter to appoint the city attorney, the office of city attorney was continued as it had theretofore existed, and from the adoption of the new charter was governed thereby, or, at least, from the , date when it was officially declared to have been adopted.
    4. Same — Battle Creek Charter — De Facto Officer.
    In an action by a city attorney for the salary of his office, evidence that the person who usurped or undertook to perform its duties had no official title and no apparent right to perform the functions of city attorney, and that he had been appointed by the mayor, who was deprived by the terms of the new charter of the power of appointment, entitled the plaintiff to recover judgment for the amount of his salary.
    Error to Calhoun; Cross, J.
    Submitted January 15, 1915.
    (Docket No. 106.)
    Decided April 19, 1915.
    Assumpsit by Walter H. North, as executor of the estate of Duane C. Salisbury, deceased, against the city of Battle Creek for salary of decedent as city attorney. Judgment for plaintiff. Defendant brings error.
    Affirmed.

      Howard W. Cavanagh, for appellant.

      N. A. Cobb (James Cleary, of counsel), for appellee.
   Ostrander, J.

At the election held in the city of Battle Creek April 7, 1913, there were elected a mayor and five aldermen, who, with five aldermen holding over, constituted the common council. At the same election, a new city charter was submitted to and adopted by the electors. It is apparent, from certain provisions of the new charter, that it was contemplated it might or might not' be adopted. If not adopted, municipal affairs were to run on under the old charter; if adopted, such provision was made that there should be no municipal or official interim. If adopted, a commission was to be elected, at a primary and municipal charter election to be called immediately after the common council had declared that the same was adopted. One of its provisions was that:

“This charter, when approved by the governor and the electors of the city of Battle Creek as provided by Act No. 279 of the Session Laws of 1909, shall be deemed a public act. * * * ”

It also provided that after the adoption of the charter, and until the commission had been elected, qualified, and organized as a commission, the common council, board of public works, police commission, and the officers and employees under them should continue to exercise and perform the duties and have the powers given under the charter which was superseded.

Under the old charter the mayor made certain appointments to office, among them to the office of city attorney; his power and duty in this respect being to appoint on the third Monday in April, the person appointed to hold office for one year and until his successor was appointed and had qualified. This power had been exercised in 1911 and in 1912, and when the new charter was adopted Duane C. Salisbury was the incumbent of the office of city attorney, to which he was appointed in 1911, and again in 1912. According to the new charter, all appointive officers theretofore appointed by the mayor and common council, whose appointment was made “for a definite or indefinite term,” and whose term had not expired “when this charter shall go into effect,” were to continue in office “under this charter” until successors were appointed by the commission, and at the salary paid them “when this charter went into effect,” “at which time their term of office shall expire.”

The common council declared on April 10, 1913, that the new charter had been adopted, on that day a copy of the charter was filed with the county clerk, and on April 11, 1913, a copy was filed with the secretary of State. The common council did not direct the filing of these copies, and it seems that the city attorney, Salisbury, was responsible for this action. Later on, by order of the council, other copies were also so filed. The newly elected mayor on the third Monday in April (April 21st) appointed Howard W. Cavanagh. city attorney, and he thereafter claimed to hold the office; no new or other appointment having been made by the commission thereafter elected. Mr. Salisbury advised the common council, and the commission, in effect, that he was city attorney, and demanded recognition as such and the emoluments of the office. Mr. Cavanagh appears to have been recognized as city attorney and to have drawn the salary of the office. No proceeding was instituted by either claimant to determine who held the officé by right. Mr. Salisbury died November 26, 1913, and the executor of his estate brought this action for the salary of the office, and recovered. A special question was submitted to the jury, which was: “Did Mr. Salisbury ever abandon the office of city attorney?” And the jury was instructed that, if he did not, if the question was negatively answered, he was entitled to the salary.

A large number of errors are assigned, but the meritorious questions raised by them are two only, and they are: First, whether the suit can be maintained at all; second, whether, after the adoption of the new charter, it was under and by virtue of its provisions that municipal affairs were conducted.

1. It is the general rule that the title of an incumbent of a public office cannot be collaterally questioned, nor be tried in an action by the incumbent or by any one else for the salary of the office. 28 Cyc. p. 410; Carlisle v. City of Saginaw, 84 Mich. 134 (47 N. W. 444); Attorney General v. Parsell, 99 Mich. 381 (58 N. W. 335); Matter of Corrigan, 37 Mich. 66; Druse v. Wheeler, 22 Mich. 439; Grondin v. Logan, 88 Mich. 247 (50 N. W. 130); Tower v. Welker, 93 Mich. 332 (53 N. W. 527); Moiles v. Watson, 60 Mich. 415 (27 N. W. 553); Hallgren v. Campbell, 82 Mich. 255 (46 N. W. 381, 9 L. R. A. 408, 21 Am. St. Rep. 557); 24 Cyc. p. 416. See, also, Blain v. Circuit Judge, 145 Mich. 59 (108 N. W. 440). And it has been held that the payment of the official salary to a de facto officer having the legal indicia of title is a defense to a claim against a public corporation or its disbursing officer made by the de jure officer. Auditors of Wayne Co. v. Benoit, 20 Mich. 176 (4 Am. Rep. 382); Scott v. Crump, 106 Mich. 288 (64 N. W. 1, 58 Am. St. Rep. 478). As I shall point out, Mr. Cavanagh did not perform the duties of the office with apparent right, nor have the legal indicia of title to the office.

2. Nothing can be plainer than that, after the adoption of the new charter by the electors, it then, by its terms, ex proprio vigore, continued in office all officers of the city, elective and appointive. Their duties, powers, and salaries were described and defined in the old charter; but it was by virtue of the new charter alone that any person held office and performed official duties. It extended the terms of some appointive officers, and shortened the terms of some elective officers. It preserved, and was intended to preserve, the official status quo as of the time when by official determination (if not earlier) the new charter was adopted. Under the old charter the mayor had power to appoint a city attorney. Of this power the new charter in unmistakable terms divested him. It is said in argument, in effect, .that the new charter could speak only from the time it took effect —became effective — which is true, and that it became effective after April 21st, the day when Cavanagh was appointed, which is plainly not true. The old charter was superseded by the adoption of the new one, and, if not from the day of its adoption by the electors, at least from the day when the adoption was officially declared, it was the governing law of the city.

In this view, it is not important to discuss the effect of failure of Salisbury to file an oath of office after his last appointment to office, the effect of the first or second filing of copies of the charter, nor the effect of payment of the salary of the office to Mr. Cavanagh. He shows no apparent right to the office; the entire situation being governed by the plain language of the city charter, in violation of which he assumed to net.

The judgment is affirmed.

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