author: Steere, J. Ostrander, J.

text:
    FLINT v. LE HEUP.
    1. Fraud, Basis of — Promises.
    Fraud must be predicated on existing facts rather than promises.
    2. Corporations — Foreign Corporations — Status.
    A foreign corporation organized for tbe purpose of establishing and maintaining a summer resort In a foreign country is engaged in business in tbe State where it has established an office and agency in a city in the State, and its fiscal agent and secretary transact its business in such city, where its executive officers and nearly all of its resident directors reside and meetings of its stockholders and directors are held, and its stock book is kept and certificates are issued by its secretary.
    3. Same — Foreign Corporations — Contracts — Validity — Statutes.
    The failure of a foreign corporation to comply with 2 Comp. Laws 1915, § 9068, providing that no foreign corporation subject to the provisions of the act shall be capable of making a valid contract in the State until it shall have fully complied with the requirements of the act and at the same time holds an unrevoked certificate to that effect from the secretary of State, invalidates all its contracts.
    4. Equity — Corporations—Accounting—Fraud.
    A stockholder who tenders back to the corporation the stock received and contracts for the purchase of lots and demands return of his money on the ground of fraud is not entitled to an accounting or a trustee or to compel defrauding members to make restitution to it, except on a sufficient showing that he cannot collect what the corporation owes him in a direct action against it. Ostrander, J., and Kuhn, C. J., dissenting.
    5. Same — Adequate Remedy at Law.
    A stockholder in a foreign summer resort corporation illegally doing business in the State has an adequate remedy at law for the recovery of money paid the corporation under void contracts for stock and lots, precluding relief in equity, where no showing is made that the corporation is insolvent, fraudulently concealing its assets or that a judgment against it is uncollectible. Ostrander, J., and Kuhn, C. J., dissenting.
    6. Appeal and Error — Transfer of Causes — Judicature Act.
    Where a suit is improperly brought in equity instead of at law and is decided by the trial court before the passage of Act No. 314, Pub. Acts 1915, chap. 11, § 2, authorizing the transfer of causes to the proper side by the trial court when improperly brought in equity or at law, and such law is in effect at the time of the hearing before the Supreme Court, the bill will not be dismissed, but will be remanded to the trial court for further proceedings.
    Appeal from Wayne; Hally, J.
    Submitted October 3, 1917.
    (Docket No. 6.)
    Decided December 27, 1917.
    Bill by Henry H. Flint against Edward J. Le Heup, the Bar Point Land Company, Limited, and others, to rescind the sale of corporate stock and real estate, on the ground of fraud, and for an accounting. From the decree rendered, plaintiff and defendant company appeal.
    Reversed, and remanded.

      Neal M. Hebinger (Thomas A. Conlon, of counsel), for plaintiff.

      Oxtoby & Wilkinson, for defendant Le Heup.

      A. G. Pitts, for other defendants.

      On right to recover back money paid under a contract to a foreign corporation which has not complied with the conditions of doing business in the State, see note in 38 L. R. A. (N. S.) 210.
      Authorities discussing the question as to whether establishing agency to handle a corporation’s product within the State amounts to doing business within the State, see note in 18 L. R. A. (N. S.) 142.

   Steere, J.

The Bar Point Land Company, Limited, defendant, is a foreign corporation organized for the purpose of establishing and maintaining a Masonic summer resort at Bar Point, Ontario, and incorporated in January or February, 1913, under the laws of the province of Ontario. The other defendants are, or were when this suit was begun, its officers and directors, nine of whom were residents of Detroit.

Bar Point is on the north shore of Lake Erie about four miles below the city of Amherstburg in the province of Ontario near the mouth of the Detroit river. A tract of land consisting of about 620 acres known as the McBride farm is located at this point. Defendant Le Heup, a jeweler of Detroit, bought this farm in 1912 from the McBrides on a land contract for $20,-000, assisted by his wife, as he states, and defendant Burrows. He, or they, conceived the idea of promoting and organizing a corporation to take over, or purchase, this property and develop upon it a Masonic summer resort. To that end they enlisted the services of defendant Pitts, an attorney of Detroit, who was to do the legal business of the company, aid in the promotion, and be chosen as secretary; he receiving stock for “legal and other services.” He prepared a glowing prospectus of the project for a Masonic park summer resort, emphasizing that subscriptions to capital stock would only be accepted from members of the order in good standing, etc., assurance being given that “the promoters are all Free Masons and have much confidence in the craft.” This was followed by other attractive literature, amongst which was an alluring booklet, or pamphlet, distributed generally amongst the fraternity in Detroit and elsewhere, issued by the Bar Point Company, Limited, giving notice of its incorporation with a capital stock of $75,000; “W. L. Updyke, Fiscal Agent, Free Press Bldg., Detroit,” stating amongst other things:

“This little book lets you into the secret of Masonic Park, at Bar Point, Lake Erie, as it is a secret among the few who for months have been planning and scheming to make this very thing possible.”

The secret it revealed was to a guarded degree largely promissory in its most attractive features, as were many other of the persuading assurances which plaintiff charges as fraud, overlooking the general rule that fraud must be predicated on statement of existing facts rather than promises.

Attracted by sdme of the company’s literature which he read in the “Palestine Bulletin,” plaintiff visited defendant Pitts at his office in Detroit and “asked him the details of this thing,” which was followed by an interview with the fiscal agent at the office of the Bar Point Land Company in the Free Press building in Detroit. He was present at a meeting of the directors in that office and talked with different members of the company a number of times. He testified at length as to many and extravagant representations made to him both by'the fiscal agent and members of the directorate, amongst which were that the company bought the property of the McBrides for $75,000; that aside from the summer resort project of extensive proportions the tract had other great values (for tobacco growing, fisheries, washed building sand, which alone would pay for the property in time, and they would realize from the whole investment upwards of $2,000,000); that if he took stock and subscribed for lots at that time he could make his selection when they were staked, etc. He thereupon purchased ten shares of the capital stock of the corporation, paying $500 therefor, and took an application contract for two lots, countersigned by the fiscal agent, described as on “Erie Drive, front; block 18, to be selected when staked,” paying $100 thereon. These he selected from what Pitts stated was a “preliminary plat,” which afterwards had to be changed to comply with the Canadian law.

Plaintiff visited the property before the lots were staked and made preliminary selection where there were some large trees which he fancied, and, when notified the lots had been staked, he went down again with his wife and made his selection accordingly, but found that these lots and two adjoining lots had been assigned to other persons, whom he ascertained were members of the board of directors, which he testified displeased and made him suspicious, following which he ascertained this tract had been bought of the McBrides for $20,000 by Le Heup, who promoted and helped organize the Bar Point Land Company so that it would purchase the tract from him for $75,000— with other secrets of the Masonic Park at Bar Point which the little book did not let him into.

His bill contains 12 allegations of fraud in those particulars, the majority of which are, however, largely of a promissory character. Failing to get the lots which he had selected, plaintiff wrote defendants’ fiscal agent that he was at liberty to sell any lots set aside for him to select from, giving as a reason his wife’s health, which he testified was* introductory to getting out of the concern without controversy if possible, following which he made unsuccessful efforts for some adjustment, and ultimately tendered back his certificates of stock, receipts for payments, etc., demanding return of his money, which was refused. He then filed this bill asking the appointment of a trustee for the corporation to take charge of its affairs, for an accounting with it and its officers and directors, for an injunction, and finally that the contracts for sale of stock and lots to him be declared void and he be granted a decree for return of the amount, found by the court his due. Defendants filed answers, and the case when at issue was heard upon pleadings and proofs taken in open court. After argument the trial court found that the defendant foreign corporation was unlawfully carrying on its business in this State in contravention of Act No. 206, Pub. Acts 1901, as amended (2 Comp. Laws 1915, § 906.3 et seq.), and rendered a decree determining that the contracts plaintiff sought to have set aside were wholly void and should be canceled, directing that upon surrender by plaintiff to it of certificates and receipts relating to the same the land company return to him the $600 which he had paid on such void contracts, with 5 per cent, interest from date of payment. While the decree recites that it satisfactorily appears to the court “complainant is entitled to a decree as prayed for in said bill of complaint,” no reference is made therein to the defendant officers and directors, and no other relief is granted except as above stated. From this decree plaintiff has appealed, because his prayer for relief was only granted in the one particular, and the Bar Point Land Company has appealed because decree was rendered against it for the $600.

It is conceded that the Bar Point Land Company had not complied with the law authorizing foreign corporations to carry on business in this State at the time these contracts were made and the money paid its secretary in Detroit. It had established an office and agency in that city, with its fiscal agent and secretary transacting its business. Its executive officers and nearly all its directors were residents of Detroit, meetings of stockholders were held there, and the directors met there as a rule. Its stock book was kept there, and certificates were issued from there by its secretary. No question of interstate commerce is involved, and, without going into further details, it is sufficient to say the testimony is convincing that this foreign corporation was actively and to a large degree carrying on its business in Michigan within the meaning of the law. Neyens v. Worthington, 150 Mich. 580 (114 N. W. 404, 18 L. R. A. [N. S.] 142).

Section 6 of the amended act (Act No. 310, Pub. Acts 1907; section 9068, 2 Comp. Laws 1915) now provides:

“No foreign corporation, subject to the provisions of this act, shall be capable of making a valid contract in this State until it shall have fully complied with the requirements of this act, and at the time holds an unrevoked certificate to that effect from the secretary of State.”

It will be observed that this provision is more stringent than those found in the preceding acts it amends (Act No. 206, Pub. Acts 1901; Act No. 34, Pub. Acts 1903), which only prohibited foreign corporations subject to the law from maintaining actions in this State, on Michigan contracts made by them, until they had domesticated as. the law provides. The significance of this distinction is discussed by Justice Hooker in Hastings Industrial Co. v. Moran, 143 Mich. 679 (107 N. W. 706). The provision of the present law, like that passed upon in Rough v. Breitung, 117 Mich. 48 (75 N. W. 147), providing such contracts shall be wholly void, is. too plain to call for construction or interpretation. In Showen v. Owens Co., 158 Mich. 321 (122 N. W. 640, 133 Am. St. Rep. 376), it is said in discussing this act: “By section 6 a failure to comply with the act invalidates all contracts.”

The attitude and evident object of plaintiff in filing this bill was to recover money the defendant corporation owed him, which he claims it had secured in fraud of his rights on these void contracts subsequently repudiated. He alleges in his bill that he tendered back to the corporation his certificate of stock, which vested him with the rights of a stockholder, the receipts for payment on lots, etc., “and demanded a return of his money,” because of the deceit and fraud practiced upon him, thus repudiating the contracts and offering restitution of that which he had received. He did not allege in his bill of. complaint, as ground for rescission and recovery, failure of the defendant foreign corporation to comply with the domestication law. That was apparently an afterthought. The trial court, however, granted his prayer that the contracts be declared null and void and the money he had paid the corporation be returned to him upon that ground, but failed-to find, so far as the. record discloses, that he had shown himself entitled to relief on the ground of active fraud by either the corporation or its directors.

Defendants contend, and the trial court apparently found, that under his repudiation of the contract, by which he would if valid and recognized have been a stockholder, he was not in a position as a stockholder to press a suit iii equity against defendant Le Heup and his codirectors on the theory that they had perpetrated a fraud upon the corporation and its stockholders by selling it the McBride farm at the excess over what Le Heup paid for it, or other alleged fraudulent conduct in violation of their trust relations with it. Plaintiff not only fails to prove that the farm, which he visited at least twice, was worth less than the price paid for it by the corporation, but makes no showing that the corporation with which he dealt and to which he paid the money is insolvent, fraudulently concealing or disposing of its assets, or that a judgment against it is uncollectible. Having taken the position that the contracts are void and he is not a stockholder of the corporation, but its creditor with a liquidated demand for which he is entitled to judgment, he is not concerned with its internal affairs and has no right to an accounting, a trustee, or to compel defrauding members to make restitution to.it, except on a sufficient' showing that he cannot collect what the corporation owes him in a direct proceeding against it.

This brings us to the question of jurisdiction, which the trial court is shown to have only passed upon inferentially. Whether plaintiff asserted right to repudiate the contracts and recover what he paid upon them is predicated upon a claim of active fraud or their invalidity under the statute, he had, so far as this record discloses, a complete and adequate remedy at law against the Bar Point Land Company with which he dealt and to which he paid the money he seeks to recover. Laubengayer v. Rohde, 167 Mich. 605 (133 N. W. 535); Heffernan v. Burns, 175 Mich. 457 (141 N. W. 529); Excelsior Wrapper Co. v. Yund, 176 Mich. 372 (142 N. W. 572); Berger v. Roe, 179 Mich. 184 (146 N. W. 200); Reis v. Applebaum, 182 Mich. 582 (148 N. W. 696); Lannin v. Lynn, 184 Mich. 325 (151 N. W. 645). In such case equity will not take jurisdiction, and this decree must be set aside for that reason.

Section 2, chap. 11, of the judicature act (Act No. 314, Pub. Acts. 1915, 3 Comp. Laws 1915, § 12351), provides:

“If at any time it appear that a suit commenced in equity should have been brought as an action on the law side of the court, or if it appear that an action commenced on the law side of the court should have been brought in equity, it shall be forthwith transferred to the proper side, and be there proceeded with, with only such alteration in the pleadings as shall be essential.”

This provision is, of course, purely a matter of practice and in substance corresponds with new Federal Equity Rule No. 22, adopted by the United States Supreme Court in 1912 (198 Fed. xxiv, 115 C. C. A. xxiv).

Although settlement of this case on appeal was signed by the trial judge November 18, 1916, the decree was rendered and entered October 25, 1915. The judicature act of 1915 did not take effect until January 1, 1916. At the time of the decree, the chancery court had no authority under the then practice to transfer the case, and could only have dismissed plaintiff’s bill of complaint without prejudice; but the bill was not dismissed, jurisdiction was retained, and the case brought here on appeal to be heard in this court de novo, as required in chancery cases. It has appeared upon the hearing in this, court, and been determined, that under the issues involved the suit should have been brought as an action on the law side of the court. The equity court now having authority under the statute to transfer the case “at any time” when it appears such course should be taken, this court will not dismiss the bill, but set aside the decree rendered in the court below and remand the case for further proper proceedings in the trial court.

The decree of the chancery court of Wayne county is therefore set aside, with costs of this court to defendants, and the case remanded for such further proceedings as parties may desire and are entitled to in accordance with this opinion.

Stone, Bird, Moore, Brooke, and Fellows, JJ., concurred with Steere, J.

Ostrander, J.

In my opinion the court of equity has jurisdiction to cancel the land contracts, leaving the plaintiff a shareholder in the corporation. The cause ought not to be dismissed.

.Kuhn, C. J., concurred with Ostrander, J.


source: Caselaw Access Project

author: Steere, J.

license: Public Domain

text:
    KATT v. SWARTZ.
    1. Garnishment — Service of Summons — Justices of the Peace— Judgments — Vaiidity.
    In garnishee proceedings in a justice’s court where plaintiff and the principal defendant are residents of the same county, a judgment against the principal defendant is void where he is served with a short summons returnable in five days, instead of a long summons, returnable in not less than six nor more than twelve days.
    2. Same.
    A garnishment proceeding is a proceeding by which a third party is involuntarily drawn into a litigation for which he is not responsible and in which he has no interest, the ultimate object being to compel him to pay a contractual indebtedness to another than a creditor to whom he owes the debt. It is a proceeding substantially in rem by which the garnishee defendant’s indebtedness is impounded or taken into custody or court for the benefit of his creditor and he'made an involuntary stake-holder, receiver, agent, or trustee of the court to hold the fund or res until it is determined in the litigation who is entitled to it, or he is otherwise relieved of his trust.
    3. Same. ■
    Under the judicature act, Act No. 314, Pub. Acts 1915, chap. 76, § 9, providing that where it appears upon the examination of a garnishee that he owes the principal defendant for personal work and labor and the indebtedness is due and payable, he shall forthwith pay to the justice of the peace the money shown to be due, and it shall be the duty of the justice to give the garnishee defendant a receipt for the money so paid, the garnishee is protected from liability to the principal defendant on a claim for personal work and labor where he appears and makes a full disclosure and pays the amount found dhe in court, and takes the justice’s receipt, although a judgment against the principal defendant is void because he is served with a short summons instead of a long summons.
    Error to Ottawa; Cross, J.
    Submitted October 9, 1917.
    (Docket No. 60.)
    Decided December 27, 1917.
    Assumpsit in justice’s court by Claus Katt against Nicholas Swartz for work and labor. There was judgment for plaintiff, and defendant appealed to the circuit court. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Charles E. Misner, for appellant.

      Louis H. Osterhous, for appellee.
   Steere, J.

Antecedent to the- commencement of this case, Frederick and William Hartel, doing business as Hartel Bros., commenced an action before a justice of the peace, in Ottawa county against Claus Katt, plaintiff herein. On the same day, one of said plaintiffs filed an affidavit for a writ of • garnishment against Nicholas Swartz, defendant herein, which among other things stated that said Swartz was indebted to said Katt “for his personal work and labor.” Process was issued against and personally served upon each of them on, December 18, 1916. Both the summons against Katt as principal defendant and the summons in garnishment against Swartz as garnishee defendant were made returnable December 23d at 10 o’clock in the forenoon. On the return day the principal defendant, Katt, did not appear, but Swartz, the garnishee defendant, did appear' before the justice in response to the summons served upon him and made disclosure that he was indebted to Katt, the principal defendant, in the sum of $91.61 then due and payable, which, at the conclusion of his examination, he paid into the hands of the justice, who gave him a receipt for the money so paid, reciting it was for “balance of bill due Claus Katt on bill for work on boat.” The justice’s docket record of the proceedings by and before him on the return day are as follows:

“December 23,1916. Case called at ten o’clock a. m. Principal defendant not in court. Garnisheed defendant present and Daniel F. Pagelson appeared as attorney for plaintiffs. Waited one hour and principal defendant not appearing, proceeded to trial. Daniel F. Pagelson swore as to his authority to appear for the plaintiffs and filed a bill of particulars showing an indebtedness of $84.54 due the plaintiff from the principal defendant.- No appearance'having been entered by the defendant, I at once entered judgment in favor of the plaintiff and against the principal defendant in the sum of $84.54 with costs in the case taxed at $4.40, a total of $88.94, constable costs $2.40, officers $1.50, garnishee $0.50.' Garnisheed defendant made oral disclosure admitting an indebtedness to the principal defendant in the sum of $91.61 which he paid into court and took a receipt for the same, of which sum $84.54 was paid over to the plaintiff’s attorney, Daniel F. Pagelson, taking his receipt, leaving a balance in favor of the principal defendant in the sum of $2.67.”

Katt not only failed to appear in justice’s court to answer the summons served upon him, but for about two months thereafter took no steps by certiorari, appeal, or otherwise, to indicate that he was dissatisfied with the result. He eventually secured the services of counsel on a contingent fee, who filed notice of a written agreement to that effect with claim of lien, and commenced the instant case before the same justice to recover the $91.61 which Swartz had admitted owing Katt in the prior garnishment proceedings and paid into the hands of said justice, who disposed of it as recited in his docket. Assuming that his prior payment to said justice absolved him from further liability, he did not appear on the return day of the summons, and the justice then rendered judgment against him in favor of Katt for $91.61 and costs, ^rom this judgment he appealed to the circuit court, where issue was framed by proper pleadings, and upon a retrial before the court without a jury judgment was rendered in his favor.

It was conceded upon the trial that Hartel Bros, and Katt were residents of Ottawa county. In their suit against him a long summons should therefore have been used, returnable not less than six nor more than twelve days; but the justice issued a short summons on December 18th, made returnable December 23d. The garnishee summons served on Swartz was properly made returnable in less than six days under the provisions of section 4, chap. 76, of the judicature act (3 Comp. Laws 1915, § 14364).

The trial court found, and it is practically conceded, that the judgment of Hartel Bros, against Katt, as principal defendant, was void because of the mistake made by the justice in issuing a short summons instead of a long one, but held that defendant was discharged from liability and absolved from further proceedings by payment of the amount of his disclosed and undisputed indebtedness into court in response to the garnishment proceedings against him, which were so far as related to him in full compliance with the requirements of the statute and in all respects regular.

The controlling question involved here was properly-preserved by objections, exceptions and various assignments of error, and centers upon the following objection by plaintiff to the judgment in Hartel Bros. v. Katt and all proofs offered in relation thereto:

“First, because a short summons was issued when a long one was required by law; second, because the docket shows on its face that no witnesses were sworn or testimony taken on behalf of plaintiff to support the judgment.”

It is conceded by defendant that prior to the amendment of the garnishment law payment into court by a garnishee defendant after disclosure of his indebtedness to the principal defendant would not protect him unless the proceedings and judgment against the principal defendant proved valid. But it is urged that under the present garnishment law a defendant who, in response to a garnishee summons regularly issued by a court of competent jurisdiction, in proper form and made returnable at time and in the manner prescribed by law, pays into court the amount of his disclosed indebtedness to a principal defendant, taking the receipt of the justice therefor, has discharged his indebtedness and is no longer answerable to the principal defendant for any part of the sum so paid, regardless of the result of the suit against the principal defendant, or what was done with the money after the justice receipted for it in accordance with law; while it is contended by the plaintiff that the garnishee defendant pays the money into court at his peril as before.

The amended garnishment law, as found in the so-called judicature act (chapter 76, Act No. 314, Pub. Acts 1915, 3 Comp. Laws 1915, § 14361 et seq.), follows in its main features and largely re-enacts the law upon that subject as it previously existed in this State, with certain amendments, amongst which, as pertinent to this contention: Section 1 now requires that affidavits for writ of garnishment shall state whether or not the amount due from the garnishee defendant to the principal defendant is for personal work and labor of such principal defendant or any member of his family. Section 2 provides that the summons shall'require the garnishee defendant to answer under oath all questions put to him touching his indebtedness to the principal defendant, etc., according to the allegations contained in the affidavit for writ of garnishment. Section 4 requires the justice to issue a short summons, to be served at least two days before the time of appearance mentioned therein, if it appears by the affidavit that the amount sought to be reached as being due from the garnishee defendant is for work and labor of the latter, or any member of his family. Section 5 provides, as before, for liability from the time of service of summons, etc., with a proviso that, when the defendant is a householder having a family, “nothing herein contained shall be applicable to any indebtedness of such garnishee to the defendant for the personal labor of such defendant or his family to the amount of sixty per centum of such indebtedness, but in no ease shall more than thirty dollars of such indebtedness be exempt,” and in case defendant is not a householder with a family an exemption of thirty per centum is provided. Section 9, which raises the principal contention here, provides:

“On the appearance of such garnishee before such justice, or on some other day to which the same may be adjourned, the plaintiff, or principal defendant may proceed to examine the garnishee on oath, or otherwise, as the plaintiff or principal defendant may elect, touching the matters alleged in the affidavit, and the justice shall take minutes of such examination, and file the same with the other papers in the cause. Upon such examination, the garnishee shall not be deemed a witness for the plaintiff, and his answers, or disclosures upon such examination may be contradicted or controverted by the plaintiff, or the principal defendant. If it should appear upon such examination or disclosure that the money owing from the garnishee defendant is for personal work and labor performed by the principal defendant, or some member of his family, and is then due and payable, such garnishee defendant shall forthwith pay to the justice the money shown by the disclosure to be due, and it shall be the duty of the justice to give to the garnishee defendant a receipt for the money so paid.”

Section 10 requires that out of any money paid to the justice under section 9 he shall forthwith pay to the principal defendant so much thereof as the principal defendant satisfactorily proves is exempt to him for work and labor under provisions of the act.

It is said that these provisions relative to exemptions were embodied in the law to remedy prevailing and grievous abuses of the process of garnishment in justices’ courts under former statutes which afforded persons entitled to 'exemptions no summary method of securing the benefit of the same where all their wages were tied up in often protracted garnishment proceedings. A comparison of the present garnishment law with those which preceded it, as construed, makes plain that such was the purpose in the changes and additions referred to, and it seems fairly clear' that in working to that end by compelling the garnishee defendant to forthwith pay to the justice the money shown by the disclosure to be due, where it appeared the debt was for work and labor of the principal defendant, it was the legislative intent to relieve him from further liability in the premises, and transfer his trusteeship of the fund to the justice to whom he was compelled to pay it and who controlled the litigation over it. To compel the garnishee defendant to pay the money over to the justice and yet hold him responsible for it would be so manifestly vexatious and unjust legislation that such intent cannot be presumed unless made imperative by the language of the law.

Garnishment is generally recognized and held to be a harsh, peculiar, and anomalous remedy both in scope and practice, purely of statutory origin, and so varying in different jurisdictions that few general underlying principles are found or rules formulated by which the rights and obligations of parties can be safely tested in the practical operation of a garnishment law. It is a proceeding by which a third party is involuntarily drawn into a litigation for which he is not responsible and in which he has no interest, the ultimate object being to compel him to pay a contractual indebtedness to another than the creditor to whom he owes the debt. It is said to be a proceeding substantially m rem, by which the garnishee defendant’s indebtedness is impounded or taken into the cus* tody of the court for the benefit of a creditor of his creditor and he made an involuntary stakeholder, receiver, agent, or trustee of the court to hold the fund, or res, until it is determined in the litigation who is entitled to it, or he is otherwise relieved of his trust. If in response to his summons he freely and unconditionally admits his indebtedness and is compelled by an order of the court, or by statute, to pay the money •into court, it would seem but reasonable that his forced trusteeship should thereupon end.

“When a garnishee admits an indebtedness to the defendant, or that he has money of the defendant’s in his hands, it is within the province of the court to order him to pay it into court, to be there held pending the litigation. He has no right to appeal from such an order, and he will be protected by it against both the plaintiff and the defendant.” Drake on Attachment and Garnishment (7th Ed.), § 676a.
“Statutes frequently provide that, under certain! conditions, the garnishee may — and.in some of them' direct that, in certain cases, under order of the court,j he shall — pay or deliver the attached property into' court, and that thereupon he shall be discharged from all further liability in respect thereof.” Rood on Garnishment, § 317.

In 2 Wade on Attachment and Garnishment, § 398, it is said:

“When the garnishee is summoned, and the circumstances are favorable to the unconditional admission of the indebtedness, he may so answer, recover his costs, pay the money into court, and be discharged from further liability.”

That it was the legislative intent the garnishee defendant should be released from liability upon paying his admitted indebtedness into court, as the statute says he shall do forthwith, is emphasized by section 12 of the act, which changes the former law relating tó payment into court of the amount which his examination, or disclosure, shows to be due, and he no longer is required to wait until the plaintiff shall have recovered a judgment against the principal defendant. It reads as follows:

“Upon closing the examination, or upon filing the disclosure, in cases where a written disclosure is permitted, or at any time thereafter, the garnishee may pay to the justice before whom the examination was had, all money then due and owing by him to the defendant, as shown by his disclosure, and thereupon such justice shall execute and deliver to the garnishee a release and discharge for the money so paid, and enter such discharge upon his docket. If the plaintiff shall have recovered a judgment against the defendant, and the time limited* by law for an appeal shall have expired if no appeal has been made, the justice shall pay to the plaintiff in said cause out of such moneys, the amount of the judgment and taxable costs, and the surplus, if any, he shall pay to the principal defendant. If the plaintiff shall not have recovered a judgment against the defendant, the said justice shall retain said moneys in his hands until the final disposition of the cause, when he shall dispose of the same in the manner aforesaid: Provided, That if a judgment shall have been recovered against the defendant, and an appeal shall have been taken therefrom by the defendant, the said justice shall forthwith pay over said moneys to the principal defendant.”

This section is a modification of section 996,1 Comp. Laws of 1897, also appearing as section 6445 in the compilation of 1871. The radical modification authorizing prompt payment to the justice upon disclosure and admission of the indebtedness, to be followed by a release and discharge from the justice, with detailed provisions directing what disposition the justice shall make of the money according to the contingencies of the litigation, fairly indicates the intent that he shall thereafter become the stakeholder, or trustee, for the litigants in the place of the garnishee defendant and be held accountable in his official capacity, as he of right ought to be, for the proper disbursement of the money thus paid into his hands, rather than, as formerly, hold the garnishee defendant accountable, after he has once paid his debt as the law authorizes, for the justice’s mistakes.

In Laidlaw v. Morrow, 44 Mich. 547 (44 N. W. 191), cited by plaintiff to the point that payment to the justice is no protection when judgment against the principal defendant is void, Justice Graves, speaking for the court, although constrained under the wording of the statute as it then was to hold a judgment no defense in that case, offered the following reflections upon the law:

“Whether the proceedings, in the garnishee suits proper might not be upheld in favor of the garnishee against this collateral attack need not be considered. The court would struggle to save a garnishee acting fairly and in good faith from paying a debt twice. The law which regulates this proceeding contains many defects, and not the least among them is the want of suitable express provisions for guarding and protect, ing the rights of garnishees in respect to interests be-. longing to or claimed by parties other than the garnishee debtor,' and for guarding and protecting the rights of parties claiming adversely to the various parties litigating.”

In Somers v. Losey, 48 Mich. 294 (12 N. W. 188), plaintiff contended that a former garnishee payment interposed as a defense was no protection because, amongst other things, the former judgment in the main case and garnishee proceedings were both void. In affirming a judgment for the defendant this court there said, speaking through Justice Campbell:

“The objection to the judgment is that the suit was not brought in the proper name, or in the proper way to collect delinquent taxes. It is sufficient to say that there being a plaintiff who has actually sued, and a defendant who has been cast in a judgment from which he has not appealed, for an amount within a justice’s jurisdiction, that judgment cannot be attacked collaterally. * * * And it is not very important to determine whether the justice’s judgment against the garnishees is regular without a further declaration, or whether it can be attacked collaterally, because under the statute the disclosure fixes the liability without a judgment so that the garnishees may pay the money over. 2 Comp. Laws (1871), § 6445.”

As pointed out by Justice Graves, not least among the many defects in the old garnishment law was a want of suitable express provisions to protect the rights of garnishee defendants who obeyed the mandates of the court, disclosed their indebtedness, stood ready, and desired to promptly pay the same to whoever was entitled to it. As the law - then stood, it was a “struggle,” often unsuccessful, to save an innocent garnishee who had acted fairly and in good faith from paying twice. We think it manifest that the changes from the old law found in section 12 were intended to cure that defect and relieve such garnishee defendants, and the courts, from the complications and struggles which the old law gave rise to.

While payment before judgment is optional under section 12, it is mandatory under section 9. Where exemptions for labor are involved, the law commands that the garnishee defendant “shall forthwith pay to the justice” the amount of his disclosure. Defendant in this case simply obeyed the law and volunteered nothing. He was legally summoned by proper process issued from a court of competent jurisdiction, regularly served and returned, to answer as garnishee defendant in an action then begun and pending in that court. The court had jurisdiction over the subject-matter of the suit, and the principal defendant was • within the territorial jurisdiction of the court with actual, if not legal, notice of the pendency of the suit against him. At the time and in the manner prescribed by statute, defendant appeared, disclosed touching his indebtedness according to the allegations of the affidavit for writ of garnishment, forthwith paid the amount of his indebtedness as disclosed to the justice before whom he was summoned, who gave him a receipt for the money so paid showing that it was for work and labor. His duties and liabilities as fixed by statute were then fulfilled. The law no longer required him to dance attendance upon the justice, who had the money, was thereafter accountable for it, and under bonds for faithful performance of the duties of his office.

The judgment is affirmed.

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


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    SHEAHAN v. McCLURE.
    Contracts — Money Loaned for Illegal Purpose — Principal and Agent — Liability of Agent.
    Wbere money is loaned for the purpose of betting at races and is repaid to an agent of the lender, the agent can be required to account for the money received, as the contract of agency, created upon receipt of the money, is not vitiated by the illegal gambling contract between the principal and the borrower.
    Error to Wayne; Hally, J.
    Submitted October 8, 1917.
    (Docket No. 44.)
    Decided December 27, 1917.
    Assumpsit by Mary E. Sheahan, administratrix of the estate of James F. Sheahan, deceased, against William McClure for money had and received. Judgment for defendant non obstante veredicto. Plaintiff brings error.
    Reversed, and remanded.

      Max Hulett, for appellant.

      A. B. Hall, for appellee.
   Steere, J.

Plaintiff is the widow of James F. Sheahan, deceased, who was at the time of his death engaged in what is designated a “hand-book business,” with headquarters at 92 Woodward avenue in the city of Detroit. Without going into details, it appears that this line of business activity has to do with betting ventures on horse races. On Friday, September 17, 1915, Sheahan took an order from a customer, considerately designated as “John Doe,” to place a bet of $1,-050 on a certain horse race, and at the request of the customer advanced that sum for him, sending it to a correspondent, or agent, in Chicago to be applied in betting on a horse race as the customer had directed.

The money was personally advanced by Sheahan from funds he had on deposit in the Peninsular State Bank of Detroit, upon which he drew a check for the requisite amount payable to the order of William Ryan of Chicago, who indorsed it to the Illinois Trust & Savings Bank of Chicago, or order, whence it was subsequently paid through the Detroit clearing house and charged to Sheahan’s account by the Peninsular State Bank. Sheahan lent this money to John Doe upon the understanding that he would call and repay it on or • before the following Monday, September 20th. On that day Sheahan was taken seriously ill and removed to a hospital in Detroit, where he died the following Saturday, September 25th.

On Monday, September 20th, the customer, John Doe, went to Sheahan’s place of business at,92 Woodward avenue, where he found defendant William McClure in charge and gave to him for Sheahan the $1,-050 in payment of his indebtedness to Sheahan.

A pawnbroker of Bay City named Tierney had an interest in the fund from which Sheahan withdrew the $1,050, and on the day Sheahan sent the money to Chicago, September 17th, he wrote Tierney advising him of the transaction, saying, in part, as follows:

“Friend Peter: I got a check from Postal yesterday and had to send check to Chicago for $1,050 for a bet. My man will be in and pay me tomorrow the money and will send check then. It was for a. bet I placed for a customer who settles next day when he is home. He is. away today, be back not later than Monday.”

After Sheahan’s death, Tierney, who was in Detroit and attended the funeral, spoke to McClure about Sheahan’s indebtedness to him, showing McClure Sheahan’s letter. Tierney testified that:

In the interview “he (McClure) said he had nothing to do with it at all. He had nothing to do with the transaction; that that was Sheahan’s own personal affairs, and that he didn’t even collect it. * * * He said Mrs. Sheahan would have to pay me.”

Tierney then presented his claim against her husband to Mrs. Sheahan with his evidence of the indebtedness, and she subsequently paid it. She then made demand upon McClure for the $1,050, which she testified that he at first said “was Mr. Sheahan’s matter and he had nothing to do with it; * * * and I asked him about the $1,050, if the man had paid it, and he said he didn’t know anything about it,” but that, when she said to him she knew who the man was that owed the debt and was going down to ask him about it, he replied, “You need not go down, because he paid .it,” refusing, however, to pay it over to her because, he said, “Sheahan owed him”; and that he did not then, or at any other time, claim to her it was a partnership asset. McClure denied that he ever told Mrs. Sheahan he had not received the money from the customer, or that it was a personal matter of Sheahan’s; stated he did not remember any conversation with Tierney upon the subject “at all”; claimed that he was a partner with Sheahan in the hand-book business and the bet placed by Sheahan for John Doe was a partnership matter; that he had been in business, with Sheahan about 25 years, and during that time “there was no limit to what each would do for each other,” as a result of which Sheahan was heavily indebted to him; that he advised Mrs. Sheahan “to pay the $1,050, as the firm owed the money,” and in that connection said to her if she would pay it “I will never say anything further about what you owe me, or never come to you with any story of the money Jim owed me when he died.”

A stipulation in the record, signed by attorneys for the respective parties, authorizing substitution of an amended declaration in place of the original, also reads in part as follows:

“It is further stipulated and agreed, on the part of the defendant, that John Doe, mentioned in said declaration, was indebted to James F. Sheahan, deceased, in the sum of ten hundred fifty ($1,050.00) dollars, and on or about the 20th day of September, 1915, did call at the place of business of said James F. Sheahan, deceased, and in the absence of said James F. Sheahan did then and there leave and pay over the said sum, of ten hundred fifty ($1,050.00) dollars to the person ■ then in charge of said place of business, viz., said defendant, and that said ten- hundred fifty ($1,050) dollars was then and there paid by the said John Doe in satisfaction of his said debt of ten hundred fifty ($1,050.00) dollars.”

It was contended on behalf of defendant in the trial court that plaintiff could not recover because a partnership existed between defendant and Sheahan, and the transaction in question was a partnership matter, which could only be litigated, if at all, in a court of equity; and for the further reason that the alleged debt was the result of a bet on a horse race, and had its inception in a gambling contract, which made the whole transaction illegal; and a verdict should therefore be directed for the defense.

On the other hand, it was claimed for plaintiff that Sheahan and McClure were not in fact partners; but if they were McClure had no interest in this particular transaction, was a stranger to the gambling contract, a third party acting only as bailee, or agent, in receiving the money for Sheahan from John Doe, and could not interpose their unlawful conduct as a defense for refusing to account for it.

Reserving decision upon defendant’s request for a directed verdict,' the court decided to submit the case to the jury upon the two questions, whether a partnership existed between Sheahan and McClure, and, if so, whether this transaction was part of their partnership business, giving proper instructions as to the law applicable to those propositions. The jury rendered a verdict in favor of plaintiff for $1,050. Before entering judgment thereon, the court decided as a matter of law that defendant’s motion for a directed verdict should prevail and ordered judgment in accordance with such decision notwithstanding the verdict; to which action of the court plaintiff had exception as a matter of course under the provisions of Act No. 217, Pub. Acts 1915 (3 Comp. Laws 1915, § 14568 etseq.).

Whatever the jury may have found as. to the existence of a partnership, they manifestly decided that the transaction was not partnership business, and found that the $1,050 left with defendant at Sheahan’s place of business was, as counsel stipulated, “then and there paid by the said John Doe in satisfaction of his said debt” to Sheahan.

While the record does not contain the reasons, if any, given by the court at the time of entering judgment non obstante, the discussion between court and counsel during the progress of the trial indicates that the court decided, as contended by defendant’s counsel, that recovery could not be sustained because “the whole thing is a gambling transaction.”

To this we cannot agree. By the record McClure had no interest in or connection with the illegal contract itself, between Sheahan and John Doe. He was. as to it a disinterested third party, with no concern, whether it was enforceable between the contracting: parties. There was nothing unlawful in his bailment,, or agency in receiving the money for Sheahan. Acting in that capacity, he cannot as against his principal set up the illegality of an executed contract to which he was a stranger. John Doe, the obligor who might have urged it, waived the illegality and consummated the transaction by paying his debt as and where he had promised. In Sheahan’s absence from his place of business, McClure, as his agent in charge, received the money for him, paid in liquidation of John Doe’s debt to Sheahan. He thereby accepted and assumed the. trust which such capacity implies, thus giving rise to an implied new contract of agency and a demand due from him to Sheahan, not as between them vitiated by the illegal contract between Sheahan and John Doe, to which McClure was not a party.

In Floyd v. Patterson, 72 Tex. 202 (10 S. W. 526, 13 Am. St. Rep. 787), the controlling principle is thus stated:

“But if the transaction has been completed and another grows out of it collateral to it, dependent upon a new consideration, the new contract is not vitiated by the taint of the old one, and will be enforced. Tt has been observed that the test whether a demand connected with an illegal act can be enforced is whether the plaintiff requires any aid from the illegal transaction to establish his case.' Gilliam, Ex’r, v. Brown, 43 Miss. 641, citing Simpson v. Bloss, 7 Taunt. 246; Roby v. West, 4 N. H. 290 (17 Am. Dec. 423). It is accordingly held that when one as agent of another has received money growing out of an illegal contract he can be made to pay it over at the suit of his principal.”

Applying this test to the stipulated facts' quoted, plaintiff requires no aid from the illegal transaction to establish her case. In O’Bryan v. Fitzgerald, 48 Ark. 487 (3 S. W. 527), it was held that a principal may recover money collected by his agent for him upon an executed illegal transaction, in an action for money had and received.

“And again, if parties to an illegal contract waive the illegality, and honestly account between themselves, no other person can be heard to complain of such accounting. Hence we think that if, in making such settlement, one of the guilty parties should deliver property or money to an agent of another to be delivered by the agent to his principal, such agent is bound to account therefor to his principal.” Norton v. Blinn, 39 Ohio St. 145.

Even if an intermediate stakeholder, which he was not, the defense McClure sought to make here is not open to him. The following from 20 Cyc. p. 950, concisely states the settled law upon the propositions presented by this case:

“When a wagering contract has been executed and its fruits paid to the agent or partner of the winner, the recipient of the fund cannot shield himself by setting up the vice of the original transaction. Neither is it any affair of a bailee of such money or property that the parties have been gambling or intend to gamble ; the invalidity of their proceedings does not affect his contract as bailee.”

Amongst the authorities cited to support this doctrine is the early case of Willson v. Owen, 30 Mich 474, in which this court, through Justice Cooley, made plain that the general rule under which courts refuse to enforce an illegal contract between the contracting parties does not apply to third parties who have no interest in or connection with the illegal contract itself. With citation of earlier authorities pointing out the distinction, it is there said, in part:

“It is true that the trials of speed for money at the horse fair, and the selling of pools under the auspices of the association, were illegal; but there is no illegality in the promise, express or implied, of the defendant to pay over to the plaintiffs the moneys received for them from whatever source derived, or from whatever transactions springing. In Bronson Agricultural, etc., Ass’n v. Ramsdell, 24 Mich. 441, the attempt was made to enforce the illegal contract by a suit to recover the moneys promised by it; but this suit involves no such attempt. The illegality of this association only appears incidentally in explaining whence the moneys were received; but the grounds of recovery is that tibe moneys were received for the plaintiffs, and it is not material how or on what account they came to his hands, if in fact for the plaintiffs’ use.” '

Defendant’s claimed partnership participation in the illegal transaction not being sustained, his defense has no foundation in fact or law and cannot be sustained.

It follows that the judgment non obstante veredicto appealed from must be reversed, with costs. The case is hereby remanded, with directions to set the same aside'and enter judgment upon the verdict as rendered.

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


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    WULFF v. BOSSLER.
    1. Master and Servant — Safe Place to Work — Personal Injuries.
    It is incumbent upon the owner of a manicuring and. hairdressing establishment operated in the basement and first floor of a building to furnish a person customarily employed as scrubwoman a safe place to work, and he must keep a flight of stairs connecting the two floors adequately lighted and in good condition for easy and safe passage.
    2. Same — Safe Place to Work — Negligence—Question for Jury.
    The negligence of an employer due to the inadequate lighting of premises is usually a question for the jury.
    S. Same — Workmen’s Compensation Act — Defenses.
    The defense of contributory negligence, assumption of risk and negligence of a fellow employee are not available to an employer who has not elected to come under the workmen’s compensation act.
    4. Judgments — Directed Verdict — Statutes.
    Under the Empson act (Act No. 217, Pub. Acts 1915, § 1, 3 Comp. Laws 1915, § 14568), providing that should the trial court see fit to reserve a decision upon a request which, if granted, would dispose of the case as a matter of law, but submit the claimed issue of fact to the jury for a verdict to rest contingent on the disposition made of the reserved question of law, then, “after the case is thus submitted to the jury, or after receiving and. recording the verdict of the jury and before judgment is entered * * * the court may hear arguments of counsel for and against said request, but in all cases shall receive and record the verdict of the jury as rendered,” a judgment granting a motion to set aside the verdict for plaintiff and of no cause of action is improper where the court “clinched” the verdict by an immediate judgment, and the motion was not considered until about three weeks after rendition of the judgment ' and no order was at that time made directly disposing of the original official record of a judgment on the verdict as rendered.
    Error to Kent; Brown, J.
    Submitted October 19, 1917.
    (Docket No. 65.)
    Decided December 27, 1917.
    Case by Christine Wulff against Joseph A. Bossier for personal injuries. Judgment for defendant non obstante veredicto. Plaintiff brings error.
    Reversed, and remanded.

      William J. Landman, for appellant.

      Frank W. Hine and Maynard & Chase, for appellee.
   Steere, J.

This action was brought by plaintiff to recover damages for personal injuries- sustained on November 5, 1915, by falling down stairs in defendant’s place of business where she was employed as a scrubwoman. The stairway down which she fell was an inside one connecting the first floor of defendant’s place of business with the basement floor. The negligence claimed is a failure to properly light the sanie and keep it “clean and free from fruit skins and other foreign substances that might cause any one traversing sáid stairway to slip and fall.”

Defendant conducted a hairdressing and manicuring establishment at Monroe avenue, in the city of Grand Rapids, employing female help, and at the time of the accident had failed to avail himself of the provisions of the workmen’s compensation law. His workroom, hot water plant for shampooing, etc., were on the basement floor, which was frequented by the help, and used in connection with the store above it during business hours. Plaintiff was employed td scrub the floors and do other cleaning around defendant’s place every Tuesday and Friday. She had regularly rendered such service on those days for about five years prior to her injury. Her work required her to use the stairs down which she fell. The accident occurred shortly after her arrival at about 8 o’clock in the morning, as she was on her way to the basement to get her pail and mop and hang up her street clothing. She testified that it was a rather dark morning, the stairway was not lighted as usual, and there was something upon which she stepped when going down which caused her to slip and fall. It was admitted by defendant that he customarily kept an electric light burning in the stairway during business hours, but he contended it had been turned on that morning before her arrival and was burning when she fell.

At the close of plaintiff’s testimony defendant’s counsel moved for a directed verdict in his favor, which was then denied but renewed at the conclusion of all the testimony. After hearing counsel the court said:

“I will submit this case to the jury because of the authority given in the judicature act, when the testimony is taken. I will submit it to the jury and the court can consider your motion just as well in the course of a couple of weeks as now. * * * Under the judicature act the court can consider the matter just as well within a week or so if you should have occasion to renew your motion.”

Thereupon the court submitted the case to the jury upon the question of defendant’s negligence in failing to light the stairway, and a verdict of $500 was rendered in plaintiff’s favor, on June 18, 1916, upon which the verdict and judgment thereon were recorded by the clerk in the journal as a part of the business of the court upon that day and signed by the judge in the regular course of proceedings. On the following day, June 14, 1916, defendant’s counsel moved the'court—

“to direct a verdict in favor of. defendant as requested by defendant’s attorney at the close of the testimony in the above-entitled cause, and to set aside the verdict of the jury in favor of the plaintiff and against defendant; and, further, if it is the desire of the court to hear further argument of counsel for and against said request, that the court fix the time for such argument.”

Argument was thereafter heard upon this motion, and on July 6, 1916, the court reviewed the argument, stating that at the time the case was submitted the question of defendant’s negligence was not free from doubt in the mind of the court, and was therefore allowed to go to the jury, so that should the Supreme Court reverse the action of the trial court, it would be unnecessary to have another trial and place plaintiff to a double amount of expenses, but upon consideration of the whole case it was the opinion of the court that it was ruled by Gleich v. Detroit Free Press, 169 Mich. 247 (135 N. W. 306), concluding:

“I will say that the motion in this case to set aside the verdict rendered by the jury will be granted, and a verdict may be entered for the defendant of no cause of action.”

Whereupon, under the direction of the court, a judgment of no cause of action was entered, upon that date, in part as follows:

“The cause having be^n heretofore duly brought on for trial before a jury, said jury rendered a judgment for the, plaintiff for $500 on June 13, 1916. Now comes_ counsel for the defendant, moving the court to set aside the said judgment rendered by the said jury on June 13, 1916, which motion was granted by the court, the court directing a verdict for the defendant of no cause of action. The court now here after mature deliberation therefore finds that the said defendant is not guilty in manner and form as the said plaintiff hath in her declaration in this cause alleged,” etc., concluding in the usual form of judgment for defendant.

While various assignments of error are urged and argued by .plaintiff’s counsel, the primary and controlling question presented by this record is whether plaintiff’s testimony, taken as true and viewed in its most favorable light, carried defendant’s negligence to the jury as an issue of fact. The trial court was impressed that the holding of this court in Gleich v. Detroit Free Press, supra, was: controlling and defendant should be absolved from liability as a matter of law. Had plaintiff in the instant case brought her action against the owner of the building, instead of her employer, the case would be more nearly analogous.

In the Gleich Case plaintiff, who was not in the employ of the owner of the building, charged that his fall down a stairway was due to defendant’s negligence in failing to sufficiently light the stairs, which were not out of repair, covered with rubber matting and provided with a hand rail at the side. Plaintiff started down them, carrying a musical instrument in one hand and a music rack in the other. While attempting to cross to the side on which was the railing he lost his balance and fell. He did not make clear what caused him to fall. This court there held his contributory negligence precluded recovery, which alone entitled defendants- to a directed verdict, and also said of their alleged negligence that it was based solely upon failure to light the hallway and stairs which, in the absence of contract, defendants, as owners, or landlords, were not required to do — citing a number of cases involving the duty of owners or landlords in that particular to tenants, their guests and customers. Neither the relations of master and servant, nor the question of providing a safe place for employees, are discussed or involved in the Gleich Case and authorities to which it refers.

When the accident in question occurred defendant, was conducting his business in this building on the ground and basement floors which were connected by an inclosed, inside stairway, but scantily lighted on a clear day when its door was open by the light which reached it from the outside windows of the two floors. It was regularly in use by himself and his employees, mostly women, during business hours, as their work required them to pass from one floor to the other, and was a necessary part of their place of employment. It was about 4^4 feet wide, consisted of a top landing and 14 bare steps, and inferably had no hand rail on either side, as no reference is made to one by any of the witnesses in describing the stairway, and a Miss Hall, called by defendant, who testified the light was burning at the time of the accident, stated she had been down the stairs so often she knew just how that landing was, and “felt safe in going down on a dark, cloudy day without having the lamps lit,” by just running her hand along the wall. Defendant testified that he regularly turned on this light on his arrival in the morning at about 7:30, thought it would sometimes be unsafe without a light there, and he kept it turned on during business hours, whether it was a sunshiny or cloudy day, for the safety of himself and his employees, although on a bright sunshiny day it would not be necessary.

It is undisputed that the accident occurred on a dull, cloudy morning; that while going down the stairway in the line of her duties plaintiff slipped and fell head first to the floor of the basement, striking upon her hands in such a manner as to break both her wrists, permanently injuring her. She testified that her fall was caused by some foreign substance upon the stairway on which she slipped and which she could not see because the light was not turned on, Whether the steps were clean and the stairway light turned on at the time are facts in dispute.

That it was the duty of the master to furnish the servant a reasonably safe place in which to work, according to the location and nature of the employment, is settled law. It was defendant’s duty to keep this flight of steps in good condition for the easy and safe passage of his employees going up and down. Ferris v. Hernsheim, 51 La. Ann. 178 (24 South. 771).

“Usually the negligence of the employer is a question for the jury, where the evidence tends to show that the place where the injury was received was inadequately lighted.” 3 Labatt on Master and Servant (2d Ed.), §1005.

Counsel for defendant emphasize that plaintiff was familiar with this stairway, knew it was usually lighted, and where the light was located; that all conditions were known to her, and if, as she claimed, she could not reach the light to turn it on, she could easily have had it done by others. These matters come within defenses of assumption of risk and contributory negligence, which, even if open for consideration, would be questions for the jury under the somewhat analogous case of Strickland v. Woolworth Co., 143 Mo. App. 528 (127 S. W. 628), where a female employee of defendant slipped on the steps of a dark stairway leading to the basement and fell. She was familiar with the stairway, and the fact that it was. provided with an electric light which she might' have turned, on before starting down, but it was held that the significance of those facts was for the jury. Here, however, defendant had not elected to come under the provisions of the workmen’s compensation law, and the defenses of contributory negligence, assumption of risk, and negligence of a fellow employee were not open to him. Section 1, pt. 1, Act No. 10, Extra Session 1912 (2 Comp. Laws 1915, § 5423). The only available defense to him was freedom from negligence on his part, which we conclude was, under the conflicting evidence, clearly an issue of fact for the jury.

Under the condition of the record this court will not in form, “order judgment entered in accordance with the verdict of the jury as rendered,” as provided in the so-called Empson act (Act No. 217, Pub. Acts 1915, 3 Comp. Laws 1915, § 14568 et seq.), which the trial court apparently had in mind in the course followed and inadvertently assumed was a portion of the judicature act. While there is an indicated attempt to adopt the course authorized by the Empson act, the court clinched the verdict which was taken by an immediate judgment. That act distinctly provides that should the court see fit to reserve decision upon a request which, if granted, would dispose of the case as a matter of law, but submit the claimed issue of fact to the jury for a verdict, to rest contingent on the disposition made of the reserved question of law, then— .¡r j

“after the case is thus submitted to the jury, or after receiving and recording the verdict of the jury and before judgment is entered in said case, the court may hear arguments of counsel for and against said request, but in all such cases shall receive and record the verdict of the jury as rendered.” Section 1.

In this case a final judgment authenticated by the signature of the presiding judge was entered and recorded on June 13,1916, and the proceedings under inquiry were not had until July 6, 1916. No order was then made directly disposing of the original official record of a judgment on the verdict as rendered, which we cannot assume was unauthorized or inadvertent. The statutes of this State require that a journal shall be kept of the proceedings in circuit court, by the clerk under direction of the presiding judge, which shall at least be verified by the signature of the judge before whom the business was transacted. 1 Comp. Laws, § 314; 4 How. Stat. (2d Ed.) § 11789; 3 Comp. Laws 1915, § 12138. When so entered and signed as of a certain date they are to be taken as a true record of the official action of the court on that date. Unquestionably circuit courts have a general power to correct inadvertent entries upon their records, and to set aside verdicts and judgments thereon, and grant new trials when, upon proper motion and showing, the ends of justice so require in the opinion of the court, but the action taken by the court on July 6, 1916, does not purport to be the exercise of that authority.

It follows that the second judgment entry must be vacated and held for naught in its entirety, leaving the record of the case in the circuit court to stand as apparently written up and authenticated by the signature of the presiding judge on June 13, 1916.

The judgment appealed from is therefore reversed, with costs to plaintiff, and the case remanded to the jurisdiction of the trial court.

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


text:
    WILCOX v. CLARAGE FOUNDRY & MANFG. CO.
    1. Master and Servant — Workmen’s Compensation Act — Construction.
    The workmen’s compensation act is in derogation of the common law, and is to be construed and administered according to its terms and as it reads.

    2. Same — Industrial Accident Board — Award oe' Compensation —Correction of Mistake.
    Where an award of compensation based upon an agreement was approved by the accident board and payments made for temporary total disability, and, upon the permanent nature of the injury becoming evident, an agreement for compensation for the loss of a leg was by a mistake entered as approved on the records, and notice of the approval sent to the parties, and the board, on discovery of the mistake, notified the insurance company in time for it to have stopped the payment under the second agreement, the board was not divested of jurisdiction to correct its mistake, and, upon hearing of claimant’s petition, to award compensation for total disability for 500 weeks, although the insurance company in fact paid the second award.
    3. Same — Temporary Disability — Permanent Disability — Correction of Award.
    Where an award for temporary total disability is made for injury to a leg, and it is later ascertained that the injury is permanent in character so as to cause permanent total disability, a new award for permanent total disability may be made.
    ' Certiorari to Industrial Accident Board.
    Submitted November 27, 1917.
    (Docket No. 170.)
    Decided December 27, 1917.
    George G„ Wilcox presented his claim for compensation against the Clarage Foundry & Manufacturing Company for injuries received in defendant’s employ. From an order awarding compensation, defendant and the New England Equitable Insurance Company, insurers, bring certiorari.
    Affirmed.

      Frank J. Riggs, for appellants.

      Jonas B. Honck, for appellee.

      On construction and effect of workmen’s compensation acts, generally, see comprehensive notes in L. R. A. 1916A, 23, L. R. A. 1917D, 80.

   Steere, J.

George Wilcox was injured in an industrial accident on September 13, 1913, while in the employ of the Clarage Foundry & Manufacturing Company as foreman in its shipping department, earning an average weekly wage of $15.86. A falling pile of cast-iron plates struck his left leg, breaking it both above and below the knee. Physicians describe his injuries as a fracture of the lower third of the femur and a compound fracture of the tibia and fibula. He was at once taken to the hospital, where he received proper care and medical attention, but it is conceded that his limb is permanently crippled and practically useless. His employer was under the workmen’s compensation law, and had insured with its codefendant, the New England Equitable Insurance ■ Company, against loss arising from injuries received by its employees.

A report of the accident dated September 1-5, 1913, was filed with the industrial accident board on October 1,1913. Thereafter the matter of compensation to the injured employee was assumed by the defendant insurance company and all business in that connection conducted by its claim adjuster, A. L. Aiken, so far as this record discloses. For some time after the accident Wilcox was concededly under total disability for work as a result of his injury, and on October 21, 1913, a first agreement in regard to compensation, fixing the same at one-half his average, weekly wage as the act provides, was signed by him and the insurance company, per A. L. Aiken, and filed on October 23, 1913, with the industrial accident board, which approved it on November 4, 1913. The length of time such payments should continue was not stated, impliedly being left contingent on duration of total incapacity.

Payments were made according to this agreement from time to time, and as the permanent nature of the injury became manifest negotiations were entered into with Wilcox for a final settlement, manifestly on the basis of compensation provided in section 10, part 2, of the compensation act (2 Comp. Laws 1915, § 5440), “for the loss of a leg, 50 per centum of average weekly wages during one hundred and seventy-five weeks.” On July 31, 1914, Wilcox petitioned the industrial accident board for direction that the balance of compensation coming to him on that basis be paid in a lump sum. On December 16, 1914, an order was made by the accident board reciting that a personal investigation had been made by one of its members and authorizing defendants “to make a lump sum payment of $500 in accordance with section 22 of part 2 of the law” (2 Comp. Laws 1915, § 5452). In the meantime a second agreement in regard to compensation, signed by Wilcox and the insurance company, per Aiken, was filed with the board on September 23, 1914, which described Wilcox’s accident and injury as “resulting in the complete loss of use of the said leg,” and stated the agreed compensation to be “at the rate of $7.93 per week for a period of 175 weeks, less 53 weeks’ compensation at the rate of $7.93 already paid.” A notice of the approval of this agreement by the board, signed by its secretary, dated December 20, 1914, was mailed to the parties in interest. On January 8, 1915, an order was entered by the board stating that an examination of the files and records in this matter erroneously showed approval of said agreement with notice thereof to parties in interest, “whereas, in fact, the board did not approve said agreement”; that said apparent approval and all records purporting to show the same were therefore “canceled and held for naught, the same having been erróneously made.” On the same day a copy of this order was sent all parties in interest, and the following letter and notice, dated January 8th, signed by the secretary of the board,' was at once mailed to the defendant insurance company :

“In re Clarage Foundry & Manufacturing Company. George G. Wilcox.
“The files and records in the above case, together with the recent correspondence, has been presented to and examined by the board today, and I am directed to write you as follows:
“The second agreement filed in said cause providing for 175 weeks’ compensation was recorded and approved by a clerical error. Notice of such approval which was sent you was based on such error, and this notice is sent you for the purpose of correcting the same. The second agreement has not been approved, and its terms do not meet with the approval of the board.
“The order made in the case for the payment of $500 as an advance payment has not been acted upon by your company, and in the opinion* of the board, could not be enforced against you for the reason that no notice of hearing on the petition was given or opportunity for your company to be heard in opposition to the same. We are therefore setting for hearing the petition for such lump sum payment, and the same will be brought on before the board on January 26, 1915, in the afternoon of said day.
“This letter will be your notice of such hearing, and your company or its representative will be given full opportunity to present your side of the ease at that time.”

On January 11th a letter dated January 9th was received by the board from the insurance company, per Aiken, “manager claim department,” acknowledging receipt of this communication, stating that on the previous day a draft had been issued to claimant for the lump sum approved by the board and protesting, with argument, that it could not repudiate its former acceptance of the agreement. Other correspondence followed, and on January 16th the insurance company, acknowledging a letter of the 14th, stated that no reason was seen for its being represented at the hearing. on January 26th, as it had acted on the board’s order authorizing payment of $500, and did not wish “to contest a lump sum settlement.” In evidence of such payment the following receipt was inclosed:

“Receipt on Account of Compensation.
“Received of New England Casualty Company, the sum of five hundred and three dollars and seventy-five cents, being the proportion of the weekly .wages of myself from the 4th day of September, 1915, to the 20th day of January, 1917, under the Michigan workmen’s compensation law, subject to review by the industrial accident board, said accident occurring on the 13th day of September, 1913, while in the employ of Clarage Foundry & Manufacturing Company, Kalamazoo, Mich.
“George G. Wilcox,
“'308 3d St., Detroit.
“Date 1/8/15.”

On January 26, 1915, the board took up the matter of lump sum payment pursuant to the notice given, and after recital of certain facts entered an order “that no further action be taken relative to said petition, such action being made unnecessary by respondent’s paying the sum of $500 aforesaid”; notice of said order being sent to the parties in interest. On November 16, 1915, Wilcox filed a petition with the board, alleging that he was totally and permanently disabled as the result of his injury; that the advanced payment made to him was exhausted in meeting medical expenses, etc., so that he was destitute, and praying the board to determine that by reason of such total and permanent disability he was entitled to 500 weeks.’ compensation, the balance of which should be paid in a lump sum. In connection with said petition depositions of certain physicians were thereafter taken in the city of Detroit on December 3,1915, pursuant to notice, at which time counsel for defendants appeared and participated in the examination, first interposing an objection to taking the depositions because the matter had been fully settled and there was nothing then legally pending therein before the board. Thereafter further time was given to all parties to take additional testimony and file briefs if desired, and a hearing upon the petition was set for February 10, 1916. Briefs were filed by counsel for the respective parties; defendant’s counsel contended that the matter was fully settled and beyond the power of the board to take further action; that the injured employee was not permanently or totally disabled; that “claimant is now paid up in advance until the 20th of January, A. D. 1917,” and in any aspect of the case there could be nothing due before that time. On April 19,1916, an order was made by the board denying plaintiffs prayer for a lump sum payment, following which considerable correspondence passed and a conference was had between the board, defendants and plaintiff respecting further proceedings in the matter. On February 8, 1917, the insurance company, per A. L. Aiken, filed with the board a petition that it be relieved from making any' payments after January 20, 1917. Claimant filed an answer under oath alleging that the compensation already paid him was not because of the loss of his leg, but because of total incapacity to labor by reason of his injuries; that said total incapacity yet continued and he was then in the same condition as at the time of taking the depositions of physicians in Detroit, to which special reference was made and which were offered in evidence. A hearing was had on this petition, February 27, 1917, and on March 20,1917, an order was made denying the same, with findings of fact and conclusions of law thereon.

Three contentions are urged in defendant’s brief, as follows:

“First. That the agreement for the payment of compensation on the basis of the loss, of a foot conformed to the provision of the workmen’s compensation act.
“Second. That such agreement, after its approval by the board, became final and binding upon both respondents and the applicant.
“Third. That there is no evidence in the record tending to sustain the finding or order made by the board.”

Without going into details, it is shown by the testimony and found by the accident board that the injuries to plaintiff were so severe as to result in substantially complete loss of the use of the limb, although the same was not amputated.

In support of their first contention, counsel for defendant quote from the testimony of physicians who emphasize the disabled and useless condition of the limb by saying plaintiff would be benefited and have a better chance to get around if it were amputated and an artificial limb substituted, as he would then have the use of his arms unrestricted by crutches, and urge for our reconsideration the proposition that the statutory provision relative to loss of a member should be construed as including the loss of the use of a member. Various cases are cited in which contracts of insurance have been so construed. The same line of authority was relied upon and like reasons urged as here in the recent cases of Packer v. Motor Works, 195 Mich., 497 (162 N. W. 80), and Adomites v. Furniture Co., 196 Mich. 498 (162 N. W. 965); the contention being there made, however, in behalf of the injured party and opposed by the employer and insurer. It can at least be said of the rule that it works both ways.

This statute is. emphatically in derogation of the common law, to be construed and administered according to its terms and as it reads.. The conclusion has been reached by this court in former cases that the schedule in -section 10, part 2, of the act is plain and unambiguous; that it is not for the court or the accident board to change its provisions or to read into them palpable additions beyond the distinct limits of what they express. If the act is in certain features unfair, illogical, or incomplete, and should be changed, the remedy is with the legislature. Limron v. Blair, 181 Mich. 76 (147 N. W. 546); Hirschkorn v. Fiege Desk Co., 184 Mich. 239 (150 N. W. 851); Weaver v. Maxwell Motor Co., 186 Mich. 588 (152 N. W. 993); Cline v. Studebaker Corporation, 189 Mich. 514 (155 N. W. 519, L. R. A. 1916C, 1139); Carpenter v. Forging Co., 191 Mich. 45 (157 N. W. 374); Bruce v. Taylor & Maliskey, 192 Mich. 34 (158 N. W. 153); Purchase v. Refrigerator Co., 194 Mich. 103 (160 N. W. 391); Packer v. Motor Works, supra; and Adomites v. Furniture Co., supra.

To defendants' contention that the second agreement was approved by the accident board, and was therefore final and binding upon all parties, we have the records and return of the board that the agreement never was in fact approved by it; that only by mistake and “clerical error" was such record made and notice given, which was promptly corrected when discovered and parties, notified, in time as the board finds and returns for the insurance company to have withheld or stopped the advanced payment if so inclined. It is contended there is no evidence to support the latter conclusion, and the payment was made in dependence upon notice of approval. Whether the payment was made the day before or immediately after receipt of notice is of little importance. In making the advance payment but present worth of future weekly payments was computed and paid. Defendants were hot prejudiced in that particular, for the injured employee was under total incapacity during the whole 175 weeks covered by such, discounted payment and the first agreement for payment during total disability of a moiety of claimant’s average weekly wages had been approved by the board and was in force. The second was not in accordance with applicable provisions of the act, had not in fact been approved by the board, as its return and corrected records disclose, and was not therefore binding upon the parties to it.

Upon the hearing of this petition the board found as a fact that the injured employee then was and continuously had been since the accident “totally incapacitated from earning anything whatever in the employment in which he was engaged at the time he received the accidental injury”; that the statutory and agreed compensation of $7.93 per week as approved by the board had been fully paid until January 20, 1917, and directed such weekly payments should continue from that date “while said incapacity shall remain total, for a period not to exceed 500 weeks from the date of the accident.”

There is evidence in the record to support the facts found by the board, and under the facts as found it would have been the duty of the board on application by plaintiff and notice to defendants to correct the so-called clerical errors in its records and set aside its erroneous order of approval, even if entered by its direction. The board was not divested of jurisdiction in the matter by the, as it returns, unauthorized and inadvertent entries and notice.

Under the only agreement which the board had in fact approved, as it certifies and returns, the physical condition of the injured employee remained open to inquiry, and the facts found as to his physical condition authorized its order for continuance of payment, which is therefore affirmed.

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