text:
    PAW PAW SAVINGS BANK v. FREE.
    1. Landlord and Tenant — Fiduciary Relations — Trusts.
    The action of the president of a bank, while in its active employment, in securing to himself, for his personal advantage, a lease of its place of business where it had been located many years, was a breach of trust, and a palpable violation of his fiduciary relations with the corporation and its stockholders; while he was not technically a trustee, his position was one of trust, demanding the utmost good faith.
    2. Same — Lease—Delivery—Subsequent Loss.
    Where a lease to the bank of its place of business was properly executed and delivered to defendant, its president, in the interest and for the benefit of the bank by which he was employed, its subsequent destruction or loss would not invalidate it.
    3. Same — Estoppel—Equitable Rights.
    Although the directors of the bank, after learning that defendant had taken the lease in his own name, under the advice of the banking department, accepted a sublease from defendant, it was not thereafter precluded from explaining the circumstances of its subtenancy, asserting equitable rights and trying the question of paramount derivative title between it and its president; the general landlord and tenant rule inhibiting the tenant’s denial of the landlord’s title not being .applicable.
    See note in 7 L. R. A. (N. S.) 930.
    Appeal from Van Burén; Tucker, J., presiding.
    Submitted January 30, 1919.
    (Docket No. 75.)
    Decided April 3, 1919.
    Bill by the Paw Paw Savings Bank against John W. Free to enjoin an interference with plaintiffs banking quarters, and to construe a lease. From a decree for plaintiff, defendant appeals.
    Affirmed.

      Glenn E. Warner, David Anderson, and Victor M. Gore, for plaintiff.

      Alfred J. Mills and Thomas J. Cavanaugh, for defendant.
   Steere, J.

This bill of complaint was filed to restrain defendant, John W. Free, from tearing down, ripping out or removing any portion of a brick wall at the rear of the banking quarters now occupied by the Paw Paw Savings Bank, plaintiff herein, and from ejecting it therefrom, or interfering with its officers in discharge of their duties in the use of the vault and other equipment of said bank on said premises; and that a certain lease thereof dated April 1, 1915, taken by said John W. Free in his own name while plaintiff’s president, be decreed to have been obtained for the use and benefit of said bank and to be its lease with the same force and effect as though running directly to it.

Plaintiff, the Paw Paw Savings Bank, was incorporated in 1886,. with Frank W. Sellick its president and defendant John W. Free its secretary, and since that time has occupied and used for banking purposes the premises in question, which are located on the first floor of a building owned by George W. Longwell, Sr., and known as the Longwell block, in the village of Paw Paw at the corner of Kalamazoo and Main streets. For the first seven years the bank had a written lease of these banking quarters from Mr. Long-well; after it expired the bank continued to occupy the same under a verbal lease, continuing to pay a mutually satisfactory rental, $500 per year payable in quarterly installments being paid during the last seven years before the lease in question was given, in which the same rental was specified.

After the death of Mr. Sellick defendant became president, continuing in that position for many years, and until he resigned in December, 1917. All the original incorporators of the bank had died before 1915 except defendant, and new men became active in its affairs as stockholders and directors. In 1915 dissensions arose and two factions developed between members of the directorate, the occasion and responsibility for which are somewhat in' dispute and unimportant in this controversy beyond the fact that they existed and were apparently the moving cause for defendant’s conduct of which complaint is made. Defendant and those associated with him held about one-third of the stock of the bank and the opposing faction the remainder. He, however, remained an active officer of the bank and was retained as its president, receiving his regular salary of $2,000 per year, until his resignation took effect on December 31, 1917, after he had matured his plans to open a private bank in the same building, which he did under the name of The John W. Free & Co. Bank, on January 1, 1918.

It is claimed for plaintiff that for some time prior to April 1, 1915, there had been discussion among the directors as to the advisability of securing a written lease from Mr. Longwell of the premises occupied by the bank and that defendant was informally authorized to obtain the same. He about that time interviewed Mr. Longwell upon the subject and secured a lease. Longwell testified that about the first of April, 1915, defendant met him in the office of the store of Longwell Brothers and said, “the directors thought they ought to have a lease, and instructed him to get the lease, terms to that effect. I said it was a proper thing to do, best for all parties, and he said the same conditions, for 5 years”; that after the time and terms had been talked over defendant went away, and supposing it was. left for him to attend to he drew up a lease between himself and the Savings Bank, the rent being $500 a year, for a term of five years payable quarterly which he signed and took to the bank, delivering it to Mr. Wolfs, the cashier, and asked him to hand it to defendant, who was not present. Mr. Wolfs laid the lease aside and on defendant’s return told him of it. He testified that Mr. Free picked the lease up and asked him to say nothing about it. This defendant denies. He did, however, interview Mr. Longwell some time later and told him that for personal reasons he would like to have the lease run to himself. Of this Longwell testified:

“He (Free) came in the office, same place where he met me before, and says: ‘Now, in regard to the lease business, I would like to have it changed to myself, or John W. Free, and if you just as soon, for particular reasons of my own,’ and I says: ‘Why, of course. It is no affair of mine. I just as soon make a lease to you, John, as the savings bank. You are a responsible man. You have done business with me all these years, and I would as soon make it out to you, anyway, if that is your wish.’ And he said: T will have Lynn draw up a typewritten lease.’ ‘Well,’ I said, ‘all right, if that makes it any stronger,’ and he did make a typewritten lease which I signed in duplicate and Mr. Free signed.”

This lease, which is dated April 1, 1915, covered the quarters which plaintiff had occupied and used for the transaction of its banking business since its organization.

Wolfs became cashier of the bank in 1910, terminating his connection with it by resignation in November, 1917, shortly before defendant resigned. At the time of the events giving rise to this controversy they were the salaried executive officers in direct charge of the affairs of the bank. To what extent Wolfs was personally interested beyond his employment does not appear, but it is undisputed that as friction developed between the so-called Free and Allen factions of directors he was allied with the latter which represented the controlling interest. It was denied for defendant during the trial that any lease was ever obtained for the bank by him and considerable testimony was devoted to that issue. Wolfs testified that the advisability of securing one had at different times been discussed amongst.the directors and between himself and defendant who on one occasion suggested a written lease should be obtained to prevent further increase in rent, which had previously been imposed, and after the lease was brought into the bank by Mr. Long-well as related he (Wolfs) examined it; that it was a five-year lease of the premises running from Longwell to the bank, at a rental of $500 per year payable quarterly; that when at a. subsequent meeting of the directors the affairs of the bank were being discussed he told them of it and Mr. Free stated no such lease had been taken by him; and learning later that Free had a lease of the property in his own name Wolfs so advised the directors. Free testified of this that after he obtained the lease to himself he told the directors of it and they made no complaint until Wolfs told the board that the lease did not run to defendant but to the bank, which greatly surprised him, and' he stated to the board it was not true, “because up to that time I never knew but that it did run to me.” While not admitting that a lease was made to the bank by Long-well, as Longwell and Wolfs both positively testify, he conceded that Wolfs turned over to him in the bank a lease Longwell had left there for him, which did not suit him because it was crudely drawn, required security for the rent, he wanted two copies and wanted them typewritten, finally saying:

“Anyway, I didn’t want it that way, so I told him (Longwell) I was not satisfied with it and I would have my son draw a typewritten lease for himself to have and one for me to have, which he did.”

He also stated, in direct contradiction of Longwell’s testimony, that he never asked him for a lease to the bank, but to himself, “for personal reasons” and that when he obtained the second he returned the first lease to Longwell, which the latter denied.

Of his attitude in relation to obtaining this lease to himself defendant testified on cross-examination:

“I have stated that my reasons for doing' that was that such a lease would serve my personal interest and that is correct. I got the lease for that purpose and I was president of the Paw Paw Savings Bank, and my personal interests were antagonistic to those of the bank at that time and that is the reason I took this lease. I had not resigned as president at that time. * * * It was absolutely for personal reasons that I took this lease. At the time I served- notice on the Paw Paw Savings Bank to vacate the premises, I was still the president and director of the bank. As president, I had not made arrangements for other quarters for the bank. I had not personally done anything to prepare other quarters for this bank that I notified to vacate. I had not directed anybody to do that.”

While some complaint was voiced by certain of the directors to the defendant taking the lease in his name, he was president of the bank, the chief officer in direct charge of its daily affairs and at that time intimated no purpose hostile to its interest or intent to evict the bank from the quarters it had occupied for near 30 years, and it continued in occupation as before, paying the same rent. He had previously looked after paying its rent and no change took place in that respect, except that he credited the payments to himself on the books of the bank and personally paid the rent to the owner of the building.

The charter of the bank would expire in 1916 and on May 28, 1915, a resolution was adopted relative to extending, or renewing, the same. In the latter part of that year and continuing during 19.16 the bank was in correspondence with the banking department of the State upon the subject, in which the affairs of the bank were discussed. The department became advised of the lack of harmony amongst directors of the bank, including the matter of this lease, and strongly intimated those differences should be adjusted before a renewal of the charter would be favorably considered. On October 28, 1915, the banking commission wrote the bank, in part:

“8th. The department cannot at this time consent to the extension of corporate existence in view of the above mentioned assets and in view of certain other internal conditions about which the department should have more information. I believe a thorough understanding cannot be had in any other way than to have your entire board of directors and active officers visit the department at some day in the near future.”

And on April 6, 1916:

“21st. Referring to the department’s letter of December 9th, we notice that the same condition obtains with reference to the lease of your bank building as at previous examinations. As stated in that communication, the writer is of the opinion that the department will insist that some arrangement be made whereby a suitable banking office is assured before charter extension is granted. This is one of the matters that should be worked out by officers and directors, and the department must be advised as to what course will be pursued with reference to the lease of the bank building.”
“23d. We trust that the department may receive within the next twenty days-at the very latest, advice as to elimination of the assets mentioned in this letter, as well as information relating to the reconciliation of the factions on your directorate and advice-as to the lease of the bank building.”

The records of the bank show that on April 18, 1916, the matter of the lease was taken up at a meeting of the board of directors and defendant informed the board it was his intention to hold the lease personally, after which a committee was appointed to secure other quarters for the bank if possible. Nothing seems to have resulted from this and early in May, 1916, A. E. Manning, the State deputy commissioner of banking, visited Paw Paw to confer with the directors in an endeavor “to straighten out the difficulties that existed in the bank.” He testified that he was very frank with the directors and “told them we would expect the bank would secure a permanent home, or a home for a sufficient length of time to warrant us in extending the charter. * * * As to straightening out the complications that had arisen out of the lease, after considerable discussion it simmered down to a question of buy or sell proposition”; that following an intermission for supper the Frees agreed to sell for a certain price which the others accepted, and an agreement was drawn up accordingly in which the lease of these premises was to go to the bank. It had some time before been called to Manning’s attention that there were several loans in the bank which had become assets on the say so of A. L. Free, defendant’s son, and when they came back with the agreement he asked A. L. Free whether, if they sold, he would pay a loan which he owed the bank, and he replied he would not. Manning then said that so far as the department was concerned it would expect him to pay his indebtedness to the bank if he sold his stock, which he refused to do and the agreement was not consummated. It is said in defendant’s brief: “This was a gratuitous insult to that gentleman, which both he and his father resented”; and it was largely because of this the agreement failed. Following this Manning had an interview with defendant and his son and suggested that defendant give the bank a sublease of the premises which he at first declined to do, but in an interview with Manning the next morning “agreed to sub-let the bank quarters to the bank,” as Manning stated it, but as defendant testified, “until the following December.” Manning then informed the others and returned to Lansing. At a special meeting of the directors, on May 5, 1916, a resolution was adopted, with recitáis, concluding as •follows:

“Whereas, J. W. Free has a lease of said premises, running from George W. Longwell, Sr., owner of said premises, to the said J. W. Free, and
“Whereas, the said J. W. Free has consented to sublet and lease said premises to the said Paw Paw Savings Bank,
“Now, therefore, be it resolved by the said Paw Paw Savings Bank by its board of directors that said bank,_ through its board of directors do hereby accept of said J. W. Free said sublease,, according to terms of said sublease; and be it further
“Resolved, that C. A. Wolfs, cashier of said bank, be and he is hereby authorized to sign and accept said lease for the use and benefit of said bank.”

The sublease, dated May 5, 1916, which defendant proffered was “for a period ending December 1, 1916, at six o’clock in the afternoon.” The charter of the bank was thereafter renewed and its business continued as before in its old banking quarters without any special disturbing incident so far as shown until, on November 14, 1917, defendant, while yet its president and in its employ, served notice upon the bank to surrender possession of its quarters on or before January 1, 1918. On December 14, 1917, he had rented of Longwell rooms in the building directly adjoining that portion occupied by the bank, and employed a contractor to tear out the partition wall between, which he was proceeding to do when this bill was filed by the bank, on December 21, 1917, and a preliminary injunction obtained.

Defendant duly answered, the case was heard upon testimony taken in open court and the relief asked by plaintiff was granted.

It scarcely requires argument or citation of authorities to show.that the scheme of defendant to undermine this bank, of which he not only was a director and president but its hired agent in active employment, by securing to himself for his personal advantage a lease of its place of business where it had been located for many years was a breach of trust, and a palpable violation of his fiduciary relations with the corporation and its stockholders. Any differences existing between him and certain of the directors afforded him no immunity from his responsibilities, and duty as a director and president of the bank to do all things reasonably within his power to promote its business and enhance its profits. The trial court rightly said that his effort while president—

“to seize by an apparently legal but actually unlawful and inexcusable means the quarters occupied by the bank at a time when its charter had expired and such action was liable to prevent its renewal, was quite likely to injure seriously the usefulness of the bank.”

Defendant saw fit to retain his position of trust as director and salaried president of this bank and was held by such position to faithful service in its behalf during a time when he admits his “personal interests were antagonistic to those of the bank,” and says he took the lease for “absolutely personal reasons; * * * to protect myself against being imposed upon by others.” While not technically a trustee his position was one of trust demanding the utmost good faith. While many authorities might be cited to that effect the recognized duties of one in his position are sufficiently and clearly summed up by Justice Field in Wardell v. Railrood Co., 103 U. S. 651, as follows:

“It is among the rudiments of the law that the same person cannot act for himself and at the same time, with respect to the same matter, as the agent of another whose interests are conflicting. * * * The law, therefore, will always condemn the transactions of a party on his own behalf when, in respect to the' matter concerned, he is the agent of others, and will relieve against them whenever their enforcement is seasonably resisted. Directors of corporations, and all persons who stand in a fiduciary relation to other parties, and are clothed with power to act for them, are subject to this rule; they are not permitted to occupy a position which will conflict with the interest of parties they represent and are bound to protect.”

It is further contended for defendant that assuming but not conceding the lease taken by defendant to himself could have been held as taken for the use and benefit of the bank had it seasonably so insisted by proper legal proceedings and not accepted defendant as its landlord, it must be held as now conclusively estopped by its subsequent delay, acquiescence and acceptance of a sublease from defendant, particularly appealing with citation of authorities to the well-recognized general rule that a tenant in possession of leased premises may not dispute his landlord’s title.

On the claims of delay and acquiescence the fact is to be kept in mind that defendant as its president was not only at the head of and the representative of this corporation but actively employed by it as a salaried officer behind the counter ostensibly attending to the details of its daily business, whose duty it naturally was to look after such matters as this in the interest of his employer, rather than the unemployed directors engaged in other pursuits and not in constant touch with its current affairs. He is not in a position to take advantage of neglect and delays in the affairs of the bank for which he is in any manner responsible.

In the first place, we think it conclusively shown that Mr. Longwell, the owner of the building, gave a new lease of these premises to this bank which had occupied them as his tenant for more than a quarter of a century, at the request of its president, and delivered the same at its place of business into the hands of its cashier, with the natural request that he hand it to the bank’s president, with whom Longwell had transacted the business. This the cashier did. So far as Longwell was concerned he had executed and 'delivered to the bank a five-year lease, which he testified was never returned. Its destruction or loss would not invalidate it after it was executed and delivered. It was secured by and delivered to defendant in the interest and for the benefit of the bank by which he was employed, and was a transaction in the line of defendant’s official duty, while securing a second lease for and to himself was not, but a violation of it, and an act hostile to the interest of the bank.

But beginning the inquiry with this second lease running to defendant, it is the general rule that:

“Though a tenant may not have any absolute right to a renewal against the will of his lessor, courts of equity re'cognize his reasonable expectancy of renewal as a property or asset, and if one standing in a fiduciary or quasi-fiduciary relation to a lessee secures a renewal of the lease to himself, a court of equity will treat him as holding the lease in trust for the original lessee; * * *
“Where an agent of a lessee employed in reference to demised premises secures a lease to himself from the lessor on the expiration of the lessee’s term, the lessee is entitled to the benefit thereof.” 18 Am. & Eng. Enc. Law (2d Ed.), p. 696.

Thereafter the bank remained in its old quarters continuing its business there and paying the same rent as before, the money, or its equivalent, to pay rent being taken from the bank’s funds by its president and paid to the same landlord, with no physical change in any respect so far as shown, except in defendant’s bookkeeping. Although some complaint was made when the other directors learned that he had the lease run to himself, he was yet retained as salaried president in the same position of trust as before, expected and in duty bound to attend to the affairs of the bank and guard its interests, not least of which was assured quarters at its old business stand. This he continued to do, seemingly in the same manner as for many years before the period under consideration, and until it became necessary for the bank in continuation of its business to renew its charter which was about to expire, and the State banking department required that before doing so it should, amongst other things, adjust the matter of this lease, which the department had learned was an uncertain and disturbing element in its affairs. At this critical period in the career of the bank defendant’s refusal to co-operate and claims as to his lease of its quarters seriously embarrassed and delayed securing an extension of its corporate life by renewal of its charter until, on suggestion of the deputy bank commissioner, the matter was temporarily adjusted by this sublease, acceptance of which defendant now seeks to interpose as an estoppel under the general landlord and tenant rule inhibiting the tenant’s denial of the landlord’s title.

The general rule is not to be questioned where the facts are such that it applies, but here plaintiff did not enter under a lease from defendant. Neither of these parties makes any claim to the premises beyond a bare tenancy. Longwell is the primary landlord and owner. The bank was let into possession by him and had enjoyed the same for many years as his tenant before these leases in question were given. At the request of its president, to whom he answered that it was a proper thing and best for all parties, as he testified, Longwell gave to his old tenant a new lease for five years at the same rental it had been paying for many years before; and when its president later asked that it be made to himself he assented without return of the first, as he states, and signed another which defendant had prepared, saying it was no affair of his and he had just as. soon make a lease to defendant as to the bank. The bank thereafter continued in possession, in the same business, with the same officers in charge, it paying and he receiving, from its president, the same rent as before. There never was any actual delivery of possession by defendant to the bank, or direction to the bank from the owner of the premises to attorn to defendant who in fact paid nothing and parted with nothing in the transaction, the only change being in crediting and charging to himself the money' he took out of the bank to pay the rent. At the time he sought to evict plaintiff and get possession of its place of business in which to start a private bank he was yet plaintiff’s president and the sublease had long- since expired. To apply the doctrine of estoppel under such circumstances would enable him to secure an unfair advantage by a breach of trust and consummate a wrong to the corporation with which he was then in fiduciary relations as director and president.

The rule invoked by defendant does not preclude plaintiff from explaining the circumstances of its expired subtenancy, asserting equitable rights and trying the question of paramount derivative title between it and its president.

“The tenant or his assignee, it may then be broadly stated, is not estopped to explain the circumstances under which, being already in possession, he has made acknowledgment of an attornment to the plaintiff.” Bigelow on Estoppel (6th Ed.)j p. 568.

In the case of De Peralta v. Ginochio, 47 Cal. 459, where defendant was not let into possession by plaintiff, whom he had recognized as landlord, and was permitted to assert but failed to show a paramount title, the court said:

“It appears that the defendant was in possession of the premises at the time when the verbal lease was made, and he relies upon the rule in Tewksbury v. Magraff, 33 Cal. 237; Franklin v. Merida, 35 Cal. 566, and other cases in this court, to the effect that as he did not enter under the lease from the plaintiff, but was in possession at the time it was made, he is not estopped from disputing his landlord’s title. The rule, in its operation, permits the tenant in such case to dispute his landlord’s title, by showing that his is the better title. It is not enough to dispute it by averment, but proof is required on his. part. The landlord, by the production of the lease, makes a prima facie case, and the burden of proof is cast on the tenant; and unless he overcomes it by showing paramount title in himself, or those under whom he claims, tie landlord must prevail.”

A conflict of authority exists in other jurisdictions in cases where the question of estoppel arises solely out of prior possession and later acceptance of lease by the same, person, which is carefully considered in Franklin v. Merida, supra, but this inquiry goes further, presenting other questions involving equitable claims. We think the circumstances of this case fairly relieve it from the general rule of estoppel from questioning the landlord’s title under the principles stated in Fuller v. Sweet, 30 Mich. 237 (cited with approval in Lake Shore, etc., R. Co. v. hnson, 157 Mich. 115), wherein it is said, in part:

“And it was held in Accidental Death Insurance Co. v. Mackenzie, 10 C. B., N, S. 870, that a party might set up his own title at the expiration of his term, without restoring possession, upon the plain and sensible ground that it would be idle to compel a party to go out of possession, when he could turn round and recover it back upon the title, and hold the person to whom he had restored it as a wrongful occupant. * * * Where there is possession given, there is an actual consideration, which may render it also reasonable enough, under ordinary circumstances, to require the landlord to be put back in statu quo. But a person who never had or gave up possession to the tenant, is left in statu quo by the tenant’s remaining in possession, and in reason should have no further claim.”

The decree will stand affirmed, with costs to plaintiff.

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


source: Caselaw Access Project

author: Moore, J.

license: Public Domain

text:
    PEOPLE’S STATE BANK v. FRISBEE.
    1. Appeal and Error — Judgment—Issuance op Writ as Matter, op Course — Statutes.
    Where two cases, each involving less than ?500, were tried separately in justice’s court, but on appeal to the circuit court, by agreement of the attorneys, were combined and tried as one case, and a judgment for more than ?500 was entered, the contention that appellant was not entitled to the issuance of a writ of error as a matter of course, under the provisions of Act No. 172, Pub. Acts 1917, is. without merit.
    2. Trial — Bills and Notes — Evidence—Admissibility.
    In an action by a hank upon certain promissory nótese where the indorsement on two of them was claimed to be; a forgery, testimony regarding dealings between the maker’ and indorser, which clearly raised a, collateral issue wholly” unrelated to the issue on trial, was improperly admitted.
    3. Same — Cross-Examination—Discretion.
    Cross-examination of defendant, indorser, as to the usurious character of his dealings with the maker of the notes rested in the sound discretion of the court.
    Error to Wayne; Murphy, J.
    Submitted January 24, 1919.
    (Docket Nos. 54, 55.)
    Decided April 3, 1919.

      Assumpsit in justice’s court by the People’s State Bank against Daniel D. Frisbee and Thomas E. Mitchell on certain promissory notes. There were two separate suits in which one resulted in a judgment for plaintiff and one in judgment for defendants. Both were appealed to the circuit court, and by stipulation were tried as one case. Judgment for plaintiff. Defendant Frisbee brings error.
    Reversed.

      Mülis, Griffin, Seely & Streeter, for appellant.

      Keena, Lightner, Oxtoby & Hanley, for plaintiff.
   Moore, J.

Plaintiff commenced two suits in the justices’ court for the city of Detroit against defendants, one involving two promissory notes and the other one. In each case less than $500 was involved. Plaintiff succeeded in one of said cases and defendants in the other. Both cases were appealed to the circuit court where they were brought on for hearing at the same time, when counsel for plaintiff in open court made the following announcement:

“Mr. Hanley: It is agreed, by the attorneys, Keena, Lightner, Oxtoby & Hanley, for plaintiff, and Millis, Griffin, Seely & Streeter, for the defendant Frisbee, and Wesley Nutten, for the defendant Mitchell, all being present, that the two cases between the same parties, being No. 64,030 and No. 64,031, may be combined and tried as one case.
“The Court: You all agree to that?
“Mr. Nutten: Yes.
“Mr. Seely: Yes.”

After a full trial upon the merits and under a charge to the jury which indicated that there was but one issue for their determination, a verdict was rendered against both defendants in the sum of $834.13. Defendant Mitchell was the maker of each of the three notes on which suit was brought and at the trial conceded his liability thereon. Defendant Frisbee admitted the genuineness of his indorsement upon one of the three notes, but insisted that his name had been forged upon the other two. The sole question, therefore, for the determination of the jury was whether defendant Frisbee had, in fact, indorsed the two notes in question. Through an error in the circuit court, judgment was rendered in each of the cases appealed in the same sum, $834.13. This error was cured by stipulation of counsel. In this court although ’appellant caused the issuance of two writs of error the cases were argued as one. From the judgment rendered against him, defendant Frisbee alone appeals.

Before entering upon a discussion of errors assigned by appellant we will notice the claim made in behalf of the appellee that the writ of error should be dismissed upon the ground that it issued in violation of the provisions of Act No. 172, Pub. Acts 1917. This argument is based upon the contention that inasmuch as no formal order for consolidation was made in the circuit court and as not more than $500 was involved in either of the'cases in the justices’ court, appellant was not entitled to the issuance of a writ of error as a matter of course under the provisions of said act. We think there is no merit in the contention. The language of the act in question is unambiguous and provides:

“Writs of error, upon any final judgment or determination, where the judgment exceeds in amount five hundred dollars, may issue of course.” * * *

There is no question that the judgment in the case at bar exceeds the specified amount, and we must therefore hold that the writ properly issued as a matter of course.

It appears from the record that defendant Mitchell was engaged in the insurance business; that in the conduct of his business it frequently became necessary for him to secure advances of cash from some source. Being acquainted with defendant Frisbee in tie year 1910, it is apparent that an arrangement was entered into between the two men whereby, for a consideration, Frisbee indorsed the promissory notes of Mitchell, which Mitchell thereafter discounted at plaintiff bank. These notes and the renewals thereof were many in number and in the aggregate reached a considerable amount, the practice continuing over a period of some five years. Frisbee finally refused to further indorse whereupon the notes then extant were protested and certain of them paid by Frisbee to an amount in excess of $2,000. Among those so paid Frisbee claims to have discovered two bearing his forged indorsement and he refused to pay-those in suit unless he should be given credit for the amount of those which he claimed to have erroneously liquidated. The execution of the notes in .question having been denied, under oath, by defendant Frisbee, and notice under the plea having been given to the effect that they were produced by fraud, it became apparent that a considerable latitude in the examination of the witnesses was allowable in order that the relationship of the two defendants .might properly be understood by the jury. The only meritorious question presented upon this record is whether the learned circuit judge who heard the case permitted counsel for plaintiff to go too far afield, thus introducing collateral issues which cannot properly be tried in the case and which tended very seriously to prejudice the rights of the defendant Frisbee. It appears that sometime during the acquaintance of the two defendants a lease was executed between Frisbee as lessor and the defendant Mitchell and one Conklin covering a large garage on Jefferson avenue, the rent reserved being $600 a month.' During the examination of defendant Mitchell, by plaintiff’s counsel, under the statute, he was permitted to testify over most strenuous objection that Frisbee had falsely and fraudulently misrepresented to him facts and conditions with reference to certain subtenants occupying the garage and in effect that such fraudulent misrepresentations had caused him, Mitchell, to lose between two and three thousand dollars in said enterprise. The objection to this testimony was fully stated to the effect that it introduced a collateral issue which cannot be determined in this case. The examination was permitted, however, and after repeated objections and much argument the court said:

“I think it is pretty far afield myself., I will say that much.”

Later counsel for defendant Frisbee offered to prove by Mr. Mullen (one of the garage tenants) that he left the garage and that he left it because he was unable to get along with Mr. Mitchell, but that Mr. Frisbee had absolutely nothing to do with it. On objection of plaintiff’s counsel this evidence was excluded. A motion to strike out all of the evidence with reference to the garage matter as raising a collateral issue was denied. In his charge the court endeavored to guard the effect of the' alleged incompetent testimony by saying:

“Now, in a sharply defined conflict of this character, you will, upon a moment’s reflection, see that'naturally the range of the testimony must be considerably broadened beyond that which ordinarily obtains in disputes in cases before a jury. If the testimony here were to be limited simply to the statement of the defendant Mitchell that his co-defendant indorsed the notes, and limited by the further statement by the defendant Frisbee that he did not indorse them, you would have no other aid in coming to a conclusion than those two statements directly contradictory of each other.
“Now, when such an issue as that is presented to a jury for consideration it is wisely permitted that the jury have not only these direct conflicting statements before them to aid them in the deliberations, but also a larger field of inquiry is permitted. Why? So that the jury may, in coming to its verdict, have before them the entire relations of the parties, the precise situation in which they were relatively toward each other; so that, having these side lights, the benefit afforded by these collateral relations, of the parties, the jury may thereby be better enabled, to come to a true and correct conclusion.
“So here, gentlemen, pursuant to that principle of law, the parties upon each side have been permitted to go outside of the direct controversy raised with reference to these notes, and to go into the mutual situation of the parties, their dealings with each other, the course of their business conduct, that you might then have the better light afforded for your aid in determining which is the more probable of the stories presented for your consideration, which is the more likely, in view of the entire course of dealings of the two parties, the one with the other. These are side lights permitted in this case for whatever benefit or aid they may have, if any, in assisting you to come to a correct conclusion upon the main controversy, which is, namely, Did the defendant Frisbee indorse those two disputed exhibits ?”

We are of opinion that the admission of the testimony regarding the dealings between the two defendants with reference to the garage clearly raised a collateral issue it was impossible to properly determine in the case on trial, and can clearly see how such testimony may have been injurious to defendant Frisbee. In Wessels v. Beeman, 87 Mich. 481, it was said:

“In the investigation of fraud, it is usual to permit a wide range of investigation of matters which will throw light upon the question at issue, but irrelevant testimony is no more admissible in trying questions of fraud than in any other investigation or trial of civil actions at law.”

See, also, Smith v. Nixon, 145 Mich. 593; Hyman v. Kirt, 153 Mich. 113; Bales v. Evans, 182 Mich. 383; and Stevens v. Stevens, 181 Mich. 449.

The issue between the plaintiff and defendant Frisbee was a very simple one: Was his signature on two of the notes in suit genuine or forged? As bearing upon this question the relations between himself and defendant Mitchell might be shown within reasonable bounds, but it was clearly incompetent to go into the detail of deals between them wholly unrelated to the issue on trial.

Error is assigned upon the ruling of the court in permitting too wide a latitude in the cross-examination of defendant Frisbee upon the usurious character of the dealings with defendant Mitchell. This matter we think rested in the exercise of a sound discretion by the court.

For the error pointed out the judgment must be reversed with costs and a new trial ordered.

Bird, C. J., and Ostrander, Steere, Fellows, Stone, and Kuhn, JJ., concurred. Brooke, J., took no part in the decision.


author: Brooke, J.

text:
    NELSON v. SANDEL.
    1. Adultery — Evidence—Sufficiency-—-Proof.
    Mere opportunity to commit adultery is not sufficient to establish this offense; there must be evidence of -such facts and circumstances, times and places, and association together as would naturally lead a man of ordinary care and prudence to the conclusion that such parties were having illicit sexual intercourse.
    2. Husband and Wife — Criminal Conversation — Adultery—Evidence — Sufficiency.
    In an action for criminal conversation, evidence that defendant and plaintiff’s wife left the public sitting-room of a hotel in company with each other and returned together after an absen'ce of from 20 to SO minutes, held,, insufficient to warrant an inference that an opportunity was afforded for the commission of the crime charged, in the absence of testimony of any undue intimacy between them or tending to show that defendant was actuated by an adulterous disposition.
    Error to Gratiot; Tappan, J., presiding.
    Submitted February 4, 1919.
    (Docket No. 70.)
    Decided April 3, 1919.
    Case by Clinton Nelson against George J. Sandel for criminal conversation with plaintiff’s wife. Judgment for defendant. Plaintiff brings error.
    Affirmed.

      Lyon & Sea/rl, for appellant.

      Charles H. Gog gin (William A. Bahlke, of counsel), for appellee.
    This action is brought for the purpose of recovering damages from defendant growing out of his alleged criminal conversation with plaintiff’s wife. The plea was the general issue with notice thereunder:
    “that if there are any facts or circumstances tending to prove the matters and things set forth in plaintiff’s declaration, such transactions, facts and circumstances, if any, were committed, performed and occurred, if at all, by reason of the fraudulent, dishonest and illegal acts of the said plaintiff, in this, to-wit, that the said plaintiff unlawfully conspiring and confederating with one Joseph Ray, Frederick W. Hooper, William Ball and Edith Fletcher and divers other persons to this defendant unknown, heretofore, to-wit, on the 15th day of July, 1916, made and entered into a scheme or plan to fraudulently procure a cause for divorce from the bonds of matrimony from one Lorinda M. Nelson, the wife of the said plaintiff, and to procure fraudulently from her, the said Lorinda M. Nelson, a property settlement with said plaintiff and for such purposes and in furtherance of said fraudulent scheme and conspiracy to debauch the said Lorinda M. Nelson by inducing, enticing and causing her to commit adultery and various .other kinds of misconduct with divers persons then unknown and now unknown to this defendant.”
    The notice further charges that as a result of such conspiracy a property settlement between plaintiff and his wife, Lorinda M. Nelson, was procured on the 15th day of September, 1916, and that thereafter a suit for divorce ’was commenced by plaintiff against his said wife.
    The evidence introduced on behalf of the plaintiff tends to establish the following facts: Defendant is a married man and became acquainted with plaintiff’s wife in the spring “of 1916 on which occasion plaintiff and his wife and defendant and his wife went to Ed-more in an automobile; that in April, 1916, defendant called in the daytime at a house where both defendant and his wife were visiting; that plaintiff’s wife went to the door upon which defendant said to her:
    “Hello! What about that date? Have you seen the other party, and are you game yet?”
    —to which she answered:
    “Clint is here.”
    Whereupon defendant pushed open' the door and said:
    “Oh, Clint, you are the man I want to see. I want to see you about selling the Johnson home. I didn’t want Marne to hear it for she would tell it.”
    The record discloses no other meetings between defendant and plaintiff’s wife until the 8th day of July, 1916, upon which date it is alleged the act of criminal conversation was committed. One Mrs. Madden testified that in the forenoon of that day defendant called her up and said that:

      “Mr. Beadle (defendant’s partner in business), would be in on the noon train and wanted to know if Mrs. Nelson and I would go to Hemlock”;
    —that he agreed to call up Mrs. Nelson; that the witness agreed to go and that later she called for plaintiff’s wife in her car and the two drove to Hemlock; that soon thereafter defendant and Beadle arrived at Hemlock in their car and that the four thereafter drove to Saginaw, defendant and Beadle sitting in the front seat and Mrs. Madden and Mrs. Nelson in the back seat; that in Saginaw they went to the Hotel Leisher, reaching there about 4:30 in the afternoon ; that upon arriving at the hotel the four persons constituting the party went upstairs to the public sitting-room where they remained in conversation some fifteen minutes, at the end of which time defendant and Mrs. Nelson left the sitting-room with the statement that they would return in a minute; that they were gone between twenty and thirty minutes; that on their return all four went downstairs, entered the automobile and drove to a store where Mrs. Nelson purchased a coat costing $12 for which defendant paid; that thereafter the four dined in company at the Fordney hotel and later drove back to Hemlock where the two women entered their own automobile and the parties proceeded to their respective homes; that there were bedrooms on the same floor as the sitting-room in the hotel.
    Defendant denied having the alleged conversation with plaintiff’s wife with respect to a “date”; denied making an appointment with Mrs. Madden to meet her and plaintiff’s wife at Hemlock, but claimed that such meeting was wholly accidental; admitted driving to Saginaw with Beadle in their company, but claimed that the women alighted from the automobile in the business section of the city where it was agreed that if defendant and Beadle got through with their business before the train left they would all meet at the Hotel Leisher and return to Hemlock in company; admitted that the meeting occurred at the Hotel Leisher, but denied that on that occasion he went upstairs to the public sitting-room and in support of this denial introduced corroborative evidence; admitted that. a call was made at a store where plaintiff’s wife purchased a coat and borrowed from him two' or three dollars to pay for or to help pay for the same; admitted dining with the women at the Hotel Fordney and thereafter driving to Hemlock in their company. It affirmatively appeared by the testimony of the hotel proprietor that no rooms were engaged by either the defendant or his associate, Beadle, on the occasion in question. At the conclusion of all the testimony the defendant preferred certain requests to charge, the first of which follows:
    “1. The jury is hereby instructed that there is no evidence in this case from which the jury may legally infer that the defendant was guilty of having criminal or unlawful sexual intercourse with the plaintiff’s wife at the time and place as alleged in the plaintiff’s declaration, or like act at any other time or place and the plaintiff’s declaration counting alone upon criminal conversation with the plaintiff’s wife, Lorinda Nelson, as the sole cause of action, the plaintiff cannot recover in this cause and your verdict by direction of the court will be not guilty or no cause for action.”
    The court denied this request and submitted the case to the jury under careful instructions. A verdict of not guilty was returned by the jury and judgment duly entered thereon.
   Brooke, J.

(after stating the facts). In this court plaintiff reviews the case under some 57 assignments of error which we find it unnecessary to consider at large for the reason that after a careful reading of all the testimony introduced we are of opinion that the learned circuit judge who tried the case was in error in failing to grant the first request to charge preferred by defendant’s counsel and direct a verdict in' his favor upon the grounds stated. Error is assigned upon the admission and exclusion of testimony. A careful scrutiny of such assignments makes it clear that no evidence offered on behalf of the plaintiff was excluded which had the remotest tendency to establish defendant’s guilt. We, therefore, reach for consideration the sole question whether, given its highest probative value, the evidence introduced on plaintiff’s part was such as to legally warrant the jury in drawing an inference that defendant on the 8th day of July, 1916, in the twenty or thirty minutes during which he and plaintiff’s wife were absent from the public sittingf-room in the Hotel Leisher, committed the act of criminal conversation of which complaint is made in the declaration.

Under all the authorities in a casé of this kind it is necessary, for the plaintiff to prove by a preponderance of the evidence an adulterous disposition on the part of the parties. It is further necessary to prove in the same manner that the parties had an opportunity to commit the crime. Knickerbocker v. Worthing, 138 Mich. 224. In Brown v. Evans, 149 Mich. 429, this court specifically approved of the following instruction:

_ “Mere opportunity to commit adultery is not sufficient to establish this offense; there must be evidence of such facts and circumstances, times and places, and association .together as would naturally lead a man of ordinary care and prudence to the conclusion that such parties were having illicit sexual intercourse.”

Applying these.rules to the facts in the case at bar we find that prior to the day in question the defendant' had been in the society of. plaintiff’s wife but twice, upon each of which occasions plaintiff himself was present. There is absolutely no evidence of any undue intimacy between defendant and plaintiff’s wife upon either of the occasions in question, nor, assuming that every word testified to by Mrs. Madden is true, is there anything in her evidence contained tending to show that the defendant was actuated by an adulterous disposition. The circumstances surrounding the parties in the Hotel Leisher at Saginaw are not only consistent with defendant’s innocence, but they are insufficient, in our opinion, to support an inference of his guilt. The mere fact that a man and woman in broad daylight leave the public sitting-room of a hotel in company with each other and return together after an absence of from twenty to thirty minutes is not sufficient to warrant the jury in drawing an inference that an opportunity was afforded for the commission of the crime charged. The case under its facts is much weaker than Brunelle v. Ruell, 140 Mich. 256, cited and relied' upon by plaintiff. The jury by its verdict upon its own volition reached the result which it should have reached under the direction of the court.

The judgment is affirmed.

Ostrander, Moore, Steere, Stone, and Kuhn, JJ., concurred with Brooke, J. Bird, C. J.,. and Fellows, J., concurred in the result. .


text:
    NEWCOMB v. MONTAGUE.
    1. Fraudulent Conveyances — Bulk Sales Act — Sales—Equity —Jurisdiction—Judgment Creditor.
    The objection, in a suit to enforce a claim against purchasers of the business of plaintiff's debtor, who did not comply with the “sales in bulk” law, that the plaintiff should be denied the right to attack this conveyance of property because he was not a judgment creditor, his claim not having been reduced to judgment until about two weeks after the transfer was made, is without force; such objection should be raised by demurrer, it coming too late if made for the first time at the hearing.
    2. Same — Mortgages.
    The finding of the court below that a mortgage given by the debtor to his father was fraudulent,' held, justified by the evidence.
    3. Same — Mortgages—Liens—Release.
    The giving of a bond by the father to the purchasers of the mortgaged property indemnifying them from any liability to him under his mortgage, in effect released the property from the lien created by his mortgage.
    4. Same — Value oe Goods Sold — Evidence.
    Where the inventory of equipment and stock sold showed a value of over $2,300, and it was undisputed that $1,200 of the consideration was paid in cash, defendant’s contention that plaintiff cannot recover because the value of the merchandise and fixtures did not exceed $400 cannot be sustained.
    See notes in 39 L. R. A. (N. S.) 374; L. R. A. 1916B, 974.
    Appeal from Grand Traverse; Mayne, J.
    Submitted January 22, 1919.
    (Docket No. 87.)
    Decided April 3, 1919.
    Bill by David B. Newcomb against Herbert B. Montague and others to discover property of defendant Montague to satisfy a judgment. P’rom a decree for plaintiff, defendants appeal.
    Affirmed.

      John J. Tweddle and Patchin & Duncan, for plaintiff.

      M. W. Underwood, for defendants.
    As stated by counsel for plaintiff the bill in this case is in the nature of a bill for discovery to reach property of defendant Herbert B. Montague to satisfy an indebtedness of $764.10. In December, 1912, said defendant Herbert B. Montague entered into a contract with plaintiff for the purchase of a Buick roadster for the sum of $700. No payment having been made plaintiff brought suit in assumpsit on January 9, 1914, against defendant for the value of said automobile. Defendant Herbert Montague was the owner of a garage located at 116-118 State St., Traverse City, Mich. He was likewise the owner of an undivided interest in the firm of “Joseph A. Montague & Son.” On March 3, 1914, defendant Herbert B. Montague gave a chattel mortgage to his father, Joseph A. Montague, covering all his stock in trade consisting principally of automobiles, automobile tires and accessories, as well as tools and garage equipment and all other property used in connection with said business. This mortgage was for the sum of $6,000 and covered, besides the individual business of the defendant Herbert B. Montague, his interest in the co-partnership assets belonging to himself and his father, the mortgagee. This mortgage was given a few days before the first trial of the law case between plaintiff and defendant Herbert B. Montague which occurred at the March, 1914, term and resulted in a disagreement of the jury. The law case came on for trial again at the June term when on motion of defendant it was continued over the term on payment of the costs by defendant. The next term of court occurred early in October, 1914. On the 22d day of September, 1914, defendant Herbert B. Montague executed a bill of sale covering the stock and fixtures of his garage business to four individuals who a few days thereafter organized a corporation for the conduct of the said business under the name of the West Michigan Garage Company. The consideration for this bill of sale was $2,500 of which $1,200 was paid in cash by the purchasers to Herbert B. Montague and $1,800 by the assignment of a land contract. No notice was given by Herbert B. Montague to plaintiff or his other creditors under the provisions of the sales in bulk act (Act No. 223, Pub. Acts 1905, 2 Comp. Laws 1915, § 6346 et seq.). On October 5th, a new chattel mortgage was executed by the son to the father for $6,000 covering only the son’s interest in the partnership business. At the time the sale was made to the four individuals of the garage property, they were not advised of the existence of the chattel mortgage thereon for $6,000 running to Joseph A. Montague. They, however, learned of it soon thereafter and, as a result, Joseph A. Montague executed and delivered to the purchasers of said merchandise and' fixtures a bond conditioned to—
    “hold said obligees herein harmless from any cost, expense or payment of any sum or sums of money whatsoever by reason of their purchase of said merchandise, and agrees further to protect said obligees herein in their quiet possession and ownership of said stock as described and to secure to them the absolute and perfect title thereto from any claims or demands of any nature or kind whatsoever.”
    In the meantime and on October 6th, the law suit between plaintiff and defendant Herbert ■ B. Montague was determined, resulting in a judgment in favor of the plaintiff for $764.10 and costs. At about the same time, defendant Joseph A. Montague took possession of the garage property, putting another son, Gerald Montague, in charge thereof and undertook to foreclose the mortgage. A sale was made thereunder about October 18, 1914. Joseph A. Montague purchased the property at the sale and immediately thereafter executed a bill of sale to the West Michigan Garage Company or to the individuals who afterwards organized that company. No consideration was paid for the second bill of sale, it being understood that the transaction was in furtherance of the undertaking of Joseph A. Montague as evidenced by his bond given on the 8th of October. Thereafter the plaintiff caused to be issued a writ of fi. fa. in the law case against defendant Herbert B. Montague which was returned by the sheriff nulla bona on'February 10, 1915.
    The bill of complaint herein was filed December 29, 1916. All the foregoing and many other facts are set forth in said bill and it is charged that the originál mortgage of March 3, 1914, from defendant Herbert B. Montague to his father, Joseph A. Montague, was fraudulent and void; that the sale of September 22, 1914, was likewise fraudulent and wholly void as to plaintiff and all other creditors of the defendant Herbert B. Montague.
    The court made a decree in the following terms:
    “1. That on to-wit, during the summer of 1913, the defendant Herbert B. Montague was engaged in the mercantile business in Traverse City, Michigan, and that a part of his business was dealing in automobiles; that the plaintiff, David B. Newcomb, was the owner of a Buick automobile; that the plaintiff and defendant had certain dealings in regard to the purchase and exchange of automobiles, which dealings resulted in a fraudulent conversion of plaintiff’s automobile by the defendant Herbert B. Montague, said automobile being of the value of seven hundred sixty-four and 10/100 dollars,. and that thereby and previous to March 3, 1914, the said Herbert B. Montague was and continued to be a creditor of the plaintiff in the said sum of seven hundred sixty-four and 10/100 dollars, and that he had brought suit against the said Montague for the recovery of the said, sum, which suit was then pending.

      “2. That the said Herbert B. Montague was the owner of a one-third interest in a hardware business in the city of Traverse City, operating and doing business in the name of J. A. Montague & Son, J. A. Montague being the father of defendant Herbert B. Montague, and that on to-wit, the third day of March, 1914, while the defendant Herbert B. Montague owned a stock of merchandise and store furniture and fixtures and was carrying on a mercantile business in the city of Traverse City, he gave a chattel mortgage upon said stock of merchandise, store, furniture and fixtures, and his interest in the hardware business of J. A. Montague & Son to his father, Joseph A. Montague, defendant herein, to secure a claimed indebtedness of six thousand dollars. The said mortgage was given and placed on record at a time when suit by plaintiff against said Herbert B. Montague .was pending in the circuit court for Grand Traverse county to recover the sum of seven hundred sixty-four and 10/100 dollars.
    “3. That said suit brought to recover the said sum of seven hundred sixty-four dollars and ten cents, then pending in the circuit court for the county of Grand Traverse, was tried at the March, 1914, term of said court and resulted in a disagreement by the jury. That the said cause came on to be tried again at the June, 1914, term of said court, at which time the said defendant Herbert B. Montague made a motion for continuance of the said cause, which was granted by the court on terms that the said defendant Herbert B. Montague pay the costs to be taxed in said cause, which were taxed at the sum of twenty-nine dollars.
    “That the said cause came on to be tried at the October, 1914, term of said court and that the said defendant Herbert B. Montague did not appear and contest the claim of the said plaintiff amounting to seven hundred sixty-four and 10/100 dollars; that on October 6, 1914, judgment was rendered in favor of David B. Newcomb, plaintiff in this suit, and against the said Herbert B. Montague, in the sum of seven hundred sixty-four and 10/100 dollars, and that the costs in said cause were taxed in the sum of ninety-five and 90/100 dollars, none of which has been paid.
    “4. That on, to-wit, the twenty-second day of September, 1914, the said defendant Herbert B. Montague being the owner of a stock of merchandise and store furniture and fixtures and carrying on a mercantile business in the city of Traverse City, upon the last mentioned date attempted and undertook to sell his stock of merchandise, office and store furniture and fixtures to certain parties composing the West Michigan Garage Company, a corporation defendants in this cause, without giving notice to his creditors as is provided in the “sales in bulk” statute of this State, and that no notice of the said attempted sale was given this plaintiff and other creditors of the said Herbert B. Montague, or by his would-be purchaser as the statute requires.
    “5. That the said defendant Joseph A. Montague, and his son, Herbert B. Montague, being engaged together and owners of the J. A. Montague & Son hardware business, were closely and intimately associated in business relations; that no consideration for the mortgage dated March 3, 1914, passed at that time; that the said mortgage covered the interest of Herbert B. Montague in the business of J. A. Montague & Son, and also the stock of goods, wares and merchandise, furniture and fixtures in the mercantile business of the defendant Herbert B. Montague. That at the time of taking the said mortgage of six thousand dollars the said Joseph A. Montague knew that the plaintiff in this cause was a creditor of the said Herbert B. Montague, and that the said Joseph A. Montague, in order that he might assist the said Herbert Montague in making the sale of his stock of goods, wares, merchandise, furniture and fixtures, on to-wit, the twenty-second day of September, 1914, to the parties composing the West Michigan Garage Company, made, executed and delivered to the said parties, the West Michigan Garage Company, an instrument in writing, indemnifying the West Michigan Garage Company from any liability to him under his said mortgage of March 3, 1914, or in other words, releasing the said stock of goods, wares and merchandise, furniture and fixtures from the said mortgage lien, and with full knowledge of all the facts and circumstances connected therewith, thereby intending to release the said stock of goods in order that the said Herbert B. Montague could make a sale thereof, and thereby permitted and assisted the said Herbert B. Montague to sell and deliver the said stock of merchandise, office fixtures and furniture to the said parties composing the West Michigan Garage Company, and to collect the proceeds of said sale. The said indemnifying instrument, the court finds to be a release of the goods, wares and merchandise, office furniture and fixtures from the mortgage lien before sale, or an instrument made with intent to cover the defeats of the illegal sale in fraud of creditors of Herbert B. Montague.- ■
    “6. That several days after the said West Michigan Garage Company had taken possession of the said goods, merchandise, office fixtures and furniture under the said pretended sale so made, the said Joseph A. Montague pretended to repossess himself of the said goods, merchandise, office furniture and fixtures by the pretense of putting his son, one Gerald Montague, in charge of the same at the store of the West Michigan Garage Company, where the said goods were located and kept for sale, and advertised the same for a sale under the chattel mortgage, which pretended sale took place on the fifth day of October, 1914, the day before judgment was taken by David B. Newcomb against Herbert B. Montague in the circuit court for the county of Grand Traverse to recover the said sum of seven hundred sixty-four dollars and ten cents and the costs connected therewith.
    “That on said mortgage sale the said Joseph A. Montague bid in the goods for fourteen hundred and some odd dollars; he did not move them or do anything other than turn them over to the West Michigan Garage Company. No consideration passed for the said sale, but the consideration was the same consideration that -passed between Herbert B. Montague and the said West "Michigan Garage Company, and that on the same day, to wit, October 5, 1914; the said defendant Herbert B. Montague gave another chattel mortgage to the said defendant Joseph A. Montague for six thousand dollars, being the same pretended debt that was mentioned and set forth in the mortgage that the said Joseph A. Montague undertook to foreclose, which mortgage dated October 5th, covered the interest of Herbert B. Montague in the hardware business of J. A. Montague & Son and other property.
    “7. That during the period of time while the chattel mortgage dated March 3, 1914, was. in process of pretended foreclosure by the said Joseph A. Montague, and while his said son, Gerald Montague, pretended to be in charge of the property covered by the same, all of the property enumerated in such mortgage and the premises wherein the same was. located, actually remaining in the full use, possession and control of the said West Michigan Garage Company and the said company, in its own behalf, continued to operate in the premises and use said property from day to day in like manner as though no mortgage were in existence and without any regard for any pretended foreclosure proceedings.
    “8. That under the facts and circumstances in this case the court, finds that the mortgage given by Herbert B. Montague to Joseph A. Montague, on the third day of March, 1914, was a fraud upon the creditors of the said Herbert B. Montague, and was released both as to Herbert B. Montague and the West Michigan Garage Company by means, of the instrument given on September 22, 1914, in the form of an indemnity for the purpose of assisting in the illegal sale as against the creditors of Herbert B. Montague in violation of the “sales in bulk” act. And that if the said Joseph A. Montague was a creditor of the said Herbert B. Montague in good faith in the sum of six thousand dollars, he was protected in the same by his mortgage then secured on the fifth day of October, 1914, for that amount, being the only debt claimed by him, from the said Herbert B. Montague.
    “9. The court finds that the said Herbert B. Montague in executing the mortgage above mentioned to his father, Joseph A. Montague, and in all of his doings relative to the attempted sale of the said goods and property, did not claim nor reserve any exemptions to himself therefrom, and so mortgaged and attempted to sell the whole thereof, and that the release of the said property by the said Joseph A. Montague from said mortgage was of the whole of the goods and merchandise, furniture and fixtures of the Herbert B. Montague business, and that the said Herbert B. Montague made no claim for nor set aside any exemptions and has now no lawful exemptions in the said merchandise and fixtures.
    “In consideration thereof, and on motion of John J. Tweddle and Patchin & Duncan, attorneys for the plaintiff, it is hereby ordered, adjudged and decreed:
    “I.
    “That from and after the date of the attempted sale of the said merchandise, fixtures and furniture, to-wit, September .22, 1914, the said West Michigan Garage Company became receiver of all of the said property, merchandise, furniture and fixtures so conveyed to it, and from and after that date has held the same and been accountable for the same as receiver thereof for the use and benefit of the said plaintiff and the creditors of the said Herbert B. Montague.
    “II.
    “That the said West Michigan Garage Company, as such receiver, is hereby decreed and directed to forthwith deliver to the said David B. Newcomb sufficient of the said property, merchandise, furniture and fixtures to make said sum of seven hundred sixty-four and 10/100 dollars, together with costs taxed in the sum of one hundred twenty-four and 80/100 dollars, and interest accrued and accruing to the date of such payment, and the costs in this suit to be taxed, and that in default thereof, within thirty (80) days after the entry of this decree that the West Michigan Garage Company pay to the said plaintiff, David B. Newcomb, the said sum above mentioned, amounting to eight hundred eighty-eight and 90/100 dollars and interest thereon at the rate of five per cent, from the date of such judgment and that the plaintiff have execution therefor.”
    From this decree defendants appeal.
    Counsel for appellants state their contentions as follows:

      “First This plaintiff was not on September 22, 1914, such a creditor as this act contemplates.

      “Second. If he was such a creditor he is estopped by the course he pursued after the sale by taking a judgment and after exhausting his remedy of law thereon, then bringing his action in equity and pursuing the same course or the same form of action as if no attempt had been made to collect such judgment.

      “Third. That the mortgage of Márch 3, 1914, was a valid lien upon the property sold at the date of sale and that the mortgagee regularly foreclosed the same and acquired the title by such proceedings.

      “Fourth. That subsequent to the 22d day of, September, 1914, the said mortgagee did not by any act of his part with his lien or title to the property involved here until he gave the bill of sale to the purchasers.

      “Fifth. That under plaintiff’s theory in this case, granting a right to recover in this form of action, the value of the property sold to the West Michigan Garage Company that can be designated as merchandise and fixtures did not exceed $400.00. The exact computation of merchandise and equipment for fixtures as computed from the inventory, including the worthless stuff, was $380.57, divided as follows: Shop equipment or fixtures, $194.69; merchandise, $185.88. This statement is not challenged in this record, and is more favorable to the plaintiff than the real facts warrant. R. p. 77.”
   Brooke, J.

(after stating the facts). We are unable to agree with the contention of appellant that the plaintiff is denied the right to attack this conveyance of property in violation of the sales in bulk act because the transfer was made on September 22d and his claim was not reduced to judgment until about two weeks later, October 6th. The rule as stated in 20 Cyc. p. 421 is as follows:

“Existing creditors are, as the words imply, persons having subsisting obligations against the debtor at the time the fraudulent alienation was made or the secret trust created although their claims may not have matured or been reduced to judgment until after such conveyance.” Citing cases.

In the case of Coffey v. McGahey, 181 Mich. 225, this court said:

“We find from the authorities it is not an inflexible rule that a judgment at law must be obtained by a creditor before resort to equity.”

Plaintiff in the case at bar, however, did reduce his claim to judgment and exhausted his legal remedy thereunder before filing his bill. The claim of appellant that in the course taken, plaintiff is following a double remedy is without force. He proceeded in his law case to judgment. Defendant a few days before said judgment was taken transferred his property to the four individuals who afterwards organized the defendant West Michigan Garage Co. in violation of the sales in bulk statute. Plaintiff was not, as suggested by counsel for defendants, obliged at that time to discontinue his suit at law and file his bill in equity, but might very properly continue to judgment in the law case, thus fixing the legal liability of his debtor and then proceed in equity to establish the illegality of the sale which his debtor had recently undertaken to make without complying with the act.

What we have said above applies to the second claim of appellants, but in addition thereto it may be noticed that defendants answered issuably and took proofs upon the merits of the bill. They did not demur to the bill of complaint on jurisdictional grounds. Such an objection comes too late if made for the first time at the hearing of the cause. Coffey v. McGahey, supra, at page 229, and cases cited. See, also, Humiston, Keeling & Co. v. Yore, 181 Mich. 629.

With reference to the third contention the trial court found that the mortgage from son to father bearing date March 3, 1914, was given for a fraudulent purpose and that if any consideration for said mortgage existed it was covered by the mortgage of October 5, 1914, for the same debt; we are of opinion that the evidence fully justifies the opinion of the learned trial judge. It was given but a few days before the trial of the law case which had been pending for some weeks. The entire dealings of the defendants, father and son, with the garage property are such as to indicate a studied attempt on the part of‘both to place those assets beyond the reach of judgment creditors, including the plaintiff.

Touching the fourth contention, we are of opinion that by executing the bond in question the defendant Joseph A. Montague, in effect, released the garage property from the lien created by his mortgage. We have no doubt that the subsequent foreclosure of the mortgage was in furtherance of the general plan to defeat and defraud creditors. It is in evidence, too, that in foreclosing said mortgage the right of the defendant the West Michigan Garage Co. to continue the business was not abridged. A son of defendant Joseph A. Montague was nominally in possession, but the business proceeded as usual.

As to the fifth contention of appellant it may be said that the inventory of equipment and stock sold shows a value of something over $2,300. There is evidence that an exaggerated value was placed upon the stock and equipment, but that this was offset by an over-valuation of the land contract assigned in part payment thereof. There is no dispute that $1,200 of the consideration was paid in cash to the defendant Herbert B. Montague, and this sum is largely in excess of the plaintiff’s claim. It may be noticed in passing that the decree charging the West Michigan Garage Co., as receivers, with the payment of the plaintiff’s unsatisfied judgment will not affect that company by reason of the undertaking of the defendant Joseph A. Montague to hold the purchaser of the garage property harmless by reason of any infirmity of title.

The result reached was proper and the decree is. affirmed.

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


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    RICHARD v. LEE.
    Frauds, Statute of — Written Lease — Ambiguity—Parol Testimony — Guaranty.
    In an action against the guarantors of a lease where the undertaking was, in case of any default, “to pay * * * all rent and arrears thereof that may be due and fully satisfy the conditions and provisions of said instrument and to pay all .damages that may accrue by reason of the nonfulfillment thereof; providing that in no case shall the liability of the undersigned exceed the sum of $2,000,” parol evidence was inadmissible to prove that it was the first $2,000 that was guaranteed; the instrument being unambiguous, plaintiffs were entitled to a directed verdict.
    See note in 17 L. R. A. 270.'
    Error to Jackson; Williams, J.
    Submitted January 14, 1919.
    (Docket No. 32.)
    Decided April 3, 1919.
    Assumpsit by Julia B. Richard and another against James E. Lee and others upon a guaranty for the payment of rent. Judgment for plaintiffs on a directed verdict. Defendants bring error.
    Affirmed.

      Richard Price and Robert A. Smith, for appellants.

      Lyman B. Trumbull, for appellees.

      Plaintiffs are devisees and legatees under the last will and testament of William A. Richard, deceásed, who in his lifetime, through his agent, one Kennedy, executed a lease to the interpleaded defendant, the Jackson Cover & Bag Company, covering a certain building in the city of Jackson. The lease was in writing and on the back of the contract there was indorsed at the time of its execution and delivery the following undertaking, signed by defendants, Lee, Smith and Welcome:
    “In consideration of the letting of the premises in the foregoing instrument described, and for the sum of one dollar, to us paid, we do hereby become sureties for the punctual payment of the rent and performance of the covenants in said instrument mentioned, to be paid and performed by the party of the second part therein named; and if any default shall at any time be made therein, we do hereby promise and agree to pay unto the party of the first part named in said instrument, the said rent and arrears thereof that may be due, and fully satisfy the conditions and covenants of said instrument, and to pay all damages that may occur by reason of the nonfulfillment thereof. Provided, that in no case shall the liability of the undersigned guarantors exceed, the sum of two thousand dollars.
    “Witness, our hands and seals, this........day of ..................19....
    “James E. Lee, (Seal)
    “Robt. A. Smith,
    “L. R. Welcome.”
    Plaintiffs brought suit on the undertaking against the three signers thereof at a time when the inter-pleaded defendant had paid in rent the sum of $2,-381.69 and was in default under the terms of the lease in the sum of $621.64. Defendants entered a plea of the general issue with notice thereunder to the effect that upon the trial they would prove that the words constituting the proviso at the end of said guarantee: “were written into the printed form and signed by this defendant and the other guarantors, it being the intention of all the parties, by the use of those words, that the guarantors thereby guaranteed the payment to the lessor of two thousand dollars ($2,000) of the rent to be paid by the lessee to the said lessor for the term mentioned in the said lease, and said plaintiffs are now putting a wrong construction upon the words of the guaranty, and one which was not in the minds of the parties at the time that the said guaranty was signed.”
    Upon the trial counsel for the defendants claimed that the language of the writing relied upon by plaintiffs was ambiguous and offered proof tending to show that prior to its execution the agent of the then owner who was about to make repairs upon the building in question amounting to upwards of $1,000, insisted that a certain amount of the rent should be guaranteed in case the interpleaded defendant failed to occupy the premises for the term reserved. The court after argument upon the question of ambiguity and the right of the defendants to introduce parol testimony touching the terms- of the agreement, held that the writing in question was unambiguous; that parol testimony was inadmissible to vary its terms and directed a verdict for the plaintiff in the sum of $689.77, that being the amount of unpaid rent with interest, to date of the verdict. Defendants in this court have assigned error-upon both rulings.
   Brooke, J.

(after stating the facts). We find ourselves entirely unable to agree with the contention of defendants’ counsel that the liability of the guarantors is limited by the terms of the contract to the first $2,000 of rent accruing thereunder. The primary liability for the payment of the rent was assumed by the lessee. The obligation of the guarantors is not to pay any particular installment of the rent, but to pay: “said rent and arrears thereof that may be due and fully satisfy the conditions and provisions of said instrument and to pay all- damages that may accrue by reason of the nonfulfillment thereof.”

No liability fell upon the guarantors until default on the part of the lessee but upon such default the liability of the guarantors attached. The only limitation upon defendants’ liability was that it should in no event exceed the sum of $2,000.

We are of opinion that the writing in question is as plain and unambiguous as language can well make it and quite agree with the construction placed thereon by the learned circuit judge. Being unambiguous, it is elementary that parol evidence may not be introduced to vary its terms. We have examined the authorities cited by counsel for defendants and find that they do not affect the conclusion above stated.

The judgment is affirmed.

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


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    PEOPLE v. BENNETT.
    Rape — Chastity—Ase op Consent.
    In a prosecution under 3 Comp. Laws 1915, § 15211, for rape upon a female under the age of 16 years, it is immaterial whether she was previously chaste and whether the act was committed with or without her consent.
    Ersor to Montcalm; Davis, J.
    Submitted January 16, 1919.
    (Docket No. 115.)
    Decided April 3, 1919.

      Clarence Bennett was convicted of the crime of statutory rape, and sentenced to imprisonment for not less than five years nor more than ten years in the Michigan reformatory at Ionia.
    Affirmed.

      Hall & Gillard (George Clapper ton, of counsel), for appellant.
    , Frank A. Miller, Prosecuting Attorney, for the people.
    Defendant was arrested on a warrant charging him with rape under the provisions of section 15211, 3 Comp. Laws .1915, which provides:
    “If any person shall ravish and carnally know any female of the age of sixteen years, or more, by force and against her will, or shall unlawfully and carnally know and abuse any female under the full age of sixteen years, he shall be punished by imprisonment in the State prison for life, or for any such period as the court in its discretion shall direct, and such carnal knowledge shall be deemed complete upon proof of penetration only.”
    On the examination before the justice of the peace it was made to appear that on the 11th day of August, 1917, the date of the commission of the alleged offense, the complaining witness, Hazel M. Luce, was nineteen days less than sixteen years of age. Her testimony as to the commission of the offense given upon direct examination was in part as follows:

      “Q. What did you do after you stayed there and talked for a while?

      “A. He took me into the barn.

      “Q. How did he do it?

      “A. He picked me right up.

      “Q. In what way?

      “A. Took hold of my arms. '

      “Q. Whereabouts in the barn did he take you?

      “A. Over on the hay?

      “Q. In what part of the barn is that?

      “A. North part.

      “Q. What did he say to you when he took you by the arms?

      “A. I don’t remember.

      “Q. What did you say to him?

      “A. I wanted him to leave me alone.

      “Q. What did he say to that?

      “A. I don’t remember what he did say.

      “Q. What else did you say to him?

      “A. I told him I was going to tell papa on him.”
    And upon cross-examination she testified:

      “Q. You say you did not walk back into the barn?

      “A. No, he dragged me.

      “Q. Was you afraid of him?

      “A. Yes.

      “Q. Did you cry?

      “A. Yes, I did.

      “Q. Did you scream?

      “A. I don’t know whether I did or not.

      “Q. You know whether you screamed or not.

      “A. I don’t think I did.”
    Defendant upon the examination was represented by counsel. He was bound over for trial before the circuit court where he was duly arraigned. The reading of the information was by him waived and he pleaded guilty thereto. The trial judge thereupon held a private interview with him in which respondent admitted that he had had sexual intercourse with the complaining witness at the time and place charged in the information and that he knew that she was less than sixteen years of age at that time. He claimed, however, that the complaining witness did not resist and that if she was pregnant as she claimed to be, her unborn child must belong to some one else. The examination before the magistrate occurred on the 15th day of January, 1918, at which time the complaining witness testified that she was pregnant. The proceedings in the circuit court occurred on March 4, 1918, and on the 14th day of March, 1918, the defendant was sentenced to be confined in the Michigan reformatory at Ionia, Michigan, at hard labor for not less than five years and not more than ten years with a recommendation of five years. Defendant was immediately incarcerated in prison where he now is serving the sentence imposed. On August 16, 1918, defendant made a motion, supported by affidavit, in arrest of judgment, and on the same day made a motion for a new trial based upon the following grounds, many of which are set up in the motion in arrest of judgment:
    “1. It appears from the evidence taken at the preliminary examination that the respondent did not commit the offense charged in the complaint, the warrant and the information.

      “2. It appears from’ the records and files of said cause that the respondent was informed against for the crime defined by section 14542, Howell’s Michigan Statutes (2d Ed.), when the offense, if any was committed, was. properly defined by section 14813 Howell’s Michigan Statutes (2d Ed.).
    “3. The plea of the respondent, together with the information conveyed to the court in the private interview, clearly showed that it was not a plea of guilty to the charge set forth in the complaint, warrant and information.

      “4. The sentence of the court was in excess of the sentence allowed by law for the offense, if any, which the respondent had committed.
    “5. There was no proper proof in the case that Hazel Luce was of the age of less than sixteen years.
    “6. There was no allegation in the complaint, warrant, or information that the said Hazel Luce was a girl theretofore chaste, of the age of fourteen years, and not more than sixteen years of age.
    “7. That the said Hazel Luce was at the time of the committing of the alleged offense of the age of more than sixteen years.
    “8. That the said Hazel Luce was not at the time of the commission of the alleged offense a girl theretofore chaste and was not a chaste girl at the time of the alleged offense.
    “This motion is based upon the records and files in said cause and upon the affidavit hereto annexed.”
    Both motions were denied by the learned circuit judge and the case is now in this court upon writ of error.
   Brooke, J.

(after stating the facts). In; the affidavits in support of the motions mentioned it was made to appear that the complaining witness had given birth to no child nor suffered from abortion or miscarriage. From this premise it is argued that the judge in imposing sentence upon respondent proceeded upon an erroneous assumption of fact and that this error is reflected in the severity of the sentence. There seems to be no doubt that at the trial in the circuit court it was believed that the complaining witness was then pregnant and there appears to be no question that such belief was erroneous. It is not apparent, however, how that error can be made available for relief in the present proceeding.

Much stress is placed by counsel upon the legislation affecting this question. The act under which respondent was prosecuted was originally passed in 1887 and is practically identical in phraseology with 3 Comp. Laws 1915, § 15211, with the single exception of the age of consent, which was placed at fourteen in the ’87 act and at sixteen in the amendment of 1895. At the same session at which Act No. 112, Pub. Acts 1887, was passed the legislature passed another act-known as Act No. 143, section 1 of which provides:

“The people, of the State of Michigan enact: That any male person of the age of sixteen years or more who shall carnally know any girl, theretofore chaste, of the age of fourteen years and not more than sixteen years of age, with the consent of such girl, shall, upon conviction thereof, be punished by imprisonment in the State Prison, or the State House of Correction and Reformatory, for a term of not more than five years or in the county jail not more than one year, or by fine of not more than one thousand dollars^but no prosecution shall be commenced under this section after one year from the time of committing the offense.”

By the first of these two acts passed at the same session it was the evident intention of the legislature to make absolutely unlawful sexual intercourse with girls, chaste or unchaste, under the age of fourteen years, with or without consent and to provide severe punishment for the same. By the second act sexual intercourse with girls between the ages of fourteen and sixteen theretofore chaste, with their consent, was prohibited and a lesser punishment provided. The law stood so between the years 1887 and 1895 when by the amendment contained in Act No. 70 of the Public Acts of that year the age of consent was raised to sixteen years, since which time the unchaste girl as well as the chaste girl under sixteen has been unable to legally consent to an act of cohabitation. It was held by the learned circuit judge that the passage of the amendment of 1895 raising the age of consent to sixteen years as to all girls chaste as well as unchaste operated as a repeal of Act No. 143, Pub. Acts 1887, and in this view we agree with him.

If it were important to answer the contention of counsel that the complaining witness consented to the commission of the act it seems to us that a reading of the quotation from her evidence might well negative the assertion that she was a willing participator in the commission of the act. Respondent was a man ten years her senior and was quite able to have imposed his will upon her, but whether the commerce was induced through the exercise of force and against her will or through persuasion and with her consent can make no difference in the result, for under the law she had no legal capacity to give such consent. See People v. Smith, 122 Mich. 284, where it is said:

“The crime is complete, under the statute, whether the intercourse is had with force or by consent. In this case the proof is conclusive that the girl consented, unless it should have been found that she did not possess sufficient mind or intelligence to consent.”

Some argument is made with reference to the word “abuse” in the sentence, “unlawfully and carnally know and abuse,” it being the contention that in this case there is- no proof of rape or abuse. The quotation from People v. Smith, supra, is a sufficient answer to this contention. If it is true as claimed by counsel for respondent that the case is one of peculiar hardship and that the sentence is- excessive, that argument may be presented to the pardoning power of the State which it must be presumed grants relief in all proper cases. The respondent is plainly guilty under the law of the offense charged in the information.

We find no error in the proceedings and the judgment must be affirmed.

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