text:
    UNION NATIONAL BANK v. RICH.
    1. Trust Mortgage — Beneficiaries—Indemnity to Surety.
    A trust mortgage recited that the mortgagor, being indebted to certain persons therein named upon promissory notes, some of which were indorsed by R., “ and to R.” upon certain notes made by the mortgagor to U. and P., “indorsed by R., and upon which he is liable as indorser,” executed the mortgage “ for the purpose of securing payment of said debts, and securing R. against his liability upon said indorsements,” and authorized the trustee, upon default in the payment of said indebtedness, or if R. should be obliged to pay the notes upon which he was liable, to foreclose and sell the property, retaining from the proceeds of such sale “ sufficient to pay said debts and indorsed notes.” Held, upon a bill filed by U. to enforce an alleged interest in the security, that, so far as its debt was concerned, the mortgage constituted a mere personal indemnity to R., and that complainant was not a beneficiary thereunder.

      2. Principal and Surety — Indemnifying Mortgage — Subrogation.
    Where a debtor executes a mortgage to indemnify his surety, the principal creditor at once becomes subrogated to all of the rights of the surety therein, even though it be given after the original obligation has been incurred, and without previous agreement therefor; and the creditor may enforce such right in equity without first exhausting his remedies at law or reducing his debt to judgment. Such a case is distinguishable from one where the security is given by a stranger to the-transaction, under which circumstances it has been held that the right of subrogation will not arise.
    Appeal from Wayne; Lillibridge, J.'
    Submitted May 3, 1895.
    Decided September 26, 1895.
    Bill by the Union National Bank of Detroit against Charles A. Rich, trustee, and others, to compel the application of certain of the proceeds of a trust mortgage to the payment of a note held by complainant, and for other relief in connection therewith. Complainant appeals from a decree dismissing its bill.
    Reversed.
    Sloman, Groesbeck & Robinson (H. A. Harmon, of counsel),, for complainant:
    In support of the contention that complainant was a beneficiary under the terms of the mortgage, or was at least entitled to be subrogated to the rights of the surety therein, counsel cited: McMullen v. Neal, 60 Ala. 552;. Ijames v. Gaither, 93 N. C. 358; Morrill v. Morrill, 53 Vt. 74; Cooper v. Middleton, 94 N. C. 94; In re Fickett, 72 Me. 266; Smith v. Gillam, 80 Ala. 299; Durham v. Craig, 79 Ind. 117; Loehr v. Colborn, 92 Ind. 24; Rice’s Appeal, 79 Pa. St. 168; Thornton v. Bank, 71 Mo. 221; Barton v. Croydon, 63 N. H. 417; Richards v. Yoder, 10 Neb. 429; Seibert v. True, 8 Kan. 63; Kinsey v. McDearmon, 5 Coldw. 392; Eastman v. Foster, 8 Metc. 23; Rice v. Dewey, 13 Gray, 47; Boyd v. Parker, 43 Md. 182 Curtis v. Tyler, 9 Paige, 435; Bank of Auburn v. Throop, 18 Johns. 505; Vail v. Foster, 4 N. Y. 312; Maure v. Harrison, 1 Eq. Ca. Abr. 93.

      A. G. Pitts, for defendants Augusta Rich, Oscar E. and Frank A. Rasch, and Pitts:
    The principal creditor is not subrogated to a mortgage given to an indorser purely as a personal security to him,, and not for the better protection of the debt. Jones, Mortg. (4th Ed.) § 883a; Homer v. Bank, 7 Conn. 478; Thrall v. Spencer, 16 Conn. 139; Macklin v. Bank, 83 Ky. 314; Taylor v. Bank, 87 Ky. 398; Leggett v. Mc-Clelland, 39 Ohio St. 624; Osborn v. Noble, 46 Miss. 449. In any event, he cannot claim the security by subrogation until the surety’s liability to him has become absolutely fixed by judgment, and his insolvency established. Jones, Mortg. (4th Ed.) §§ 387, 883a; Trust Co. v. Reeder, 18 Ohio, 35; Grant v. Ludlow, 8 Ohio St. 1, 20; Bank v. Douglass, 2 Head, 699; Homer v. Bank, 7 Conn. 478; Jones v. Bank, 29 Conn. 25; Hampton v. Phipps, 108 U. S. 260; Seward v. Huntington, 94 N. Y. 104. And the surety may discharge the mortgage before the rights of third parties have intervened. Jones, Mortg. (4th Ed.) § 386; Post v. Bank, 28 Conn. 429; Jones v. Bank, 29 Conn. 25; Transportation Co. v. Bank, 46 Conn. 569; Rankin v. Wilsey, 17 Iowa, 463; Waller v. Oglesby, 85 Tenn. 321; Hopewell v. Bank, 10 Leigh, 206; Logan v. Mitchell, 67 Mo. 524.

      Wells, Angell, Boynton & McMillan and Corliss, Andrus & Leete, for remaining defendants.
   Long, J.

The complainant filed its bill in the Wayne circuit court in chancery, charging, among other things, that Oscar E. Rasch & Co., a special partnership, composed of August Rasch and Oscar E. Rasch, father and son, were wholesale, retail, and manufacturing furriers in Detroit; that on May 12,1894, the said firm and defendant August Rasch were indebted to the complainant on a note of $8,000, dated February 7, 1894, payable in. 90 days; that it was a firm note, indorsed by August Rasch before delivery; that, among other things, for the purpose of providing for the payment of this note and other indebtedness therein named at maturity, and to save the defendant August Rasch harmless thereon, Oscar E. Rasch & Co., on May 13, 1894, executed and delivered to the defendant Charles A. Rich, the father-in-law of Oscar E. Rasch, a chattel mortgage, in trust for certain beneficiaries . therein referred to, including complainant, which mortgage was filed on the day it was given, and covered all the firm’s assets, including book accounts; that at the time the mortgage was given the firm of Basch &-Oo. was insolvent; that the claims of Augusta Bich (who is Oscar E. Basch’s mother-in-law, 'and wife of Charles A. Bich) and others of the beneficiaries are fraudulent; that the stock of goods covered by the mortgage, at the time the same was given, amounted in value to upwards of $80,000, and was in good and salable condition, and the book accounts amounted to $5,000 and upwards.

That on June 2d, after complainant’s note had matured, and default had been made in its payment, complainant notified defendant Bich, trustee in said mortgage named, that it was a beneficiary under said mortgage on account of said note, that the same had not been paid, and that it was entitled to its pro rata share of moneys realized under said mortgage; that it deemed itself insecure; and requested said Bich to take possession of the property, and cause the same to be sold, and to give the widest publicity to the sale, so that the highest price could be realized, and that complainant desired to be notified of the time and place thereof, SO' that it might be represented at the sale; that, pending the notice of sale, an inventory of the property should be taken, and that said trustee should ascertain what moneys had been taken in by the firm since the mortgage was given, and while they were-left in possession; and warned him not to pay to the defendant August Basch any portion of the proceeds which complainant would be entitled to on account of said note.

That Rich informed complainant that he was aware, that it was a beneficiary, and was entitled to its share of the proceeds realized by him upon the property mortgaged, and that he would see that it was paid to the complainant as soon as he realized the same; that he would give complainant information as to the amount of stock and book accounts, and also furnish it with a list of the receipts and disbursements while the mortgagors were in possession, and, in ease of sale, would notify it so that it might be represented thereat, and have an opportunity to protect its interests.

That thereafter Rich, acting in concert and in fraudulent conspiracy with the mortgagors, and his wife, who was a beneficiary to the amount of $10,000, and other persons, for the purpose of preventing complainant from sharing in the proceeds of the mortgaged property, and in violation of his duty as a trustee, and being himself insolvent, did not furnish complainant with the information he had promised, nor advise it of the time and place of sale, and did not give it any information relative to the property covered by the mortgage, its amount and character, but purposely withheld information regarding rhe same from complainant, and on June 13, 1894, permitted Rasch & Co. to sell to the defendants Walter Buhl & Co., at private sale, their entire stock in trade covered by the mortgage, which then, at a fair market value, amounted to about $30,000, for the sum of $10,000; that the sale was not made subject to the mortgage thereon, but that said trustee, Rich, joined with Rasch & Co. in a bill of sale to Buhl & Co. thereof, and released and discharged the trust mortgage therefrom; that, instead of selling the goods to Buhl & Co. for cash, the trustee, Rich, took their notes, and, conniving with the defendants August, Oscar E., and Frank A. Rasch, Augusta Rich, and his adviser, Alvah G. Pitts, delivered the said notes to his wife, Augusta Rich, upon her pretended claim, for the purpose of securing to the defendant August Rasch the benefits thereof; that Walter Buhl & Co. were not bona fide purchasers; that they had notice of complainant’s claim under the mortgage, and that Rich, trustee, had no authority to release the same; that in equity they hold the same for the benefit of complainant, and subject to its mortgage interest; that the defendant August Rasch has not paid complainant’s note, and does not intend to do so, and has refused, upon complainant’s request, to direct the trustee to pay it its share of the proceeds realized upon the property covered by the mortgage; that the trustee has in his possession a large number of book accounts and other property of Rasch & Co., of the value of upwards of $5,000, which were covered by the mortgage, and which, unless restrained, he will permit Oscar and August Rasch to collect and appropriate the proceeds.

The bill asks for an injunction to restrain Trustee Rich from paying or turning over to the mortgagors any property in his possession; the defendants August and Oscar Rasch from obtaining or seeking to obtain any proceeds of any sales made by the trustee, and taking or obtaining possession of any of the property covered by said mortgage, and from collecting any of the book accounts, and from removing or secreting the books and said accounts; the defendants Buhl & Co. from paying the notes given by them; and the defendant Augusta Rich from transferring the notes received by hen The bill then asks for a receiver in the place of the defendant Rich; that the sale made to Buhl & Co. be declared invalid, or, if valid, only to the extent of the equity of Rasch & Co. therein, and that such sale be subject to the trust chattel mortgage, and that, in any event, it should be subject to the lien of complainant; that Buhl & Co-. be decreed to have had notice of complainant’s interest and of the trustee’s want of power, and of the collusive purposes of the defendant Rich and the other defendants; that the property in the possession of Buhl & Co-, be decreed to be held in trust for complainant and other beneficiaries; that Buhl & Co. be required to pay the complainant’s portion of the value of the property as the court may decree it; that the several defendants come to an accounting touching the sale, disposition, and receipt of the property covered by the mortgage; that the claims of Augusta Rich, Frank A. Rasch, and Alvah G. Pitts (who it is claimed is the adviser of the defendants Rasch and Rich) be declared to be fraudulent, and that complainant’s claim have priority. The bill also contains a general prayer for relief. All the beneficiaries, including- the mortgagors and others interested, are made parties defendant.

The defendants all answered, and denied all the material allegations of'the bill; but it is unnecessary to set out their answers here, as the court below, on the hearing, treated the case as on general demurrer, and dismissed the complainant’s bill.

Only two questions are raised: (.1) Whether the complainant, by the terms of the chattel mortgage, was a beneficiary thereunder; (2) whether complainant, as holder of the note upon which August Rasch had obligated himself as accommodation maker or surety, was, under the facts set up in the bill and the terms of the mortgage, in equity entitled to be subrogated to his rights, and protected under the -trust mortgage.

The mortgage, which is set up in the bill, is as follows:

“Know all men by these presents that we, Oscar E. Rasch & Co., a special partnership composed of Oscar E. Rasch, general partner, and August Rasch, special partner, of the city of Detroit, Wayne county, Mich,, parties of the first part, being justly indebted unto the following described persons upon obligations hereinafter set forth, that is to say: To Mrs. Augusta Rich, upon a note made payable to her by Oscar E. Rasch & Co., dated January 31, 1891, payable upon demand, upon which is -now due about $364.75, and to the same upon a promissory note for $9,000, dated November 28, 1892, payable upon demand, upon which is now due the said sum of $9,000, with interest; and to -the Mechanics’ Bank of Detroit, upon a note made by said Oscar E. Rasch & Co., and indorsed by August Rasch, dated April 26, 1894, payable 30 days after date, $1,000, and upon which is now due all of said sum; and to the American Exchange National Bank of Detroit $500 upon a promissory note for that amount made by Oscar E. Rasch & Co-, to said bank, indorsed by August Rasch, dated April 23, 1894, payable 30 days after date; and to August Rasch upon a promissory note for $8,000, made by Oscar E- Rasch & Go. to the Union National Bank of Detroit, indorsed by said August Rasch, and upon which he is liable as indorser, which note is dated February 7, 1894, payable 90 days after date, and upon which there is now due the said sum of $8,000,' with accrued interest; and to said August Rasch upon a promissory note for $8,000, made by Oscar E. Rasch & Co. to the Peninsular Savings Bank of Detroit, indorsed by said August Rasch, upon which he is liable as indorser, which note is dated March 15, 1894, payable two months after date, and upon which there is now due the said sum of $8,000, with accrued interest; and to A. G. Pitts and F. A. Rasch for legal services, $500; • — have, for the purpose of securing payment of said debts, and securing said August Rasch against his liability upon said indorsements, and for the purpose of securing the payment of the interest upon same, granted, bargained, sold, and mortgaged, and by these presents do grant, bargain, sell, and mortgage, unto Charles A. Rich, of the city of Detroit, as trustee for the above-named creditors and sureties, the following described goods, chattels, and personal property, to wit: All and every the stock and fixtures of the said special partnership heretofore and now employed in their business at No. 160 Woodward avenue, in the said city of Detroit, as wholesale, retail, and manufacturing furriers, including all the merchandise and stock manufactured, unmanufactured, and in process of manufacture, of skins, furs, etc., all the tools and implements of said business, all bills and accounts receivable and books of account, one'bay horse, one harness, one delivery wagon, and all supplies and materials, including all property of the sorts described which may hereafter be acquired in the course of trade, all moneys due or owing, or which may hereafter become due or owing, to said special partnership, the leasehold interest of the said special partnership in said store No. 160 Woodward avenue, and all other personal property of said special partnership, wherever located. Said mortgagors to be privileged to continue in possession of said property, and to deal with it in the ordinary course of trade, buying and selling as the ordinary course of trade may make necessary, but not otherwise. Which said above-described goods at this date are free and clear from all liens, incumbrances, and levies, except the legal exemptions of the general partner, which are expressly excepted from the operation of this mortgage. To have and to hold the same unto the use of the above* named beneficiaries forever.
“Provided always, and these presents are upon the express condition, that if the said Oscar E. Easch & Co. shall pay or cause to be paid to said beneficiaries the said indebtedness hereby secured, and shall save harmless said August Easch upon his said indorsements, when said indebtedness shall fall due, then this mortgage shall be void, and of no effect. But, if default be made in the payment of any of said indebtedness when same shall become due in accordance with the terms and conditions of the several notes above set forth, or if the said August Easch shall be obliged to, qr shall, pay or provide for the payment of either or all of said notes upon which he is indorser as aforesaid, the said trustee is hereby authorized to and shall take possession of the above-described property, and shall sell the same either at public or private sale, — if at public sale, after like notice as required by law for constable’s sales, — either in bulk or in parcels, either the whole thereof or so much as may be necessary to satisfy the debts and indorsements hereby secured; and out of the proceeds of such sale he shall retain sufficient to pay said debts and indorsed notes, together with his reasonable expenses, and any and all interest that may then be due; the overplus, if any, to belong and be returned to said Oscar E. Easch & Co. .And said trustee is hereby authorized at any time when he shall deem said indebtedness hereby included, or any part thereof, insecure, or if the said Oscar E. Easohi & Co. shall assign or dispose of, except as above, or remove or attempt to remove, the whole or any part thereof, except in accordance with the terms heretofore in this' instrument contained, without the written assent of said trustee, from the city of Detroit, aforesaid, then and from thenceforth it shall and may be lawful for said trustee, his successors or assigns, or his or their authorized agents, to enter upon the premises of said Oscar E. Easch & Co., or any place or places where said goods and chattels, or any part thereof, may be, and take possession thereof, and same retain in some convenient place, at the risk and expense of said Oscar E. Basch & Co., until said sums of money, or any of them, shall become due as aforesaid, and then to dispose of the same in the manner above specified.
“In witness whereof said Oscar E. Rasch & Co. have caused these presents to be executed in duplicate by the hand and seal of Oscar E. Rasch, general partner, the 13th day of May, in the year of our Lord 1894.
(Signed) “Oscar E. Rasch & Co.,
“By Oscar E. Rasch.”

Upon the first point, it is contended by counsel for complainant that the mortgage was given for a double purpose, to wit, to save August Rasch harmless from liability upon his note, and to pay the same out of the proceeds of the sale. On the other hand, the defendants claim that this security to August Rasch is a mere personal indemnity to him, as it clearly appears that it was not the intent of the mortgagors to create by this security a fund out of which to pay the note; that the purpose of the mortgage is stated to be the securing of the payment of the other class of debts, and also the securing of August Rasch against his said liability; that, looking to the condition of the mortgage, the same distinction is made between the two classes of claims secured, — that is, if Oscar E. Rasch & Co. shall make default in the payment of any of the indebtedness of the first class, then the trustee shall foreclose, or, if August Rasch shall be obliged to pay the note upon which he is liable, then the trustee shall foreclose and sell to indemnify him. From an examination of the mortgage, we are satisfied that the defendants’ contention is correct, and we need not discuss that question further.

The important question arises under the second point made by counsel for complainant. The doctrine is well settled that an indorser of a note or the surety of a debt, upon being compelled to pay it, is entitled to the benefit of any security which the principal creditor holds, ' — as, for instance, a mortgage given by the principal debtor to the holder of the note or debt to secure it, — and without any assignment of it he is by force of law subrogated to the benefit of it. McLean v. Towle, 3 Sandf. Ch. 117; Dick v. Moon, 26 Minn. 309. The general rule is also that the principal creditor is subrogated to the benefit of any mortgage which the debtor has given to a surety. In Demott v. Manufacturing Co., 32 N. J. Eq. 124, the two banks had loaned money to the defendant company on notes indorsed by its directors. The directors had security by mortgage from the defendant company, and it was held that the banks were entitled to be subrogated to the rights of the directors under the mortgage. The general rule was there laid down, as stated in 2 Brandt, Sur. (2d Ed.) § 324, that, as a general rule, where a surety, or a person standing in the situation of a surety, for the payment of a debt, receives security for his indemnity and to discharge such indebtedness, the principal creditor is in equity entitled to the full benefit of that security, and it makes no difference that such principal creditor did not act upon the credit of such security in the first instance; and the right of the creditor is the same when the security is a mortgage or other lien given to the surety by the< principal after the principal and surety have become bound, even though there may have been no previous agreement that indemnity should be given; and, to entitle the creditor to enforce this right in equity, it is not necessary that he should have exhausted his remedies at law, or have reduced his debt to judgment. The same rule is laid down in Jones, Mortg. (4th Ed.) § 883«, and the cases are there collected sustaining the rule. This rule, of course, only applies when the security is given by the principal debtor, as in the present case, for where property is pledged by a stranger to indemnify a surety, and not with intention that it shall be applied to the payment of the debt in order to relieve the surety, it cannot be subjected by the creditor, nor can the surety subject the property until he has sustained loss, or is in such a condition as that loss must be necessarily sustained. Macklin v. Bank, 83 Ky. 314. Counsel for defendants seems to have relied upon this class of cases under his contention that the complainant in the present case would not be subrogated. But we think the rule well settled that, where the principal debtor gives the security to the surety, the creditor is at once subrogated to all rights secured thereby; and under this rule, to entitle the creditor to enforce this right in equity, it is not necessary that he should have exhausted his remedies at law, or have reduced his debt to judgment.

We think, under the facts stated in the bill, that the complainant would be subrogated to the rights of August Rasch under the mortgage. Whether Walter Buhl & Co. were good-faith purchasers under the sale made to them by the trustee need not now be determined. And neither is it necessary to determine now whether the trustee had the right to discharge the mortgage. The court below treated the case as upon demurrer to the bill, and it is so treated here. The answers are not now considered, but we have treated the facts stated in the bill as true, and under the facts there stated we determine that the complainant would be entitled to subrogation to all the rights of August Rasch under the mortgage.

The decree below must be reversed, and the cause remanded for further proceedings under the answers. Complainant will recover costs of this court.

The other Justices concurred.


source: Caselaw Access Project

author: Montgomery, J.

license: Public Domain

text:
    SCHOOL DISTRICT NO. 11 OF ALPINE TOWNSHIP v. BATSCHE.
    1. Landlord and Tenant — Occupancy op Premises by Servant —Tenancy by Sufferance — Use of Schoolhouse for Resi- - dence of Teacher.
    The occupancy of premises by an employé for the purpose of enabling him the better to perform the service of his employer, there being no letting in terms and no rent reserved, does not create the relation of landlord and tenant between the parties, but the possession will be deemed to be that of the employer. The employé may, however, become a tenant at sufferance by holding over after the termination of his employment. So held where a teacher occupied a part of a school building as a residence by virtue of his contract with the district board to teach the school.
    2. Tenancy by Sufferance.
    A person lawfully in possession of land, who holds over without right, becomes a tenant at sufferance, if the owner permits him to remain a sufficient length of time to imply an intentional acquiescence in the occupancy, although his previous holding was not that of a tenant.
    Error to Kent; Grove, J.
    Submitted May 8, 1895.
    Decided September 26, 1895.
    Summary proceedings by school district No. 11 of Alpine township against Aloys Batsche to recover the possession of certain premises. From a judgment for defendant, complainant brings error.
    Reversed.

      Wolcott & Ward, for appellant.

      Francis A. Stace (Carroll, Turner & Kirwin, of counsel), for appellee.
   Montgomery, J.

This proceeding was instituted before a circuit court commissioner to recover possession of the lower floor of a school building, the complaint alleging that the said school district is landlord of said premises, and that said Aloys Batsche is the tenant of said school district, and that said Aloys Batsche holds said premises unlawfully and against the right of said school district, and that said school district is entitled to possession of the same. The building in question is a two-story building; the school room being on the second floor, and the rooms beneath being occupied, in connection with the school room, by the teacher. In 1885, the defendant contracted with the district board to teach school for seven months, and, in pursuance of the contract, took possessi on of the building, the same as any teacher does. He had possession of the keys of the building, and continued to teach the school throughout the term, and remained there afterwards, and has always from that time, until the commencement of this suit, been in possession of the building. Every year the district has contracted with him, and he has continued to teach the school. The school term ended in June, 1892, and August 31, 1892, notice to quit was served. The case turned in the court below upon 'the question of whether the relation of landlord and tenant existed. The circuit judge, being of the opinion that it did not, directed a verdict, and complainant brings error.

Numerous questions are discussed in the brief of the complainant’s counsel, but we think it cannot be fairly said that the circuit judge was called upon to pass upon anything more than the simple question of whether the relation of landlord and tenant existed. Not only was this the question presented by complainant’s and defendant’s counsel as the sole question in the case, but the complaint upon which this suit was founded was based upon this relationship. This question, however, resolves itself into two branches: First, was the occupancy in the first instance as a tenant? and, second, was complainant entitled to treat defendant’s subsequent holding as that of a tenant at sufferance?

It is fairly inferable from tlfe statement made by complainant’s counsel below that the occupation of the premises was incident to, and deemed essential for, the performance of the duties of defendant as teacher. It was not proposed to show that there was a distinct letting of these premises occupied by defendant, or that any rent was reserved. It has been held that under such circumstances the occupant’s possession is that of the employer, and that the relation of landlord and tenant does not exist. Rex v. Inhabitants of Cheshunt, 1 Barn. & Aid. 473; State v. Curtis, 4 Dev. & B. 222; Stock’s Case, 2 Leach, 1015; Haywood v. Miller, 3 Hill, 90; Kerrains v. People, 60 N. Y. 221. The case last cited is well reasoned, and, we think, notes the proper distinctions. It states the case of Hughes v. Parish of Chatham, 5 Man. & G. 51, in which it was said:

“There is no inconsistency in the relation of master and servant with that of landlord and tenant. A master may pay his servant by conferring on him an interest in real property, either in fee, for years, at will, or for any other estate or interest; and if he do so the servant then becomes entitled to the legal incidents of the estate, as much as if it were purchased for any other consideration.”

But in the main case the court held that, whore the occupancy of the house was for the purpose of enabling the servant .the better to perform the service, the occupancy was that of the master, and not of the servant. We think that this is the rule in a case where, as in the present, there was no letting in terms, no rent reserved, and where it is clear that the purpose of the occupancy was to enable the employé to perform the service of his employer. The case of Bristor v. Burr, 120 N. Y. 127, cited by counsel, does not overrule Kerrains v. People, but is entirely consistent with it, the court placing Its conclusion in that case upon the ground that the relation of master and servant did not exist between the defendants and 'the plaintiff.

But we think that, upon the statement of counsel (upon which the case was decided below), a jury would have been justified in finding that defendant became a tenant art sufferance. That such a relation may grow out of an occupancy by a servant is recognized in Kerrains v. People. In that case it was said, it is true, that, in order to have the effect to create a tenancy by sufferance, the occupancy must be sufficiently long to warrant an inference of consent to a different holding; but we are aware of no case which fixes the precise time within which such consent may be inferred. In People v. Annis, 15 Barb. 301, it was held that on the termination of the contract of service the continued occupancy, of the servant must he deemed that of a tenant by sufferance. The court say:

“The .contract for the service having been determined and an end put to it in this way, the right of occupancy under it went also, and was ended. The relator, after that, was in possession, not as a trespasser, but as one holding after his right of occupancy had been extinguished; and, of course, he became a tenant at will or sufferance.”

It is contended by defendant’s counsel that, in order to have an occupancy grow into a tenancy by sufferance, there must have been a tenancy originally created by agreement of the parties, and that, as no agreement for a tenancy ever existed, the relation cannot arise. We do not so understand the law. We think the rule is that a person in possession of land lawfully, who holds over without right, becomes a tenant at sufferance, if the owner suffers him to remain in possession a sufficient length of time to imply an intentional acquiescence in the occupancy, and it is not necessary that the previous holding be that of a tenant. An express consent to occupancy is not necessary to create such a tenancy. It is said in Wood on Landlord and Tenant (section 7):

“The tenancy is of such a nature as necessarily implies an absence of my agreement between the owner and the tenant, and if express assent is given by the owner to such possession the tenancy is thereby, instanter, converted into a tenancy at will, or from year to year, according to the circumstances.”

A contract to pay rent is not essential to create the relation of landlord and tenant. Wood, Landl. & Ten. § 1-

It is suggested that, on the showing of complainant, the title to land came in question. But we think not. If the possession was received from complainant, defendant is not in position to raise a question of title. If it was not, clearly the relation of landlord and tenant never existed.

Judgment will be reversed, and a new trial ordered.

The other Justices concurred.


author: McGrath, C. J.

text:
    DUFFY v. CITY OF SAGINAW.
    1. Municipal Corporations — Public Improvements — Advertising for Bids.
    A city charter provided that, when the making of a public improvement should have been determined upon, the board of public works should advertise for proposals for furnishing the • material and for the performance of the work. No time was fixed for which the publication should continue. An improvement having been ordered by the council, the board instructed its clerk to “ advertise for proposals ” until a certain date, but the first publication was not made until three days after such direction had been given. Held, that the board, by receiving bids at the time sprcified, would be presumed to have ratified the action of the clerk, and determim d that the advertisement was for a sufficient period.
    2. Same — Detailed Statement of Cost — Validity of Assessment.
    Where the common council of a city, pursuant to the charter, has declared what proportion of the expense of making a public improvement shall be defrayed by an assessment upon the lands benefited thereby, and the board of public works has reported to the council an estimate in detail of the probable cost and expense of the improvement, a further provision requiring said board, after the improvement has been completed, to certify to the council “a detail statement of the cost of such improvement, showing the amount to be assessed upon the property benefited,” is sufficiently complied with by the submission of a statement showing the amounts in gross to be paid by the city and by the property owners, respectively, by reason of the improvement.
    8. Same — Certification of Roll by Board of Public Works-Confirmation by Council — Enjoining Collection of Assessment.
    A certificate attached to a special assessment roll required to be made by the board of public works was signed by the president and attested by the secretary of the board, they being authorized thereto by resolution spread upon its records. Held, that, even if such a certification were insufficient under the charter, which provided that the board of public works should certify to the roll, equity would not, for this reason, enjoin the collection of the assessment, at the suit of one who-made no objection to the subsequent confirmation of the roll by the common council, though afforded an opportunity to be heard thereon.
    Appeal from Saginaw; Wilber, J.
    Submitted May 8, 1895.
    Decided September 20, 1895.
    Bill by James Duffy and others against the city of Saginaw and Henry Melchers, city treasurer, to cancel a paving assessment. From a decree for complainants, defendants appeal.
    Reversed.

      James H. Davitt, for complainants.

      William G. Gage, for defendants.
   McGrath, C. J.

This is a bill to cancel a paving assessment upon three grounds: First, that there was no legal advertisement forbids before letting the contract; second, that no detail estimate of the cost of the improvement was certified to the council; third, that the certificate of the board of public works to the assessment roll is no! valid, because it was not signed by the members of such, board.

Section 3, tit. 13, of the charter provides that the board' of public works “shall -advertise for proposals for the furnishing of material and for the performance of such work.” Local Acts 1889, p. 946. The time is n-o-t fixed by the charter. The records of the board show that on Monday, the 27th day of June, 1892, the board met, and ordered the clerk to “advertise for proposals until 12.. o’clock noon, Saturday, July 9, 1892.” The testimony shows that the advertisement actually made was published in the official newspaper, but that it was not published on the 28th or 29th of June, but appeared for tbe first time in the issue of June 30th. There is no force in this objection. The time for which the publication should be made was a matter for the determination of the board. The board received the bids, and must be presumed to have ratified the action of the clerk, and determined that the advertisement was for a sufficient period. Updegraff v. Palmer, 107 Ind. 181; Taber v. Ferguson, 109 Ind. 227; Beniteau v. City of Detroit, 41 Mich. 116.

Section 5 of title 6 of the charter provides that when the improvement is completed, or as soon thereafter as may be convenient, the board of public works “shall prepare a detail statement of the cost of such improvement, showing the amount to be assessed upon the property benefited as provided by the resolution ordering the said improvement.” Local Acts 1891, p. 402. Section 6 provides that “the same shall'be certified to . the common council, and, when such statement shall have been approved by the common council, the same shall be certified to the board of public works, who shall proceed without unnecessary delay to make an assessment,” etc.

The statement submitted contained the following details:

The common council, at its next meeting, approved the statement, and instructed the board to make the assessment.

The charter, in section 3, tit. 13, provides that, whenever the council shall have decided upon making an improvement, the board of public works shall estimate iu detail the probable cost and expense of such work and of the material to be used therein, shall make a record thereof in their office, and shall report such estimate to the council. This was done; the bids were reported to the council; and the contract for the work authorized by the common council. The council had, under section 5 of title 6 of the charter, in the resolution ordering the improvement, directed that the entire cost of the improvement, except the intersections, should be defrayed by an assessment upon the lands to be specially benefited thereby.

The facts bring the case within the rule laid down in Goodwillie v. City of Detroit, 103 Mich. 283. The cost of the intersections was payable out of the highway fund, and it may be said that the charter only requires that the statement shall be so far in detail as to show the amount to be assessed upon the property benefited.

As to the certificate of the board of public works to the assessment roll, the records of the board show the adoption of a resolution determining and certifying that it has made the assessment as set forth in the roll, and authorizing 'the president “to sign, and the clerk to attest and seal, the foregoing certificate.” The certificate concluded as follows:

“In testimony whereof, said board has subscribed this certificate by its president, and duly authorized and caused the seal of said board to be affixed, and the clerk of said board to attest the same, at Saginaw, this 25th day of March, A. D. 1893.
“The Board ok Public Works ok the City ok Saginaw, Michigan.
“By B. B. Buokhout,
“President of said Board.
“Attest: Alfred Davies,
“Clerk of Said Board of Public Works.”

The charter provides for the organization of the board; for the election of one of their number as president; that the city clerk shall be the clerk of the board; and that it shall keep a record of its proceedings, which shall be open to public inspection. .Local Acts 1889, pp. 945, 947. But this roll does not become operative upon this certification. It is then filed with the city clerk, whose duty it is to report the same to the common council. That body thereupon gives notice by publication to all parties interested, reciting the names on said roll, that the council will, at a time stated, hear objections to and appeals from said assessment. Provision is then made for the hearing of all persons, and the council “may rectify and amend the said assessment in whole or in part, or may set the same aside and direct a new assessment,” or may confirm with or without corrections. And then follows this provision: “Every assessment roll so.ratified and confirmed shall be final and conclusive, and, within five days after the confirmation thereof, the controller shall deliver the same to the treasurer.” Upon delivery of such roll to the treasurer, the tax becomes a lien upon the property. Local Acts 1889, p. 922; Local Acts 1891, pp. 402, 403. The fact of confirmation by the council is indorsed upon the roll, and attested by the clerk.

We think the certification was sufficiently attested; but, in any event, the case is not one calling for the intervention of a court of equity. The assessment is in all other respects a valid one. Complainants had an opportunity to be heard thereon before the council. They did not avail themselves of that opportunity. Section 28, tit. 6, of the charter provides that the council, in case an assessment shall be deemed invalid, may vacate the same, and when so vacated, or when it has been held invalid by a court, the council may cause a new assessment to be made. 'Local Acts 1889, p. 927; Sinclair v. Learned, 51 Mich. 335.

The decree below is reversed, and the bill dismissed, with costs to defendants.

The other Justices concurred.


text:
    MORET v. MASON.
    1. Trover — Timber Out from Unoccupied Lands.
    The owner of land can maintain trover for timber out therefrom by one claiming under a void tax deed, where the possession of the latter was fugitive merely, and for the sole purpose of cutting the timber. Cools v. Cools, ante, 164, followed.
    3. Same — Evidence of Conversion — Joint Wrongdoers.
    In trover for timber cut from plaintiff’s land, it appeared that, at the suggestion of H., defendant procured a quitclaim deed of the premises from the holder of a void tax title, and that thereupon, pursuant to agreement between them, H. cut and hauled the timber, defendant receiving a certain sum per M. as stumpage. Held, that it was for the jury to say whether defendant was a joint wrongdoer.
    3. Trover for Timber — Measure of Damages.
    In an action of trover for timber cut from plaintiff’s lands by the defendant under a void tax title, a recovery may be had for the value of the logs at the place to which they were removed by the defendant for manufacture. The rule thus laid down in Ch'ant v. Smith, 26 Mich. 201, was not disturbed by the holding in Winchester v. Craig, 33 Mich. 205, in which case the timber had been cut by mistake.
    4. Same — Instructions—Harmless Error.
    Where, in such a case, punitory damages are not allowable under the charge of the court, an instruction characterizing the alleged trespass as “ willful and negligent” is not prejudicial.
    Error to Charlevoix; Corbett, J.
    Submitted May 9, 1895.
    Decided September 26, 1895.

      Trover by Josephine Moret against Albert E. Mason for the conversion of certain logs and hemlock bark out from lands alleged to belong to plaintiff. Defendant claimed under a tax deed. Among other things, the court instructed the jury as follows:
    “You are instructed that, in actions of trover for timber taken from lands by a trespasser, the measure of damages depends upon whether the trespass is willful and negligent, or the contrary. Our highest court has held that a void tax title does not tend to show that a person acting under it does so in good faith, but that the trespass must have been willful and negligent. You have already been instructed that the tax deed under which defendant claims to have acted is void upon its face. The plaintiff had the right to treat the time and place of manufacture of these logs into lumber, and the time and place of selling the bark, as the period of conversion, and would be entitled to recover as damages the value of said products at such time and place.”
    There was a judgment for plaintiff, and defendant brings error.
    Affirmed.

      R. W. Kane, for appellant.

      B. T. Halstead and C. K. Hull, for appellee.
   McGrath, C. J.

This is trover for timber cut from unoccupied lands. Defense, a tax title in defendant, and a tax title held by a third party. The court held both tax deeds void, and plaintiff had judgment.

It is urged that- the action does not lie against one in possession. Clearly, under the evidence, the possession was but a fugitive possession, and for the purpose only of cutting the timber. The question is ruled by Cook v. Cook, 106 Mich. 164. The constructive possession was in plaintiff. The court having declared the tax deeds void, there were no conflicting titles for the jury to try. Busch v. Nester, 70 Mich. 525.

Defendant’s testimony tended to show that he entered into an agreement with one Hull, whereby the latter was to cut and haul the timber to mill, and defendant was to receive a certain sum per M. as stumpage. The timber was cut and hauled by Hull, and defendant received the amount agreed upon. His own testimony, however, tended to show that at Hull’s suggestion, and with reference to this cutting, he procured a quitclaim deed from the holder of the tax title, and then made this arrangement with Hull. We think that the court properly left it to the jury to determine whether or not he was a joint-wrongdoer.

The rule as to the measure of damages was that laid down in Grant v. Smith, 26 Mich. 201. In Winchester v. Craig, 33 Mich. 205, the jury expressly found that the defendants cut the timber by mistake. That case does not disturb the rule adopted in Grant v. Smith. As in that case, punitory damages were not allowed, and what was said by the court as to the nature of the trespass was without prejudice.

The judgment is affirmed.

The other Justices concurred.


author: Long, J.

text:
    BEDIER v. FULLER.
    Fraud — Election of Remedies — Waiver of Tort.
    One who has been induced by fraudulent representations to sell property for less than its real value cannot disaffirm the con - tract, and, waiving the tort, maintain assumpsit as upon an implied promise for the difference between the amount so received and the actual value of the property.
    Error to Wayne; Carpenter, J.
    Submitted June 7, 1895.
    Decided September 26, 1895.

      Assumpsit by Josephine Bedier against Jay Fuller and others to recover the difference between the actual value of plaintiff’s interest in her father’s estate and the amount for which she sold the same to defendants by reason of their alleged fraudulent representations. (See 95 Mich. 518.) From a judgment for defendants on demurrer to the declaration, plaintiff brings error.
    Affirmed.

      F. A. Baker (George Gartner, of counsel), for appellant:
    In support of the proposition that plaintiff could waive the tort and sue in assumpsit, counsel cited: Moore v. Mandlebaum, 8 Mich. 433; Fiquet v. Allison, 12 Mich. 328; Johnson v. Insurance Co., 39 Mich. 33; Barnard v. Colwell, 39 Mich. 215; Chandler v. Childs, 42 Mich. 128; McLaughlin v. Salley, 46 Mich. 219; Nugent v. Teachout, 67 Mich. 571; Tuttle v. Campbell, 74 Mich. 652; Aldine Manfg. Co. v. Barnard, 84 Mich. 632; Railway Co. v. Chew, 67 Ill 378; Dietz v. Sutcliffe, 80 Ky. 650; Roberts v. Evans, 43 Cal. 380; Lehmann v. Schmidt, 87 Cal. 15; Roth v. Palmer, 27 Barb. 652; Hawk v. Thorn, 54 Barb. 164; Putnam v. Wise, 1 Hill, 234, 240 (note a); Berly v. Taylor, 5 Hill, 584 (note a); Goodwin v. Giiffis, 88 N. Y. 629; Blalock v. Phillips, 38 Ga. 216; Manufacturing Co. v. White, 53 Ga. 395; Evans v. Miller, 58 Miss. 120; Logan v. Wallis, 76 N. C. 416; Nor deny. Jones, 33 Wis. 604; Walker v. Duncan, 68 Wis. 624; Morford v. White, 53 Ind. 547; Stockett v. Watkins, 2 G. & J. 343; Gordon v. Bruner, 49 Mo. 570; Winter v. Bandel, 30 Ark. 362; Jones v. Hoar, 5 Pick. 285; Marshall v. Gilman, 47 Minn. 131, 52 Minn. 88.

      John D. Conely, for appellees:
    Fraud does not render a contract void, but merely voidable at the election of the defrauded party; and if a vendor, having a right to rescind a contract of sale of goods on account of the fraud of his vendee in making the purchase, brings indebitatus assumpsit to recover the price of the goods, he thereby affirms the contract. Galloway v. Holmes, 1 Doug. (Mich.) 330; Jewett v. Petit, 4 Mich. 508; Emerson v. Detroit Steel & Spring Co., 100 Mich. 127. One who has been induced by the fraudulent representations of another to enter into a contra ct may affirm or disaffirm it; but he cannot do both, and he must affirm or disaffirm altogether. He cannot adopt the part which is for his own interest and reject the residue. Same oases, and Peninsular Bank v. Hanmer, 14 Mich. 208; Merrill v. Wil

      son, 66 Mich. 232. Where the defrauded party rescinds an express contract, he cannot set up an implied one (Galloway v. Holmes, 1 Doug. [Mich.] 330; Jewett v. Petit, 4 Mich. 508; Emerson v. Detroit Steel & Spring Co., 100 Mich. 127); and plaintiff’s only remedy is to take the contract as it is, or sue in an action on the case (Jewett v. Petit, 4 Mich. 508; Walsh v. Sisson, 49 Mich. 423; Emerson v. Detroit Steel & Spring Co., 100 Mich. 127).
   Long, J.

The declaration in this case contains the common counts in assumpsit and a special count, also in assumpsit, which sets forth, substantially, that Joseph Coon was a resident of the county of Wayne, and had real estate of the value of $100,000, and personal estate of the value of $2,000; that he died intestate, leaving a widow and heirs art law; that plaintiff was one of such heirs at law, and, as such, entitled to an undivided one-sixth of his estate; that the debts of the estate were less than the sum of $8,000, and the widow somewhat advanced in years, so that the value of her dower did not exceed the sum of $16,000; that the net one-sixth undivided share possessed by the plaintiff was of the value of $15,000; that defendants knew the values above mentioned, but plaintiff’s home was in Montana, and she herself was not familiar with the value of her father’s estate, or the amount of his debts, or with the value of the widow’s dower, and she was without means to go to Detroit, from Montana, to look after her interest; that she was unaccustomed to business and to transactions like those mentioned; that defendant Fuller was appointed administrator of the estate of Joseph Coon; that he qualified, and entered upon the performance of his duties; that he was and is. an attorney and counselor at law, duly licensed to practice in the courts of this State; that the other defendants (Wilmarth and Reaurne) were his clients and friends, and frequenters of his office in Detroit; that on April 1, 1889, the three defendants entered into a conspiracy to defraud the plaintiff of the greater part of her share of her father’s estate; that on October 3, 1889, at the special instance and request of all the. defendants, plaintiff executed, at Montana, and forwarded and delivered to all the defendants, at Detroit, a deed and conveyance, running to the defendant Reaume, of her one-sixth interest in her father’s estate; that about two months later, namely, on December 2, 1889, the defendant Reaume and his wife gave to one Josephine Kenney a. mortgage on that part of said one-sixth which was situated on Michigan avenue, in Detroit; that, upon the security of this mortgage, all the defendants borrowed from said Josephine Kenney the sum of $500, which money they all caused to be paid to the plaintiff, as a part of the consideration for her deed above mentioned; that all the defendants thereupon caused this Kenney mortgage to be recorded, and at the same time the deed from plaintiff was recorded, so that the Kenney mortgage was the first mortgage or lien on the property described in it, being plaintiff’s share in the Michigan avenue lots; that five days later, being December 7, 1889, all the defendants caused Reaume to give the plaintiff a mortgage on the one-sixth interest in the Michigan avenue lots, and upon a sixth interest in a small house on Howard street, as the remaining part of the consideration for her deed; that the condition of this mortgage from Reaume to the plaintiff is as follows:

Provided, always, and these presents are upon this express condition, that if the said parties of the first part [Reaume and wife] shall and do well and truly pay or cause to be paid to the said party of the second part [plaintiff] the sum of four thousand dollars, within two years after the estate of Joseph Coon, deceased, is fully settled and distributed, — this mortgage is to draw legal interest from and after the time said estate is fully settled and distributed, and that said legal interest is six per cent, per annum, all interest to be due and payable semi-annually; and after the said settlement of said estate, and the distribution of the. same, said first parties to have the privilege of paying the whole or any part of the principal sum due hereon at any time, — according to a promissory note, bearing even date herewith, executed by Denis J. Reaume to the said party of the second part, to which this indenture is collateral security, then these presents and said promissory note shall cease and be null and void.”

That the promissory note is in the words and figures following:

“$4,000. December 7,1889.
“According to a real-estate • mortgage, after date I promise to pay to the order of Josephine Cole four thousand dollars, at law office of Jay Fuller, Detroit, Mich., with interest, according to a'real-estate mortgage bearing even date herewith and collateral "hereto. Value received.
“Denis J. Reaume.”

That two months later, namely, on February 10, 1890, the plaintiff made an assignment of this mortgage to defendant Wilmarth, and received from all the defendants $1,000 in money, and the promise of all to pay her the balance when the mortgage should be collected, and that the mortgage and assignment were then recorded; that the following summer, namely, June 21, 1890, this being between nine and ten months after she had conveyed' her interest to Reaume, plaintiff, at the special instance and request of all the defendants, executed another and a full assignment to Wilmarth of the mortgage given by Reaume, and upon receiving this full assignment all the defendants paid to her the sum of $3,000, being the entire balance owing to {her.

The count avers that for the purpose of inducing plaintiff to execute the deed of October 3, 1889, the first assignment to Wilmarth (that of February 10, 1890), the further assignment of June 21, 1890, and to accept the sum of $4,500 as the purchase price of her said share, the defendants, and each of them, made certain fraudulent representations, substantially as follows:

1. That her share was not worth to exceed $4,500.

2. That the widow’s dower would absorb about half of the estate.

3. That the widow insisted upon having, for her right of dower, $30,000 in cash, and that this would fake two-thirds of the estate, if it was sold at auction.

4. That the debts and expenses of administration would be between ten and twelve thousand dollars, and that it would take all of the farm lands of Joseph Coon to pay the same.

5. That the estate was so involved in litigation that the heirs at law would not realize anything.

6. That it would be necessary to sell the estate of Joseph Coon at forced or auction sale to pay the debts of the estate.

7. That the heirs of Joseph Coon, including the plaintiff, were not entitled to draw any money from the estate, or to realize thereon, until the estate was settled, and that the plaintiff could get all the money she wanted, from any one, on the mortgage given to her by defendants.

8. That the other children and heirs of Joseph Coon were not entitled to receive, and could not and would not get, more than $4,500 for or from their respectivé shares of the estate, and that that amount was all that the one-sixth share of said estate was worth.

The count then avers that the plaintiff believed these representations, and, if she had not been deceived and misled by them, would not have made the deed or assignments, nor would she have accepted the $4,500 as the purchase price, and that by means of the promises, and in consequence of the fraud, the defendants deprived her of all the value of her share of her father’s estate, over and above the sum of $4,500. The count adds:

“Waiving the’tort, and suing in assumpsit, * * * the defendants became and were and are liable to pay to the plaintiff the difference between the said sum of $4,500 and the real and actual value of her share in her father’s estate, * * * and, being so liable, * * * the defendants promised to pay to the plaintiff the said sum of money.”

Two of the defendants (Jay Fuller and Hiram D. Wilm'arth) demurred to this count. They assigned three causes of demurrer: (1) That said special count does not state a cause of action founded on contract, either express or implied; (2) that said special count does not state a cause of action for which assumpsit will lie; (3) that said special count does not state a cause of action which will warrant or sustain a writ of attachment. The demurrer was sustained in the court below. Judgment was entered for defendants Fuller and Wilmarth on this demurrer. Plaintiff brings the case into this court by writ of error.

The damages claimed by this count is the difference between the sum paid for the deed and the actual value of plaintiff’s share of her father’s estate. It, is the only sum claimed by this count. It is this amount out of which plaintiff claims to have been defrauded by the defendants. The count sets out that the consideration for the deed was $4,500, and it is admitted that she received that amount. This is the only sum which defendants agreed to pay, and that amount has been paid. If a fraud was perpetrated, it was in procuring the deed at the price of $4,500, and it was then and there accomplished. But plaintiff, by her declaration, waives the tort, and sues in assumpsit. We think the averments in the declaration preclude a recovery in this form of action. The agreed price for the property was $4,500, and no implication can arise that any greater sum was agreed upon. We think the case is ruled by Galloway v. Holmes, 1 Doug. (Mich.) 330, and Emerson v. Detroit Steel & Spring Co., 100 Mich. 127. One who has been induced by the fraudulent representations of another to enter into a contract may affirm or disaffirm it. If he disaffirm, and assent the fraud, he cannot, in the same action, turn it into an action of assumpsit, and recover as for an implied promise. As was said in Emerson v. Detroit Steel & Spring Co., supra:

“It is suggested that, as a fraud was perpetrated upon the creditor, he would have the right to waive the tort and sue in assumpsit. But we are aware of no case which authorizes a party to first turn a contract into a tort, and then shift it back into the form of a new contract other than the original one.”

The cases above cited are so squarely in point that we deem further discussion of the question unnecessary.

The judgment below must be affirmed.

The other Justices concurred.


text:
    CASE MANUFACTURING CO. v. PERKINS.
    1. Fraudulent Conveyances — Consideration.
    A revived claim, to constitute a sufficient consideration to sustain a conveyance by an insolvent debtor, must be founded upon an acknowledged and recognized indebtedness theretofore existing.
    2. Same — Husband and Wife.
    Evidence reviewed, and held to establish that a conveyance-from a debtor to his wife was made for the purpose of placing the property beyond the reach of his creditors, and that the indebtedness to the grantee, if any existed, was so disproportionate to the value of the land as to render the consideration, grossly inadequate; and a decree was entered subjecting the property to the claims of creditors.
    Appeal from Eaton; Smith, J.
    Submitted June 7, 1895.
    Decided September 26, 1895.
    Bill by the Case Manufacturing Company against Judiah P. Perkins and others, in aid of execution. Complainant appeals from a decree dismissing the bill..
    Reversed.

      Powers & Stine, for complainant.

      Huggett & Smith, for defendants.
   McGrath, C. J.

A judgment creditor assails as fraudtílent a conveyance made by Judiah P. Perkins to his wife May 15. 1891, of 154-J acres of land. The deed fixes the consideration at $8,000, and the testimony shows that the valuation put upon it at that time was not excessive. The defense is that the conveyance was made in good faith, in payment of an indebtedness due from the husband to the wife. Counsel for defendants, in their brief, give the items of indebtedness as follows:

The parties were married in 1859, in Ohio. He was a farmer, and owned a small farm there. This farm was aflerwards sold, and they came to this State. A farm was bought here, which was afterwards sold, and in 1870 the land in question was bought. He was elected sheriff of Eaton county in 1884, and they moved to Charlotte in January, 1885, where they resided until sometime after the levy, which was made in July, 1892. After his term as sheriff expired, he engaged in business at Charlotte, and at the time of the conveyance he owned and was operating a flouring mill, under the name and style of J. P. Perkins & Go. Upon the billheads appeared the names of J. P. Perkins and M. A. Perkins, the latter being his wife.

The wife testifies that, when she was married, she had some household things that were her mother’s, and that her father gave her $200, a cow and a calf, and 10 sheep; that the money and the cow and sheep were used on the farm in Ohio; that the farm was sold in 1864 or 1865, and with it two cows at $45, and 20 sheep at seven dollars and a shilling a head. The entire proceeds of the cows and sheep are charged up in the itemized account aforesaid, and are the third, fourth, fifth, and sixth items, and aggregate $612.90. No agreement to pay or repay the first six items of the account, or to pay interest thereon, is even suggested by the record. No acknowledgment of any indebtedness is shown. The wife testifies that, when the next item was advanced, a note was given for the amount, viz., $100. Her father died in 1887, testate, possessed of 57 acres of land in Ohio, and some notes and other personal property. The will gave to the wife of decedent, the stepmother of Mary A. Perkins, all the household furniture, $100 in money, and $125 each year during her natural life. Subject to this legacy and annuity, and the payment of debts and funeral expenses, Mary A. Perkins took the residue. J. P. Perkins was appointed executor. The ninth item is a charge for the entire proceeds of the sale of the personal property, less expense of $51, and the eleventh item is alleged to consist of three notes of J. P. Perkins, given by him to decedent. A memorandum was produced, which is alleged to have been made at the date of the auction of the personal property at the farm in Ohio, May 14,1887, in which these notes are set forth as follows:

The aggregate amount is $1,006.15. -Ollier notes found with the papers of the decedent, aggregating $524.10, appear in this statement, making $1,530.25, the eleventh item of the account. In the memorandum produced, other items, purporting to be the proceeds of sales of personal property, appear, which aggregate the amount of the ninth item of counsels’ statement. This entire amount is charged up to J. P. Perkins, as due his wife. In this memorandum some 12 or more notes were given for small amounts. It nowhere appears that 11 nut of the 12 were ever paid. The memorandum includes also the proceeds of the sale of household furniture, which, under the will, was bequeathed to the widow. It also includes one item which was to be paid for “in work this fall,” evidently upon the farm, which was owned by the wife, and which was not sold until 1880. It further contains an item of “Pd. Bill Wood, for crying sale, $5.” Not even this is credited. It further includes items, aggregating $628.85, for hay, oats, sheep, and cows, evidently bid in by the husband at the auction sale. There is no testimony tending to show that this property was ever taken from the farm, or appropriated by the husband. Mary A. Perkins testified that, at the time of the sale of the personal property belonging to her father’s estate, her husband executed to her a note for $1,312, or thereabouts, as the proceeds of such sale. It appears, however, that the entire avails of that sale were but $1,261, and the amount stated by her as the amount of the note not only includes the items already referred to, but evidently includes an item of $61.54 actually charged by her husband as moneys paid to the widow as the proceeds of her household furniture disposed of at that sale, and stated upon the memorandum to be in settlement of ber claim therefor. The farm was sold March 27, 1889. The sum of $400 was paid down, and a mortgage of $2,000 was taken for the balance, payable, $500 April 1, 1891; $500 April 1, 1893; |500 April 1, 1895; and $500 April 1, 1897. Assuming that the first payment on the mortgage was made promptly, the second installment was not payable until nearly two years after the conveyance in question; yet two payments are charged against J. P. Perkins. The twentieth item is an amount paid to the husband for washing, sewing, and mending done for prisoners while J. P. Perkins was sheriff.

J. P. Perkins was not sworn. The wife testified. She had testified that she had let her husband have the second payment of $500 made on the mortgage; that “he wanted it, as he was buying the mill.” It appeared, however, that he became the sole owner of the mill in February, 1893, having at that time bought out the interest of his partner, and that in March, 1892, the mill was totally destroyed by fire, and the business abandoned, whereas this amount did not become due upon the mortgage until April 1, 1893. It further appears that, at about the time when this payment matured, she made a loan and took a mortgage for $600 from one Owens. When asked respecting it, she says:

“Q. Now, isn’t that $500 the very money you loaned John Owens, the last payment which you got from the farm of your father down there? What is it?
“A. No.
“Q. When did you lend that—
“A. (mterruptwg). I never loaned John Owens any money.
“Q. Mr. Owens, of whom you took the $600 mortgage?
“A. That came from the avails of the farm, 1 believe.
“Q. Isn’t it a fact that the last payment of $500 that came from the Ohio farm was the money you loaned, and took that mortgage for?
“A. I don’t think it was.
“Q. Are you sure it was not?
“A.- I don’t think— I am not sure. * * *
“Q. Isn’t that $500 the very money that went into the mortgage which you took on the house and lot here in town?
“A. I can’t say.”

When asked what amount her husband owed her when he conveyed the farm she says:

“I believe it was over $5,000. * * * Because I think that was what he had. * * *
“Q. What was the amount of the note whicli Mr. Perkins gave you at the time you sold off your father’s personal property?
“A. That I can’t say.
“Q. What are you reading from, Mrs- Perkins?
“A. I have a list here of a few notes I took from my bill of sale.
“Q. What bill of sale?
"A. At the auction there, at the time. * * *
“Q. What was the amount of the note which Mr. Perkins gave you at the time of the sale in Ohio?
“A. What was it?
“Q. What was the amount of that note?
“A. That he gave me?
“Q. Yes.
“A. (referring, to paper). I haven’t no pencil. I can’t compute here.
“Q. (by Mr. Smith). You know the amount? You know the amount of that note, don’t you?
“A. I can’t say how much it was. * * *
“Q. Well, then, your recollection now is that the note which your husband gave you down in Ohio, and that was the first note he had ever given you, and was for $223, less $70?
“A. Yes, sir.
“Q. What did you do with that note?
“A. I had it in my possession.
“Q. Until when?
“A. Until the conveyance of the farm.
“Q. When was the next note your husband gave you?
“A. He gave me my notes—
“Q. (interrupting). No, when was the next note he gave you — the note which he signed, and gave to you?
“A. He gave me one at — at the same time of the sale with the— I think there was $1,312, I think. [She had said that she surrendered seven notes to her husband at the time of the conveyance.] * * *
“Q. Didn’t you tell us a little while ago, at the time of the conveyance of tbe farm to you, that you had seven notes against Mr. Perkins, and surrendered them to him?
“A. I didn’t say whether I had any more or not. I told you I—
“Q. (interrupting). Did you have seven at that time?
(No reply.)
“Q. You don’t know whether you did or not, do you, Mrs. Perkins? (No reply.)
“Q. Do you? (No reply.)
“Q. And, really, you don’t know how much Mr. Perkins owed you at that time, do you?
“A. He owed me over $5,000.
“Q. How much over?
“A. I couldn’t say how much, Mr. Powers.
“Q. Why do you say over $5,000?
“A. Because that was what I — I gave him for the—
“Q. For the farm?
“A. Yes, sir.
“Q. Didn’t you giv<* him but $5,000 for the farm?
“A. Yes, sir; I gave him more.
“Q. How much more?
“A. I can’t say how much more.”

It is unnecessary to further review the testimony of this witness. It is, in many respects, contradictory and unsatisfactory. The husband might have been able to give a clearer account of the transaction. She endeavored to speak from memoranda, but seemed to have no clear understanding when led away therefrom. The first item of the charge against her husband corresponds both in amount and time with one of the notes alleged to have been held by her father against the husband. The making of this memoranda, figuring up interest for 22 years upon one note and 20 years upon another, against the husband in favor of the wife, who seems to have allowed him to handle, without question or account, all her moneys, is not an ordinary transaction; to say the least. It may have been done, however. It is, however, clear from this record that there has been a flagrant attempt to> inflate the indebtedness existing at the date of this conveyance, which casts suspicion upon the entire transaction. Courts have, in many instances, allowed a revived claim to enter -into the consideration for such a conveyance, but it is only in cases where an actual, acknowledged, and recognized indebtedness existed at some period prior to the revival. As to the first, third, and fifth items of counsels’ statement, there is no claim that there was at the time any undertaking to repay, or any expectation of repayment, and, as to all the other items, any promise respecting them must be predicated upon the testimony of Mary A. Perkins, to which allusion has already been made. Her testimony does not tend to show a mere passive acquiescence in a conveyance to her in payment of an indebtedness the items of which were not discussed, but she has undertaken to show a settlement upon the basis indicated, and a surrender of evidences of indebtedness.

It is claimed, however, that, at the time of this conveyance, Perkins owned the mill property, and that complainant might have made its claim therefrom. The farm was conveyed away a few days before the note matured upon which the judgment is based. It does not appear when complainant learned of the conveyance. The mill was destroyed by fire in March, 1892, and it is shown that Perkins received upon policies of insurance about $6,000. There was a mortgage upon the real estate, and, after the fire, the mortgagee took a deed of the land in satisfaction of the mortgage. There were other mortgages^ evidently upon the machinery, but not covered by the insurance policies. There was a large amount of floating indebtedness, and, although Mary A. Perkins testified that the avails of the policies were used to pay debts, it appeared at the hearing that there were a number of claims which existed at the date of the conveyance that were still unpaid.

There is but one legitimate inference that can be drawn from this record, and that is that it was to place the farm in question beyond the reach of creditors that the conveyance was made to the defendant Mary A, Perkins. The mortgage upon the farm was $1,200. Complainant’s judgment is in the neighborhood of $700. There was a margin in the farm over and above the mortgage, and the homestead interest, if any existed, of $5,300. We are satisfied that the actual indebtedness, if any existed, was so far below this figure as to make the consideration grossly inadequate.

The decree below will therefore be reversed, a decree entered for complainant, with costs of both courts, and the record remanded.

The other Justices concurred.


author: Grant, J.

text:
    WOLPERT v. NEWCOMB.
    1. Drains — Validity op Proceedings — Certiorari.
    One who is not injured by the widening and deepening of a drain across his land is not entitled to question the validity of the proceedings on certiorari.

    2. Drains — Condemnation Proceedings— Sufficiency of Citation.
    One who has been properly served with á citation from the probate court in proceedings to condemn land for the construction of a drain under 3 How. Stat. § 174059 ef seg., cannot be heard to raise the objection of a defective service on other land-owners, who, having released the right of way and all damages, are not themselves in position to complain.
    3. Same.
    Where it clearly appears from the citation so issued that the proposed drain will cross the lands of the persons to whom the citation is addressed, it is immaterial that the fact is not stated in the exact language of the statute. (3 How. Stat. § 1740cl.)

      4. Same.
    The citation need not be issued under the seal of the probate court, the statute not requiring it; nor is it such a process as is required by the Constitution (article 6, § 155) to be “in the name of the people of the State of Michigan.”
    5. Same.
    The person serving the citation need not be specially appointed for that purpose, under the provision of the statute requiring the service to be made by the commissioner “or some other competent person.”
    Error to Eaton; Smith, J.
    Submitted June 7, 1895.
    Decided September 26, 1895.

      Certiorari by Caleb Wolpert to review the proceeding» of Morrell E. Newcomb, county drain commissioner, and Jacob L. McPeek, judge of probate, in the matter of straightening, widening, and deepening a drain. The circuit court dismissed the writ, and plaintiff brings error.
    Affirmed.

      John Nichol and F. H. Stowe, for appellant.

      Huggett & Smith; for appellees..
   Grant, J.

Plaintiff brought certiorari to the-circuit court to review the proceedings of the defendants in the matter of straightening, widening, and deepening a part of the “Mead Drain,” so called, in the township of Rox- and, in Eaton county. The circuit court sustained the proceedings, and plaintiff has appealed to this court. The objections raised are:

(1) That the citation issued upon the petition did not set forth that the lands of the persons to whom it was addressed would be crossed by said drain.

(2) That the affidavit of service did not show proper service upon certain parties.

(3) That the citation issued on the 14th of July, fixing August 1st as the day of hearing, was without jurisdiction.

(4) That the citations were not under the seal of the court.

(5) That the citations were not issued “in the name of the people of the State of Michigan.”

(6) That when the probate court appointed the special commissioners there was no legal proof before it of the service of the citation.

A legal ditch was in existence. It extended 14 rods across plaintiff’s land, across which it was only necessary to deepen and widen it. After a full hearing, at which he and his attorney were present, and in which they participated, he was awarded $25 damages.

After receiving the application, which is correct in form, the drain commissioner made an examination, and determined that “the deepening, widening, and straightening of a portion of said Mead drain was necessary, practicable, and conducive to the public health, convenience, and welfare.” He also returns:

“That soon thereafter I caused to be presented to all of the owners of the lands traversed by the part of said drain to be deepened, widened, and straightened, a proper drain release of the right of way and damages, and requested the owners of said lands, respectively, to execute the same; and that all of such owners did execute such release of right of way and damages, except Caleb Wolpert, one of the owners of said land, who refused to execute such release.”

The proceedings are conceded to be regular up to the issue of the citation.

The statute allowing certiorari to these proceedings provides that, “if any material defect be found in the proceedings for establishing the drain, such proceedings shall be set aside.” It is nowhere shown or claimed that the plaintiff will be injured by the deepening, widening, and straightening of the ditch. If he is not injured, there is no reason why he should have the proceedings quashed, or be heard to question their validity by the writ of certiorari, which is subject to discretion. Roediger v. Drain Commissioner, 40 Mich. 745, and authorities there cited. None of .the other parties interested complain, nor are they in a position to do so, because they have assented, and released their right of way, and have thereby waived'all irregularities until proceedings are taken under chapter 5 of the drain law (3 How. Stat. § 1740e2 et seq.) for the assessment to construct the drain.

The object of the citation is to afford a hearing to the parties interested to make objections, and to be heard in the selection of commissioners. Kinnie v. Bare, 68 Mich. 634. The plaintiff was properly served with the citation, and cannot now raise the objection of a defective service upon others, none of whom are’in condition, for the reason above stated, to make the same objection. We will therefore consider only those objections which, upon the assumption that he may be injured, he is entitled to raise.

1. Plaintiff appeared specially upon the 9th day of July, the return day of the citation, and objected to the jurisdiction, because the citation did not state that the lands owned by the persons to whom it was addressed would be crossed by such drain. The citation used the word “affected” instead of “crossed.” The judge adjourned the hearing until the 14th day of July, and on that day ordered the citation to be amended by inserting the word “crossed” instead of “affected,” adjourned the hearing to August 1st, and caused the citation as amended, and the daite of hearing as of August 1st inserted therein, to be served in due time upon the parties interested. The statute requires that the citation “shall set forth that lands owned by the persons to whom it is addressed will be crossed by such drain, or will be subject to assessment for its construction, and that a description and survey of such drain is on file with the court issuing the citation.” 3 How. Stat. § 1740cl. The commencement, terminus, and the general course, and direction of the drain, and the description of the plaintiff’s land, are fully stated in the citation. From these it conclusively appears that the drain did cross his land. This was a sufficient compliance with the statute. It is not necessary to use the exact language of the statute, where the citation contains the substance of its requirement, and the party is not misled.

2. The drain law does not require the citation to be issued under the seal of the court, nor is it such a process as the Constitution requires to be “in the name of the people of the State of Michigan.” The proceedings of the commissioner are entirely ex parte until at the proper stage application is made by him to the probate court for the appointment of commissioners to determine the necessity, etc. The citation commenced as follows: “At a session of the probate court" for the county of Eaton, holden at the probate office in the city of Charlotte on Monday, the 4th day of June, 1894,” etc., and was signed, “Jacob L. McPeek, Judge of Probate.” It was in proper form without the seal or the statement that it was issued “ in the name of the people,” etc.

8. The statute provides that “the citation shall be served by the commissioner or some other competent person.” The citation in this case was served by one Alexander Hecock, whom the return shows to have been a competent person. He made due proof of service by affidavit. The contention is that no investigation was made into the competency of Mr. Hecock before the service, and that he was not expressly appointed to make the service; and the following authorities are cited: Rasch v. Moore, 57 Mich. 54; Gadsby v. Stimer, 79 Mich. 260; Union Mutual Ins. Co. v. Page, 61 Mich. 72. Those cases arose under a statute which only authorized service of process issued by a justice of the peace by other than an officer, upon request of a party, and by written authority, indorsed upon the process. No such provision is found in the drain law, which authorizes service by any competent person. No special appointment is required. The return shows that Mr. Hecock was a competent person, and the return is conclusive. No claim is made that he was not competent.

The proceedings are affirmed.

The other Justices concurred.


text:
    SANDS v. GAMBS.
    Town Plats — Construction—Boundaries-Riparian Rights.
    The owner of lands adjoining a river platted a portion of the same into village lots. Upon the plat as recorded, between the river and the lots, was a strip 450 feet in length, lying parallel with the river, marked “ Slab Dock,” which consisted of slabs extending into the water from the bank, and which at some points was entirely submerged. The inner line of this strip was substantially coincident with the meander line of the stream; but the lot lines, according to the distances marked thereon, carried the lots past the meander line, .and, in some places on the plat, to within a few feet of the river side of the dock, while beyond the lines of some of the lots when so extended there was in fact high land. No way to the strip was reserved by the plat, the only access thereto being from the river or from other parcels of land not platted; and the owners of the abutting lots, for many years, without protest, treated the dock property as part of their respective holdings. Held, that it was not the intention to reserve the dock from the dedication, but that the platted lots extended to the river.
    Error to Manistee; McMahon, J.
    Submitted June 6, 1895.
    Decided September 26, 1895.
    Ejectment by Louis Sands against Joseph (Jambs and another.- From a judgment for plaintiff, defendants bring error.
    Reversed.

      Smurthwaite & Fowler, for appellants:
    Government' meander lines do not limit boundaries on waters. Twogood v. Hoyt, 42 Mich. 609; Boom Co. v.
      Adams, 44 Mich. 403; Palmer v. Dodd, 64 Mich. 474; Clute v. Fisher, 65 Mich. 48. When the boundary is the water’s edge, no matter by what terms indicated, the grant extends to the thread of the stream, unless expressly reserved. Norris v. Hill, 1 Mich. 202; Watson v. Peters, 26 Mich. 508; Richardson v. Prentiss, 48 Mich. 88; Cole v. Wells, 49 Mich. 450; Fletcher v. Boom Co., 51 Mich. 277; Turner v. Holland, 65 Mich. 453; Butler v. Railroad Co., 85 Mich. 246; Gilbert v. Emerson, 55 Minn. 254; St. Clair Co. v. Lovingston, 23 Wall. 46.

      Dovel & Smith, for appellee:
    It is beyond question, at least in this State, that the owner of lands fronting upon a navigable stream may separate the low lands from the bank or shore, and convey them to different grantees, or, as in a case like this, he may reserve the water privileges or low lands; and he does so reserve them whenever and wherever there is anything upon the face of the plat or deed to show that it was not intended to dedicate or convey the same, — in other words, enough to overcome the legal presumption which arises where the grant in express terms extends to the stream or river as a boundary. Watson v. Peters, 26 Mich. 508; Richardson v. Prentiss, 48 Mich. 91; Fletcher v. Boom Co., 51 Mich. 281; Turner v. Holland, 65 Mich. 463; Nichols v. Furniture Co., 100 Mich. 242; Hanford v. Railroad Co., 43 Minn. 104; Gilbert v. Eldridge, 47 Minn. 210; Bradshaw v. Mill Co., 52 Minn. 59; Gilbert v. Emerson, 55 Minn. 254, 60 Minn. 62; People v. Madison Co. Supervisors, 125 Ill. 9. But in the present case, as appears from the plat, defendants’ lots do not border upon the stream, aDd hence no riparian rights could attach. Palmer v. Dodd, 64 Mich. 476; Nichols v. Furniture Co., 100 Mich. 242; Bristol v. Carroll Co., 95 Ill. 84; Trustees of Schools v. Schroll, 120 Ill. 509; People v. Madison Co. Supervisors, 125 Ill. 9.
   Montgomery, J.

This is an action of ejectment. The plaintiff recovered by direction of the court, and defendants bring error.

In September, 1863, Filer & Smith were the owners of lot 6, section 1, town 21 N., range 17 W., and platted a portion of the same as an addition to the village of Manistee. Upon the recorded plat, all the portion adjoining the river, consisting of a continuous parcel east, north, and west of the lots and blocks, was marked as reserved, the other boundary of the reserve being Manistee river. In 18C8, the title to this reserve had been vested in M. S. Tyson & Oo., and they platted a portion of the same. The plat is as follows:

The surveyor’s certificate, which was confirmed in the dedication by the owners, was as follows:

“This is to certify that I have been employed by Mark S. Tyson, George W. Robinson, and Richard G. Peters, under the ^ title of M. S. Tyson & Go., to survey and lay out into village lots a portion of lot number six, section number one, in township number twenty-one north, of range number seventeen west, and known also as that: part of the reservation of Filer & Smith’s addition to the village of Manistee lying contiguous to, and immediately north and west of, block number one in said Filer & Smith’s addition; that I have laid out a street to the north and west of said block number one, and nine lots, as appears by the plat here represented, which is a correct plan of the said survey.”

The locus in quo is that portion of the land marked “Slab Dock,” abutting on the lots 1,' 2, and 3, and lying, between them and Manistee river. Both parties derive title from the platters. If the platted lots run to the river, the legal title is in the defendants. If the lots only extend to the slab dock, the legal title is in the plaintiff.

It appears from the evidence that the so-called slab dock consisted of slabs, the product of the mill of M. S. Tyson & Co., with the ends resting on the shore and extending out into the river. Mr. Peters, a witness for Ihe plaintiff, testified:

“The slabs were piled in just as they came from the saw, — broken pieces and all. The ends of the pieces were laid in the bank, just enough to hold them, and the balance extended ouit into tbe river. * * * There was a low slab dock extending from the mill clear down across-' this property. Near this property, I don’t think it was very much above the water.”

“George A. Ford, a witness for the defendants, testified:

“There was no slab dock there before Smith bought [August 15,1868, after the platting]. Nothing but what slabs were dumped there and burned up.”

Another witness testified that the slab dock extended-only part way across these lots, and he completed it in 1870.

It further appears that the meander line was substantially coincident with the south line of the slab dock, a§ marked at the east side of the plat. But the lot lines, as marked in feet, carried the lots past the meander line,, and, in some places on the plat, to. within four or five feet of the river side of the slab dock, although the shaded portion on the plat does, not indicate this irregularity ~ so that it is apparent that the shading for the slab dock was to some extent arbitrary, and did not conform to any actual existing structure on the ground. There was testimony that opposite the lots in question there was high land for a greater distance from the street than that marked on the plat to indicate the lot lines. In other words, if the plaintiff’s contention be true, — that the slab dock is a monument, — a portion of that strip marked on the plat is not a slab dock, but solid land.

The question of the intention of the platters is not altogether clear. So far as any practical construction of the parties can be of aid, it. favors the contention of defendants, for it appears that the defendants and their grantors have for many years, at intervals, treated the land as part of the platted lots, and this without any protest from those through whom plaintiff derives title. This fact is not without its significance. Turner v. Holland, 65 Mich. 465; Watson v. Peters, 26 Mich. 517.

No case has been cited, nor have we found any, which can be said to rule'this case. There are, however, certain rules which may be of aid in determining the question. The tendency of the decisions is to turn every doubt upon expressions which fix the boundary next the river in favor of a contact with the water. Ang. Water Courses, § 23; Butler v. Railroad Co., 85 Mich. 246. In this class of cases the rule also obtains that grants must be construed most strongly against the grantor. Butler v. Railroad Co., supra- Monuments usually control courses and ‘ distances. Gilman v. Riopelle, 18 Mich. 145; Turner v. Holland, 65 Mich. 453. Applying these rules, we find that the dedication carried the lines past the meander line, and'to the slab dock, which was the only monument, except the river. This slab dock was, in large part, submerged. There is nothing in the nature of a reservation in the certificate of survey or the dedication. If the line of the lots, as marked in feet, measures defendants’ holding, it comes into the slab dock as marked on the plat, and in other portions of the plat this is still more marked. Another fact which indicates that there was no intention to reserve this strip is that 'no way to it was reserved, the only access to it being from the river, or from other pieces of land not platted. For independent use as a dock, it would apparently be valueless. It could only be used either in connection with the platted lots, or with reserved strips to the east and west, which would leave a dock 450 feet in length accessible only at the ends, and in some places consisting of but a very narrow strip. Upon full consideration, we are of the opinion that it was not intended to reserve from the dedication the slab dock, but that it was so designated in the plat as showing its adaptation to use in connection with the lots, and was considered and treated as part of the stream.

In this view, it becomes unnecessary to discuss the other questions raised.

The judgment will be reversed, with costs, and a new trial ordered.

The other Justices concurred.


text:
    FIRST NATIONAL BANK OF KALAMAZOO v. STONE.

    1. Banks and Banking — Rediscounted Paper — Liability of Bank upon Indorsement.
    The defendant bank, in response to plaintiff’s request for some good paper with defendant’s indorsement, sent to plaintiff, “for discount and returns,” a note payable at the defendant bank to the order of third parties, indorsed by them in' blank, and bearing defendant’s guaranty of payment. Held:

    (1) That, the transaction being in accordance with defendant’s usual method of rediscounting paper, the note would be treated as paper rediscounted by the bank, although no - record was made upon the bank books, except to credit the maker of the note with the proceeds thereof, less a charge made by the bank.

      (2) That plaintiff, having received the note in good faith and for value, would be entitled to protection, even though the-officials of the defendant bank who negotiated the transfer may have sought to defraud the plaintiff or the stockholders-of their own bank.
    2. Same — Authority op Cashier.
    A bank the directors of which have for several years intrusted the entire management to the cashier is liable upon the latter’s indorsement in its behalf of paper negotiated by him as the property of the bank in the usual course of the business.
    Appeal from Ingham; Person, J.
    Submitted June 11, 1895.
    Decided September 26, 1895.
    Petition of the First National Bank of Kalamazoo for an order requiring George W. Stone, as receiver of the Central Michigan Savings Bank, to recognize and pay the claim of petitioner. From an order granting the petition, defendant appeals.
    Affirmed.

      Osborn, Mills & Master, for petitioner.

      M. V. Montgomery, for defendant.

       Rehearing denied December 24, 1895

   Grant, J.

The First National Bank of Kalamazoo present ed a claim against the defendant upon two promissory notes for $5,000 each, executed by the Lansing Iron & Engine Works, one to the order of O. M. and O. F. Barnes, and the other to the order of O. F. Barnes, payable at the defendant bank. The former was indorsed by O. M. and O. F. Barnes, and the other by O. F. Barnes, and both were indorsed by the defendant bank. The claim was allowed by the court, and the receiver appeals.

The first note originated in 1886; the second in 1889. Both had been renewed every 90 days, until the failure of the defendant bank in 1893, each renewal note being the same in form as the original. The defendant bank had attended to the renewals, and remitted the discount to the claimant. Two trials were had in the circuit court, upon the first of which Mr. Bradley, the cashier of the defendant bank, testified that the original paper was. rediscounted paper. This state of facts brought the case directly within that of Davenport v. Stone, 104 Mich. 521. The evidence upon the second trial differs only from that upon the first in that one of the bookkeepers of the defendant bank and Mr. Bradley, the cashier, testified that the bank books do not show that these notes were first discounted by the defendant bank. The claim is therefore made that this was not rediscounted paper. In Davenport v. Stone the last note, the note upon which suit was brought, was not entered upon the bank books. The correspondence in regard to these notes and their renewals was carried on in the manner usual between banks. The first letter by the claimant was written June 24, 1886, by the cashier of the Kalamazoo bank to the cashier of the defendant bank, and reads as follows:

“I have a surplus of funds at present, and would like some good paper. Can’t you send me some good paper with your bank indorsement, say three to five thousand, on time 60 to 90 days?”

In reply to this the defendant bank wrote:

. “Inclosed I hand for discount and returns Lansing Iron & Engine Works, $5,000, 8 mos. from June 28, 1886.”

The correspondence in regard to the second note does not appear.

Three of the five or six directors were cognizant of these transactions while they were going on, one of whom was at one time president, and another cashier during the entire time. These notes were in the form commonly taken by the defendant when it discounted paper, and in the form common among banks. While the correspondence does not in terms speak of rediscounted paper, yet it is entirely manifest that these notes were sent and received as the paper owned by the defendant bank. The claimant did not ask the defendant to go out as its agent and make loans for it, but asked it to send good paper with its indorsement. Fairly interpreted, this means paper then owned by the defendant. Mr. Bradley, undoubtedly, stated the exact truth in his examination on the first trial when he said this was rediscounted paper. It appeared in Davenport v. Stone, as it also appears in this ease, that this was the customary method of doing business, and that there was about $100,000 of such paper outstanding. The mere fact that no record was made upon the books of the bank, except to credit the maker of the note with the proceeds thereof, less a charge made by the defendant bank, does not establish the fact that this was not rediscounted paper. Especially is this true in the presence of the testimony of Mr. Bradley upon the first trial, and the fact that the business was done in the usual manner. Even if there had been an attempt or design upon the part of defendant’s cashier and the directors who were cognizant of the transaction to defraud either the claimant or the stockholders of the defendant bank, this would not affect the rights of the claimant, who acted in good faith, without any knowledge of the real state of affairs, and for a valuable consideration. Chemical Nat. Bank v. Armstrong, 8 C. C. A. 155, 13 C. C. A. 47 (28 L. R. A. 231).

Another complete answer to the defendant’s position is that the directors are chargeable with knowledge of the transaction, because courts will presume that the directors knew what by due diligence they might have known. No director of the defendant bank has testified that he did not know the method of doing business. It is evident that they might have known had they made the investigation which law and common prudence require of such officers. If they chose to trust the entire management to their cashier, the bank is liable. This was sufficiently discussed in Davenport v. Stone, supra. See, also, St. Paul & M. Trust Co. v. Howell, 59 Minn. 295; Martin v. Webb, 110 U. S. 7.

The. order of the court allowing the claim is affirmed, with costs.

The other Justices concurred.