author: Moore, J.

text:
      In re RUST’S ESTATE.
    Taxation — Inheritance Tax Law — Wills—Mining Lease — Interest in Real Property — Exemptions.
    An agreement to lease certain lands for a term of 50 years and three months to a mining corporation, “together with all the mining rights, interests, and estate of the lessors, and of each of them, in, of and to all of the said lands and premises,” and providing that lessee is to pay a certain sum per ton as royalty on all iron ore mined, ánd giving it the option of terminating same by giving 30 days’ notice, and also providing that if lessee fails to perform lessors may take possession, is a lease rather than a contract for the sale of said ore, and the interest of the widow and adopted daughter under the will of one of the lessors giving to trustees for their benefit all of his right, title, and interest in and to said lands and said mining lease, is an interest in real estate, and as such exempt from taxation under the provisions of the inheritance tax law (3 Comp. Laws 1915, § 14525).
    Error to Saginaw; Snow (Ernest A.), J.
    Submitted October 15, 1920.
    (Docket No. 29.)
    Decided March 30, 1921.
    Petition by George L. Hauser, deputy auditor general, against the estate of Ezra Rust, deceased, for a determination of an inheritance tax. There was an order denying the petition, and plaintiff appealed to the circuit court. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Alex. J. Groesbeck, Attorney General, and Duane H. Hosier, Assistant Attorney General (Leland W. Carr, of counsel), for appellant.

      Weadock & Weadock and Cavanaugh & Burke (George W. Weadock and H. J. Cavanaugh, of counsel), for appellee.
   Moore, J.

Ezra Rust, a resident of Michigan, died in January, 1918, leaving a large estate. He made a will, leaving to his widow and his adopted daughter a large amount of property. This proceeding was instituted on the petition of the auditor general of the State to collect an inheritance tax to which it is claimed the State is entitled because of the provisions of the will. The probate court held against the contention of the State, and the case was appealed to the circuit court, where after trial a verdict was directed in favor of the estate. Judgment was entered, and .the case is here by writ of error.

The facts were stipulated. So far as it is necessary to state them they are as follows: Mr. Rust was the owner in fee of a one-half interest in lands in Minnesota, valuable because of the mineral contained therein, and he was the owner of one-third of the mineral contained in said land. At the time of the death of Mr. Rust it is conceded that his interest in this property, after making proper deductions, was appraised at upwards of $1,800,000. The State of Minnesota collected an inheritance tax of the estate. In the lifetime of Mr. Rust a paper was drawn reading in part as follows:

“This indenture made this second day of October, A. D. 1899, between George L. Burrows (widower) of Saginaw, in the State of Michigan, Ezra Rust and Emma B. Rust, his wife, of the city of New York, in the State of New York, and Gilbert B. Goff and Emily A. Goff, his wife, of Edenville, in the State of Michigan, hereinafter called the lessors, parties of the first part, and Lake Superior Consolidated Iron Mines, a corporation organized under the laws of the State of New Jersey, hereinafter called the lessee, party of the second part, witnesseth as follows:
“First: That the lessors, in consideration of the sum of one dollar to them paid by the lessee, the receipt whereof is hereby acknowledged, and in further consideration of the covenants, conditions and provisions of this lease to be kept and performed by the lessee, do hereby let, demise and lease, unto the lessee for the term of fifty years and three months from and after the first day of October, in the year one thousand eight hundred and ninety-four, the following described lands and premises in the county of St. Louis and State of Minnesota, to-wit.”

Then follows a description of the land.

“Together with all the mining rights, interests and estate of the lessors, and of each of them, in, of and to all of the said lands and premises, subject, nevertheless, to any and all rights of way evidenced by instruments now of record, through, over or across any part of the said land and premises, granted to the Duluth, Missabe & Northern Railway Company, and to the Duluth, Mississippi River & Northern Railroad Company.
“It is agreed by the parties hereto that the rights possessed by the lessee under said instrument shall not be terminated by the making of this lease, but shall continue and shall be the same as if this lease had been in force at the expiration of said instrument.
“The said lands and premises are demised to the lessee for the sole purpose of exploring for, mining, taking out and shipping therefrom the merchantable iron ore (as well as other minerals as hereinafter provided for) which is or hereafter may be found on, in or under 'the said lands, with the right to the lessee to construct all buildings and to make all excavations, openings, ditches, drains, railroads, wagon roads, and all other improvements which are or may become necessary or suitable for the mining or removing of the iron ore therefrom and the carrying on of mining operations thereon. * * * The term ‘merchantable ore’ as used in this, lease shall be taken to mean such ore as shall be merchantable from time to time as the work of mining progresses.
“Second: The lessee hereby covenants and agrees to pay to the lessors a royalty on all iron ore mined and shipped from the said lands while this lease shall remain in force as follows:
“For all iron ore mined and shipped prior to the first day of January, A. D. 1900, the royalty shall be at the rate of thirty cents for each gross ton, and for all iron ore mined and shipped, on or after the first day of January, A. D. 1900, the royalty shall be at the rate of twenty-five cents for each gross ton. As to all iron ore mined and shipped before January 1, 1900, the lessee will pay the royalty to the lessors on or before the 25th day of each month for all ore mined and shipped during' the calendar month preceding the first day of the month in which the payment is to be made. As to all iron ores mined and shipped on or after the first day of January, 1900, the royalty shall be due and payable on the tenth days of April, July, October and January in each calendar year (which days, are hereinafter called ‘quarter days’). The payment on each quarter day shall be for the full amount of ore mined and shipped from the said lands during the three months immediately preceding the first day of the month in which the payment shall become due. The premises above described being under lease from the lessors to the lessee herein under instrument of lease reserving royalty at the rate of thirty cents per gross ton upon an agreed minimum output of twenty thousand tons in each year, and which lease is surrendered simultaneously with the execution and delivery of this instrument, the lessee further covenants that during the year 1899 it will have mined and shipped from the said lands at least twenty thousand gross tons of iron ore, or in' case the ore so mined and shipped in the year 1899 shall be less than twenty thousand tons, the lessee will pay to the lessors advance royalty in such sum as shall, together with the amount paid as royalties for ore actually shipped, amount to six thousand dollars.
“The lessee further covenants that in each year during the existence of this lease, after January 1, 1900, it will mine and ship from the said lands at least two hundred thousand gross tons of iron ore as an agreed minimum output, or in ease in any one or more of such years the lessee shall not actually ship from the demised premises the full quantity of said agreed minimum output, the lessee will, nevertheless, pay to the lessors advance royalty to be treated and considered as ground rent, in addition to the royalty paid for iron ore actually shipped during that year, such sum as shall, together with the amount paid as royalty for iron ore, actually shipped during the said year, amounts to fifty thousand dollars.
“Said advance royalties or ground rents shall be paid quarterly at the time and in the manner herein-before provided for the payment of royalties for ore actually shipped. * * *
“The obligation of this lease to pay advance royalties as aforesaid shall continue in force without regard to the quantity or quality of iron ore existing on the premises during the full term of this lease or until the same shall be terminated or surrendered or assigned in the manner herein provided; and in case of an assignment of the said lease the obligation to mine or pay for such agreed annual minimum output, as well as all other provisions of the lease, shall bind the assignee as fully as the lessee is bound hereby. * * *
“Fifth: The lessee further covenants to pay all taxes and assessments, ordinary and extraordinary, general and specific, which may be levied or assessed upon the lands hereby demised, and on the iron ore mined thereon, and on all improvements and personal property thereon while this lease shall remain in force, and to furnish the lessors with duplicate receipt showing the payment of all such assessments or taxes; provided, however, that the lessee shall always have the right to contest in the courts or otherwise the validity of any such tax or assessment. * * *
“But provided further that the lessee shall not permit or suffer said lands and property or any part thereof to be sold at any time for any taxes or assessments. And upon the termination of this lease, by surrender or otherwise as herein provided, the lessee will peaceably surrender possession of the said lands to the lessors.
“The lessee covenants that while this lease shall remain in force, and until’it is surrendered or assigned in manner herein provided it will protect the said lands and the improvements and iron ore in stock piled thereon from all mechanic’s or laborer’s liens or other liens and keep the title to the same free and clear from all clouds and encumbrances arising from such liens in any way because of its mining operations thereon, or the use and occupation thereof by the lessee, its agents, servants, employes or contractors. * * *
“The several payments required to be made hereunder shall be made at and to George L. Burrows & Company’s bank at Saginaw, Michigan, or at and to any other bank in the city of Saginaw, Michigan, or elsewhere in one of the United States as .the lessors, their executors, administrators or assigns may in writing designate, and the bank or banks so designated shall be deemed the agent or agents of the lessors respectively for the purpose of receiving, collecting and receipting for such payments. * * *
“Seventh: It is mutually covenanted between the parties, and this lease is granted and accepted upon condition, that the lessee shall have' the right at any time, upon thirty days’ notice to terminate this agreement and lease, by giving written notice in the manner hereinafter provided to the lessors, their heirs, executors, administrators or assigns, who will in such case acknowledge in writing the receipt of such notice; and this lease shall terminate thirty days after the giving of such notice, whether the same shall be so acknowledged or not.
“All'arrearages and sums, including taxes, which shall be due and payable under this lease up to the time of its termination as set forth in the said notice, must and will be paid by the lessee within thirty days after such termination; and the lessee upon such termination must and will forthwith execute and record in the office of the register of deeds of St. Louis county, Minnesota, a formal relinquishment of such lease. * * *
“Eighth: This lease is granted and accepted upon condition that if the royalty hereby reserved on the advance royalty or ground rent hereby provided for and agreed to be paid or any part thereof be and remain unpaid after the days and times above specified, and if the same shall remain in default for a period of sixty days, or in case the lessee shall fail to keep any of the covenants or conditions herein expressed to be kept and performed by it, and such failure shall continue for sixty days after the receipt by it of written notice from the lessors specifying the default, negleet and failure complained of, then and from thenceforth and in either of the said events, but not otherwise, it shall be lawful for the lessors, at their option, to terminate this lease and .to take possession of the said leased premises with or without any previous process whatever, to re-enter and have and possess the same as fully as if no lease had been given to the lessee, and the said lessee and all parties claiming under it shall be wholly excluded therefrom, and this lease shall become and be wholly void and at an end subject to the provisions of article ninth hereof; and the lessors reserve and at all times shall have, possession and hold a lien for all unpaid balances due hereunder upon all ore mined upon said premises and upon all improvements made upon the said premises by the lessee. * * * '
“Eleventh: All covenants, conditions and provisions of this lease shall run with the land and shall inure to the benefit of and be binding upon their heirs, executors, administrators, successors and assigns of the lessors and lessee respectively.”

The provisions of the will of Mr. Rust, which are important in this discussion, read:

“I hereby give, devise and bequeath to my wife, Estelle Rust, James G. McPherson and Charles J. Reynick, all of the city of Saginaw, Michigan, as trustees, and to their successors in said trust, all my right, title and interest of every name, nature and description in and to (certain lands which are described), together with all my right, title and interest in and to one certain mining lease thereon, dated October 2, 1899, between George L. Burrows, Ezra Rust and Emma B. Rust, Gilbert B. Goff and Emily A. Goff, and Lake Superior Consolidated Iron Mines, a corporation organized under the laws of the State of New Jersey, and the right to collect, receive and recover all rents, royalties and income thereunder from said Lake Superior Iron Mines, its successors or assigns, together with all minerals, mining rights and mineral interest of every kind, name, nature and description arising or growing out of or connected with said land above described, and the minerals therein, hereinafter for convenience called ‘Ezra Rust Mining Property’ to be held in trust, however, during the lives of my said wife, Estelle Rust, and my adopted daughter, Maxine Rust, and the lifetime of the survivor of them hereby giving and granting to said trustees and_ their successors in said trust full power and authority to carry out the said trust for the following purposes, viz.:
“(1) To do all acts proper in the management and care of said trust property, and to deduct the expenses of said care and management, and their compensation as trustees.”

Then follow detailed directions for the execution of the trust.

The provisions of the inheritance tax law of Michigan so far as they are important here may be found in sections 14524 and 14525, 3 Comp. Laws 1915. The last mentioned section exempts the widow, children, adopted children or children to whom the decedent stood in the mutually acknowledged relation of a parent for a certain length of time, from any inheritance tax on real estate.

We cannot state the claim of the- State more clearly and concisely than to quote from the brief of counsel, which we do:

“Under the terms of the will the interest of Mr. Rust in and under a certain mining contract was given to his widow and to his adopted daughter. This case involves the question as to whether the transfer of this interest under the will is subject to the inheritance tax law of the State. The contract referred to is set out in full in the record. The basic question at issue here is whether this instrument is a contract for the sale of the ore in place and is in consequence to be regarded as a credit, or is (as claimed by appellees) a lease of land in Minnesota.
“It is the claim of the State that this instrument must for the purposes of this proceeding be construed as providing for the sale of the ore in the lands described, which lands were owned by Mr. Rust and his associates. If this decision is correct it follows that the contract must be regarded as a personal property credit within the meaning of the inheritance tax law, as well as within the meaning of the general tax law, of this State. • * * *
“In passing we wish to call attention to the fact that Mr. Rust in his will disposed of the land and also disposed of his ‘right, title and interest’ in and to this contract. It is evident, therefore, that he regarded the contract as property separate and apart from the land itself. It will be noted also that Mr. Rust bequeathed ‘the right to collect, receive and recover all rents, royalties and income thereunder from said Lake Superior Iron Mines.’ The use of the term ‘rents,’ ‘royalties’ and ‘income’ suggests that the testator had in mind the payment of rental for the ground by the mining company and also the payments for the ore.
“The parties proceeded under the terms of the contract from the time of the execution thereof up to the present and are now operating under it. At the time of the death of Mr. Rust the estimated gross tonnage of iron ore remaining in the mine was 69,165,662 tons. As appears from the contract Mr. Rust was the owner of one-third of such ore or a quantity in excess of twenty-three million tons. The contract was expressed to continue for fifty years and three months from the date thereof (October 2, 1899). At the time of Mr. Rust’s death it had, therefore, a probable future life of approximately thirty years during which the mining company may remove the ore and pay the stipulated royalty per ton. The determination as to the amount that will be paid to the takers of Mr. Rust’s interest under the terms of his will and the reduction of that amount to present worth are matters of mathematical computation concerning which no question has been raised.
“We believe it is well settled by the decisions of this court that a mining contract of this character should be interpreted as providing for the sale of the ore. In the case of Palms v. Palms, 68 Mich. 355, 371, the principal question involved related to the construction of the will of Francis Palms. The court was called upon, however, to determine the nature of royalties received under a mining contract similar to the Rust contract. * * *
“It is obvious from a reading of the contract that the parties have used ambiguous and inconsistent phrases. However, we must judge of the real intention, not by chance expressions that may be found, but from an examination of the instrument as an entirety. The recent decision of the appellate court of Indiana in the case of In re Spurgeon, 126 N. E. 238, well illustrates the rule referred to. There the parties had entered into a contract which they designated as a lease. By the terms of the instrument the so-called lessees were to pay taxes assessed against the property, keep the property insured, and also pay a specified sum of money on the. first day of each month as rental. In case of failure to make payments the party of the first part under the contract was to have the right to take possession of the property. On the completion of the agreement it was agreed that a deed of conveyance of the premises should be made. The question arose as to whether this contract was taxable on the theory that it was in effect a land contract, notwithstanding that an attempt had been made by the parties to execute it in the form of a lease. The appellate court of Indiana determined that it was taxable, saying in substance that the transaction was a sale. The court, among other cases, cited the decision of this court in City of Marquette v. Iron & Land Co., 132 Mich. 130. The court also quoted with approval from the earlier Indiana case of In re Aurora Gaslight, Coal & Coke Co., 64 Ind. App. 690 (113 N. E. 1012), where it was said:
“ ‘If the real transaction was a sale of the property and such amounts in truth and in fact represented a balance of purchase money, the character of the transaction cannot be changed by any nomenclature, form ,or subterfuge employed by the parties, whether innocently or with design, to have the transaction appear to be something other than what it in fact was.’ * * *
“The decision in the Palms Case has not been overturned and we submit is the law of this State upon this question. We insist that under this decision, and others referred to later on, that royalties received under such a contract .do not constitute in any sense rents and profits of the land, but rather do constitute payment for the ore itself in place; that there is a constructive severance of the ore and separate sale thereof.
“The court in the Palms Case compared the mining contract to a contract for the sale of standing timber or a land contract. The latter has been held by this court to be subject to taxation as a credit. In the case of City of Marquette v. Iron & Land Co., 132 Mich. 130, the court in its opinion used the following language :
“‘1 Comp. Laws, § 3831, subd. 6, makes taxable “all credits of every kind, belonging to inhabitants of this State.” Defendant’s counsel insists that the obligations in question are not credits. He argues that they should be classed with obligations to pay future rent upon existing leases, obligations to pay salary under contracts for future services, and with obligations to pay for the future delivery of the products of a farm, of a shop, or of a mine. If the obligations in question are indistinguishable from those above instanced, we think that it should be decided that they are not taxable; hut in our judgment they are clearly distinguishable. In the instances supposed, the landlord will receive rent for the future use of his own property, the employee will receive wages in payment for his future services, and the farmer, manufacturer, and miner will receive pay for the sale of products which, until the sale is consummated, belong to them. In none of these cases is a credit contemplated. On the other hand by the contracts under consideration (and this is as true of the timber as of the land contracts) the equitable title to the property therein described is at once transferred to the vendee.’ * * *
“That the principle announced by the court in the Palms Case is the established law of Michigan is shown by the language of Justice Ostrander in the case of Newport Mining Co. v. City of Ironwood, 185 Mich. 668, at page 686, as follows:
“ ‘Usually the price to be paid would be a fixed price per ton during the continuance of mining operations, or a variable price, depending upon the quantity or selling price, of ore mined and shipped or both. The expense of opening the mine, of conducting mining operations, would he incurred, and if the adventure was successful the owner of the fee would receive, in installments, his royalties, his selling price of the ore.’
“Any possible doubt as to the intention of this court in announcing the rule applied in the Palms Case is set at rest by the reference therein to the decisions of the Pennsylvania courts. By a long line of authorities in that State, previous to the Palms Case, it was settled that a mining contract of this nature was to be regarded as providing for a sale of the ore; and money paid thereunder was subject to the incidents of the purchase price.” (Citing Caldwell v. Fulton, 31 Pa. St. 475.)

Counsel also cite many other authorities with the idea of supporting their contention. We have examined all of the authorities cited by counsel for appellant and think none of them are controlling.

In Palms v. Palms, supra, Justice Morse did express his individual opinion as to the status of royalties, but there is nothing to indicate the other members of the court shared his views in that regard, as the question was not controlling, and Justice Morse himself expressly reserved the question until its decision was necessary in order to reach a result.

In City of Marquette v. Iron. & Land Co., supra, the court was dealing with the question whether a land contract for the sale of timber could be assessed to the vendor as a credit, and it was held that it could be. Of course in that case the vendee was bound to take and pay for all of the timber sold to him. In the instant case the lessee can terminate the agreement at any time by giving 30 days’ notice, which clearly distinguishes the cases.

In Newport Mining Co. v. City of Ironwood, supra, the question involved was whether the action of the assessing officers was such as to call for the interference of the court. We quote:

“The point we are concerned with is whether a method, wrong in principle, was adopted by the assessing officers in their endeavor to form a judgment as to the present value of the particular land. There is no reasonable ground for contending that the State may not use the methods of business to ascertain such values. In such a case, it is not compelled to ignore, or discount, the facts of demonstrated availability, quantity, and quality of mineral. If a rule or method exists by which engineers and business men ascertain the values of ore bodies for the purpose of buying and selling them, if no better rule is or can be suggested, how can it be said that the rule is wrong in principle when adopted by the State? The State must, of necessity, treat the peculiar subject of taxation as the subject requires, not to change or modify a cardinal rule of taxation, but to apply it. Upon this record no other rule is suggested, and the rule employed is conceded to be the rule of engineers in like cases. * * *
“There is another consideration affecting the question at issue. The board did not adopt the valuation of the experts. On the contrary it assessed the property at a sum nearly $5,000,000 below that valuation. Was this an extravagant valuation, in view of all facts before the board? Suppose it did adopt Mr. Finlay’s method; will it be contended that if the valuation placed upon the mine was no greater than its owners would concede to be its value, because the method was employed the tax must be held invalid?”

—and it was held the court was not called upon by the record as made to overrule the action of the assessing officers.

Some of the earlier decisions in Pennsylvania cited by appellant’s counsel support the contention of the State, but, as will be seen later, these decisions have either been modified or overruled by the later decisions in Pennsylvania. This was recognized in Poole v. Union Trust Co., 191 Mich. at p. 169.

It may be well now to state the contention of the appellee. We quote from the brief:

“Appellee’s claim is that the land described in the lease and the unaccrued rents and royalties in said land covered by said mining lease are real estate situated in the State of Minnesota. That they do not pass as a transfer of property in Michigan. That they are not subject to an inheritance tax in Michigan, and that to subject this estate to the payment of an inheritance tax in the State of Michigan on the transfer in question would be in conflict with the Constitutions of the State of Michigan and of the United States, as not giving equal protection of the laws and as taking property without due process of law. * * *
“We submit that the land covered by the lease in question, the mining lease thereon and the unaccrued royalties on the ore therein payable under the lease, are real estate situated in •the State of Minnesota and that the laws of that State control the character of the property as to whether it is real estate or- personal property. If this is true, it follows that the interest of the estate of Mr. Rust in this Minnesota land and mining lease thereon is not a credit or personal property the transfer of which is subject to the payment of an inheritance tax in this State. * * *
“Whether the land and the rights of the lessor in the mining lease in question is real estate must be determined by the laws of Minnesota where the land lies. The rule is that will provisions concerning real estate are controlled in their operative effect by the laws of the State wherein the land is situated, and not by the laws of the State of the testator’s domicile. The doctrine is thus stated by the Supreme Court of the United States, the present Chief Justice writing the opinion in Clarke v. Clarke, 178 U. S. 186, at p. 190 (20 Sup. Ct. 873); approved by Justice Day in Olmsted v. Olmsted, 216 U. S. 386, 393 (30 Sup. Ct. 292, 25 L. R. A. [N. S.] 1292) :
“ ‘It is a doctrine firmly established that the law of a State in which, land is situated controls and governs its transmission by will or its passage in case of intestacy. This familiar rule has been frequently declared by this court, a recent statement thereof being contained in the opinion delivered in DeVaughn v. Hutchinson, 165 U. S. 566 (17 Sup. Ct. 461), where the court said (page 570):
“ ‘ “It is a principle firmly established that to the law of the State in which the land is situated we must look for the rules which govern its descent, alienation and transfer, and for the effect and construction of wills and other conveyances.” ’ ”

Counsel cite many other authorities to the same effect.

We are furnished with long and able briefs to show the contentions of the respective parties. The issue involved is a clear cut one. We have already said enough about the authorities cited by appellant to indicate that we are of the opinion they are not controlling. We think counsel for the State have not sufficiently emphasized the fact that the lessee may at any time terminate the lease by giving 30 days’ notice. Nowhere in the contract is it agreed that the lessee will mine and pay for all the ore in the land. It is also agreed therein that if the lessee fails to perform its agreement the lessor at once may take possession of and control the land and mineral as though the agreement had not been made.

Questions similar to the ones involved in the instant case have been before the supreme court of Minnesota. The case of State v. Royal Mineral Ass’n, 132 Minn. 232 (156 N. W. 128), is instructive. We quote:

“The defendant was assessed for the year 1913 for ‘credits’ at a valuation of 830,000. The alleged credits were made up of the minimum amounts agreed to be paid under certain iron mining leases of land owned b3^ defendant in this State. These instruments are nine in number. They run for a fixed term, in most cases for 50 years from their date, but are terminable by the lessees on notice. Eight of them are terminable on 30 days’ notice; one of them on 90 days’ notice. One of these instruments is submitted as a fair sample of all. It is a lease in form. It grants possession to the lessee. It provides that the lands are leased for the purpose of exploring for, and mining and taking out, ore, and authorizes the lessee to construct all buildings, ditches, drains, wagon roads, railroads and other improvements on said land incident to such mining operations, and gives the right to cut certain of the timber on the land for fuel and other purposes incident to such operations. The lessee agrees to mine and remove at least 150,000 tons of ore an'nually and to pay a royalty of 25 cents per ton upon all ore mined, or at his option to pay ‘an advance royalty, which shall be treated and considered as ground rent,’ of 25 cents per ton on said minimum, though less than the minimum is mined, or none is mined at all. This ‘advance royalty’ is payable in advance, it may be, of mining operations. It is not, however, payable in advance as that term is commonly used in leases, but it is payable in the months of January, April, July and October of each year for the three months next preceding. * * *
“At the outset it is important to consider the nature of these so-called mining leases. Their nature is not an open question in this State. It is settled that they are leases in fact, as well as in name. (Citing authorities.)
“The earlier Pennsylvania cases announced the doctrine that such instruments were sales of the mineral in place. * * * On this point these earlier cases are overruled by the later cases above cited, which hold, in substance, that while a contract regarding mineral in place may be a sale, or a lease, or a license, depending on its terms, an instrument such as the instruments we have here under consideration is ‘at common law a lease without impeachment of waste,’ that the amount paid by the lessee is rent and not the purchase price of mineral in place, that the lessee is in the position of a lessee of a house, bound to pay rent whether he occupies it or not. Denniston v. Haddock, 200 Pa. 426, 428, 429 (50 Atl. 197) ; Girard Trust Co. v. Delaware & Hudson Co., 246 Pa. 161 (92 Atl. 129). Few, if any, State courts follow the early Pennsylvania decisions. * * *
“We adhere to the doctrine of the Evans and Boeing Cases, and hold these instruments leases. It follows logically that the amounts stipulated to be paid by the lessees are rents, and they were expressly held by this court to be rents in the Boeing Case, supra, a case which involved a construction of the very leases now before the court. They are ‘the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows.’ ”

In Minnesota Loan & Trust Co. v. Douglas, 135 Minn. 413 (161 N. W. 158), it is said:

“The first proposition to be determined is the character of royalties, or the income derived from mining leases given and to be given upon these lands. The contention of appellant is that these are not rents and profits from real estate, but constitute capital, or land converted into personalty, because as the ore is mined the value of the land is proportionately and permanently depreciated. The respondent maintains that by the decisions in State v. Evans, 99 Minn. 220 (108 N. W. 958, 9 Ann. Cas. 520); Boeing v. Owsley, 122 Minn. 190 (142 N. W. 129) ; and State v. Royal Mineral Ass’n, 122 Minn. 232 (156 N. W. 128), it is now settled law in this State that royalties under mining leases constitute rents and profits from land. The importance of the question, as met in each of the cases mentioned, was fully appreciated by the court and the well-recognized standing and ability of counsel, who represented the parties therein, vouch for the thoroughness with which every argument and point was pressed upon the attention of the court. Of these cases, the Boeing Case is closely related to the one at bar, since it determined that royalties from mining leases were to be considered as rents and profits from real estate in the distribution and descent of property. Eminent counsel now urge that the precise question here presented was not involved in any one of the three cases mentioned. In a certain sense this is true; at the same time the nature of a mining lease, whether it constitutes a sale in place of the ore so as to be a conversion of realty into personalty, or whether it returns to the lessor what is ordinarily termed rent from land, was considered from every angle, and the result reached in each case, that it was the latter.”

In Von Baumbach v. Sargent Land Co., 242 U. S. 503 (37 Sup. Ct. 201), the leases involved were substantially the same as the ones before us. Mr. Justice Day, speaking for the court, commencing on page 517, said:

“The nature of these mining leases has been the subject of some difference of opinion in the courts. The circuit court of appeals in this case took the view announced in some of the earlier cases, notably in Pennsylvania, that the leases were such in name only, and were in fact conveyances of the ore in place as part of the realty, and that the so-called royalties merely represented payments for so much of the land and were in no just sense income, but mere conversions of the capital.
“These lands are situated in Minnesota, and this character of lease has long been familiar in that State as a means of securing the development and operation of mining properties. Some years before the passage of the corporation tax act, the supreme court of Minnesota had dealt with the character of such instruments. In the case of State v. Evans, 99 Minn. 220, that court, after a review of the English and American cases, said (p. 227):
“ ‘The propriety of a lease for the purpose of developing and working mines is recognized by all of the cases, and the rule established by the great weight of authority that such leases do not constitute a sale of any part of the land, and further that iron or other materials derived from the usual operation, of open mines or quarries, constitute the rents and profits of the land, and belongs to the tenant for life or years, and to the mortgagor after sale on foreclosure, and before the expiration of the time for redemption. The rule, however, has no application to unopened mines in the absence of a contract, express or implied for opening and leasing them.’
“The same doctrine was held in Boeing v. Owsley, 122 Minn. 190 (142 N. W. 129), and in the late case of State v. Royal Mineral Ass’n, 132 Minn. 232 (156 N. W. 128), in which the decision of the circuit court of appeals in this case, that such leases were merely conveyances of the ore in place, was brought to the attention of the court, and that conclusion expressly denied the supreme eourt of Minnesota saying:
“ ‘We adhere to the doctrine of the Evans and Boeing Oases, and hold these instruments leases. It follows logically that the amounts stipulated to be paid by the lessees are rents, and they were expressly held by this court to be rents in the Boeing Case, supra, a case which involved a construction of the very, leases now before the court. They are “the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows.” ’ Lord Denman in Queen v. Westbrook, 10 Q. B. 205.
“These conclusions of the supreme court of Minnesota are not only made concerning contracts in that State, such as are here involved, but are supported by many authorities. Ordinarily, and as between private parties, there is no question of the duty of the Federal court to follow these decisions of the Minnesota supreme court, as. a rule of real property long established by State decisions. Kuhn v. Fairmont Coal Co., 215 U. S. 349, 360 (30 Sup. Ct. 140).”

In United States v. Biwabik Mining Co., 247 U. S. 116 (38 Sup. Ct. 462), it was said in part:

“In the Sargent Land Company Case it was pointed out that the courts of Minnesota, certainly familiar with the physical characteristics of the ore deposits involved, had in a series of cases held these instruments to be leases, and that the royalties agreed to be paid were rentals, in compensation for the privileges granted the lessee. We held the conclusion of the Minnesota courts to be warranted by reason and authority. (242 U. S. 503, and cases, cited in margin, p. 518.) * * *
“In the Sargent Land Company Case the circuit court of appeals for the eighth circuit found that the land including the ore in it was worth hundreds of thousands of dollars, and without the right to the ore the land was worth practically nothing. (134 C. C. A. 649, 219 Fed. 38.) This, finding, as well as facts of general knowledge, leaves little room to suppose that this court made its decision concerning the rights of the lessor influenced by the fact that the land itself was the chief thing, and the ownership of it after the exhaustion of the minerals one of the controlling reasons in reaching the conclusion announced in that case. The lessee takes from the property the ore mined, paying for the privilege so much per ton removed. He has this right or privilege under the form of lease here involved so long as he sees fit to hold the same without exercising the privilege of cancellation therein contained. He is, as we held in the Sargent Land Company Case, in no legal sense a purchaser of ore in place.”

The reasoning of these cases is persuasive. Suppose in the instant case that after the will was made and before the death of Mr. Rust the lessee had exercised its right to terminate the lease, would not the widow and the daughter take under the will the real estate with the ore included? or suppose in like case the testator had not used the words “all my right, title and interest of every name, nature and description in and to” the land, Is it not clear that the widow and daughter under the will would get, so far as the Minnesota real estate and mining property are concerned, an interest of but little value? We are constrained to hold that a proper disposition of the case was made in the court below.

The judgment is affirmed.

Steere, C. J., and Fellows, Stone, Clark, Bird, and Sharpe, JJ., concurred.

The late Justice Brooke took no part in this decision.


source: Caselaw Access Project

author: Stone, J.

license: Public Domain

text:
    PATRONS’ MUTUAL FIRE INSURANCE CO. OF MICHIGAN v. PAGENKOFF.
    1. Insurance — Fire Insurance — Fraud—Cancellation of Policy.
    Fraud in the application for a policy in a mutual fire insurance association, which was made part of the contract of insurance, in concealing the existence of a mortgage indebtedness on the insured premises, held, sufficient to justify the court of equity in canceling same and setting aside an award thereunder, where plaintiff acted promptly on the discovery of the fraud.

      2. Same — Moral Hazard — Breach of Condition — Presumption of Injury.
    It cannot be presumed tbat tbe breach of a condition, which increases the moral hazard, does the insurer no injury.
    3. Fraud — Intent—Actionable Fraud.
    It is immaterial whether a false representation is made innocently or fraudulently if by its means the party to whom it is made is injured.
    Appeal from Ingham; Wiest (Howard), J.
    Submitted October 7, 1920.
    (Docket No. 41.)
    Decided March 30, 1921.
    Bill by the Patrons’ Mutual Fire Insurance Company of Michigan, Limited, against William Pagenkoff to cancel a policy of insurance, and to set aside an award by an adjusting board on said policy. From a decree for plaintiff, defendant appeals.
    Affirmed.

      Kinname, Black & Leibrand, for plaintiff.

      Michael J. Doyle, for defendant.
   Stone, J.

The bill of complaint in this case was

filed to cancel a policy of fire insurance and to set aside an award by an adjusting board, on the ground of misrepresentations by defendant in the written application for insurance, and in the sworn proofs of loss. Plaintiff is a domestic farmers’ insurance corporation, organized under Act No. 262, Pub. Acts 1895 (2 Comp. Laws 1915, § 9586 et seq.). Defendant is a resident of Menominee county. On May 22, 1915, he made written application for increase of insurance in plaintiff company. In such application he warranted his representations therein set forth to be the truth, the language of the application being:

“The undersigned states and warrants, for the purpose of obtaining such insurance, the representations and statements herein to be the truth; and agrees that this application, together with the policy of said company, its articles of association and by-laws, are a part of the contract of insurance with said company.”

To the question:

“If there is a mortgage or any other claim against the property by other than applicant, give name of claimant, nature of claim and amount of mortgage or claim?”

The answer was:

“$800 Hartner & Son, balance due on land.”

On the strength of such representations plaintiff issued policy No. 23,500 on May 26, 1915. On May 15, 1915, defendant had mortgaged the insured real property for $275 in addition to the $300 Hartner mortgage. On May 26, 1915, the very day the policy was issued, the real estate mortgage tax to the county treasurer was paid, presumably by the defendant who had agreed to pay the same by the terms of the mortgage. Oin August 12, 1915, the insured property burned. On August 23, 1915, defendant made and delivered to plaintiff sworn proofs of loss in which he set forth that “there was at time of loss no mortgage, lien or execution, or any other claim or interest in or against any of the property lost, except * * * David Goldberg of Marinette, Wis., chattel mortgage on horse $275, Geo. Hartner & Son, Faithorn, Mich., real estate mortgage $300.”

Articles XI and XII of plaintiff’s articles of association are as follows:

“Article XI. The policy of any member shall be void if the assured has concealed or misrepresented in writing or otherwise any material fact or circumstance concerning his insurance or the subject-matter thereof; or if the interest of the insured in the property is not truly stated; or if the' property insured shall be sold, transferred or incumbered, after such policy is issued, unless the consent of .the president and secretary of said company be indorsed in writing on said policy and signed by both of them.
“Article XII. The written application for insurance shall be a part of the policy and a copy thereof shall be attached to the policy and the statements therein shall be representations and warranties of the facts therein stated; also a copy of charter and by-laws of said company shall be printed upon each policy issued and shall be(a part thereof.”

An adjusting committee consisting of Ralph N. Seward, Charles G. Swanson and Pat Hayes was appointed to, and did, make an adjustment, and allowed the defendant $315.25.

In his application for insurance defendant also failed to disclose a chattel mortgage on a horse which was insured and consumed in the fire. Plaintiff appealed to the board of arbitration provided for in the charter, which, in its award, deducted $150, being the amount allowed by the adjusters for the chattel mortgage on the horse, leaving the liability of the company $165.25. Defendant refused to accept that amount and sued on the award made by the adjusting board. That case reached this court on a question of practice (see Pagenkoff v. Insurance Co., 197 Mich. 166). Subsequently plaintiff’s officers discovered for the first time that defendant had misrepresented his mortgage indebtedness in both his application for insurance and also in his sworn proof of loss, following which discovery this bill of complaint was promptly filed;

In his application for insurance plaintiff represented the value of the farm, including buildings, at $1,200. Mr. Ralph N. Seward, a witness for the defendant, estimated the value of the real estate to be $500. Upon the hearing the secretary of the plaintiff company, whose duty it is to pass upon the acceptability of risks and to issue policies, testified that if he had been apprised of the $275 real estate mortgage in addition to the $300 mortgage he would not have issued the policy. The witness Seward, and also Charles G. Swanson, a witness on behalf of plaintiff, and members of the adjusting committee, both testified that if they had known of the $275 real estate mortgage in addition to the $300 mortgage at the time of their adjustment “it certainly would have influenced the adjustment,” and would have had an effect upon the result. The witnesses testified that they got the information and facts from the sworn proofs of loss.

After the hearing upon the pleadings and proofs and the arguments, the learned circuit judge who heard the case below, filed an opinion ordering the cancellation of the policy and the vacating of the award of the adjusting committee. Subsequently the matter was re-argued upon briefs, and a supplemental opinion was filed by the. judge, adhering to his former opinion. After stating the amount of insurance and the representations in the application, the circuit judge, in his opinion, said:

“Meeting with a loss by fire, the defendant was given an award under the policy by adjusters, and plaintiff claims to have taken an appeal to arbitrators as provided under the articles of association and bylaws of the company, but the validity of such appeal is questioned by defendant. Whether an appeal was properly taken or not is of no importance, as defendant has sued at law on the award made by the adjusters, and plaintiff’s claim for relief is based upon defendant’s misrepresentation in obtaining the policy and no discovery of the fraud until after the action by the adjusters and the arbitrators. The failure of defendant to state in his application the true mortgag’e indebtedness kept from plaintiff information it was entitled to have, and his warranty of the truth of what he did state, bars him from claiming that plaintiff should not have relied upon his statement. The plaintiff had a right to be informed of the total mortgage indebtedness and to rely upon the statement warranted true by defendant in his application and to rest upon the same until discovery of the truth. Such representation was material and being untrue invalidates the policy unless waived by plaintiff. Niles v. Insurance Co., 119 Mich. 252.
“Plaintiff is bound by the action of the adjusters and arbitrators unless the misrepresentation made by defendant was not discovered until after such action. The proof shows that plaintiff did not discover the misrepresentation until after the awards of both the adjusters and the arbitrators. Plaintiff was not bound to be suspicious of defendant’s representation and therefore to make investigation of the public records, but was bound to act quickly when aware of the misrepresentation and that it has done in the only forum open to it. By suing on the award of the adjusters, defendant has cut plaintiff off from making the defense at law. The policy is void because of defendant’s misrepresentation in his application, and plaintiff not being aware of the misrepresentation in time to present the issue to the adjusters or arbitrators, has a right to maintain this suit.
“The policy is canceled and the award of the adjusters vacated and a decree may be prepared to such effect.”

Supplemental Opinion.

“Consideration of the supplemental brief leads to no change of opinion. The fraud charged in the bill was that of defendant in procuring the insurance. If that fraud was discovered, or should have been discovered by the company, in time to present the same to the forum stipulated between the parties, then, of course, it was for that forum and not for this court. Under the bill and the evidence this is not a proceeding to review the award, nor is plaintiff trying now to avail itself of a defense it should have presented to the adjusters or arbitrators. Defendant having procured his insurance by misrepresentation upon a material matter, the company is at liberty, upon discovery of the fraud too late to have relief elsewhere, to ask this court to stay defendant’s hands and defendant is in no position to urge that his fraud has been washed clean by an award made before discovery thereof.
“One led into a contingent liability contract through fraud, has a remedy, if liability is asserted, sometime, somewhere. Such remedy is by way of relief from the contract itself, and must be claimed at the first opportunity after discovery, but if not discovered until the doors of the law side of remedy are closed, the door of equity jurisdiction is open and relief can he obtained, provided it appears that the defrauded party has been guilty of no laches and the fraud is of such a nature as to invalidate the contract. It appears that the plaintiff moved promptly and in the only forum open to it after discovery of the fraud and is not to be charged with fault in not making discovery at an earlier date.
“A decree will be entered in accordance with the opinion heretofore filed herein.”

The defendant has appealed.

In his brief in this court counsel for defendant quotes the following in article V of the articles of association of the plaintiff, which are as follows: ¡

“(c) The duties of said adjusting board shall be to investigate the standing of the losing member in his subordinate grange; his compliance with the policy contract; the justice of his claims; the validity of his policy; the cause of the loss and the liability of the company, and to fix the amounts and valuations of property lost, and shall make a full report of their proceedings and findings to the secretary of the company.
“(d) If required, the loser shall submit to a full examination) under oath by the adjusting board, or, in case of an appeal by the board of arbitration, of all matters pertaining to said loss, his application for insurance, his policy, his membership in the grange, his standing as regards dues, etc. And if there be any fraud or evasion on his part with fraudulent intent, the claimant shall forfeit all claims for such loss under his policy.”

And the following in article VI of the articles of association:

“Article VI. * * * In case the company desires to appeal from the findings of the adjusting board to the board of arbitration, the secretary shall notify such board and loser in the same manner as is provided in case where the loser appeals. And no appeal to such board of arbitration shall be taken by either the loser or the company after the expiration of thirty days from the date of the findings; but in such case the findings of the adjusting board shall be final and conclusive as to both the loser and the company.
“When an appeal is taken to the board of arbitration, said board shall investigate, try, hear and decide upon the justice of the claim, the validity of the policy, the liability of the company, and fix the amounts and valuation of the property lost or destroyed, and no suit at law or in equity shall be commenced or maintained by any loser or the company to determine the justice of the claim, the validity of the policy, the liability of the company or to fix the amounts of valuations, but the board of arbitration shall have exclusive jurisdiction to determine all controversy between the loser and the company, and such determination shall be binding and conclusive upon any such loser and the company.”

We quote from the brief of defendant as follows:

“The question (and there is but one question — a concrete issue at that) is a simple one. Nor is there any contradiction in the evidence as to the facts. The learned circuit judge has overlooked, or deems unimportant, that which, according to my understanding of the law, is the all-important question in this case, viz.: the well defined differentiation between what is frequently, though inaccurately, termed legal fraud (conduct or silence in many instances entirely free from moral reproach) and actual fraud, a species of misconduct that predicates a wicked heart. Indeed, I am warranted in contending that the decree of the lower court proceeds entirely upon the assumption that no such differentiation is a part of our law.”

Counsel then proceeds to quote from 2 Words & Phrases (2d series), pp. 638-642 et seq., and other authorities in support of his position, claiming that the case is not controlled, as the circuit judge held, by Niles v. Insurance Co., 119 Mich. 252. He then refers to 20 Cyc. p. 36, quoting these words:

“There can be no actual fraud without a dishonest intent indicating moral turpitude.”

Turning to that authority we find the entire sentence from which, counsel quotes a part to be as follows:

“It is sometimes stated that proof of ‘actual fraud’ is essential to maintain the action, or there can be no actionable fraud without a dishonest intent indicative of moral turpitude.”

In a note under the text we find the following:

“But in Michigan the rule prevailing in courts of equity, that innocent misrepresentations may constitute fraud (see Contracts, 9 Cyc. 408), has been applied in actions of deceit, it being well settled that ‘if there was in fact a misrepresentation, though made innocently, and its deceptive influence was effective, the consequences to the plaintiff being as serious as though it had proceeded from a vicious purpose, he would have a right of action for the damages caused thereby.’ Holcomb v. Noble, 69 Mich. 396, 399 (followed in Busch v. Wilcox, 82 Mich. 315); Baughman v. Gould, 45 Mich. 481. See, also, Totten v. Burhans, 91 Mich. 495.”

In the Totten Case the headnote is as follows:

“It is immaterial whether a false representation is made innocently or fraudulently, if, by its means, the party to whom it is made is injured.”

In Holcomb v. Noble, supra, Mr. Justice Morse, in a concurring opinion, said on page 399:

“But an equally careful examination of the cases adjudicated in this State satisfies me that the doctrine is settled here, by a long line of cases, that if there was in fact a misrepresentation, though made innocently, and its deceptive influence was effective, the consequences to the plaintiff being as serious as though it had proceeded from a vicious purpose, he would have a right of action for the damages caused thereby either at law or in equity.” See cases cited.

We think the above reference to our authorities sufficient answer to the claim of defendant’s counsel above quoted.

Under the Michigan authorities the evidence in the case shows that the misrepresentations of the defendant as to the mortgage conditions resulted in a fraud upon the plaintiff. It cannot be presumed that a breach of a condition, which increases the moral hazard, does the insurer no injury. Quite the contrary. The plaintiff issued a policy in the amount applied for. Had the information of the other mortgage been given in the application, the evidence substantially is that the plaintiff would have declined to issue a policy on account of the excessive mortgage indebtedness. The record shows incumbrances exceeding the value of the real estate under the testimony in the case. By what we have said we do not wish to be understood as conceding that the record does not show actual fraudulent intent on the part of the defendant. It is inconceivable that he was in ignorance of the real estate and chattel mortgage to Goldberg when he made his application for insurance. We think the case of Wilms v. Insurance Co., 194 Mich. 656, cited by defendant’s counsel, inapplicable here. A careful reading of that case will show that no fraud or mistake was charged against Wilms. We have examined Metropolitan Life Ins. Co. v. Peeler (Okla.), 176 Pac. 939, cited by defendant, but think it is not in line with our own decisions.

In addition to the authority cited by the circuit judge, we call attention to Shelden v. Insurance Co., 124 Mich. 303, 310. We quote as follows:

“The court instructed the jury that if the valuation in the policy was an honest one, and not grossly overestimated, it would not avoid the policy, but that if Tuckey overestimated the property knowingly, for the purpose of procuring a larger insurance than he was entitled to, he should not recover. The valuation was made a warranty, and, under the authorities, a substantial overvaluation would avoid it, irrespective of motive, as shown by the following cases cited by counsel: American Ins. Co. v. Gilbert, 27 Mich. 429; Van Buren v. Insurance Co., 28 Mich. 398; Ætna Ins. Co. v. Resh, 40 Mich. 241; Briggs v. Insurance Co., 65 Mich. 55, 56. See, also, Niles v. Insurance Co., 119 Mich. 252.”

It follows from what we have said that the decree below should be affirmed. If defendant elects, a provision may be embraced in the decree for the return to him of all premiums, fees, dues and assessments paid on account of the insurance under said policy. These amounts are tendered by the bill of complaint.

The decree below is affirmed, with costs to plaintiff in this court.

Steere, C. J., and Moore, Fellows, Clark, Bird, and Sharpe, JJ., concurred.

The late Justice Brooke took no part in this decision.


author: Bird, J.

text:
    PEOPLE v. DE LA MATER.
    1. Constitutional Law — Criminal Law — Search Warrants— Discretion op Magistrate to Determine Probable Cause— Statutes — Mandatory Provisions.
    Section 25, Act No. 53, Pub. Acts 1919, amending Act No. 338, Pub. Acts 1917, providing that if any person makes a sworn complaint or affidavit before any magistrate authorized to issue warrants in criminal cases that he has reason to believe that any intoxicating liquors are being manufactured, possessed, etc., or kept for the purpose of being sold, etc., such magistrate “shall immediately issue his warrant” to search the premises described, and. if such liquors are there found, to seize the same, is unconstitutional in that it makes the issuance of the warrant mandatory and takes away the right of the magistrate to determine the question of probable cause given him by the State Constitution under article 2, § 10.
    2. Intoxicating Liquors — Criminal Law — Druggists—Quashing Information — Void Search 'Warrant — Evidence—Sufficiency.
    On error to review, under Act No. 159, Pub. Acts 1917. the granting of a motion to quash an information alleging violation of the liquor law by a druggist, the contention of the prosecution that there was sufficient legal evidence, aside from that procured by a void search warrant, to hold defendant for trial, cannot be sustained, such contention being based on the discovery by the inspectors of 4% pints of Kentucky Maiden whisky in the prescription case of defendant before he knew that they had a search warrant, where it may be assumed that the inspectors ■ would probably not have been there except for said search , warrant, and in view of the fact that one of the inspectors certified in his return that by virtue of the warrant he found 4y2 pints of Kentucky Maiden whisky.
    Error to superior court of Grand Rapids; Dunham (Major L.), J.
    Submitted October 14, 1920.
    (Docket No. 109.)
    Decided March 30, 1921.
    Edgar D. De La Mater was bound over to the superior court for an alleged violation of the liquor law. The information was quashed on motion of defendant, and the liquor seized ordered returned. To review this judgment under Act No. 159, Pub. Acts 1917, the people bring error.
    Affirmed.

      Alex. J. Groesbeck, Attorney General, James A. Greene, Assistant Attorney General, and Cornelius J. Hoffius, Prosecuting Attorney (Fred P. Geib, of counsel) , for the people.

      Rodgers & Rodgers, for appellee.
   Bird, J.

Defendant, a resident of Grand Rapids, was apprehended on a warrant for the violation of the liquor law. He was held for trial in the superior court by the police court. Upon motion the information and proceedings were quashed by the superior court, and the case is here for review on writ of error at the instance of the prosecutor, under the provisions of Act No. 159 of 'the Public Acts of 1917.

It appears that defendant is, and has been, for several years, engaged in operating a drug store in the city of Grand Rapids, and as such druggist had a permit to sell intoxicating liquors up to May 1, 1919. After that date the food and drug department refused to renew his permit, which left him with a stock of liquors on hand. While negotiating for a renewal of his permit, and on December 30, 1919, George M. Bradley, one of the inspectors of the food and drug department, made an affidavit for a search warrant to search defendant’s premises, and it was issued by the police court. Upon a search of defendant’s place of business and storage house a quantity of various kinds of intoxicating liquors was found and seized. About three weeks thereafter defendant was arrested and taken before the police court. An examination was had and defendant was held for trial. Subsequently an information was filed in the superior court, following the charge in the complaint and warrant, charging him with running a drug store where liquors were stored and sold without having a permit to do so, and also with having intoxicating liquors in his possession contrary to the provisions of Act No. 338 of the Public Acts of 1917, as amended (Act No. 53, Publ Acts 1919). Defendant moved the court for an order quashing the information and for his discharge, assigning several reasons therefor. The trial court granted the motion, it being the opinion of the court that section 25 of said act was in conflict with both the Federal and State Constitutions. It was also the opinion of the court that no probable cause was shown for the issuance of the search warrant. Accordingly, an order was granted quashing the information; suppressing all evidence obtained by virtue of the search warrant and discharging the defendant from custody, with the further order that the liquors so seized be returned to him.

The assignments, of error raise several questions, two of which demand our attention:

(1) Wasi the superior court in error in holding that section 25 was. in conflict with section 10, article 2, of our Constitution?

(2) Was there sufficient legal evidence, aside from that procured by the search warrant, to hold defendant for trial?

The section of the statute which is questioned provides that:

“Sec. 25. If any person makes a sworn complaint or affidavit before any magistrate authorized to issue warrants in criminal cases, that he has reason to believe and does believe that any intoxicating liquors are being manufactured, possessed, sold, furnished, given away, or kept for the purpose of being sold, furnished, given away or possessed, contrary to law, or that any such liquors are stored, temporarily or otherwise, in any depot, freight house, express office, or in any other building or place with the apparent intention of being delivered for the purpose of being sold, furnished ox-given away contrary to the provisions of this act, such magistrate shall immediately issue his warrant to any officer whom the complainant may designate, having power to serve criminal process, commanding him to search the premises described and designated in such complaint and warrant, and if such liquors are there found, to seize the same, together with the vessels in which they are contained, and all the implements and furniture used and kept for such illegal manufacturing, importing,-selling, furnishing, giving away, possessing, or storing of such liquors, and them safely keep and make immediate return on said warrant.” * * *

The constitutional provision with which the statute is said to be in conflict is as follows:

“The person, houses, papers and possessions of every person shall be secure from unreasonable searches and seizures. No warrant to search any place or to seize any person or thing shall issue without describing them, nor without probable cause, supported by oath or affirmation.” Article 2, § 10.

The argument is made that this provision of the Constitution forbids the issuance of a search warrant except upon probable cause, supported by oath or affirmation, and that the question of probable cause is one to be determined by the magistrate who is requested to issue the warrant. It is insisted that section 25 takes away this right from the magistrate and transfers it to the complainant. The language employed in section 25 is persuasive that it was intended by the legislature that when an affidavit or complaint complying with the terms of the statute was presented to a magistrate he would be in duty bound to issue his warrant. There appears to be no room for an exercise' of his judgment as to whether probable cause exists. The statute does not say that he may issue his warrant, but the wording is he “shall immediately issue his warrant.” The use of the adverb “immediately” contributes much to the conclusion' that the duty of the magistrate was intended to be mandatory. Taking the language in its plain ordinary meaning, together with the rule that when the word “shall” is used in a command to a public official, it excludes the idea of discretion (In re Rourke, 30 N. Y. Supp. 375), we think the command to issue the writ is mandatory and that the magistrate is without authority to determine the question of probable cause. It is quite evident that if a showing were made to this court that a sworn application complying with, the statute had been made and tendered to a justice of the peace, who refused to issue the warrant, we would compel him to do so by writ of mandamus, if no constitutional question were raised. If this be the proper construction, is the section in collision with the constitutional provision heretofore quoted?

The statutory provision which has existed in this State for many years, authorizing the issuance of search warrants, is as follows:

“When complaint shall be made on oath to any magistrate authorized to issue warrants in criminal cases, that personal property has been stolen or embezzled, or obtained by false tokens or pretenses, and that the complainant believes that it is concealed in any particular house or place, such magistrate, if he be satisfied that there is reasonable cause for such belief, shall issue a warrant to search for such property.” 3 Comp. Laws 1915, § 15879.

Tiffany’s Criminal Law (How. 4th Ed.), p. 355, in commenting on the issuance of search warrants, has the following to say:

“The facts and circumstances which induce the complainant’s belief must be set forth, and those facts and circumstances must be sufficient to make it appear that there is probable cause for such belief and for making the search.
“And the magistrate must be satisfied and determine from the facts and circumstances set forth and sworn to, that there is. reasonable cause for such belief.”

Of course, it may be said, that this is legislation and may be changed by legislation, and this would be true if it were not a constitutional requirement. The case of Hastings v. Haug, 85 Mich. 92, determines that the question of probable cause is a constitutional question. It says :

“The Constitution and the statute both require that the complaint must be on oath, and that the magistrate must be satisfied that there is reasonable or probable cause.”

The case of Lippman, v. People, 175 Ill. 110 (51 N. E. 872), discusses a situation so nearly like the present one that we quote from it at length:

“Section 6 of article 2 of the constitution is as follows:
“ ‘The right of people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated; and no -warrant shall issue without probable cause, supported by affidavit, particularly describing the place to be searched and the persons or things .to be seized.’
“Section 4 of the act in question provides as follows :
“ ‘In case- thei owner or owners of any cask, barrel, keg, bottle or box so marked, stamped and registered as aforesaid, shall, in person or by agent, make oath in writing, before any justice of the peace or police magistrate, that he has reason to believe, and does believe, that any manufacturer or bottler of ale, porter, lager beer, soda, mineral water or other beverage, or any other person is using, in any manner by this act declared to be unlawful, any of the casks, barrels, kegs, bottles or boxes, of such person or his principal, or that any junk dealer or dealer in casks, barrels, kegs, bottles or boxes, or any other dealer, manufacturer or bottler, has any such cask, barrel, keg, bottle or box secreted in, about or upon his, her or their premises, the said justice of the peace or police magistrate shall issue his search warrant and cause the premises designated to be searched,’ etc.
“This section of our constitution is identical with the fourth amendment to the Constitution of the United _ States, except that it substitutes the word ‘affidavit’ for ‘oath or affirmation.’ It is a step beyond the Constitution of the United States, in requiring the evidence of probable cause to be made a permanent record in the form of an affidavit; otherwise, it is the same. It has been uniformly held, wherever the question has arisen under a statute or constitution containing such provision, that the oath or affirmation must show probable cause arising from facts within the knowledge of affiant, and must exhibit the facts upon which the belief is based, and that his mere belief is not sufficient. United States v. Turreaud, 20 Fed. 621; Johnston v. United States, 30 C. C. A. 612, 87 Fed. 187. The constitutional provisions on this subject had their origin in the abuse of executive authority, and their design is to substitute judicial discretion for arbitrary power, so that the security of the citizen in his property shall not be at the mercy of individuals or officers. The general statute authorizing search warrants, contained in the criminal code, fully recognizes this rule by the requirement that the judge or justice of the peace shall be satisfied that there is reasonable cause for the belief of the affiant, before he shall issue his warrant. .Wherever a statute requires probable cause, supported by oath or affirmation, the complaint must set up facts, and cannot rest on mere belief, which will not satisfy the requirement. Blythe v. Tompkins, 2 Abb. Prac. (N. Y.) 468; People v. Heffron, 53 Mich. 527; Ex parte Dimmig, 74 Cal. 164 (15 Pac. 619). A search warrant can only be granted after a showing made before a magistrate, under oath, that a crime has been committed; and the law, in requiring a showing of probable cause, supported by affidavit, intends that facts shall be stated which shall satisfy the magistrate that suspicion is well founded. The mere expression of opinion, under oath, is no ground for the warrant, except as the facts justify it. Cooley, Const. Lim. (4th Ed.) p. 372: ‘The 'warrant is not allowed for the purpose of obtaining evidence of an intended crime; but only after lawful evidence of an offense actually committed.' Id. p. 374. The act now under consideration does not even require an affidavit that any offense has been committed, and an affidavit which fulfills its conditions belongs to a class universally condemned by every authority, when used to disturb a citizen in the security guaranteed him by the constitution. It requires nothing but the belief of the party making the affidavit; and, as he is not required to state any fact or satisfy the magistrate that there is reasonable ground for his belief, he may just as well swear by wholesale, according to the printed form, to 400 bot-ties and 40 kegs, as to his affidavit to the facts of a particular case. The act attempts to transfer the judicial discretion, which the constitution intended should be exercised by the magistrate, from that officer to the party making the affidavit. The vesting of such discretion in the magistrate has been the main purpose of constitutional provisions of this character; while this act destroys the protection secured, and permits the affiant to pass upon the question of probable cause.”

The prosecutor has cited the following cases in support of his position: Lowrey v. Gridley, 30 Conn. 450, 458; Gray v. Kimball, 42 Me. 299, 307; State v. Miller, 48 Me. 576, 581; State v. Nowlan, 64 Me. 532; State v. McManus, 65 Kan. 720 (70 Pac. 700); In re Horgan, 16 R. I. 542 (18 Atl. 279); In re Fitzpatrick, 16 R. I. 80 (11 Atl. 773) ; Lincoln v. Smith, 27 Vt. 328, 346, 356.

The Connecticut case cited appears to have some bearing on the question here at issue. While the warrant was upheld in that case the court does so by holding that the proceeding was in accord with the general practice which had been in force in that State for many years. In this State it is. an innovation, the practice has always been opposed to what is now proposed in this statute. This fact, together with the direct statement in Hastings v. Haug, supra, that “the Constitution and statute both require that * * * the magistrate must be satisfied that there is reasonable or probable cause,” renders the opinion in the Connecticut case of little value in this State. We do not think the other cases are sufficiently in point to discuss them.

Our conclusion is, that section 25 of the statute is in conflict with the Constitution, and for that reason is without force.

It is argued by the prosecutor that there was evidence introduced aside from that obtained by the search warrant, which would sustain the information. This is based upon some proof that 4% pints of Kentucky Maiden whisky were discovered in the prescription case before defendant knew that the inspectors had a search warrant. While this is true the fact remains, however, that the inspectors would probably not have been there except for the fact that they were in possession of a search warrant, and it is fair to assume that what they did was done in pursuance of it. Added to this fact is the return of Inspector Bradley, who certifies therein that by virtue of the warrant he found 4% pints of Kentucky Maiden whisky in defendant’s, possession. In view of this, we can hardly say that any intoxicating liquors were discovered in defendant’s place without the aid of the search warrant.

The other questions discussed by the trial court will need no consideration by us.

The judgment of the trial court is affirmed.

Steere, C. J., and Moore, Fellows, Stone, Clark, and Sharpe, JJ., concurred.

The late Justice Brooke took no part in this decision.


text:
    PEOPLE v. LE VASSEUR.
    1. Intoxicating Liquors — Criminal Law — Search Warrant — Constitutional Law.
    A conviction of a violation of the liquor law resting upon evidence obtained by proceedings taken under section 25, Act No. 53, Pub. Acts 1919, declared unconstitutional by the Supreme Court. (People v. De La Mater, ante, 167), must be set aside.
    2. Same — Search Warrant — Premises—Person.
    As to whether a search warrant which authorizes a search of defendant’s premises authorizes a search of defendant’s person, — qucere.
    Exceptions before judgment from Bay; Houghton (Samuel G.), J.
    Submitted June 17, 1920.
    (Docket No. 83.)
    Decided March 31, 1921.
    Philip LeVasseur was convicted of violating the liquor law.
    Reversed, and defendant discharged.

      Hitchcock & Allison, for appellant.

      William A. Collins, Prosecuting Attorney, for the people.
   Bird, J.

Defendant was convicted by a jury in the Bay circuit court for having in his possession a quantity of spirituous and intoxicating liquors. He has assigned error on the proceedings and contends that the conviction should be set aside because his constitutional rights have been invaded.

In June, 1919, defendant was engaged in conducting a soft drink parlor in the Republic hotel in Bay City. On June 18th Mr. George W. Snedicor, one of the State food inspectors, made an affidavit for a search warrant to search defendant’s premises, upon which affidavit a search warrant was issued by the police justice of Bay City, directed to the said food inspector, commanding him to

“enter into the premises of the Republic hotel occupied by Philip LeVasseur, located on the corner of 4th and Saginaw streets, in the city of Bay City, in the county of Bay, and there diligently search for the said intoxicating liquor and vessels, implements and furniture, and that you will bring the same, or any part thereof, found in such search, forthwith, before me, to be disposed of and dealt with according to law.”

The food inspector, with his aides, visited defendant’s premises and searched them. Before doing so, one of the inspector’s, aides, Mr. Gleason, reached into defendant’s pocket and took therefrom a half pint bottle nearly filled with whisky. Subsequently defendant was arrested, and held for trial.

Before trial counsel, in behalf of defendant, demanded a return of the bottle of whisky abstracted from defendant’s pocket. This was refused and the trial court denied defendant’s application for an order directing its return. A jury was then impaneled and the trial proceeded. Later the bottle of whisky was offered and received in evidence over the protest and objection of defendant’s counsel.

It is counsel’s contention that the admission of the bottle of whisky in evidence was error because the possession thereof was gotten illegally by the inspector, that while the search warrant authorized the inspector to search the premises, it did not authorize him to search the person of defendant. This raises the question whether a search warrant which authorizes a search of defendant’s premises authorizes a search of defendant’s person.

If the food inspector had the right to search defendant and seize property found on his person, it must be found in the statute. Act No. 53 of the Public Acts of 1919 is the authority relied on by the people to justify the conduct of the inspector. Section 25 of this act provides:

“If any person makes a sworn complaint or affidavit before any magistrate authorized to issue warrants in criminal cases, that he has reason to believe, and does believe, that any intoxicating liquors are being manufactured, possessed, sold, furnished or given away, or kept for the purpose of being sold, furnished, given away or possessed, contrary to law, or that any such liquors are stored, temporarily or otherwise, in any depot, freight house, express office or in any other building or place with the apparent intention of being delivered for the purpose of being sold, furnished or given away contrary to the provisions of this act, such magistrate shall immediately issue his warrant to any officer whom the complainant may designate, having power to serve criminal process, commanding him to search the premises described and designated in such complaint and warrant, and if such liquors are there found to seize the same together with the vessels in which they are contained, and all the implements and furniture used and kept for such illegal manufacture,” etc.

The people’s case rested upon evidence which was obtained by proceedings taken under the section quoted. This section of Act No. 53 of the Public Acts of 1919 was recently held unconstitutional by this court in the case of People v. De La Mater, ante, 167. In view of this, the judgment of conviction in this case must be set aside and the defendant discharged.

Steere, C. J., and Fellows, Stone, Clark, and Sharpe, JJ., concurred. Moore, J., did not sit.

The late Justice Brooke took no part in this decision.


author: Sharpe, J.

text:
    WOLFSCHLAGER v. APPLEBAUM.
    X. Equity — Pleading—Defenses—Answer—Notice—Nuisance.
    Where defendant’s answer to a bill to enjoin, as a nuisance in a residential district, a building to be used as an automobile paint and trimming shop, denied that the use to which the building would be put would constitute a nuisance, evidence tending to show that it was defendant's purpose to put in a ventilating system to carry off the gases and offensive odors and that all objectionable work would be conducted in another place was not inad- . missible because not set out at length in the answer.
    2. Nuisance — Contemplated Nuisance — Injunction.
    While it can seldom be said that a particular business, lawful in its nature, will, no matter how conducted, constitute a nuisance, there are certain kinds of business so indicative of such results, if established in a residential district, as to lead irresistibly to the conclusion that a nuisance will be created thereby, and where such fact is apparent from the nature of the business or becomes so from the testimony of those familiar with the conduct thereof, courts will interfere and grant injunctive relief against such contemplated use.
    3. Same — Opportunity to Be Given to Change Operation to Avoid Nuisance.
    When a business as conducted is found to be a nuisance, the defendant should be given an opportunity to avoid the objectionable features of its operation before its continuance is enjoined.

      i. Same — Contemplated Nuisance — Premature Suit — Dismissal Without Prejudice.
    Where the fact as to whether the business of an automobile paint and trimming shop, as conducted in a residential district, will constitute a nuisance can only be determined after its operation, a bill to enjoin same prematurely filed will be dismissed without prejudice.
    Appeal from Wayne; Goff (John H.), J.
    Submitted January 12, 1921,
    (Docket No. 85.)
    Decided March 30, 1921.
    Bill by Anthony F. Wolfschlager and others against Isaac Applebaum and another to enjoin the erection of a factory building in a residential district. From a decree for plaintiffs, defendant Applebaum appeals.
    Reversed, and bill dismissed.

      Beaumont, Smith & Harris (Charles Wright, Jr., of counsel), for plaintiffs.

      A. W. Sempliner (Stellwagen, MacKay & Wade, of counsel), for appellant.
   Sharpe, J.

Deféndant Applebaum is the owner of two lots located at the southeast corner of Antoinette street and Second avenue in the city of Detroit, with a frontage of 140 feet on the former and 80 feet on the latter. There are no building restrictions pertaining to these lots. When this suit was begun, Applebaum was erecting a two-story reinforced concrete building to be used for the painting and upholstering of automobiles. The other defendant was the contractor engaged in the work. The plaintiffs, who are owners of residences in the vicinity, filed the bill of complaint herein to restrain the erection of the building and the use to which it would be put—

First. For the reason that the property was restricted to the building of residences or small apartment houses.

Second. Because the district was exclusively a residential one and the proposed use of the building in such a district would constitute a nuisance.

A temporary injunction was issued but dissolved, it appearing that there was no building restriction pertaining to the land. Pending the hearing, the building was completed. Much testimony was taken bearing on the questions as to whether the building under construction was in a residential district and whether its proposed use would constitute a nuisance. The trial court found for plaintiffs on both of these issues, and a decree was entered enjoining the defendants from using the building “as an automobile paint and trimming shop,” from which the defendant Applebaum appeals.

We have read the record with care and conclude that the finding of the trial court, who viewed the premises, that the building is located in a “residential zone” is justified by the evidence.

With the other question we have had much more difficulty. The court found:

“A large automobile paint and upholstering and repairing shop will bring great numbers of automobiles to the southeast corner of Antoinette and Second avenue in need of repair and upholstering and painting, and the same will emit clouds of smoke, vile smelling gas, and obnoxious fumes. Necessarily there will be a blowing of horns before crossing the sidewalk, to notify occupants of paint shop of desire to enter, and also to warn pedestrians passing on,the sidewalk, and then the blowing of horns for the saíne purpose before emerging from the paint shop. Necessarily there will be the noise of the hammering in the business, of upholstering and trimming and repairs necessary to be made prior to painting. This noise of horns and hammering in itself will, in my opinion, constitute a nuisance. To this must be added the odors, fumes, and smells from paint removers and from paint, which witnesses of the medical profession pronounce obnoxious and unwholesome and dangerous to health. Certainly they would cause discomfort and annoyance to the residents in houses near by, and in my opinion would materially decrease the value of adjoining property for purposes of residence.”

He further found:

“Defendant Applebaum testified he intends to put a ventilating system in the shop to carry off all gas and offensive odors. Congdon, one of the lessees, testified that if in the operation of the paint shop the use of paint remover would be objectionable, he would use the paint remover at his other place of business, a considerable distance away.”

The defendant Applebaum submitted proof tending to show that it was the purpose to put in a ventilating system to carry off the gases and offensive odors and that all objectionable work in connection with the business would be conducted in another place a considerable distance therefrom. The trial court declined to consider such evidence for the reason that such facts were not specifically alleged in the answer, relying upon Reed v. Jourdan, 109 Mich. 128, 133, in which this court said :

“The rule in such cases is that, besides answering the complainant’s case as made by the bill, the defendant must state to the court in his answer all the circumstances of which he intends to avail himself by way of defense, for. it is a rule that the defendant is bound to apprise the complainant by Ms answer of the nature of the case he intends to set up, and that he cannot avail himself of any matters in defense which are not stated in his answer, even though they should appear in his evidence.”

In that case the defendant sought to attack the validity of the action of the commissioners on claims appointed by the probate court. The bill alleged that the claims were duly allowed and the answer in no way denied such allegation. We have no inclination to disturb the ruling thus made. In this case, however, the answer denied that the use to which the building would be put would constitute a nuisance. It alleged that “there will be no noise, no smoke, and no smell of any kind in the business to be conducted” therein. The burden was, on plaintiffs to support by proofs their allegation that the use of the building by defendant for the purpose for which it was. erected would necessarily cause such annoyance and discomfort to them as to constitute a nuisance. This allegation was denied by the defendant. He was not required to set out in detail the manner in which he proposed to install the machinery or appliances intended to be used by him or his tenant, or the evidence he would submit in support of such denial. We think the proof submitted was admissible and should be considered.

The business is a legitimate one and should not be suppressed unless it appears that it will be of such a character as to necessarily produce the results apprehended. It can seldom be said that a particular business, lawful in its nature, will, no matter how conducted, constitute a nuisance. There are certain kinds of business, however, so indicative of such results, if established in a residential district, as to lead irresistibly to the conclusion that a nuisance will be created thereby. Such fact may be apparent from the nature of the business itself or become so from the testimony of those familiar with the conduct thereof. In such cases, courts will interfere and grant injunctive relief against such contemplated use. The following recent cases decided by this court are illustrative of the character of the business to which this rule applies. Barth v. Hospital Ass’n, 196 Mich. 642; Saier v. Joy, 198 Mich. 295 (L. R. A. 1918A, 825); Birchard v. Board of Health, 204 Mich. 284.

Counsel do not seem to disagree as to what will constitute a nuisance in such cases under our decisions. The rule of determination laid down in the above cases and in the more recent case of Mackenzie v. Pauli Co., 207 Mich. 456, should not leave the matter in doubt. In the latter case, this court held that when a business as conducted was found to be a nuisance, the defendant should have been given an opportunity to avoid the objectionable features of its operation before enjoining its continuance. We are of the opinion that the defendant is entitled to have his tenants engage in the business as contemplated by them and that the question of whether such business becomes a nuisance in fact can only be determined after operation. See the numerous authorities cited and quoted from in Mackenzie v. Pauli Co., supra.

The bill was prematurely filed and will be dismissed, without prejudice,, with costs to defendant Applebaum.

Steere, C. J., and Moore, Wiest, Fellows, Stone, Clark, and 'Bird, JJ., concurred.


text:
    BURCH v. NIPPRESS.
    1. Taxation — Tax Sates — Redemption—Notice—Sufficiency.
    A notice by tbe purchaser of tax titles under section 140 of the tax law (1 Comp. Laws 1915, § 4138) served upon one of the plaintiffs and a bank which held an undischarged mortgage against the premises at the time, which was not signed by the purchaser or by any one on his behalf was a nullity, and plaintiffs are entitled to a re-conveyance on paying or tendering the amount provided for in the statute, although proper notice was served on the bank in which the record title rested.
    2. Same — "Description Fees.”
    Where only two lots, two descriptions, were included in defendant’s deeds, he was entitled to demand only ten dollars for “description fees” under the statute, but such excessive demand does not invalidate the notice.

      3. Same — Redemption — Mistake of Officer in Computing Amount Due.
    Where plaintiffs went to the county clerk’s office and paid to him the amount he computed as necessary to redeem, it was a sufficient compliance with the statute, although he failed to include the sheriff’s fees of $1.10, which amount was tendered at the hearing.
    Appeal from Kent; Brown (William B.), J.
    Submitted January 14, 1921.
    (Docket No. 44.)
    Decided March 30, 1921.
    Bill by Marsden C. Burch and another against Elmer Nippress to redeem from the sale of land delinquent for taxes. From a decree for plaintiffs, defendant appeals.
    Affirmed.

      Marsden C. Burch, in pro. per., and Henry E. Chase, for plaintiffs.

      Thompson & Temple, for defendant.
   Sharpe, J.

Plaintiffs seek a reconveyance of certain lots in Grand Rapids, to which defendant claims ownership by tax titles. A notice of reconveyance, provided for by section 140 of the tax law (1 Comp. Laws 1915, § 4138), was served on May 25, 1918, on the Grand Rapids Savings Bank, in which the title rested as shown by the records at that time. A notice was also served on the plaintiff Belle H. Burch and on' the Rochester Savings Bank on May 31, 1918, but neither the copy served nor that on which return was made was signed by the defendant or by any one on his behalf. The records showed that at that time the Rochester Savings Bank held an undischarged mortgage against said lots, dated July 12, 1915, and recorded on July 15, 1915.

Section 140 provides that service must be made upon—

“the last grantee or grantees in the regular chain of title * * * at the date of the delivery of such notice to the sheriff for service * * * and upon the mortgagee or mortgagees named in all undischarged recorded mortgages * * * of record at the date aforesaid.” * * *

The mortgagee was entitled to notice. That served on it, being unsigned, was a nullity. Until such service was properly made, the plaintiffs were entitled to a reconveyance on paying or tendering the amount provided for in the statute. White v. Shaw, 150 Mich. 270; Dolph v. Norton, 158 Mich. 417; Hansen v. Hall, 167 Mich. 7; G. F. Sanborn Co. v. Richter, 176 Mich. 562; Dunn v. Papenfus, 202 Mich. 131. While the omission to make proper service on the bank is alleged in the bill of complaint and denied in the answer, it does not seem to have been urged at the hearing, nor was it alluded to in the opinion of the trial court. As the other questions presented are of public interest, we feel that they should receive consideration.

The notice served stated the “Amount necessary to redeem, $347.12, plus the fees for service.” This included $40 for “description fees” as they are called. The statute, after fixing the amount necessary to be paid to secure a reconveyance, adds, “the further sum of five dollars for each description.” It seems clear to us that as only two lots (two descriptions) were included in defendant’s deeds and the notice served included the amount paid under all of defendant’s deeds, but two such fees, or $10, could be demanded. But this court has held that an excessive demand of this nature does not invalidate the notice. Rogers v. Davison, 188 Mich. 519.

The plaintiffs’ agent, Mrs. Wood, after an ineffectual effort to agree with the defendant as to the amount which should be paid, in which the defendant said:

“I told them they could make their deposit, what they thought I ought to have, with the county clerk, and if it was enough to satisfy me I would take it, and if it was not, I would not,”—

went to the clerk’s office and asked him to compute the amount necessary to be deposited to secure a re-conveyance, He fixed the amount at $317.12, and this was paid to him. Inadvertently, the sheriff’s fees of $1.10 were omitted. On plaintiffs’ attention being called to this at the hearing, they promptly paid the amount to the clerk. In O’Connor v. Gottschalk, 148 Mich. 450, this court held that when the owners, acting in good faith, “went to the proper officer in the proper office, asked for the amount due, relied upon the statement of the register, and paid it,” there had been a sufficient compliance with the statute. It is apparent that the dispute over this $30, of which the clerk was aware, caused him to overlook this fee in determining the amount to be paid.

The decree is affirmed, with costs to plaintiffs.

Steere, C. J., and Moore, Fellows, Stone, and Bird, JJ., concurred. Clark, J., did not sit.

The late Justice Brooke took no part in this decision.