author: Gbant, J.

text:
    MAY v. McQUILLAN.
    1. Banks — Transfer op Stock — Evidence—Bank Record.
    A transfer of bank stock on the books of the bank is not conclusive, but only prima facie, evidence of ownership.
    2. Same — Insolvency—Liability of Stockholders.
    Under 2 Comp. Laws, § 6135, making stockholders in banks individually liable, for the benefit of the depositors, to an amount equal to the par value of their stock, the owner of stock in a bank at the time of its suspension is so liable, though he subsequently transfers his stock in ignorance of the failure.
    3. Same.
    M. and S. entered into a written agreement whereby S. was to convey real estate to M. in exchange for certain bank stock and a cash bonus; the sum of §50 to be forfeited by either party who should refuse to carry out the contract. The next day M. had the stock transferred to S. on the books of the bank, and a new certificate was issued in S.’s name, and delivered to M. Two days thereafter the bank suspended, being wholly insolvent. The next day the parties mfet, and, without knowledge of the failure, completed the transaction by exchanging the deed for the certificate and money. Held,
      that title to the stock did not pass until the delivery of the certificate to S., at which time the bank had suspended, and hence that M. was liable to an assessment as a stockholder under the statute.
    Appeal from Ingham; Wiest, J.
    Submitted December 11, 1901.
    Decided February 11, 1902.
    Bill by John A. May, receiver of the Ingham County Savings Bank, against Richard McQuillan and Law M. Simpson, to determine the ownership of certain shares of bank stock, and the consequent liability to an assessment. From a decree against defendant McQuillan, he appealed. On his death the cause was revived in the name of his administratrix, Alice McQuillan.
    Affirmed.
    Defendant Simpson resided in Jackson, Mich.; and Richard McQuillan, the deceased, in Lansing. About the 1st of August, 1896, they entered into negotiations for an exchange of properties, by which Simpson was to deed to McQuillan two houses and a lot in the city of Jackson, for which McQuillan was to give Simpson $1,350 in cash, and nine shares of the stock of the Ingham County Savings Bank, then owned by McQuillan, and standing in his name on the books of the bank, and for which he had a certificate, the evidence of ownership. The negotiations rested entirely in parol until August 3d, when Mr. Simpson and Mr. McQuillan met in the law office of Mr. Smith, at Jackson, for the purpose of consummating the trade. The witnesses do not agree as to why the trade was not then consummated. Mr. Smith testified that it was because Mr. McQuillan had not then the $1,350 to pay, but said he would have to go to Lansing to raise the money. Mr. Simpson testified that Mr. McQuillan said he did not care to go to the expense of going to Lansing to have the stock transferred without some surety that the transaction would go through. Mr. McQuillan testified that Mr. Smith advised Mr. Simpson not to consummate the trade until the stock was properly and legally transferred on the books of the bank, and that Mr. Smith drew a letter to the cashier of the bank, instructing him to transfer the stock, and that such letter was signed either by Mr. Smith or by Mr. Simpson and handed to him, and he took it to the cashier. Stallknecht, the agent who negotiated the matter between Simpson and McQuillan, testified that McQuillan had to go to Lansing to see about transferring the stock, and that a later day was appointed to close the deal. All agree that on August 3d a memorandum was drawn, which was, in effect, an agreement to make the trade, and provided a forfeit of $50 to be paid by either party should he refuse to carry it out. None of these papers were produced.
    Mr. McQuillan returned to Lansing, went to the bank August 4th, and had transfers of the stock from Mc-Quillan to Simpson entered upon the books. The stock, as to him, was canceled, and a certificate issued in the name of Simpson, and given by the cashier to McQuillan. McQuillan went to Jackson on the 6th, and on the 7th, about 2 o’clock p. m., the parties met at the office of Mr. Smith, at Jackson, and exchanged papers; the deed from Simpson and wife being delivered to McQuillan, and Mc-Quillan paying the money and delivering the certificate of stock.to Simpson. Both Simpson and McQuillan learned that night that the bank had failed. Simpson has never made an offer to rescind, but, when notified of the assessment, denied his liability as a stockholder.
    August 6th was the last day the bank did business. The directors met on that evening. In accordance with their directions, the bank was not opened on the morning of the 7th. It was found to be in a state of utter insolvency. The complainant was appointed receiver. Under the order of the court, an assessment was made upon the stockholders, in accordance with the statute, to pay the debts of the bank. Both Simpson and McQuillan denied liability; each claiming that the other was the stockholder at the time the bank failed. Thereupon the complainant filed this bill against both, to determine who was the actual stockholder and liable for the assessment. The court below found against McQuillan, who appealed. He has since died, and his administratrix prosecutes the appeal. No appeal was taken by the receiver from the decree relieving Simpson.

      Samuel L. Kilbourne, for complainant.

      Richard Price (Rollin H. Person, of counsel), for appellant.
   Gbant, J.

(after stating the facts). ■ The proofs fail to establish that McQuillan acted in bad faith, and that he transferred his stock in order to avoid liability. There is nothing unusual in the transaction which casts suspicion upon his honesty. The memorandum agreement of August 3d between Simpson and McQuillan was not an absolute agreement on the part of either to trade. On the contrary, it was optional with either one to refuse to do so, upon the forfeiture of $50 to the other party. It is obvious that the title to none of the property which was the subject of the trade passed until the arrangement was carried out on the afternoon of August 7th by the actual delivery of the deed, the payment of the money, and the delivery of the certificate of stock. The transfer upon the books of the bank was not conclusive evidence of ownership, but only prima facie evidence. 23 Am. & Eng. Enc. Law (1st Ed.), 782. Mr. Simpson did not become the owner of this stock until the exchange of the papers and the payment of the money on the afternoon of August 7th. The -title to the stock must therefore, of necessity, have been in McQuillan. There is no such thing as suspension of title when one stockholder transfers his stock to another. The title remains in the old stockholder until it passes to the new. The statute' (2 Comp. Laws, § 6135) makes the stockholders individually liable for the benefit of the depositors of the bank. The statute means the actual stockholders at the time the bank suspends. Under this and similar statutes courts have, with comparative unanimity, held that this liability was not limited to the stockholders of record at the time of the suspension, but that stockholders who had previously transferred their stock for the purpose of avoiding liability were still liable as stockholders. For the same reason, one cannot, after suspension, relieve himself from liability by transferring the stock of which he was then the actual owner. It is true that no certificate is essential in order to transfer title to the stock. 2 Thomp. Corp. § 2377; Zane, Banks & Banking, § 52; Cook, Stock, Stockh. & Corp. Law, § 258. The certificate is only authentic evidence of title, but is not the stock itself, or essential to the existence of the stock. Pacific Nat. Bank v. Eaton, 141 U. S. 227 (11 Sup. Ct. 984). In this case, if, without any certificate or any previous transfer upon the books of the bank, McQuillan had actually sold and transferred his stock to Simpson, the title would have passed, and Simpson could have enforced the surrender of the certificate held by McQuillan, and compelled the bank to recognize him as owner by the proper transfers upon its books and the issue of a certificate, unless it had a lien upon it for the debts of McQuillan.

We are cited to no authorities, and find none, similar in their facts to those in this case, or which shed any light upon it. We are, however, of the opinion that the depositors of the bank, under the statute, are entitled to the liability of the real stockholders at the time of the suspension, and that the records of the bank do not conclusively establish who are stockholders. The learned circuit judge gave a wrong reason for a right conclusion.

The decree is affirmed, with costs.

Hooker, C. J., Moore and Montgomery, JJ., concurred. Long, J., did not sit.


source: Caselaw Access Project

author: Hooker, C. J.

license: Public Domain

text:
    BALL v. HAUSER.
    Freight Elevator — In jury to Passenger — Negligence—Assumption op Risk.
    Building contractors, operating a freight elevator for the hoisting' of materials, posted thereon a notice forbidding all persons to ride on the elevator, and warning violators of the rule that they rode at their own risk. The elevator operator and another employé were instructed to warn off persons attempting to ride, and frequently did so. Plaintiff, an employé of a subcontractor, and some other workmen, occasionally rode,'to the knowledge of one contractor, who did not object; and the contractor himself rode on the elevator. It was occasionally necessary for'men to ride up with bulky articles. After riding up with a load of materials, plaintiff got on the elevator to ride down, and it fell, and injured him. Held, that the circumstances did not show a waiver by the contractors of the rule against riding, but that plaintiff assumed the risk in accordance with the posted notice.
    Error to Kent; Wolcott, J.
    Submitted December 12, 1901.
    Decided February 11, 1902.
    Case by Oscar F. Ball against Charles A. Hauser and others for personal injuries. From a judgment for defendants on verdict directed by the court, plaintiff brings error.
    Affirmed.

      E. J. Adams (N. J. Brown, of counsel), for appellant.

      L. E. Garroll and Glapperton & Owen, for appellees.
   Hooker, C. J.

The defendants contracted to erect a large building in Grand Rapids. They sublet the carpenter work to a firm named Nordella & Owen, and the plaintiff was foreman for that firm. To raise mortar, stone, brick, iron, and other material, the defendants employed one Bush to put up and operate an elevator, and he personally ran the engine which furnished the necessary power during the time that the elevator was used. There is nothing to show that Nordella & Owen had a contract right to use this elevator. They had a derrick of their own, and a hoist, consisting of blocks and tackle, and there was access to the various parts of the building by ladders. It appears, however, that the defendants permitted Bush to use the elevator to raise material for them when it was not employed for the purposes of the defendants. Upon the crossbeam of the elevator was the following printed notice, viz.:

“Notice.

“This elevator is for freight only. All persons strictly forbidden to ride hereon. Any one acting contrary to this order does so at his own risk.”

The elevator consisted of a cross-beam to which a platform made of planks was suspended by iron rods. It was raised by winding the pulley rope over a drum operated by the steam engine. Wheelbarrows loaded with materials were run upon the platform, and raised, there being a man at the top to receive material thus hoisted, and he had charge at the top, while Bush managed it below. In lowering the elevator, the drum was usually disconnected from the engine, and allowed to run loose, being controlled by a friction brake, operated by Bush. Where an exceptionally heavy load was being lowered, the engine was not disconnected, being run backward by the weight of the load, though the brake still had to be used, lest it run away with the engine, no steam being used.

The plaintiff had some sash to carry up and distribute to the three floors, and went up with them on the elevator. On his return the brake failed to hold the elevator, and it descended rapidly to the ground, whereby plaintiff was injured in the feet and legs. A subsequent investigation showed some grease between the drum and the leather of the brake, which prevented its usual effect. The action was brought to recover damages for the injury. On behalf of the plaintiff it is claimed that the defendants were negligent in failing to seasonably inspect the brake. The learned circuit judge directed a verdict for the defendants upon the grounds that the elevator was not provided for men to ride upon, and that plaintiff, having full notice, assumed the risk; that the proofs failed to show negligence on the part of the defendants, and did show it on the part of the plaintiff. The plaintiff has appealed.

The notice is not ambiguous. It plainly states that it is for freight only. It forbids “all persons” to ride, — not all visitors, all strangers, nor all workmen, but all persons, —and states further that any one acting contrary to the order must do it at his own risk. It is contended that this notice should be construed as intended only for strangers or visitors. It is said that the elevator was in use on a large three-story building, and that access by the ladders shown to be provided would be slow and inconvenient; also that men were in the habit of riding, and had a signal which indicated' to the engineer in charge when a man was going to ride, and that the defendants rode on the elevator and made use of the signal; and it is asserted that the testimony shows a custom to use the elevator in disregard of the notice, which was acquiesced in by the defendants.

We have held in several cases involving the handling of railroad trains that necessary and habitual disregard of rules, known to the employer, might justify the conclusion that such disregard had the sanction of the company, and plaintiffs have been permitted to recover upon the ground that the rule had been abrogated, and that it would be unjust to hold one bound by a rule which his employer knew that he could not comply with, and that he did not expect him to 'Obey. Thus, in Hunn v. Railroad Co., 78 Mich. 526 (44 N. W. 502, 7 L. R. A. 500), there was evidence that a rule as to speed was impracticable if schedule time was made, and was habitually disregarded, under circumstances which indicated knowledge, and an expectation that the employés would have some latitude of discretion in complying with it.

In Eastman v. Railway Co., 101 Mich. 603 (60 N. W. 311), the court said:

*‘ In the present case the cars were moving slowly. Not only did it appear that the work was being done in the manner in which it had been done for years, but it was done in the only way that the work required of the switch-man could be done. Indeed, this testimony is not disputed.”

In Fluhrer v. Railway Co., 121 Mich. 216 (80 N. W. 24), it was said by Grant, O. J.:

“It is well settled that a violation of the rules of the company will defeat recovery. The exception to this is where the company itself has sanctioned the custom of its employés to act in violation of the rules, and has thus virtually abrogated them. This exception is based upon the theory that it would be unjust in employers to establish rules, and then sanction their violation, and interpose such violation as a defense. Fairly construed, the above rule is notice to brakemen not to enter between the cars, while in motion, to uncouple them, and an agreement not to do so. The danger in doing so is apparent. Only when this rule is violated by brakemen so universally and notoriously that it is a fair inference that the company sanctioned and approved the violation is the company barred from this defense.”

Upon a second review of the same case (124 Mich. 482, 83 N. W. 149), we held:

“Where recovery is sought for injuries received by an employé of a railway company while performing his duties in violation of a rule of the company of which he had knowledge, the onus is upon the plaintiff to show that the company sanctioned a departure from the rule by a custom so universal and notorious that the company was presumed to have had knowledge of it, and to have ratified it.”

Similar language was used in Nichols v. Railway Co., 125 Mich. 394 (84 N. W. 470).

Thus far the practice of permitting an employé to disregard a definite and known rule, and recover damages notwithstanding the fact, seems to have been confined to railroad cases in this State. In this case it is sought to apply it to another kind of a case. The exigencies of railroading may be such as to justify an employé in assuming that a rule is abrogated without inquiry of the employer before disregarding it. Whether we should say the same in a case like this may be open to grave doubt. Whatever we might conclude were it necessary to pass upon the question, it is apparent from the cases cited that, even in railroad cases, recovery is permitted only when the testimony shows that the rule has been abrogated, and this may be inferred from the circumstances fairly establishing it. If that rule should be applied to this class of cases, we must inquire whether this proof warrants such a conclusion. The plaintiff claims that his proof does warrant it, because he has shown by testimony that some of the men have been in the habit of riding on the elevator, that one of the defendants had seen it done without remark, that he rode on the elevator himself, and that in taking up some kinds of freight it was necessary that a man should ride.

The fact that some of the men rode down upon the elevator, even if occasionally seen by the defendants without remark, is not inconsistent with the claim that said rule was relied on and not abrogated. Neither does the fact that one of the defendants rode upon it indicate an intention to permit the men to do so. Nor does the fact that it was necessary for men to ride up occasionally with bulky articles, if it was necessary, establish the abrogation of the rule. Even if it could be said to justify the plaintiff in riding up, it does not tend to show a consent that he should unnecessarily ride down in violation of the rule, which he must have understood from the notice, and which, if the testimony of other witnesses is true, he was repeatedly warned against doing. We think the testimony offered does not establish the claim that the defendants sanctioned such use of the elevator. Not only does this testimony not prove it, but much evidence tends to disprove it. The defendants are not shown to have found it necessary to send men up on the elevator with their materials, or that they expected that Nordella & Owen would do so. They stationed a man at the top to receive material, a part of whose duty it was to warn men against riding down, which he is shown to have done repeatedly. The engineer below performed a similar duty at defendants’ direction; and the defendants at different times told men not to ride upon the elevator. The witness Brogden says that he repeatedly told Ball to keep off from it, and that he was in the habit of jumping on while it was in motion. It was the general custom for the men to go up and down on the ladders provided for the purpose. None of these things was disputed, except that Ball denies being warned to keep off, thereby contradicting several witnesses. This denial raised a question of fact as to that point, and we must therefore assume that he was not warned; but that, and the fact that he and others sometimes rode, do not prove that the rule was abrogated by defendants’ sanction, nor did it warrant the judge’s leaving the question to the jury. The undisputed proof shows that the defendants were insisting upon their rule. It was not their duty to hire men to warn others not to disobey a known direction; yet they did it. One warning would ordinarily be enough; yet these defendants not only kept the printed notice up, and men to enforce it at each end of the route, but themselves sometimes reproved men who still persisted in riding. An employer ought to have some rights which his employés are bound to respect. There is nothing to compel them to afford elevator transportation, or to preclude their providing for carrying freight to the exclusion of passengers without being liable to such as shall insist on riding in violation of instructions. This man knew that, in riding down upon the elevator, the defendants expected him to take the risk. We think that it should be held that he did take it.

Several questions are raised in relation to the exclusion of testimony, but there is no substance in them. If the plaintiff could have shown a necessity to ride up, it would not have tended to prove a necessity or permission to ride down. His misinterpretation of the notice, and conclusion that he could ride because others did, would not prove the abrogation of the rule, which was plain and generally understood.

It is unnecessary to mention other assignments. The conclusions of the learned judge were correct, and his judgment is affirmed. i

Moore, Grant, and Montgomery, JJ., concurred. Long, J., took no part in the decision.


author: Grant, J.

text:
    CITY OF LANSING v. DETROIT, LANSING & NORTHERN RAILROAD CO.
    1. Municipal Corporations — Defective Sidewalk — Action Against City — Notice to Adjoining Owner.
    Where, on suit brought against a city for injuries resulting from a defective sidewalk, the adjoining property owner is notified, but refuses to defend, and his attorney assists in the trial under a stipulation with the city attorney that the appearance shall not bind such owner, the stipulation does not relieve the owner from the effect of the notice, but merely reserves the right to defend if the city should sue him.
    3. Same — Conclusiveness of Judgment.
    Judgment was recovered against the plaintiff city for injuries received through falling on a sidewalk opposite premises owned and possessed by defendants. The declaration alleged that the city “did wrongfully and negligently suffer and permit one of the planks of such sidewalk to be removed and displaced therefrom, leaving a hole,” etc. Defendants were duly notified of the action, and asked to defend, but refused to do so. The city paid the judgment, and sued defendants to recover the amount paid. Held, that the question of defendants’ liability was not at issue in the action against the city, and hence the judgment was not conclusive of that question.
    Error to Ingham; Wiest, J.
    Submitted January 7, 1903.
    Decided February 11, 1902.

      Case by the city of Lansing against the Detroit, Lansing & Northern Railroad Company and the Michigan Central Railroad Company to recover the amount of a judgment paid by plaintiff for injuries caused by a defective sidewalk. From a judgment for defendants on verdict directed by the court, plaintiff brings error. '
    Affirmed.
    One Leola Sprague, in November, 1898, recovered a verdict and judgment against the city of Lansing for injuries received through a fall upon a sidewalk opposite premises charged to be owned by and in the possession of the defendant railroad companies. The allegation of negligence in the declaration is that the city “did wrongfully and negligently suffer and permit one of the planks of such sidewalk * * * to be removed and displaced therefrom, leaving a hole in such walk about six feet long, eight inches in width, and six inches in depth.” The city paid the judgment, and sued the defendants to recover the amount of the judgment so paid.
    Plaintiff introduced the record in the suit of Sprague against the city of Lansing; certain deeds, claimed to show title in the defendants; the admission by the defendants that the judgment was paid by the city; testimony that the defendants paid taxes upon the land, and controlled it; that the land was abutting upon the sidewalk where Mrs. Sprague was injured, and that the city attorney wrote to each of the agents of the companies at Lansing, and apprised them of the fact that the suit had been brought; that he received no reply by letter; that Mr. Montgomery, the attorney for the railroad companies in this case, came to him, and stated that he wished it distinctly undei’stood that the companies were not to be bound by his action in any way, yet, if the city attorney wished him to sit in the case, he would be glad to do so. On cross-examination he testified that it was agreed that Mr. Montgomery’s appearance in the suit against the city should not bind the railroad companies. Upon this record the court directed a verdict for the defendants.

      John J. Zimmer ( C. P. Black, of counsel), for appellant.

      B. A. Montgomery, for appellees.
   Grant, J.

{after stating the facts). 1. The evidence was sufficient to charge the defendants with notice of the existence of the suit against the city. Robbins v. City of Chicago, 4 Wall. 657. The stipulation between the attorneys that the appearance of the attorney for the defendants should not bind them was not intended to relieve from the effect of the notice of the existence of the suit and the opportunity to appear. The stipulation meant no more than that it should not prevent the railroad companies from raising any defense they had to the suit by the city against them upon any judgment that might be rendered against the city.

2. Is the judgment conclusive against defendants? The question of the liability of the lot owners was not necessarily involved in that suit. The city might have been liable and the defendants without fault. If the city removed the plank, the lot owner would not be liable. How, by whom, and under what circumstances, was the plank removed from the sidewalk ? Was it the negligence of the city alone ? Did the negligence consist in removing the plank, or in failing to put it in place after notice to its proper officer or knowledge on his part of its removal ? The city might have had actual notice immediately, and might have remedied the defect in five minutes. If so, the city would have been liable for the injury occurring within an hour afterwards. But the agents of the defendants, engaged in their usual labor, as they had a right to be, could not be chargeable with notice, and therefore their principals could not be held liable. Many people leave their homes, to be absent for weeks and months on pleasure, business, or health, leaving the sidewalks in front of their premises in good condition. Should they be suddenly torn up, — as was done in Wilkins v. City of Flint, 128 Mich. 262 (87 N. W. 195), — when do the lot owners become liable ? The city may become liable within a few hours, upon proof that the city officers saw or should have seen the defect, and might have remedied it within that time. To hold a judgment obtained under such circumstances conclusive against a lot owner who owns a small home, without an opportunity to show that he exercised due care, would shock one’s moral sense. A different feeling may prevail among some when a corporation is the party defendant, but in the courts the rule of law must be the same as to both. In a suit against the city it is not a question which is liable primarily, the city or the lot owner. The only issue is between the plaintiff and the city. Should the city attempt to show in a suit against it that the lot owner is liable for a defect in the highway, or for the failure to repair it, the objection to such testimony would be that no such issue is raised by the -pleadings between the injured party and the city. The sole question is, Is the city liable ? Whether the lot owner is liable can only arise in a suit when the city attempts to enforce the judgment against him. Such judgment against the city is not conclusive upon him.

Plaintiff’s counsel, among other authorities, cite 3 Dill. Mun. Corp. § 1035, in support of their contention that the judgment is conclúsive. It is there stated that such judgments are held conclusive as to three facts: (1) The existence of the defect; (3) the injury sustained; (3) the amount of damages. The author further says such judgments are not conclusive as to the lot owner’s liability to repair the defect, his neglect to do so, or as to' his negligence being the sole cause of the injury. The cases cited in the plaintiff’s brief upon this point are cases where there was some active wrong on the part of the lot owner, for which he would be liable at the common law. Such is the case of Town of Centerville v. Woods, 57 Ind. 192, where the defect was caused by the lot owner’s digging a ditch, and neglecting to fill it up. In City of Lowell v. Short, 4 Cush. 275, the defect was a pile of dirt left in the highway by the lot owner without barriers or lights. In City of Chicago v. Robbins, 2 Black, 418, Robbins made an excavation, and left it uncovered, in consequence of which one Woodbury fell into, it and was injured. He recovered judgment against the city, whereupon the city sued Robbins. In that case the court said: ‘ ‘ Robbins is not, however, estopped from showing that he was under no obligation to keep the street in a safe condition, and that it was not through his fault that the accident happened.” A new trial was ordered, and the same case was again brought before the court in Robbins y. City of Chicago, supra, and the holding was the same. Neither decision held the judgment conclusive as to Robbins’ liability. In addition to the above authorities, holding that the judgment is not conclusive upon the lot owner’s liability, see City of Boston v. Worthington, 10 Gray, 496 (71 Am. Dec. 678); Knox v. City of Sterling, 73 Ill. 214; Inhabitants of Veazie v. Railroad Co., 49 Me. 119.

This disposal of the case renders it unnecessary to pass upon the other questions raised.

The judgment is affirmed.

Hooker, C. J., Moore and Montgomery, JJ., concurred. Long, J., did not sit.


author: Montgomery, J.

text:
    McCAUGHNA v. OWOSSO & CORUNNA ELECTRIC CO.
    Dangerous Premises — Electric Wires — Injury to Trespasser.
    An electric-light company, maintaining its wires over the private grounds of a railroad company, is under no obligation to protect trespassers thereon from injury, and hence is not liable for the death of a trespasser, caused by his coming in contact with a guy wire which had become charged with electricity.
    Error to Shiawassee; Smith, J.
    Submitted January 7, 1902.
    Decided February 11, 1902.
    Case by George B. McCaughna, administrator of the estate of John Young, deceased, against the Owosso & Corunna Electric Company, for negligently causing the death of plaintiff’s intestate. From a judgment for defendant on verdict directed by the court, plaintiff brings error.
    Affirmed.

      Watson & Chapman and Selden S. Miner, for appellant.

      Lyon & Hadsall, for appellee.
   Montgomery, J.

This is an action for negligently causing the death of the intestate. The declaration avers that the defendant maintained a large number of electric 'wires in the city of Owosso, one of which was located near the south bank of the Shiawassee river and north of the Ann Arbor Railroad, near a brick building known as the “Old Electric Power House,” and was fastened to a pole 30 feet high; that, in order to hold said pole in position, said defendant had placed a guy wire connected with said pole at the top, and running southwesterly, fastened at the top of a post 5 or 6 feet high, and that the company had carelessly and negligently placed said guy wire in such a position that it came and was in contact with the electric wire, and thus became a live wire; that said guy wire was located on the west side of a wagon road or track, which was frequently traveled both by foot passengers and by teams; that a person traveling along the track was liable to come in contact with the wire, or liable to put his hand against it, and that it became the duty of the defendant, knowing that said track and grounds were so used as aforesaid, not to locate a guy wire, charged with electricity sufficient to produce death, in and near said track and grounds, so that foot passengers, or any other travelers, would be in danger of coming in contact therewith, or in any manner getting against the same. The declaration further avers that the decedent was passing along the street, highway, and track in a prudent and careful manner, and, without negligence on his part, came in contact with said guy wire, so charged with electricity, and was instantly killed. On the trial the circuit judge directed a verdict for the defendant, and the case is before us for review on error.

The annexed plat shows the scene of the accident. It will be noted that the premises shown upon this plat are the yards of the railroad company, and devoted to uses closely allied to the railroad business. At the east end of the building marked “Ann Arbor Depot ” there was a sign erected reading, in substance, ‘ ‘ Dangerous! The public is hereby warned not to trespass upon these grounds, as this is not public property.” The plaintiff introduced testimony tending to show that the place marked “ Traveled Way” on the plat had been traveled by teams, and sometimes by pedestrians, having business with the proprietors of the coal sheds, wood sheds, stock yards, and, to the east of the two extended side tracks, with the so-called “Asphalt Works.” Plaintiff also sought to show that there was a traveled way extending north past the old power house, and that people sometimes drove around the power house, and forded Shiawassee river at a point east of the power house. The testimony, however, shows that it was customary, when attempting to ford the river, — and this would appear to have been but on rare occasions, in the summer season, — to go east between the two extended side tracks, turn to the left, and cross the river, the traveled way being south of the old power house. There was testimony that teams had driven past the old power house, and turned around and come back. But there was nothing in the record to disclose that this was a public way. The most that can be said of the testimony is that people doing business at the old power house might have used these premises. There was nothing to indicate an invitation to the public to enter upon them. The place where the injury occurred is north of the most northerly of the side tracks, and the post supporting the guy wire is indicated as 5 feet and 3 inches high, two telephone poles lying near by. The evidence indicates that the deceased and a companion, having with them two bottles of beer, for some reason sought this secluded spot on the evening in question; and the manner in which the injury was received is not explained, except upon the theory that the deceased reached up and took hold of this wire, and pulled it down, receiving the shock which caused his death. There is no evidence showing actual knowledge on the part of the officers of the company of the fact that this wire was a live wire. The most that is shown is negligence in- failing to discover the condition.

In our judgment, the conclusion of the circuit judge was amply justified by the consideration that these premises were not intended as a resort, and that the defendant owed no duty to the decedent of guarding the premises. The case would fail from the fact that this is not a public way, and the evidence wholly fails to show it. The theory of the plaintiff that the decedent was following this way for the purpose of visiting the asphalt works to the east would show that his presence at the point where the injury was received was wholly unnecessary. We think the case .is ruled by Hargreaves v. Deacon, 25 Mich. 1, and it becomes unnecessary to inquire whether the evidence is sufficient to show due care on the part of the decedent. We place our decision upon the ground that no duty was owing to the decedent to keep these premises in a condition suitable for his occupancy. See, also, Bledsoe v. Railway Co., 126 Mich. 312 (85 N. W. 738).

The judgment of the circuit court is affirmed.

Hooker, C. J., Moore and Grant, JJ., concurred. Long, J., did not sit.


text:
    HOLMES v. HOLMES.
    1. Reformation of Instruments — Sufficiency of Evidence.
    Reformation of an instrument, equitable in its terms, must be based on something more than a silent acquiescence in the things done thereunder.
    2. Undue Influence — Evidence.
    Undue influence in procuring an assignment of property rights cannot be inferred solely from the advanced age of the assignor.
    3. Mortgages — Construction—Assignment.
    A widow transferred ¿11 of her interest in her husband’s estate to their four children, taking a mortgage from each for §5,000, with interest annually at 7 per cent., payable subject to her order, the mortgage to become void at her death. On the death of one of the sons intestate, she assigned the mortgage given by him to his children by his first wife, for the purpose of “evening up” between the two sets of children, and they brought suit to foreclose. Held, that the mortgagee was • entitled to so much of the accumulated interest as she might see fit to demand from time to time, and that such right was assignable.
    4. Same — Parol Evidence.
    The plain terms' of the mortgage could not be varied by proof that, at the time of its execution, there was an oral understanding that each of the mortgagors should pay an equal share of any money asked for by their mother, which should constitute full satisfaction of the mortgages to that time.
    5. Same — Gift of Interest — Receipt.
    The acceptance by the mortgagee, annually, of a sum less than the interest due, and the giving of a receipt therefor, stating that it was the interest on the mortgage for that year, showed an intention to give the balance of the interest then due to the mortgagor, and amounted to a valid gift.
    6. Same — Tenancy in Common.
    The fact that the assignees of the mortgage were tenants in common with the other heirs of the mortgagor in the mortgaged property did not invalidate the gift of the mortgage, or prevent the enforcement thereof by such assignees.

      Appeal from Branch; Yaple, J.
    Submitted January 8, 1902.
    Decided February 11, 1902.
    Bill by Nathaniel L. Holmes and Mary L. Galloway against Sarah E. Holmes and others to foreclose a mortgage. From a decree for complainants, defendants appeal.
    Modified and affirmed.

      John B. Shipman and H. H. Barlow, for complainants.

      Steioart & Bliss and Dallas Boudeman, for defendants.
   Montgomery, J.

Complainants’ grandfather died intestate, owning .personal property valued at upwards of $168,000, and real estate valued at $25,000, leaving a widow, Mary Holmes, 77 years old, and four children. Upon a settlement of the estate, Mary Holmes transferred to the children all her interest, both real and personal, in the estate of her husband, and took in return four mortgages, one from each of the children, each “to secure the payment of the sum of five thousand dollars, * * * the receipt whereof is hereby confessed and acknowledged, in manner following, to wit: Interest annually at seven per cent., payable subject to the order of Mary Holmes. This mortgage to become null and void at the decease of the said Mary Holmes.”

Defendants contend that there was an oral understanding when these mortgages were made that the mortgagors should each pay an equal share of any money asked for by their mother under the mortgages. Defendant Sarah E. Holmes, complainants’ stepmother, is the only witness whose testimony tends to show such an arrangement, assented to by Mary Holmes; and she does not testify that Mary Holmes expressly assented to it, but says:

“She was present whenever the thing was talked over, and she seemed willing, but I don’t remember any particular conversation they ever had in which she joined.
Q. Or said anything about it at all?
“A. No, sir; but she acknowledged, of course, that she did it of her own free act, when she signed her rights away. ”

Bach of the children paid their mother $26 a year on these mortgages. One receipt was introduced in evidence, running to .John T. Holmes, complainants’ father, stating the amount paid, and describing it as “interest on his mortgage for 1895.” This receipt, it was testified, resembled in form other receipts, which had been lost or destroyed. After the death of John T. Holmes, intestate, Mary Holmes assigned the mortgage given by him, for the foreclosure of which this suit is brought, to complainants, his children by his first wife, evidently, as the testimony indicates, for the purpose of “evening up” between the two sets of children. The assignment is of the obligation mentioned in the mortgage, “and the moneys now due, and the interest that may hereafter grow due, thereon. ” At the same time Mrs. Holmes receipted for interest to that date upon the three other mortgages. The indorsements, as well as the assignment, were without consideration. Defendants contend that the receipt introduced in evidence, together with the surrounding circumstances, including the receipting for accrued interest upon the other mortgages, and the parol testimony, shows a gift to John T. Holmes of the unpaid interest on this mortgage up to January 1, 1899. Defendants further contend that the assignment was the result of undue influence, and that complainants, being tenants in common with defendants, could not acquire by gift an outstanding incumbrance, and hold it adversely to defendants.

1. The most liberal construction possible of this mortgage, in favor of the mortgagor, is that the mortgagee should have, during her life, as much of the accumulated interest as she desired. It follows that, at the time of the assignment, she was entitled to demand the accumulated interest, unless she had given it, or a part of it, to her son; and it follows from this that, if she chose, she might sell or give away her interest, instead of foreclosing. Such an oral understanding as defendants sought to show was at variance with the terms of the mortgages, which each gave the mortgagee the right to demand the interest to date at any time. Certainly, where the consideration for the mortgage, as it read, was, as in this case, much more than adequate, and where the mortgagee is not shown to have understood that anything else was intended, except by silent acquiescence in the things done, a case is not made for such a reformation of the mortgage as will make it more unfavorable to the mortgagee than it is by its terms. That being so, its plain terms cannot be varied by parol. See Dunham v. Provision Co., 100 Mich. 79, 80 (58 N. W. 627); Phelps v. Abbott, 114 Mich. 88 (72 N. W. 3).

2. The evidence satisfies us that, during the lifetime of John T. Holmes, payments were made to Mary Holmes annually, and receipts were given each year, signed by Mary Holmes; and these receipts were, in form, similar to the following:

“ $26. _ Bronson, April, 1896.
_ “ Received of John T. Holmes twenty-six dollars, interest on his mortgage for 1895.
“Mary Holmes.”

The question presented is whether this amounted to a gift of all interest above the amount received from year to year. We are disposed to think that such was the intention, and that the instrument should be so construed. That such a receipt, showing the intention to accept a less sum in payment of the interest, would amount to a valid gift, is settled by Green v. Langdon, 28 Mich. 221. We think, therefore, that as to the interest accruing during the lifetime of John T. Holmes, and covered by the payments made by him upon receipts in the form above quoted, the mortgage is to be deemed satisfied.

3. We are not able to find in the record any evidence of undue influence. There is nothing, other than the age of Mary Holmes, to indicate that she is susceptible to undue influence. The provision which she sought to make for complainants was not unreasonable. The purpose evidently was, as before stated, to even up between the children of John T. Holmes by his first marriage and the children of the second marriage.

4. It is contended, however, that the complainants could not take title to this mortgage as against their co-tenants, the defendants. In this connection it is contended that the evidence shows that the mortgage was purchased. This contention ignores the essence of the transaction. It was undoubtedly, in substance, a gift. The nominal consideration of SI did not change its character. The question presented here, then, is whether a gift may be made to one tenant in common of an incumbrance upon the common property. It is stated as a general rule that, if tenants in common become purchasers of an outstanding title or incumbrance, the benefit of such purchase is to be shared with their co-tenants. Whether this rule applies to the purchase of an incumbrance has been questioned in one instance. See Blodgett v. Hildreth, 8 Allen, 186. But the great weight of authority undoubtedly applies the rule tofincumbrances as well as to adverse titles. But as is well stated in Freem. Co-Ten. § 155:

“As the rule forbidding the acquisition of adverse titles by a co-tenant from being asserted against his companions is always said to be based upon considerations of mutual trust and confidence supposed to be existing between the parties, the question naturally arises whether the rule is applicable where the reasons on which it is based are absent. ”

We have been unable to find an authority directly in point upon this question, but we deem it a case for the application of the doctrine that, where the reason for the rule fails, the rule fails. No hardship is worked to these defendants by the transfer of this mortgage from the mortgagee to the complainants; and there is no justice in saying that these complainants, the natural objects of the mortgagee’s bounty, should, of all the world, be excluded from accepting it.

We think justice will be done in this case if we decree that the defendants, who are co-tenants, may discharge the lien as to their interest by contributing their proportion of the amount remaining due upon this mortgage, and upon their failure to do so the property be sold to satisfy such amount. The decree of the circuit court, as so modified, will be affirmed. The defendants will recover costs of this court.

Hooker, C. J., Moore and Grant, JJ., concurred. Long, J., did not sit.


text:
    MICHELS v. WESTERN UNDERWRITERS’ ASS’N. SAME v. TRANSATLANTIC FIRE-INSURANCE CO. SAME v. PRUSSIAN NATIONAL FIRE-INSURANCE CO. SAME v. INTERNATIONAL INSURANCE CO.
    1. Arbitration — Bill to Set Aside Award — Parties.
    In a suit to set aside an arbitrators’ award under fire-insurance policies, all of the insurance companies that were parties to the arbitration agreement are necessary parties.
    2. Equity Praotioe — Nonjoinder op Parties — Demurrer.
    A nonjoinder of necessary parties to a bill in chancery,' disclosed on the face of the bill, can only be taken advantage of by demurrer.
    3. Evidence — Matters Within Knowledge op Decedent.
    The fact that a conversation to which a person is disqualified from testifying under the statute (3 Comp. Laws, § 10212), because of the death of the other party, was had in the presence of a third person, does not remove the bar of the statute.
    4. Equity Praotioe — Hearing in Open Court — Evidence.
    A circuit judge is not bound, on the hearing of a chancery case, to admit evidence which the statute declares shall be inadmissible.
    5 Insurance — Arbitration—Validity op Agreement op Submission
    Insurance policies held by complainants provided for the submission, of any loss under them to arbitrators, whose award should be prima faeie evidence of the amount of the loss. After a fire, complainants entered into a written agreement with the insurance companies for arbitration, which provided that the award should be binding upon both parties as to the amount of the loss. It appeared that the agreement, which was very short, was in the possession of complainants long enough for them to have read it before they signed it, and there was testimony that they did read it. No mistake was claimed, nor any actual fraud shown. Held, that the agreement was not invalid in that its effect was not explained to complainants.
    6. Equity Practice — Province op Court.
    A court of equity, in passing on questions of fact, should not submit its conscience to what a jury might do under like circumstances.
    7. Equity Jurisdiction — Arbitration—Setting Aside Award.
    Courts of equity alone have the power to determine whether an award under an arbitration agreement was corruptly or fraudulently made.
    8. Fire Insurance — Arbitration—'Validity op Award — Refusal op Hearing.
    In a suit against insurance companies to set aside an arbitrators’ award, complainants testified that they offered to show the arbitrators where certain planer patterns, as to the loss of which some question had been raised, were, and their condition, and that the arbitrators promised to look at them the next morning. Such patterns were on the schedule of property lost and damaged furnished to the appraisers. They had examined the damaged property, were on the premises frequently for several days, and found all the property except the patterns. No demand for sworn testimony or an open hearing was made. Held, that the failure of the arbitrators to look at the patterns after being informed where they were was not such a refusal to give the parties a hearing as would justify the setting aside of the award.
    9. Same — Method op Appraisal.
    The arbitrators to whom was submitted the adjustment of the loss sustained under a fire policy covering certain machine patterns allowed nothing for absolutely “dead” patterns, but allowed something for those for which there might possibly be a use. Held, that this method of estimating the loss was within the terms of the submission, authorizing them to make a proper deduction for depreciation from use, age, condition, location, or otherwise.

      10. Same — Inadequacy of Award.
    Arbitrators chosen to adjust a loss under a fire policy fixed the loss, under oath, at $740. Two appraisers employed by the insured, who made their examination some time after that of the arbitrators, and under less favorable circumstances, estimated the loss at $7,000. The property lost and damaged consisted chiefly of machinery patterns, the value of which depended on whether the machines for which they were made were in common use, or whether they were “ dead patterns.” Held, not to show that the award was so inadequate as to warrant an inference of corruption or partiality on the part of the arbitrators.
    Appeal from Wayne; Frazer, J.
    Submitted January 7, 1902.
    Decided February 11, 1902.
    Bills by Jacob Michels, Harry Michels, and Fred J. Bresee, copartners as J. Michels & Co., against the West•ern Underwriters’ Association and others, to set aside an arbitrators’ award under certain fire policies. The cases were consolidated and heard as one, and a decree entered for complainants. Defendants appeal.
    Reversed.
    Complainants were for many years prior to March, 1899, manufacturers of woodworking machinery, and con•ducted a general machine shop. At that time the defendant companies insured their property, consisting of machinery, machine patterns, stock, fixtures, etc. Some of their property (chiefly the patterns) was damaged by fire -on June 21, 1899, and it is claimed that some were totally destroyed. Upon receiving notice of the loss, the defendants sent their adjusters, who were unable to agree with the complainants as to the amount of the loss. The poli■cies were of the Michigan standard form. In them was a ■provision that, in case of disagreement as to the amount of loss, the same should be ascertained by two competent and disinterested appraisers, each party to the contract to select one, and the two so chosen to select an umpire. The appraisers were then to estimate and appraise the loss, stating separately sound value and damage, and, on .failing to agree, to submit their differences to the umpire. The award in writing of any two was to be prima facie evidence of the amount of the loss. The property covered consisted of eight items, the two principal ones being the machinery, etc., used in manufacturing, insured for $1,770, and patterns and materials for the same, insured for $3,000.
    An agreement of submission was executed June 28,1899. It provided that the award should be binding upon both parties as to the amount of the loss. It further provided that, in determining the sound value and the loss or damage upon the property, the appraisers should estimate the “actual cash cost of replacing or repairing the same, or the actual cash value thereof, at and immediately preceding the time of the fire, and, in case of depreciation of the property from use, age, condition, location, or otherwise, a proper deduction should be made therefor.” The loss was claimed upon four items mentioned in the articles of submission, viz.: (1) Stock of manufactured machinery, insured for $500; (2) engines, etc.; (3) patterns and materials for same; (4) office and shop furniture, etc., insured for $270.
    Complainants selected as their appraiser one Charles M. Caryl, a man 70 years of age, and of experience in the value of property such as was covered by the insurance. The defendants selected one Douglas, of Chicago, about 60 years of age, also a man of experience in such matters. The complainants and their foreman took the appraisers over the scene of the fire; furnished them a list of the property, which they used in checking up the. property damaged or destroyed, showed them that which was damaged, and explained the damages. The award was made June 30th. The loss and damage were found as follows:
    On stock of manufactured machinery-............ $66 00
    On machinery, belting, etc.......................- 50 00
    On patterns-------------------------------------- 594 75
    On office fixtures, etc----------------------------- 30 00
    Total.......................... — ......... $740 75

      The complainants ignored the award, and brought suit against each of the defendants upon the policies, claiming damages of $4,416.30. To these suits pleas were interposed setting up the appraisal and award as final and binding. One of the suits came on for trial, and the court held, when the facts were developed, that the award was binding, and could only be set aside in a court of chancery. A juror was then withdrawn, and complainants then brought suit in chancery against each of these defendants to set aside the award. Upon objection being made to the first suit in equity, when brought on for hearing, that the other insurance companies, parties to that award, should be made parties in the same suit, the court ordered all the cases to be consolidated and heard as one. The grounds set up in the bill for setting aside the award are:
    1. That the agreement to submit to arbitration was not in accordance with the terms of the policy; that it was “false and fraudulent; was not, in fact, agreed to by your orators, and was imposed upon them by fraud, and by taking advantage of your orators’ lack of knowledge of their rights, and of the particular terms of said agreement for submission.”
    2. That the award ‘ ‘ was false, fraudulent, corrupt, and void, because the amount was grossly disproportionate to the actual loss; because the appraisers did not conduct their investigations judiciously, honestly, fairly, or impartially ; because they held no regular sessions at which parties might be heard; because they refused to hear evidence or statements which complainants desired to make;' because they appointed a time and place for listening to proofs, and then executed and signed said award without awaiting the time so appointed; because said appraisers undertook to decide that certain items of personal property, claimed to have been destroyed by fire, were not in the fire, and were not damaged or destroyed by said fire.”
    Proofs were taken in open court, and the award set aside, because: (1) The submission was not in accordance with the terms of the policy; and (2) that the method adopted in the determination of the amount of loss by the appraisers was not such as was contemplated by the terms of the submission.

      Maybury & Lucking, for complainants.

      Moore & Goff, for defendants.
   Grant, J.

(after stating the facts). 1. It was insisted upon the hearing in the court below that all the insurance companies who were parties to the arbitration should have been made parties to one suit brought to set it aside, and that, therefore, the bill should be dismissed for lack of indispensable parties. The contention is sound, and, if this objection had not been waived, it should prevail. The learned circuit judge recognized the rule, but held that the same object could be accomplished by a consolidation of the cases. Whether that opinion be sound we need not determine. The bill set up all the facts in regard to the agreement of submission, and showed that all the companies now defendant were parties to that submission. The necessity of such parties, therefore, appeared upon the face of the bill, and, under the holding in Powers v. Hibbard, 114 Mich. 533 (12 N. W. 339), this objection should have been raised by demurrer. It was too late to raise it upon the hearing.

2. Complainants were permitted to testify to conversations with one Smitha, who was the agent and general adjuster for the defendants. Smitha had died long before the hearing. A third party was present at those conversations. Counsel for complainants admit that the testimony should have been excluded under section 10212, 3 Comp. Laws, prohibiting parties from testifying to facts equally within the knowledge of the deceased, if a third party had not been present. The admission of such testimony would be in plain violation of the statute. The third person is the only one competent to testify to what passed between the parties, one of whom is dead. This was expressly decided in Taylor v. Bunker, 68 Mich. 258 (36 N. W. 66). Although this is a chancery case, the circuit judge was under no obligation to admit such evidence, and should have excluded it.

3. It is next urged that complainants are not in position to raise the question of fraud in procuring the submission contrary to the terms of the policy, because their letters and those of their attorneys made no such claim, and no such claim was made until the bill was filed. Several authorities are cited which seem to support this proposition, but it is unnecessary to pass upon it. The contract of submission can be set aside only for fraud or mistake. We find no evidence of fraud on the part of the agents of the defendants who executed it, and no mistake is claimed. The agreement was very short, and both complainants had it in their possession and signed it. Aside from the description of the property on which the loss was to be determined, it does not fill a page of the record, and entire it fills only two pages. Both appraisers, who were disinterested, and one Loeb, an adjuster for the defendants, testified that complainants read it. They had ample opportunity to read it, and it was their own fault if they did not. The only basis for setting aside tho submission is that the complainants did not choose to read it, but supposed it was in accordance with the policy. Mr. Michels testified that he knew there was a provision for arbitration, but did not know its terms. Contracts cannot be set aside simply because one of the parties thereto did not choose to read them over. If complainants had prepared the submission, and submitted it to the defendants for their approval and execution, and the defendants had been dissatisfied'with the award and complainants satisfied, would these defendants be permitted to say, “The award is fraudulent, because our agents signed it without choosing to read it ? ” A contract of submission between an insurer and its insured is governed by the same rules as a similar contract between any other parties. The circuit judge found there was no actual fraud, but that there was a legal fraud upon 'the complainants, in that they were not informed by defendants of the effect of the agreement. Where the effect of the contract is so patent upon its face that any layman can understand it, there is no occasion for either party to inform the other of its effect. This precise question, under a state of facts very similar, and under a Michigan standard policy, was raised in Montgomery v. Insurance Co., 108 Wis. 146 (84 N. W. 175). The agreement for submission is almost identical with this. It made the award binding and conclusive. The court, speaking through Chief Justice Cassoday, said:

“ In the absence of fraud or mistake, Mollie Montgomery was conclusively presumed to know the contents of the appraisal agreements, and must be deemed to have entered into such agreements understandingly. ”

The contract of submission must be held valid.

4. The circuit judge, in a written opinion, said, “I have no reason to think there was any corruption on the part of the appraisers.” We thoroughly agree with this conclusion. They were experienced men; had no interest in the matter; and spent between two and three days in the examination of the property, listening to the statements of the complainants and their foreman, and in making up their award; were furnished a list of the property which complainants claimed was lost and damaged, and made such an examination and investigation as they deemed necessary to pass upon the matters submitted to them. They were under oath. Complainants naturally chose their appraiser from Detroit. The defendants naturally chose a man from the outside. Both acted honestly. The charge made by complainants and their counsel that the appraiser Mr. Caryl, chosen by them, “sold them out,” is unjust, and has no foundation whatever. Mr. Caryl may have been mistaken in judgment, but there is nothing in the record worthy of belief to impeach his honesty, or to show that he was improperly controlled in his judgment by his co-appraiser. Neither is there anything to show that Mr. Douglas did not act honestly, and according to his best judgment. He had frequently been employed, both by insurers and insured, in services of this character. In order to convict men of untruthfulness, dishonorable and corrupt conduct, courts must be able to find some convincing evidence in the record. The learned counsel for the complainants in their brief assert, “We believe no jury could be found that would not declare from the evidence that this was a corrupt and partial award.” A court of equity cannot abdicate its duty or submit its conscience to what a jury might do in any case, not even that of an individual against a corporation. Under the Consti-' tution and laws of this State, a court of law is not the proper forum to determine whether an award under an arbitration, agreed to by the parties thereto, was corruptly and fraudulently made. Courts of equity alone are clothed with the power to'set them aside. The learned counsel recognized this rule in withdrawing a juror and commencing proceedings in equity. The contention that this award should be set aside as fraudulent and corrupt fails.

5. Counsel urge that the appraisal must be set aside because the appraisers refused a proper hearing to the complainants. This claim is based upon the testimony of Mr. Michels that, on the evening of the 30th of June, he went to Mr. Caryl’s house to talk with him about the award, — a proceeding of at least doubtful propriety. He testified:

‘ ‘ I told him I understood there was a question on their part whether the patterns we claimed were burned were in that vault, and I came up to tell him that, if he would bring Douglas down in the morning, I would show the patterns, and that their condition was badly burned; that they were no good. He said, ‘All right, we will be down early in the morning.’”

Mr. Caryl denies this conversation.

Mr. Bresee testified that Friday (the 30th) afternoon, about half past 4, he went to the Bussell House, and saw Mr. Douglas; that the question had arisen as to whether two large planer patterns were in the vault; that Bresee told him he thought he could furnish him evidence — some parts — to show him that they were there; that Douglas replied he wished he would, and wished he would be down in the morning about 10 o’clock. Bresee testified that he reported this conversation to Michels, and this offered the occasion for Michels’ visit to Caryl.

It was a matter of no great importance whether these patterns were in the vault or not. They were on the schedule of property lost and damaged furnished by complainants to the appraisers. The appraisers had examined the damaged property, and were upon the premises two or three times a day for two or three days. No demand for sworn testimony or for an open hearing was made by either party to the submission. It was evidently not contemplated; at least neither had demanded it. The appraisers found the remains of nearly everything except the two large planer patterns. The insurance companies left the appraisers to go to the scene of the fire, view the property, and take whatever statements they chose from the complainants. There was no such refusal to give the parties a hearing as, under the authorities, justifies the setting aside of the award.

6. Complainants insist that a wrong method of estimating the loss was adopted, and that the award is void for that reason; citing Dodds v. Hakes, 114 N. Y. 260 (21 N. E. 398); Laurent v. Insurance Co., 1 Hall, 45. Washington Mills Emery Manfg. Co. v. Insurance Co., 135 Mass. 503; McCuaig v. Insurance Co., 18 U. C. Q. B. 130. Those cases are little in point. Washington Mills Emery Manfg. Co. v. Insurance Co. is as favorable to complainants’ contention as any. In that case a grantor of land sold the land, reserving a building, to be removed by a day named, and, if not removed within the time, it was to go to the grantee of the land. Before the expiration of the time for the removal, it was destroyed by fire. The insurance company maintained that the value of the property must be measured by its value for removal, and not by its intrinsic value as it stood upon the land. The court, of course, held the measure of damages to be its value as it stood upon the land. In this case the appraisers exercised their judgment upon the intrinsic value of the property. The submission provided that, in determining the sound value and the loss or damage, the appraisers should estimate the actual cash cost of replacing or repairing the same, or the actual cash value thereof; “and, in case of depreciation of the property from use, age, condition, location, or otherwise, a proper deduction shall he made.” Many patterns become what are called “dead” patterns. These are useless, and of no value. Complainants testified that they threw out every year wagon loads of them. They had a fire in November preceding, in which they recovered for loss .of patterns the full amount of insurance, $3,000, lacking $22. The most of, if not all, the patterns for which they now seek recovery were then in existence, and in the building at the time of the fire. Many of them were 10 and 12 years old; many others older. Some were patterns of machines no longer manufactured. There might possibly be an occasion to use some of these old patterns. In fixing the loss the appraisers took these things into account. They allowed nothing for absolutely “dead” patterns, but allowed something for those for which there might possibly be a use. We think this was within the terms of the submission, authorizing them to make a proper deduction for depreciation by use, age, condition, location, or otherwise. Radley v. Seider, 99 Mich. 433 (58 N. W. 366).

7. Counsel also insist that the award should be set aside for its gross inadequacy; citing authorities which hold that, where the assessment is so erroneous or exorbitant as to induce a belief that the arbitrators were corrupt or grossly partial, it should be set aside. Complainants make no case for the application of this rule. Appraisals were made by others subsequent to that under the submission, and, as one of them testified, he depended largely upon what the complainants told him as to the property and its condition. They did not have that opportunity for personal examination that Caryl and Douglas had: Such a finding must, of necessity, be based upon the adoption by the court of the estimates subsequently made by persons employed by complainants and by their own testimony. We must, therefore, in order to so find, take their opinions as true, and hold Caryl and Douglas, disinterested parties, acting under oath, as being corrupt or grossly partial. The record will not justify us in coming to that conclusion. Evidently the learned circuit judge could not adopt such a conclusion, after seeing the witnesses for the respective parties.

Complainants’ counsel, in their brief, claim a loss for their' clients, under the proofs, of $6,987.30. They also say that Weiss and Goring, two witnesses employed by complainants to examine the patterns, “estimated the loss on patterns to be $5,571.” I find no testimony in the record to sustain this statement. Neither Weiss nor Goring testified to the amount of damages made by them, except by reference to their schedule, known as “Exhibit Z2,” in the record. This schedule does not pretend to show the loss on patterns. There is a column headed “Sound Value,” and another, “Loss.” There are no figures whatever in the column “Loss,” while the column “Sound Value’’figures up $6,904. There is another part of the schedule without any heading or anything to explain what' it means. The dollars column foots up $408.

But, if their testimony were as stated, there is no reason in saying that it was not as much too large as that of Caryl and Douglas was too small. Nor is there any reason for saying that the judgment of the former was better than the judgment of the latter. If Weiss and Goring had been chosen by the parties as appraisers, and had made an award to the full extent of the loss now claimed by the complainants, and if defendants had then employed Caryl and Douglas to make an appraisal, and they had fixed the damage at $740, would their conclusion as to the value show that the appraisal of' Weiss and Goring was grossly excessive, so as to stamp the award as fraudulent and void ? None of the machinery was destroyed. It was only damaged by water, and this damage was caused mainly by rust. The damage by rust would be greater the longer the machinery stood uncleaned. The patterns of a foundry and machine shop have no market value. Their value depends upon their condition, the use to which they can be put, and whether the machines for which they are made are in common use, or whether they are what is known as dead ” patterns. It is one of those cases where honest appraisers may honestly differ, and where prejudiced appraisers would be likely to fix amounts according to the wishes of their employer. In such cases the only safe rule is to sustain that appraisal to which the parties have agreed, especially when such appraisal is under oath, and made at a time when the damages can be most justly appraised.

The decree is reversed, and the bills dismissed.

Hooker, C. J., Moore and Montgomery, JJ., concurred. Long, J., did not sit.


text:
    BERNARD v. FEE’S ESTATE.
    1. Checks — Evidence.
    The giving of a check is not, of itself, evidence of a loan, but of the payment of a debt.
    2. Same — Estates of Decedents — Claims.
    A check given by claimant to decedent, and indorsed by the latter, five years before his death, does not import a debt by the latter to the former, each having books of account, in which no record thereof appears, and the business of each being shown to have been in a flourishing condition at the time, though a brother of deceased testifies that he and deceased occasionally made loans to each other in small amounts.
    Errof to Wayne; Frazer, J.
    Submitted January 9, 1902.
    Decided February 11, 1902.
    Belle Bernard presented a claim against the estate of Edward Fee, deceased, for money loaned. The claim was disallowed by the commissioners, and claimant appealed. From a judgment for claimant, defendant brings error.
    Reversed.

      Flowers & Moloney, for appellant.

      Edward McNamara, for appellee.
    The sole written evidence of the claim presented against the estate of Edward Fee, deceased, is a check reading as follows:
    “$300.
    Detroit, Feb. 11, ’95.
    “State Savings Bank: Pay to Edward Fee, or bearer, three hundred dollars on presenting my deposit book No. 16,881.
    “Belle Bernard.”
    On the back is written:
    “ I guarantee sig. of Belle Bernard.
    “B. F. Haxton.”
    Also: ‘ ‘ Edward Fee. ”
    Claimant was a dressmaker, and had on deposit in the State Savings Bank in Detroit, at the date of the check, $1,964.56. She testified that she had no occasion to borrow money; that her business was flourishing; that she had all the money she needed; that she paid her debts sometimes in cash and sometimes in check,- — always promptly; that she had known the deceased about 14 years before he died; that he died March 26, 1900; that he had been her friend about five years before his death, and occasionally had called on her. Edward Fee’s circumstances were at least equally as flourishing. He was manager and alarge stockholder of the Banner Cigar Company; had a credit with the company at that date of $9,448.51, and had a salary of $3,000 a year. It was his custom, when he wanted money, to draw it from the Banner Cigar Company, which at that date had a cash balance of $4,000. He had individual bank deposits amounting to $405.44. The bank cashier did not know to whom the check was paid. He testified that he did not pay it to claimant.

      Joseph Fee, a brother of the deceased, was called as a witness for claimant, and testified:
    “He (my brother) and I had an exchange at the time, but I never knew of him borrowing from strangers. He has borrowed of me several times. My brother and I have exchanged loans of money in different amounts, as all brothers do. I have loaned him a couple of hundred dollars sometimes. I can’t say exactly what it was. During our lifetimes together we have exchanged loans. He borrowed $100 of me in 1895, — the year of the strike; and he has borrowed from me at different times $100 and $50 at a time. I remember he borrowed $200, and $250 once,— the time he went into business. But I never heard of him borrowing of' any strangers. * * * The loans that were made between ourselves were the same loans that are made between brothers at times. If he wanted $50, and I had it, he got it; and if I wanted $50, and he had it, I got it.”
    Another brother testified that he knew Edward borrowed money of his brother Joe.
    Mr. Haxton was the secretary and treasurer of the Banner Cigar Company. He died soon after Mr. Fee died. If the deceased wanted a small amount, he got it in cash; if he wanted it in large amounts, Mr. Haxton drew a check for it. The indorsement: “I guarantee sig. of Belle Bernard. B. F. Haxton,” — was written in violet ink, not kept at the State Savings Bank, but similar to that kept in Mr. Haxton’s private office. The signature of ‘ ‘ Edward Fee ” was written in ink similar to that kept at the bank. The evidence further shows that Mr. Fee was a prudent and careful business man. Verdict and judgment for claimant.

      Flowers & Moloney, for appellant.

      Edward McNamara, for appellee.
   Grant, J.

(after stating the facts). The case was left to the jury to determine whether the check was a loan by claimant to Mr. Fee, and they found that it was. The check, standing by itself, imports a payment, and not a loan. Downey v. Andrus, 43 Mich. 65, 69 (4 N. W. 628), and authorities there cited. But it is urged that there were circumstances surrounding the transaction indicating that it was a loan, and that the testimony is sufficient to raise a question of fact for the determination of the jury. Here are two persons, each having books of account. After one is dead, a check is produced by the other to prove a loan by the living against the estate of the dead. No record is made upon the books of either party to the transaction. Neither party is shown to be an habitual borrower or lender. The testimony of Joseph Fee that he borrowed small amounts of money from his brother and his brother of him does not make the deceased such an habitual borrower of money as to lead to the presumption that he on one occasion borrowed money of the claimant. Probably there are few men who, in the course of a lifetime, do not occasionally borrow money, especially of a brother. Under the theory of the claimant, all that it is necessary to do in order to turn a check into a loan is to find somebody of whom the deceased during his lifetime borrowed some money. Such a doctrine finds no support either in reason or authority. None of the cases cited by the counsel support it. He cites Dougherty v. Deeney, 45 Iowa, 443. The suit in that case was brought by the administrator of Patrick Deeney against his son upon a promissory note executed.by the son. The payee of the note was Kerndt & Bro. Kerndt & Bro. had received the money on the note It was conceded that the money paid to Kerndt & Bro. was furnished by the father to the son. The son paid the money to Kerndt & Bro., took the note, and says he put it in his bureau drawer, without cancellation or any indorsement thereon to indicate payment. It was found among his father’s papers. The court held that, upon these facts, the jury might reasonably infer that the note had been bought by the deceased, and was not paid by his son. The case of Stimson v. Vroman, 99 N. Y. 74 (1 N. E. 147), is no stronger.

It is not customary for business persons of ample means, and who keep books, to allow transactions of this kind to rest in parol for more than five years. Claimant testified that she paid her debts sometimes in cash and sometimes by check. If, some day after banking hours, or on some holiday, or when it was not convenient to go to the bank, she wanted some money to pay debts, it would be a very natural proceeding for her to borrow money of Mr. Fee, or some other friend, to pay them, and afterwards give him a check in payment therefor; or to take a check to Mr. Fee, and obtain from him the money on it for the same purpose. In either case, obviously no record, of the transaction would be made, for none would be necessary. Such transactions are of daily occurrence. A memorandum slip may be made and put in the cash-till as cash, and when it is paid the slip torn up. The fact that Mr. Fee indorsed the check and drew the money on it is no evidence that it was a loan. He would do precisely the same thing if he received it in payment. The circumstances proven have no tendency to show that this was a loan and to rebut the presumption that it was a payment.

Judgment reversed, and new trial ordered.

Hooker, C. J., Moore and Montgomery, JJ., concurred. Long, J., did not sit.


text:
    THIRD NATIONAL BANK OF NEW YORK v. STEEL.
    1. Statute of Frauds — Representations as to Credit of Another — Conflict of Laws — Remedy.
    3 Comp. Laws, § 9518, providing that no action shall be brought to charge a person by reason of any favorable representation concerning the credit or ability of another, unless such representation be in writing, signed by the person to be charged, is directed against the remedy, and therefore applies, though the representation was made in another State, where there is no such statute.
    2. Same — Pleading—General Issue.
    The defense of the statute of frauds is available under a plea of the general issue.
    3. Same — Signed Statement — Evidence.
    Defendant cannot be held to have signed a written statement presented to plaintiff through another June 37, 1895, as the basis for a loan, and then unsigned, showing, by schedules of resources and liabilities, that his father was worth over $1,000,000, so as to allow an action against defendant thereon under 3 Comp. Laws, § 9518, merely because he afterwards sent plaintiff a signed letter, saying, “I remember, when arranging the loan prior to October, 1895, of exhibiting statement of my father’s resources and liabilities, showing net resources in excess of $1,000,000, as shown by his books, and at the same time stating that considerable fire loss since the date of the statement had reduced this amount somewhat;’ the letter not being sufficiently connected with the statement
    Error to Clinton; Davis, J., presiding.
    Submitted January 9, 1902.
    Decided February 11, 1902.
    Case by the Third National Bank of New York against George A. Steel for fraud and deceit. From a judgment for defendant on verdict directed by the court, plaintiff brings error.
    Affirmed.

      Spaulding, Norton & Booling, for appellant.

      H. E. Walbridge, for appellee.
   Montgomery, J.

This is an action brought against the defendant to recover the amount of a loan made to Robert M. Steel, which loan, it is alleged, was induced by the false and fraudulent representations of the defendant, George A. Steel. The declaration avers that on the 37th •of June, 1895, the defendant represented that Robert M. Steel was worth a sum in excess of $1,000,000; that this representation was made through the instrumentality of an innocent agent, Gen. Spaulding, to whom was committed an unsigned statement of the resources and liabilities of Robert M. Steel under date of March 1, 1895. The plaintiff introduced testimony tending to support the aver.ments of the declaration. The defendant offered no testimony in the case, but rested his defense upon the legal .ground that our statute (3 Comp. Laws, § 9518) denies any remedy to the plaintiff in such case. The plaintiff .shows that no such statute as that in question is in force in New York, and contends that, as it was expected that Gen. Spaulding would exhibit this statement to the plaintiff in New York, the law of New York should govern, ■and that the Michigan statute constitutes no bar. This is the first and most important question presented in the case.

The authorities are not in harmony as to whether, under a statute such as the one in question, the transaction is wholly void, or whether the effect and force of the language is simply to exclude the remedy. There are not wanting authorities which sustain the contention of plaintiff, and which hold, in construing statutes similar to this, that the case is to be ruled by the law of the State where the transaction occurs or the contract is made, and that a contract valid in another State is not rendered invalid in the State where the action is brought. Plaintiff’s counsel cite and rely upon the case of Kling v. Fries, 33 Mich. 275, in support of their contention. The question involved in that case was whether a contract valid in the State where it]was entered into could be enforced in this ■State, in view of our statute (3 Comp Laws, § 9516), which provides that “no contract for the sale of any goods, wares, or merchandise, for the price of fifty dollars or more, shall be valid, unless the purchaser shall accept,” etc. It was held that this section of the statute had reference to contracts made within the State; and such, we think, would be the holding in any jurisdiction. There are, however, cases, like Cochran v. Ward, 5 Ind. App. 89 (29 N. E. 795, 31 N. E. 581, 51 Am. St. Rep. 229), which apply the same rule to a statute such as the one involved in the present case. Our statute reads as follows:

“ No action shall be brought to charge any person upon or by reason of any favorable representation or assurance made concerning the character, conduct, credit, ability, trade, or dealings of any other person, unless such representation or assurance be made in writing, and signed by the party to be charged thereby, or by some person thereunto by him lawfully authorized.” 3 Comp. Laws, § 9518.

The peculiar wording of this section distinguishes it from those sections of the statute which declare that a contract made without certain prescribed formalities shall not be valid, or shall be void. The cases which fail to note this distinction usually refer to Story, Confl. Laws, § 262. The first case in which the distinction between the two sections was noted is the carefully considered case of Leroux v. Brown, 12 C. B. 801. This case was argued at length. A separate opinion was filed by each of the justices, all concurring, and the conclusion reached that under the language of the statute (section 4 of the British act), which provides that “no action shall be brought upon any agreement,” etc., the contract was not necessarily void, but that this provision affected the remedy, and that, as it affected the remedy, the lex fori governed. The views expressed by Judge Story in his work above cited were called to the attention of the court, but the chief justice answered by saying, “Dr. Story puts the fourth and seventeenth sections together, as both avoiding the contract;” showing that, in the view of the court,, Judge Story had failed to note the true distinction. This case of Leroux v. Brown was followed in Downer v. Chesebrough, 36 Conn. 39 (4 Am. Rep. 29), and was cited approvingly by Mr. Justice Matthews in Pritchard v. Norton, 106 U. S., at page 134 (1 Sup. Ct. 102).

In 1 Brandt, Sur. (2d Ed.) § 52, it is said:

“The statute of frauds, does not provide that the contract to answer for another shall be illegal or void if not in writing. It says ‘no action shall be brought.’ The contract is just as legal since the enactment of the statute as it was before, but no action can be brought to enforce it. * * * As the prohibition is against the remedy, the courts of a country in which the statute prevails will not enforce an unwritten contract of suretyship or guaranty made in another country, which was perfectly valid and enforceable in the country where the contract was made. This is upon the principle that, while the validity and binding force of a contract depends upon the law of the country in which it is made, the remedy is always governed by the law of the country in which the action is brought.”

In Whart. Confl. Laws, at section 690, it is said:

“ But the question shifts where there is a local statute, like the statute of frauds, directing that no suit shall be sustained, in certain classes of cases, except on written testimony. Such statutes are based on moral grounds. Their object, as is shown by the title of that which served as the pattern of all others, is to prevent fraud and perjury. Here, .then, would come into play the position on which Savigny lays such great stress, that moral laws, or laws to effect moral ends, which are imposed by particular States, are peremptory and coercive, and are to be taken as rules of procedure by the judges of such States.”

The writer refers to the position of Judge Story, and criticises it, and directs attention to a note appended to Judge Story’s work by Judge Redfield, as follows:

“We must confess that upon principle, as the statute does not declare the contracts void, but only that no action or suit, either in law or equity, shall be maintained on such contract, it ought to be regarded as a statute affecting the remedy, rather than the contract: and that, wherever made, it could not be sued in the courts of a State where the statute expressly provided that no such action shall be maintained.”

In Anson, Cont. p. 62, referring to the provisions of section 4 of the English statute, it is said:

“The terms of the section do not render such a contract void, but they prevent it being enforced by action. The contract, therefore, though it cannot be sued upon, is yet available for some purposes.”

And in a note, referring to some of the cases which are apparently opposed to the doctrine of Leroux v. Brown, it is said:

“In none of these cases is the proposition announced in Leroux v. Brown considered. They are decided on the assumption that the note or memorandum required affects the validity of the contract. While many of the cases involve contracts for the sale of chattels, still the decisions are not based on any distinction between the seventeenth and fourth sections, except Houghtaling v. Ball, 20 Mo. 563.”

In our view, the better reasoning is found in the case of Leroux v. Brown, and the authorities which follow it; and the holding of the circuit judge upon this point is sustained.

But it is contended that this defense was not open to the defendant, for the reason that the statute of frauds was not pleaded. We think the general issue was sufficient to enable the defendant to raise the question. It goes to the whole liability. See May v. Sloan, 101 U. S. 231; Busick v. Van Ness, 44 N. J. Eq. 82 (12 Atl. 609). While the authorities are not uniform upon this question, we think the better rule is that a general denial puts the plaintiff to his proof of a contract complying with the law, or of a transaction which would render the defendant liable. For a collection of authorities sustaining this rule, see 9 Enc. PI. & Prac. 709. While the question has never been distinctly ruled by this court, it has been assumed in many cases that the defense of the statute of frauds was open under the general issue. Subdivisions b and c of Circuit Court Rule No. 7, cited in the brief of counsel for plaintiff, have no application.

It is further contended that the circuit judge erred in. directing a verdict, and in refusing to admit a certain letter written by defendant, for the reason that, had the letter been received, it would have shown, in effect, that there was a written statement signed by George A. Steel. The contents of the letter offered in evidence were as follows, the letter being addressed to the president of the plaintiff bank:

‘ ‘ I remember, when arranging the loan prior to October, 1895, of exhibiting statement of my father’s resources and liabilities, showing net resources considerably in excess of one million, as shown by his books, and at the same time stated that considerable fire loss since the date of statement reduced this amount somewhat.”

Was this letter so connected with the statement in question as to make the latter a signed statement, within the meaning of the statute ? It will be noted that the statement introduced in evidence was not exhibited by defendant, George A. Steel, in person, but by Gen. Spaulding. It will also appear that there was not enough in this writing to identify the statement, either as to amount or date, but parol evidence would have to be introduced to connect them. Further than that, the exhibited statement was, according to the terms of the letter introduced, not the whole substance of the communication made by defendant to the plaintiff. We think, therefore, it cannot be said that this amounted to a signed statement, within the requirements of this statute.

The judgment will be affirmed.

Hooker, O. J., and Moore, J., concurred. Long and Grant, JJ., did not sit.