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    DETROIT NATIONAL BANK v. UNION TRUST CO.

    1. Banks and Banking — Certified Check — Fraud—Burden of Proof.
    In an action against the receiver of an insolvent bank on a fraudulently certified check, the burden is on the plaintiff to show that it is a bona fide holder.
    á. Same — Evidence—Sufficiency.
    In an action against the receiver of an insolvent bank on a fraudulently certified check, evidence examined, and held, sufficient to dispute plaintiff’s prima facie showing of bona fides, and make a case for the jury.
    3. Bills and Notes —Fraudulent Issue —Bona Fide Purchasers — Notice.
    The rule that precludes one from claiming rights as a bona fide purchaser where he had notice of facts that would put an ordinarily prudent man upon inquiry, and failed to take care of his own interests, is not applied to purchasers of commercial paper.
    4. Banks and Banking — Certified Checks — Fraud—Bona Fide Purchaser — Evidence.
    In an action against the receiver of an insolvent bank on a fraudulently certified check, the issue being whether plaintiff purchased the check upon an honest belief of the validity of the certifibation,' any testimony connected with the transaction, naturally raising doubt of such belief, such as knowledge of plaintiff’s officers of the pecuniary standing, methods, and dealings of the drawer of the check and the bank, the volume of similar business done, the terms upon which it was done, whether the transactions were ordinary or usual in their character, and that the business done with the drawer was not communicated to or known by plaintiff’s directors, is admissible.
    5. Same — Trial—Argument—Prejudice.
    In an action against the receiver of an insolvent bank on a fraudulently certified check, the issue being whether plaintiff bank purchased the check upon an honest belief of the validity of the certification, arguments to the jury to the effect that the case was between the stockholders of a bank which had paid $125 for every $100 of stock and the depositors of the insolvent bank, are prejudicial.
    6. Examination of Witnesses —Cross-Examination—Scope of. Direct Examination.
    On the issue whether plaintiff bank is a bona fide holder of commercial paper, its witnesses may be cross-examined at length upon the question of bona fides, though they were not examined upon that subject in the direct examination.
    7. Banks and Banking — Certified Checks — Fraud—Evidence.
    In an action by a bank upon a fraudulently certified check the facts that much more money was advanced to the drawer upon similar checks than plaintiff was authorized to loan, and that usurious interest was charged him, though not invalidating plaintiff’s claim, are admissible on the issue whether the transaction was a legitimate discount of a certified check, or was a mere loan to the maker.
    Error to Wayne; Frazer, J.
    Submitted May 4, 1906.
    (Docket No. 89.)
    Decided September 20, 1906.

      The Detroit National Bank filed its claim with the Union Trust Company, receiver of the City Savings Bank, on certain certified checks, and on disallowance of its claim filed its petition to intervene. An issue was framed and tried on the law side of the court, resulting in judgment for the receiver, and claimant brings error. Reversed.

      Henry A. Harmon (Geer, Williams, Martin & Butler, of counsel), for appellant:
    Unless it can be said that the facts and circumstances constitute something more than a mere basis for guess or conjecture, and that the inference of such notice or knowledge on the part of the appellant is clear, it was the duty of the circuit judge to grant the motion to direct a verdict. Battles v. Laudenslager, 84 Pa. 446; Hamilton v. Vought, 34 N. J. Law, 187; Commercial Bank of Danville v. Burgwyn, 110 N. C. 267; Tescher v. Merea, 118 Ind. 586; Stevens v. McLachlan, 120 Mich; 285; Glines v. State Sav. Bank, 132 Mich. 638.
    Andrews procured most of his checks on the City Savings Bank to be certified before delivering them to appellant. Therefore he remained liable upon them after delivering them to appellant. Oyster & Fish Co. v. Bank, 51 Ohio St. 106; Born v. National Bank, 123 Ind. 78; Minot v. Russ, 156 Mass. 458; Andrews v. National Bank, 56 Tenn. 211; Merchants’ Bank v. State Bank, 10 Wall. (U. S.) 604; Bickford v. National Bank, 42 Ill. 238; Brown v. Leckie, 43 Ill. 497; Metropolitan Nat. Bank of Chicago v. Jones, 137 Ill. 634; Voltz v. National Bank, 158 Ill. 532; Mutual Nat. Bank v. Rotge, 28 La. Ann. 933; Larsen v. Breene, 12 Colo. 480; Gaden v. Savings Bank, L. R. 22 App. Cas. 281.
    Andrews having remained liable upon his certified checks on the City Savings Bank after delivering them to appellant, he had the right to pay them. Any person liable upon negotiable paper has the right to pay it. 2 Daniel on Negotiable Instruments, § 1223.
    If the checks had been legally certified, Andrews would have had the right, after having paid them, to surrender them to the City Savings Bank and have the amount thereof again credited to his account. Buehler v. Galt, 35 Ill. App. 225; Bills v. National Park Bank, 89 N. Y. 343, 98 N. Y. 87.

      Where the interest paid by the borrower is not in excess of the legal rate, the transaction is not usurious, although the lender received from a third party a sum which, if added to that received from the borrower, would make the interest exceed the legal rate. Clarke v. Sheehan, 47 N. Y. 188; McArthur v. Schenck, 31 Wis. 673.
    Usury is a defense which is personal to the borrower,— and perhaps to his privies. Farmers’ & Mechanics’ Bank v. Kimmel, 1 Mich. 84; Sellers v. Botsford, 11 Mich. 59; Gray v. Lumber Co., 128 Mich. 427; Barney v. Surety Co., 131 Mich. 192.
    The phrase, “in the usual course of business,” means “according to the usages and customs of commercial transactions.” 1 Daniel on Negotiable Instruments, § 780; Tiedeman on Commercial Paper, § 294; 1 Parsons on Notes & Bills, p. 256; Tescher v. Merea, 118 Ind. 586; Kellogg v. Curtis, 69 Me. 212; First Nat. Bank of St. Thomas v. Flath, 10 N. Dak. 281.
    Where the holder has given for the note his money, goods, or credits, at the time of receiving it, or has, on account of it, incurred some loss or liability, he is a holder in due course of trade. Bunker on Negotiable Instruments Law, p. 100; Merchants’ Bank v. McClelland, 9 Colo. 608; Kimbro v. Lytle, 10 Yerg. (Tenn.) 417; Miller v. Mayfield, 37 Miss. 688.
    The rights of a holder of negotiable paper are to be measured by the simple test of honesty and good faith. Merritt v. Boyden, 191 Ill. 136; Magee v. Badger, 34 N. Y. 247; Cheever v. Railroad Co., 150 N. Y. 59; Bank of Monongahela Valley v. Weston, 172 N. Y. 259; Tescher v. Merea, 118 Ind. 586; Kellogg v. Curtis, 69 Me. 212_
    _ Where it is established by the uncontradicted evidence that the holder of negotiable paper became the owner in good faith, for value, and without notice or knowledge of any infirmity therein, it is the duty of the trial judge to direct a verdict in his favor. Drovers’ Nat. Bank v. Potvin, 116 Mich. 474; Stevens v. McLachlan, 120 Mich. 285; Shaw, Kendall & Co. v. Brown, 128 Mich. 573; Fredonia Nat. Bank v. Tommei, 131 Mich. 674; Glines v. State Sav. Bank, 132 Mich. 638.
    It was incumbent upon defendant to first show, or introduce evidence having a tendency to show, that the plaintiff is not a bona fide holder of the two checks in suit before introducing evidence of the fraudulent inception of the checks. Drovers’ Nat. Bank v. Blue, 110 Mich. 31; Shaw, Kendall & Co. v. Brown, 128 Mich. 573; Fredonia Nat. Bank v. Tommei, 131 Mich. 674.
    Declarations by officers or agents of banks in respect to past transactions are inadmissible. Goetz v. Bank of Kansas City, 119 U. S. 551; Franklin Bank v. Steward, 37 Me. 519; Franklin Bank v. Cooper, 39 Me. 542; Lime Rock Bank v. Hewett, 52 Me. 531; Pemigewassett Bank v. Rogers, 18 N. H. 255; First Nat. Bank of Lyons v. Ocean Nat. Bank, 60 N. Y. 278; Merchants’ Nat. Bank v. Clark, 139 N. Y. 314; Bank of Northern Liberties v. Davis, 6 Watts & S. (Pa.) 285.
    Publication in a newspaper of a notice of an infirmity or defect concerning a negotiable instrument is not itself constructive notice of such infirmity, and will affect one’s character as a bona fide holder only where it can be shown that he is actually cognizant of such publication. English-American Loan & Trust Co. v. Hiers, 112 Ga. 823; Boyd v. McCann, 10 Md. 118; Kellogg v. French, 15 Gray (Mass.), 354; Clark v. Ricker, 14 N. H. 44; Hagen v. National Bank, 6 Lans. (N. Y.) 490; Beltzhoover v. Blackstock, 3 Watts (Pa.), 20; Goetz v. Bank of Kansas City, 119 U. S. 551.
    The circuit judge erred in permitting counsel for the defendant to make certain improper comments in their arguments to the jury. This court has repeatedly reversed judgments for less flagrant violations of the rule against such tactics. Rutter v. Collins, 96 Mich. 510; Cluett v. Rosenthal, 100 Mich. 193; Britton v. Railroad Co., 118 Mich. 491; Mott v. Railway Co., 120 Mich. 127; Smith v. Jennings, 121 Mich. 393; Potter v. Railway Co., 122 Mich. 205; Selby v. Railway, 122 Mich. 311; Atherton v. De Freeze, 129 Mich. 364; Goodspeed v. Hildebrand, 131 Mich. 375; Ward v. Reed, 134 Mich. 392; Johnson v. Railway Co., 135 Mich. 353; Hillman v. Railway, 137 Mich. 184; Culver v. Railway Co., 144 Mich. 254; Remey v. Railway, 141 Mich. 116.
    Neglect to inquire is not evidence of bad faith unless the circumstances are such that the jury would be warranted in inferring that it was willful, and done with the purpose to avoid the discovery of the facts impeaching the validity of the negotiable paper in question. Schmueckle v. Waters, 125 Ind. 265; Whaley v. Neill, 44 Mo. App. 316; Miller v. Finley, 26 Mich. 249.
    The rule is that gross negligence is not of itself evidence of bad faith, but that bad faith may be inferred from willful negligence. Murray v. Lardner, 2 Wall. (U. S.) 110; Collins v. Gilbert, 94 U. S. 753; Brown v. Spofford, 95 U. S. 474; Frank v. Lilienfeld, 33 Grat. (Va.) 377; Seybel v. National Currency Bank, 54 N. Y. 288; Chapman v. Rose, 56 N. Y. 140; Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 202; Comstock v. Hannah, 76 Ill. 530; Shreeves v. Allen, 79 Ill. 553; Merritt v. Boyden, 191 Ill. 136; Pond v. Agricultural Works, 50 Iowa, 596; Citizens’ Nat. Bank of Baltimore v. Hooper, 47 Md. 88; New Orleans, etc., R. Co. v. Mississippi College, 47 Miss. 560; Davis v. Seeley, 71 Mich. 219; 1 Daniel on Negotiable Instruments, §§ 774, 775. _
    _ This court has several times held that where it is shown that negotiable paper is of fraudulent inception the burden of proof is on the holder to establish his bona fides. Mace v. Kennedy, 68 Mich. 389; Stevens v. McLachlan, 120 Mich. 285; Glines v. State Sav. Bank, 132 Mich. 638.
    However, this court has never defined the limits of "this doctrine. The rule followed by the weight of authority, at least, is that where it is shown that negotiable paper is of fraudulent inception, the burden shifts to the holder to show that he became the owner thereof before maturity, for value, and in the usual course of business, but that when he shows that he is a holder for value, the burden is again shifted to the maker or indorser to show that he had notice or knowledge of the fraud. The reason for casting the burden upon the holder, when it is shown that the paper is of fraudulent inception, is that in such cases experience has shown that the fraudulent payee will transfer the paper to a third person to be enforced. However, it is not likely that an indorsee, cognizant of the fraud, would have paid full value, and where the indorsee shows that he paid full value, the reason for the rule does not exist, and therefore the rule itself should not be applied. Davis v. Bartlett, 12 Ohio St. 541; Tod v. Wick Brothers & Co., 36 Ohio St. 390; Eames v. Crosier, 101 Cal. 263; Kellogg v. Curtis, 69 Me. 212; Market & Fulton Nat. Bank v. Sargent, 85 Me. 349; Jones v. Burden, 56 Mo. App. 199; First Nat. Bank of St. Thomas v. Flath, 10 N. Dak. 281; Hart v. Potter, 4 Duer (N. Y.), 458; Commercial Bank of Danville v. Burgwyn, 110 N. C. 267; Fitch v. Jones, 5 El. & Bl. 238; Carrier v. Cameron, 31 Mich. 378; 1 Daniel on Negotiable Instruments, § 819.

      Bowen, Douglas, Whiting & Murfin (John C. Donnelly, of counsel), for appellee:
    The witness De Graff, whose testimony is relied upon to take the case from the jury in favor of the plaintiff, was an interested witness. The rule is well settled that the court and jury are not bound to accept unqualifiedly the testimony of an interested witness. On the contrary, under the rule referred to, the jury are at liberty to disregard and disbelieve the testimony of an interested witness, and especially is that so where the witness is the-party more or less responsible for the transaction and whose action would be subject to criticism and condemnation should the party in whose behalf he testifies and for whom he acted fail in the litigation. Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191; Elwood v. Telegraph Co., 45 N. Y. 549; Honegger v. Wettstein, 94 N. Y. 353; Stilwell v. Carpenter, 2 Abb. New Cas. (N. Y.) 239; Kavanagh v. Wilson, 70 N. Y. 177; Union Trust Co. v. Preston Nat. Bank, 136 Mich. 460; Peirson v. McNeal, 137 Mich. 173-177; Iowa Nat. Bank of Ottumwa v. Sherman, 17 S. Dak. 396; Pelly v. Onderdonk, 61 Hun (N. Y.), 314; Bookheim v. Alexander, 64 Hun (N. Y.), 458; Vosburgh v. Diefendorf, 119 N. Y. 357; Merchants’ Nat. Bank of Binghamton v. Tracy, 77 Hun (N. Y.), 443; Miller v. Boyer, 79 Hun (N. Y.), 131; Kingsland Land Co. v. Newman, 1 App. Div. (N. Y.) 1; Tracey v. Town of Phelps, 22 Fed. 634; Quock Ting v. U. S., 140 U. S. 417; Joy v. Diefendorf, 130 N. Y. 6; Woodin v. Durfee, 46 Mich. 437; Brand v. Johnrowe, 60 Mich. 310; Trinity County Lumber Co. v. Denham, 88 Tex. 303.
    The credibility of a witness is solely a question for the jury. See Perrott v. Shearer, 17 Mich. 48; Sheahan v. Barry, 27 Mich. 217; Blackwood v. Brown, 33 Mich. 104; Elliott v. Van Buren, 33 Mich. 49; Hayes v. Homer, 36 Mich. 374; Richards v. Fuller, 38 Mich. 657; Nicholson v. Dyer, 45 Mich. 610; Mawich v. Elsey, 47 Mich. 10; Tallon v. Mining Co., 55 Mich. 148; Davis v. Gerber, 69 Mich. 353.
    The jury were entitled to consider the illegality of the loans to Andrews and the fact that usurious interest was charged thereon on the question whether the paper was. taken in good faith and in the usual course of business. Saltmarsh v. Tuthill, 13 Ala. 410. And see, also: Saltmarsh v. P. & M. Bank, 14 Ala. 679; Carlisle v. Hill, 16 Ala. 406; Smith v. Lehman, 85 Ala. 394; Wailes v. Couch, 75 Ala. 134; McCall v. Rogers, 77 Ala. 349; Hart v. Adler, 109 Ala. 469; Ramsdell v. Morgan, 16 Wend. (N. Y.) 574; 1 Daniel on Negotiable Instruments, § 751; Eastman v. Shaw, 65 N. Y. 522; Rodecker v. Littauer, 59 Fed. 857; Hamill v. Mason, 51 Ill. 488; Bock v. Lauman, 24 Pa. 444; Eaton & Gilbert on Commercial Paper, p. 306; Sweet v. Chapman, 7 Hun (N. Y.), 579; Edwards on Bills and Notes (3d Ed.), p. 372; Norton on Bills and Notes (3d Ed.), p. 242; Powell v. Waters, 17 Johns. (N. Y.) 177; Powell v. Waters, 8 Cow. (N. Y.) 669; Clark v. Sisson, 22 N. Y. 315; Wood’s Byles on Bills and Notes, p. 466; Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191; Hall v. Wilson, 16 Barb. (N. Y.) 550; Bank of Monongahela Valley v. Weston, 172 N. Y. 259; Baily v. Smith, 14 Ohio St. 396; Munn v. Commission Co., 15 Johns. (N. Y.) 44.
    The jury were justified in finding that plaintiff did not take the checks in suit “in the usual course of business” and consequently were justified, under the testimony, in finding a verdict for defendant. Union Trust Co. v. Preston Nat. Bank, 136 Mich. 460; Roberts v. Hall, 37 Conn. 205; Merriam v. Granite Bank, 8 Gray (Mass.), 254; Crosby v. Grant, 36 N. H. 273; Merchants’ Bank v. State Bank, 10 Wall. (U. S.) 604; Mussey v. Eagle Bank, 9 Metc. (Mass.) 306; Dorsey v. Abrams, 85 Pa. 299.

       Rehearing denied November 7, 1906.

   Hooker, J.

The City Savings Bank of Detroit closed its doors and went into the hands of a receiver, owing to the failure of its vice president, Frank C. Andrews. The Detroit National Bank filed a claim against it, based upon two checks, drawn by Andrews, certified by the assistant cashier of the city bank, and discounted by Andrews at the Detroit National Bank. The case was tried by a jury, a verdict was found for the defendant, and the claimant has appealed.

The case must ultimately turn upon the bona fides of claimant’s purchase of the checks, and as the more important assignments of error relate to that question, we will discuss it first.

1. It is not disputed that the certificates were fraudulent, being made when Andrews had no funds in the city bank, and it was incumbent upon the plaintiff to show that it was a bona fide holder. See Thompson v. Village of Mecosta, 127 Mich. 528, and cases cited, 141 Mich. 175. The claimant made a prima facie showing, by the testimony of its officers, that they took this paper for value, and in good faith, honestly believing that the drawer had an adequate deposit in the city bank at the time of the certification, and it is claimed that this testimony was not disputed, and therefore that the court erred in refusing to direct a verdict for the plaintiff. This point is well taken, provided there is no testimony contradictory to that mentioned.

Defendant’s counsel say that there is such testimony, and we will allude to it in a general way. The assistant cashier of the city bank, on cross-examination (which we may parenthetically remark was, in our opinion, opportune and proper), testified to the fraudulent character of the certification. De Graff, claimant’s cashier, who discounted these checks, testified at length, upon cross-examination, that during November and December, 1901, and January and February, 1902, the claimant received from Frank C. Andrews many of his checks certified by the city bank, some of which were paid, through the clearing house, others being withheld from clearings for a day or so, at Andrews’ request, and some taken care of otherwise by him, and that in such cases interest or a bonus was charged him by claimant. Of the latter class, the aggregate in January was $1,311,000, those that went through the clearing house amount to $1,236,000. There were 21 of these checks, in both classes. The total amount of certified checks was $6,220,000. Drafts on New York being given for some or all of these checks, interest was charged as upon a loan up to the time of payment of the check. It is claimed that these charges were usurious and furnished a motive for these transactions. During the same time Andrews was drawing large checks upon the Detroit National Bank (overdrawing his account largely) in favor of the city bank, and it was claimed by counsel that this was a pernicious practice, known to banks as “kiting checks,” and must have been known and acquiesced in by the claimant; that Andrews’ practice of overdrawing upon claimant continued until he was notified that he must not do it, without advising claimant. It was further shown that plaintiff’s cashier knew that Andrews was speculating in stocks during this time, and had heard that he lost some money on Amalgamated copper, which the claimant was taking as collateral, and may have known of its value. The cashier testified that his assistant cashier criticised the method of doing business with Andrews.

On behalf of the defendant, Andrews testified that he asked that the checks be withheld for the reason that the bank had not the money to pay them. He further stated that he was requested to get the checks certified. Claimant’s assistant cashier testified to cautioning the cashier against the business being done with Andrews, and on one occasion the cashier said he wondered whether a given certificate was bona fide.

It is a general rule applicable to transactions not involving commercial paper, that where one has notice of facts which would put an ordinarily prudent man upon inquiry, he cannot be considered a bona fide purchaser, if he neglect to take such care of his own interests as an ordinarily prudent man would do, but that rule has not been applied to commercial paper. In National Bank of Republic v. Young, 41 N. J. Eq. 531, the court said:

“ The transaction upon which this conclusion was based was as follows: By the testimony of Buckley, who was the vice president of the bank and personally acted for the bank in negotiating the loan of December 31st, it appears that on the 28th or 29th of December, in an interview with the president of the crucible company, the latter told him that Eowler, Crampton & Co. held some $600,000 of borrowed paper of the crucible company. Upon this tesmony the vice chancellor remarked that ‘ the notice was amply sufficient to put him upon inquiry; it was such as would have led a prudent man, taking reasonable care of his own interests, to make further inquiry.’ And in the statement of the principle by which his judgment should be governed, the vice chancellor laid down the doctrine of the law to be that ‘ notice or knowledge, in this connection, does not mean that the maker of the paper must bring home to its holder actual knowledge of the infirmity which renders the paper valueless, but it will be sufficient if it is shown that he had the means of knowledge; that is, that he had notice of such facts as would have led a prudent man to further inquiry, which inquiry, if pursued, would have disclosed the infirmity of the paper.’
“This statement of the doctrine of notice in its effect with respect to the bona fide character of a transaction, as a general rule, is undoubtedly correct; but it is inapplicable to negotiable commercial paper, which, in virtue of its commercial character, and the need of sustaining its negotiable quality, cannot be impeached in the hands of a subsequent holder taking it for value before maturity, unless his title was acquired Under such circumstances as show actual fraud in the party so taking it.
“ In Gill v. Gubitt, 3 Barn. & Cress. 466, the court of king’s bench held that the title of the holder of commercial paper was impeached so as to let in defenses to which such paper would have been subject in the hands of the original party, where it appeared that he had taken it under circumstances ‘ which ought to have excited the suspicion of a prudent and careful man.’ But the doctrine of that case has been overruled in England and in the Supreme Court of the United States, and generally in the courts of sister States. Goodman v. Harvey, 4 Adol. & El. 870; Goodman v. Simonds, 20 How. (U. S.) 343; Murray v. Gardner, 2 Wall. (U. S.) 110; 1 Daniel on Negotiable Instruments, § 775.”

We have held several times that notice of facts which would be sufficient to arouse the suspicion of an ordinarily prudent man is not enough to preclude good faith in a purchase. It is a matter of mala fides. Stevens v. McLachlan, 120 Mich. 290; Fredonia Nat. Bank v. Tommei, 131 Mich. 674; Glines v. State Sav. Bank, 132 Mich. 638; Thompson v. Village of Mecosta, 141 Mich. 175.

A learned discussion of the subject will be found in the case of Jones v. Gordon, L. R. 2 App. Cas. 627, where Lord Blackburn, rendering the opinion, is reported to have said:

“I should be extremely sorry to say anything which should cast doubt upon the principle that a bill of exchange, or a negotiable instrument of that sort, is negotiable to the fullest extent of its kind. The negotiation of these bills of exchange, in a mercantile country like this, is of very great value. * * *
“Farther, my Lords, I think it is right to say that I consider it to be fully and thoroughly established that if value be given for a bill of exchange, it is not enough to show that there was carelessness, negligence, or foolishness in not suspecting that the bill was wrong, when there were circumstances which might have led a man to suspect that. All these are matters which tend to show that there was dishonesty in not doing it, but they do not in themselves make a defense to an action upon a bill of exchange. I take it that in order to make such a defense, whether, in the case of a party who is solvent and sui juris, or when it is sought to be proved against the estate of a bankrupt, it is necessary to show that the person who gave value for the bill, whether the value given be great or small, was affected with notice that there was something wrong about it when he took it. I do not think it is necessary that he should have notice of what the particular wrong was. If a man, knowing that the bill was in the hands of a person who had no right to it, should happen to think that perhaps the man had stolen it, when if he had known the real truth he would have found, not that the man had stolen it, but that he had obtained it by false pretenses, I think that would not make any difference, if he knew that there was something wrong about it and took it. If he takes it in that way he takes it at his peril.
“ But then I think that such evidence of carelessness or blindness as I have referred to may, with other evidence, be good evidence upon the question which,. I take it, is the real one, whether he did know that there was something wrong in it. If he was (if I may use the phrase) honestly blundering and careless, and so took a bill of exchange 'or a bank note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer, or a stupid man, but because he thought in his own secret mind — I suspect there is something wrong, and if I ask questions and make further inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover — I think that is dishonesty. I think, my Lords, that that is established not only by good sense and reason, but by the authority of the cases themselves.”

See Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191 (10 L. R. A. 676), and our own case of Goodrich v. McDonald, 77 Mich. 486, where it is held that bad faith may be inferred from testimony not direct nor positive, proof of those kinds being frequently unobtainable. See, also, Peirson v. McNeal, 137 Mich. 173-177, and cases cited. There are many similar cases, some of which will be found in the briefs.

Were this question before us in an equity case, upon the merits, we should necessarily consider the weight of the testimony pro and con. Upon this record we can only determine whether the circumstances, taken together, tend to show mala fides, whether a jury might legitimately find from them that the plaintiff’s cashier did have a suspicion that this was a fraudulent certification, and “refrained from making inquiry lest he should know that it was so,” and therefore properly a question for the jury. The burden being upon the plaintiff to establish bona fides (see Thompson v. Village of Mecosta, 127 Mich. 522, 141 Mich. 175), the question was one for the jury, if plaintiff’s testimony was contradicted. We think that it was disputed by circumstances having a tendency to show grounds of suspicion at least, and of a character which made the subject a question for the jury, justifying a verdict for the defendant, if the circumstances shown convinced them that plaintiff’s cashier did not entertain an honest belief that Andrews had the requisite deposit at the time of the purchase. The crucial question being whether the checks were purchased upon an honest belief of the validity of the certification, any testimony connected with the transaction, naturally raising doubt of such belief, was admissible. It was competent to show the knowledge of plaintiff’s officers as to the pecuniary standing, methods, and dealings of Andrews and the City Savings Bank, the volume of similar business done, and the terms upon which it was done, and whether transactions were ordinary or usual in their character. It was proper to show that the business done with Andrews was not cqmmunicated to or known by plaintiff’s directors.

The plaintiff had a right to a fair, temperate, and impartial consideration of the question, whether its cashier discounted these checks in the honest belief that Andrews had a deposit in the city bank at the time, equal in amount to the checks. That is all there was of the case. It was not a question depending upon the condition of the plaintiff bank, or whether, when its business was closed up, its stockholders received #125 for each share of stock. Based on a question merely (for the witness did not answer it in the affirmative, and for that matter it would have been no better had he done so), counsel for the defendant argued that the bank had paid its stockholders 120 cents on the dollar, or more. He said:

“ This controversy is not between the Detroit National Bank and the Union Trust Company; the question for you to determine is whether these stockholders of the bank which was wound up and paid its stockholders 120 cents on the dollar, or more than that, so far, or the depositors of the City Savings Bank are going to get this money that is now here in litigation. * * *
“And the testimony shows that the stockholders of that bank had received for every #100 worth of stock #120 at least before this suit was brought; in other'words—
Mr. Geer: I desire to take an exception to that. .
“Mr. Whiting: I thought that would come. That is, for the million dollars of stock that they originally had in that bank, before commencement of this suit, they had received $1,200,000, and there is more to come, because it has not been wound up. Of course he will object to it. And that came from that reliable witness, Mr. De Graff—
“Mr. Geer: I think I have aright to take an exception.
“Mr. Whiting: Certainly he has a right to make objection, and I have a right to comment on it.
“The Court: Note an exception to it.
“Mr. Whiting: Let him make all the objections he wants. I tell you the testimony is just as I say. Mr. De-Graff told me, and if counsel had listened, he would have heard it, that the stockholders received at least $120 for every $100 they had of stock of the bank. So that, if the suit is brought in the name of the Detroit National Bank, it is brought by those who are to benefit by it, and those are the stockholders in that bank. It is brought against the receiver of the City Savings Bank, not against the bank but against the receiver, because under the State law the commissioner of banking caused to be appointed a receiver for the City Savings Bank, when he found that through Andrews it was necessary to put it out of business. The receiver represents not alone the stockholders but he represents the depositors, the savings depositors and the commercial depositors of the City Savings Bank, and on the 10th of February, 1902, when this bank’s doors were closed, the depositors of the City Savings Bank held claims against that bank for money which the bank had had of about $3,000,000. Of those about 1,600,000 or 1,700,000 were savings depositors, the rest, about 1,400,000 or 1,500,000 were commercial depositors. Those are the people whom this receiver represents and who are really in fact the defendants in this case.
“Mr. Geer: To that I object.
“Mr. Whiting: The depositors of the City Savings Bank—
“ Mr. Geer: I desire to object to that argumont, because it is wholly immaterial to this issue.
“ The Court: Note an exception.
“ Mr. .Whiting: The stockholders of the City Savings Bank; and when the depositors are paid in full, when the depositors get that three million dollars and they get the expenses of the receivership paid, then the stockholders of the City Savings Bank are going to get something, but not until then. That is the condition as it exists, and that is the actual circumstance under which this suit is brought. What is it brought for ? To recover on two checks drawn by Frank C. Andrews on the City Savings Bank and claimed to have been certified by the City Savings Bank. Mind that word certified means what this man Schrage did by writing on the face of the check. Let me take the checks.
“Mr. Geer: I have not got them. [Mr. Harmon hands papers.]
“Mr. Whiting: That is what that means when we say certified, it applies to ‘Good, Schrage, Teller.’ Look at that and at the other one. There is nothing magical about that. That was all that there was meant by certification, that little expression, ‘ Good, Schrage, Teller.’ They seek to recover from this City Savings Bank, or from the receiver of the City Savings Bank, the amount of these two checks, and they say it is #160,000. Of course, you would not know it, or I would not know it if we looked at the papers, because the papers are for $100,000 and for $110,000, and they pretend to claim that there has been $50,000 paid on one of them, and that there is only $60,000 due on it. That is the one there. They want to receive from your hands, from this bank — a verdict against that bank for $160,000, and 5 per cent, interest for three years.
“Mr. Geer: To that I take an exception.
Mr. Whiting: There is about $8,000 a year of interest besides the face of these checks. The legal rate of interest in this State happens to be 5 per cent., and the interest on this $160,000 at the legal rate is what they seek to recover at your hands; if they don’t, I want to know it; counsel has objected to it, but when he gets up to tell you about it he will tell you that they want the $160,000 and interest, and that is about $8,000 a year, and if you give it for three years, that is for $24,000 more than the face of these checks, making it $184,000, that they are after, before these $3,000,000 of depositors get anything.”

We have seen that the rule is not different where the claim is against the estate of a bankrupt, than in other cases. See Jones v. Gordon, L. R. 2 App. Cas. 627, and it would shock the sense of justice of any impartial person, should this court announce the doctrine that the jury were at liberty to determine that the plaintiff should not recover, for the reason that it was solvent, while the creditors of the city bank were poor. It would have been error had the trial judge said so. Yet this is the idea running through the argument. Counsel are officers of court. They are learned in the law. They have the opportunity of acquiring a high appreciation of fairness and justice. They should not have made such unfair argument to the jury. The courts, and men whose interests are before the courts, have a right to have cases tried fairly, and that appeals calculated to arouse the sympathies and prejudices of jurors, who do not as a rule discriminate closely when the opportunity offers to bestow charity at the expense of litigants, be not made. If counsel cannot restrain themselves from making unfair appeals we have no alternative but to set aside the verdicts thus obtained, and we owe it to the cause of common justice to severely condemn the practice, whether it is the result of undue excitement and zeal merely, which palliates it, or to a deliberate premeditated intention to obtain an undue advantage. We have spoken more plainly and at length upon this subject than we have ordinarily done, not because the arguments of counsel in this case have exceeded in impropriety those made in many other cases, but because of the necessity arising from abuses, the' increase of which comments heretofore made have proven inadequate to check. We have attempted to stigmatize the practice as it deserves, and as every practitioner looks upon it, when he is made its victim, with a view to its correction, to which every circuit judge should be assiduous, and in which we bespeak the moral support of the members of the bar, who are personally quite as much interested as the judges can be.

There are many assignments of error which we must of. necessity omit to discuss at length. We cover many of them when we say that it was competent for the defense to show the prior transactions of the parties, and plaintiff’s knowledge of Andrews’ pecuniary circumstances, business, and methods of doing business.

We think it was competent for counsel for the defendant to cross-examine at length the witnesses of the plaintiff upon the question of bona fides, though they were not examined upon that subject in the direct examination. We have no doubt that the record is much larger than it need have been, and that much of the testimony was of little value and might have been properly omitted upon the trial, but this did not necessarily amount to a cause for reversal. Comment was made on the fact that much more money was advanced to Andrews, on the certified checks, than the bank was authorized to loan. That certainly did not of itself invalidate plaintiff’s claim, nor, did any usurious charges made, but if, as appears to be claimed, these transactions were really loans to Andrews, instead of a legitimate discounting of certified checks,' they were circumstances to be considered upon the main question.

It was proper to impeach De Graff by the testimony of Stewart. It was also competent to show by Stewart, as part of the res gestee, that at the time of taking a certified check De Graff expressed doubt of its validity, if such was the proof. It would of course be incompetent to show admissions of De Graff as such.

We think that it was competent to offer evidence tending to show printed official statements of the city bank, brought to the knowledge of the plaintiff’s officers, containing an item of only $10,000 of certified checks, when plaintiff’s officers must have known that it held a much greater amount of such checks at the time.

We think it unnecessary to refer to the assignments of error upon the charge, as the discussion of the other assignments will suffice.

The judgment is reversed, and a new trial ordered.

McAlvay, Blair, Montgomery, and Ostrander, JJ., concurred.


source: Caselaw Access Project

author: Hooker, J.

license: Public Domain

text:
    THIEL DETECTIVE SERVICE CO. v. SEAVEY.
    Principal and Agent — Unauthorized Contract — Ratification —Evidence—Sufficiency.
    In assumpsit to recover for services performed at the request of defendant’s son, in auditing the books of defendant’s business, being conducted by a manager, evidence examined, and held, to support findings that the son had no authority to bind defendant by such a contract, and that the manager did not ratify it since he had no knowledge that the work was being done under a contract ostensibly on behalf of defendant.
    Error to Emmet; Shepherd, J.
    Submitted May 8, 1906.
    (Docket No. 119.)
    Decided September 20, 1906.
    Assumpsit by the Thiel Detective Service Company against Amy R. Seavey for work and labor. There was judgment for defendant, and plaintiff brings error.
    Affirmed.

      Clare J. Leroy (Charles B. Obermeyer and Dunnebacke & Montgomery, of counsel), for appellant.

      Halstead & Halstead, for appellee.
   Hooker, J.

Amy R. Seavey was the owner of a stock of goods, and did business in Fort Wayne, Ind., under the name of “The Seavey Hardware Company.” She gave no personal attention to the business, which was in charge of Carl J. Weber, as manager. Her son, Walter Seavey, was employed in the business, having charge of the metal working department, but no authority to control or manage the business of the concern. Being at variance with Weber, and perhaps suspicious of his honesty, he contracted with the plaintiff to make an audit of the books of the concern and make a report, which was done, and this action was brought to recover compensation therefor at the agreed rate. The cause was tried without a jury, findings being filed and judgment rendered for the defendant. Plaintiff has appealed.

Plaintiff contends (1) that the undisputed evidence Shows that Walter Seavey was held out to the public by Mrs. Seavey and Weber as her general agent with authority io bind her in any transaction that might be necessary or proper and usual in the ordinary course of a business like hers; (2) that the work was done in the store, with full knowledge of Weber and of Randall, her attorney and adviser, and the contract made by Seavey was ratified. The learned circuit judge did not agree with either of these claims in his conclusion upon the facts. Our examination convinces us that the undisputed evidence does not show a holding out of Walter Seavey as a general agent or as one having any authority to make the alleged contract on the part of his mother. The finding states that the fact that his name appeared in the city directory as assistant manager of this concern did not come to the knowledge of the plaintiff previous to the making or performance of the contract. The finding also states that ¿here was no ratification of the contract by Weber, and that Randall had no authority to ratify it. We think the testimony supports these findings. It is true that the work was done with the knowledge and assistance of Weber, but the evidence justifies the conclusion that he had no knowledge that it was being done under a contract ostensibly on behalf of defendant, but that plaintiff was hired by Walter, to whom it must look. His findings must be accepted as conclusive.

It is unnecessary to discuss the testimony at length, as the merits are not before us. Referring to some of the legal questions argued, we may say as there was no holding out of Walter Seavey to the plaintiff as one having authority, and no reliance on any act of defendant or Weber upon which they had a right to rely, the authorities upon that subject become unimportant.

The judgment is affirmed.

Carpenter, C. J., and McAlvay, Blair, and Moore, JJ., concurred.


author: Moore, J.

text:
    CHAMPION v. GRAND RAPIDS, GRAND HAVEN & MUSKEGON RAILWAY CO.
    1. Appeal and Error — Chancery Appeal —Questions Considered — J urisdiction.
    Where a defendant in chancery invokes the jurisdiction of the court by filing an answer in the nature of a cross-bill, praying affirmative relief, and complainant appeals from a decree dismissing the bill and granting the relief prayed by the cross-bill, defendant, not having appealed, cannot urge that chancery has no jurisdiction because complainant has an adequate remedy at law, and the pleadings and proofs show that the amount in controversy is less than $100.
    2. Reformation of Instruments — Equity—Conditional Relief.
    Relief by way of reforming a deed of right of way to correct an ambiguity in the description will only be granted a railroad company on condition that it perform an agreement on its part, made in consideration of the deed, that it will maintain a farm crossing, drains, etc., and move the grantor’s house.
    Appeal from Ottawa; Padgham, J.
    Submitted May 8, 1906.
    (Docket No. 115.)
    Decided September 20, 1906.
    Bill by Helen Champion against the Grand Rapids, Grand Haven & Muskegon Railway Company to enjoin the construction of a road on complainant’s premises. Defendant filed an answer in the nature of a cross-bill praying for reformation of a deed. From a decree dismissing the bill and granting the prayer of the cross-bill, complainant appeals.
    Modified.

      Turner & Turner, for complainant.

      Carroll, Kirwin & Hollway, for defendant.
   Moore, J.

This is an injunction bill to which defendant answered generally and also filed an answer in the nature of a cross-bill. The court below dismissed the original bill and granted the relief prayed for in the cross-bill. The complainant has appealed; the defendant has not appealed.

The record discloses that in March, 1901, complainant made to defendant a deed reading in part as follows:

“The said party of the first part for and in consideration of the sum of five hundred dollars to her in hand paid by the said party of the second part, the receipt whereof is hereby confessed and acknowledged, does by these presents, grant, bargain, sell, remise, release, alien and confirm unto the said party of the second part and its successors and assigns a strip of land 33 feet in width over and across the east half of the southeast quarter of section 1, town. 7 north, range 13 west, extending from the southeast corner of said section 1, northwesterly in a direct line to a point on the west line of said east half of southeast quarter, where the north line of the State road would intersect the south line of said strip, being in the township of Tallmadge, county of Ottawa and State of Michigan; .said strip of land to extend 16 and one-half feet on either side of the center line of said railroad as now located, diagonally across said described premises.”

At the same time, and as part of the consideration for the deed, a contract was given to complainant wherein defendant agreed:

“First. To fence both sides of the right of way as granted. Second. To furnish, one farm crossing, with suitable gates, and also provide drain along the right of way. Third. To move house and place the same in as good condition as at present, also to provide a cellar as now. Fourth. House to be moved to a point selected by Mrs. Champion, same not to exceed 12 rods from present location.”

It is the claim of complainant that defendant did not perform the terms of this agreement. It is also her claim that, instead of building the road upon the land described in the deed, it was built about 40 feet north of said description at the southeast corner of her land. It is her claim that she is without adequate remedy at law, and in addition to her prayer for an injunction she prayed for such other and further relief as shall be proper. This proceeding was not begun until the road was nearly completed. In defendant’s cross-bill it is alleged that, when the deed was given, a survey of the line of the road across complainant’s premises had been made, that the road was in fact constructed upon the line of that survey, that the description in the deed is ambiguous, and prayed that it might be corrected.

It is urged in the brief of defendant that under the pleadings and proofs the amount at issue is less than f 100 and the court is without jurisdiction. It is also said complainant has an adequate remedy at law and for that reason complainant’s bill of complaint should be dismissed. It is a sufficient answer to these suggestions to say that defendant has seen fit to invoke the jurisdiction of the court by its answer in the nature of a cross-bill in which it asks for affirmative relief, and in accordance with which prayer the court has granted a decree in its favor from which defendant has not appealed. Its action has brought before the court the parties to the controversy and the. subject-matter.

The testimony is somewhat contradictory as to the line of the survey at the time the deed was made. We agree,, however, with the lower court, that the road was constructed upon the line as it then existed, and that there is ambiguity in the description contained in the deed which ought to be corrected. It is not equitable, however, that a decree should be made in favor of defendant until it has performed the agreement made upon its part which was part of the consideration for the deed. This it has not done. As the parties and the subject-matter are before the court, a final disposition of the case should be made. See Koch v. Sumner, ante, 358, and the many cases cited therein.

The decree will be modified so as to require defendant to perform within a reasonable time its contract with complainant. If the parties cannot agree upon the time, it will be fixed by the court upon the settlement of the decree. Complainant will recover costs.

Carpenter, C. J., and McAlvay, Blair, and Hooker, JJ., concurred.


text:
    TURNER v. ANGUS.

      1. Boundaries — Establishment—Agreement of Parties.
    Where there is no disputed boundary at the time of selling a part qf a tract, the fact that the vendor points out a line different from that described by the deed as the boundary between the land sold and that remaining will not operate, as against a purchaser of a remaining lot, to convey to the purchaser more land than is covered by his deed.
    3. Same — Evidence—Question for Jury.
    In ejectment to determine the true boundary between two tracts of land, evidence examined, and held, to make a case for the jury on the proper location of the boundaries of the lots upon the ground.
    Error to Kent; Perkins, J.
    Submitted June 6, 1906.
    (Docket No. 5.)
    Decided September 20, 1906.
    Ejectment by Henry Turner and another against James A. Angus and another. There was judgment for plaintiffs on a verdict directed by the court, and defendants bring error.
    Reversed.

      J. T. Preston, for appellants.

      Smedley & Corwin, for appellees.
   Hooker, J.

The accompanying plat will servé to show the premises in dispute. They are the land between the dotted and the dark lines and running easterly and westerly, in close proximity to each other, between the land marked “ Turner ” and Angus,” respectively. The action is ejectment, and plaintiffs recovered a verdict for the land between said lines, by direction of the court — and defendants have brought the cause to this court by writ of error.

In 1890 the premises now owned by both parties were included in lots 1 and 3, block 6, of Large’s Cable Road Addition to the city of Grand Rapids, which lots were the property of Julius Houseman. They were then vacant, and in the spring of that year he sold the south half of said lots to the defendant James S. Angus, on contract, and built a house for him near a line upon the north thereof, which Angus testified that Houseman pointed

out, and caused to be marked by two stakes as the north line of the parcel contracted. The land purchased by Angus was described as the south half of lots 1 and 2. He received a deed in 1899. In 1892, Hattie M. Amberg, sole heir of Houseman, sold the north half of lots 1 and 2 to Adele Fox. In 1893 she conveyed to Sowerby, and he conveyed to the plaintiffs in 1902. A house was built by Fox. A controversy arose over the boundary between the parties to this action, and that dispute is before us. There is no question of adverse possession, the two questions to be examined being, first, whether plaintiffs are right in their claim as to the true boundary; second, whether the boundary was settled by the line pointed out by Houseman. The circuit judge stated that the testimony showed that there was no disputed boundary at the time that Houseman drove stakes or pointed out the line to Angus, and that, therefore, if such line so pointed out was not in fact the correct one, according to the description in the deeds, although found at the time by an actual survey, the law applied sometimes to settlements of disputed boundaries and subsequent occupancy could not apply, and that the statute of frauds would preclude the claim that the parcel in dispute was covered by the deed, not being described, and that nothing short of the period of the statute of limitations could give defendants title by adverse possession. The case of De Long v. Baldwin, 111 Mich. 466, so conclusively supports this holding that we need not say more about it. See, also, Olin v. Henderson, 120 Mich. 149.

The remaining question relates to the true boundary of the land, as described. Ünder their deeds, the parties are entitled to portions of the north and south halves of these lots, respectively; their line being the line between said halves. Defendants claim that the question of location should have been submitted to the jury, as a disputed one; plaintiffs assert that the testimony was conclusive in their favor. The learned circuit judge correctly said that a division of the lots as originally staked into equal parts, would fix the true line, and that under the theory of the defendants the line pointed out by Houseman failed to so divide the lots, and therefore throws no light upon the subject. The plaintiffs offered testimony, showing that the north line of these lots was at a certain place. Without entering into a statement of the testimony, we may say that it was proper and convincing testimony that he found the correct line of the street, lying to the north of. the premises, at two points — one to the east and one to the west of block 6 — and onr understanding is that there is no testimony that disputes him in this particular. To ascertain the street line at the north of block 6, he ran aline between these points, and found it to coincide, not only with the platted distance from the section line, but also within an inch of the distance at which the street curb was actually laid. The only testimony which is inconsistent with this is that of a man, who, as an employe of the city, fixed the line for laying the curb, and he testified that when he did so there was a stake near that point which was 14 inches north from the straight line referred to. He also testified that there were a number of stakes about there, that he did not know what any of them were, though this looked like an old stake. In the course of his cross-examination he said that he found a stake (as already stated) at (or near) the northwest corner of lot 1, that therefrom, and in a line with each other, extended a line of stakes, both east and west, to the monuments on Diamond and East streets, where the monuments are not in dispute, though the effect of this was to make an angle in the south line of the street at that point, which the plat did not show, that the distance from a straight line between Diamond and East streets and the stake first mentioned was 14i inches, and that the stakes were disregarded, and when the curb was laid, it was placed in the line as straightened 14i inches to the south of the stake at the northwest corner of lot 1. The evidence justifies the conclusion that this still left the platted distance within an inch or so. This testimony tends to prove that the true north line of block 6 was shown by the stakes at the northwest corner of lot 1 and those to the eastward. True, these may not have been correct stakes, and perhaps were not original ones, and that they did not mark the true line is perhaps made the more probable from the fact that they show an overplus of land, and make an angle that the plat does not show; but, under the rule that the trial court recognized, viz., that stakes rather than surveyed line must prevail, a question of fact arose as to whether these stakes marked the original line, and should have gone to the jury. It is obvious that even if this 14-J- inches were to be regarded, the plaintiffs must still recover the greater portion of the land in dispute; but as the verdict 'covers the whole of it, the direction as to a small portion of the land was erroneous, and we .are constrained to reverse it.

Judgment reversed, and a new trial ordered.

Carpenter, C. J., and.McALVAY, Grant, and Moore, JJ., concurred.


text:
    MONGER v. NEW ERA ASSOCIATION.
    1. Insurance — Mutual Benefit Associations — Actions—Venue.
    Sections 10444 and 10445, 3 Comp. Laws, providing for service on insurance companies in any county in which, the plaintiff resides and defendant does business, do not apply to fraternal beneficiary societies organized under chapter 212, 2 Comp. Laws, as amended by Act No. 226, Pub. Acts 1901.
    2. Same — Associations—Lodge System — Necessity.
    The New Era Association of Grand Rapids is a fraternal beneficiary society, and as such entitled to the exemptions from the general insurance laws of the State provided by chapter 212, 2 Comp. Laws, though it has no lodge or ritualistic work, being exempted therefrom by Act No. 226, Pub. Acts 1901; and this irrespective of the question whether the exemption contained in said Act No. 226 is invalid as class legislation or not, only the State being entitled to raise that question.
    3. Same — Action on Policy — Declaration — Necessary Averments — Venue.
    Where suit is begun against an insurance company under sections 10444 and 10445, 3 Comp. Laws, by filing and serving declaration and rule to plead, the declaration must show that the plaintiff is a resident of the county in which suit is brought, and that defendant is a corporation subject to the provisions of the sections mentioned.
    4. Appeal and Error —Form of Remedy— Error — Jurisdictional Defects.
    Where a judgment is void on the face of the record for want of jurisdiction over the defendant, a writ of error and proper assignments to review the judgment constitute correct practice, though a motion was made below to quash the affidavit of service and overruled, irrespective of whether the motion and order overruling it are part of the record proper.
    Error to Berrien; Coolidge, J.
    Submitted June 6, 1906.
    (Docket No. 26.)
    Decided September 20, 1906.
    Assumpsit by Maria Monger against the New Era Association on a benefit certificate. There was judgment for plaintiff, and defendant brings error.
    Reversed, and no new trial ordered.

      Knappen, Kleinhans & Knappen, for appellant.

      John J. Sterling, for appellee.
   Hooker, J.

The appellee’s brief begins with the statement:

“The statement of facts in appellant’s brief is partial and incorrect. However, since the facts are few, and the inaccuracies and discrepancies can be pointed out in the argument, we deem it unnecessary to present a statement of them here.”

This is not a compliance with the spirit of Sup. Ct. Rule 40, though perhaps it is with the letter, if the alleged inaccuracies are pointed out anywhere in his brief. It is a convenience to the court to have them presented at the beginning of appellee’s brief, and that practice should be followed.

As stated in appellant’s brief, the defendant is a fraternal beneficiary society, organized under chapter 212 of the Compiled Laws, its principal office being at Grand Rapids, Mich. Plaintiff claims to be an assignee from the beneficiary of the certificate issued by defendant to one Llewellyn Monger, a member. She began her action by declaration, in the Berrien county circuit court. It contains no allegation as to the plaintiff’s residence, and the record does not show that she was or is a resident of that county. No rule to plead was filed with the declaration, though the notice, attached to the copy, calls attention to a rule entered. No service was had in Berrien county, and there is no return by a sheriff or other officer. An affidavit on file shows that copies were delivered to defendant’s secretary, in Kent county, on January 12, 1906. On January 22d, defendant appeared specially, and filed a motion to quash, and strike from the files this affidavit of service, on the ground that service was not had in Berrien county. This motion was denied on January 29th, and on January 30th an order of default was made, and judgment was entered against defendant on March 9th. A writ of error was taken out, and assignments of error were filed.

An important question arises over the application of 3 Comp. Laws, §§ 10444, 10445, to this cause, that being the authority relied on to sustain the service, and covering the point stated in the motion. If it should be held not to apply, the service was unauthorized and necessarily void. These sections are as follows:

“ (10444). Section 1. The People of the State of Michigan enact, That suits may be commenced, tried, and disposed of against insurance companies, or co-operative and mutual benefit associations, having for their object insurance against accidents, organized under the laws of this State, by any member of said company or association, or other person, in the courts of any county in this State in which the plaintiff resides, and such company issues policies, certificates of membership, or take risks, in the same manner and with the like effect as if the suits were brought in the county where such company or association has its principal office.
“ (10445). Sec. 2. Such suits may be commenced by declaration or by writ, which may be served upon any agent of such company or association, residing or found within the county by the sheriff of the county where the suit is brought, or by the sheriff of any county where an agent may be found, or by the sheriff of the county where the principal office of such company or association is located.”

The contention that it should be held not applicable rests upon an alleged exemption contained in section 1 of the act under which defendant was organized, i. e., 2 Comp. Raws, § 7740, and as amended by Act No. 226, Pub. Acts 1901. This section, and the chapter (212) of which it is a part, provides for the formation of “Fraternal Beneficiary Associations.” Such associations are declared to be corporations, societies, or voluntary associations, formed or organized and carried on for the sole benefit of their members and their beneficiaries, and not for profit; such associations having a lodge system, with ritualistic form of work, and a representative form of government, and making provision for the payment of death benefits, may also provide for the payments of benefits in the case of accident, sickness, and disability, or old age of its members. The exemption claim referred to is the following:

“ Such association shall be governed by this act and shall be exempt from the provisions of the insurance laws of this State, excepting as provided by this act.”

We have no hesitation in holding that the defendant is an insurance company in a sense, because it does insuring, and the express provision exempting it from the provisions of the insurance laws of the State shows that it must have been understood to be an insurance company in that sense. See, also, Citizens' Life-Ins. Co. v. Com'r of Insurance, 128 Mich. 85. But that being true, only increases the difficulty, for it shows a clear intent that this kind of insurance companies should be governed by other, and perhaps more general, provisions, less reistrictive than those expressly applicable to other insurance companies.

It is contended by counsel for plaintiff that sections 10444 and 10445 are not insurance laws, but laws of judicial procedure, and therefore may apply to fraternal societies, notwithstanding the exemption referred to. If it be a law of judicial procedure, it is one pertaining to insurance companies merely, and one which makes an exception of them in the matter of judicial procedure. Such law is one that should not be omitted from any compilation of insurance laws, and in our opinion is included in the exemption. These sections were enacted in 1881, while section 7740 dates from 1893, leaving no. opportunity to say that the exemption was repealed by them, or that it was not fairly within the actual legislative intent.

This law not authorizing a service in Kent county upon this defendant, the proceedings are void unless it can be said that defendant is not a fraternal beneficiary society. Such a claim is mad¿ upon the ground that it does not comply with the law inasmuch as it has no lodge or ritualistic work, which it is said appear because admitted, and from the express provision of section 7740, as amended by Act No. 226, Pub. Acts 1901, which contains a proviso “that the provisions of this section requiring a ritualistic form of work shall not apply to the New Era Association of Grand Rapids heretofore incorporated and doing business under the provisions of this act,” and which proviso is said to be class legislation and void. Granting that this proviso is void, the fact remains that this is. a “ fraternal beneficiary association,” one falling short, perhaps, in the performance of a statutory duty, in which failure the deceased member shared. He was willing to contract with it as such a society, and whether it should have a lodge system and ritualistic form of work was chiefly of ■ interest to itself, its members, and perhaps its competitors and the State. It may be that upon application to the proper officer by any person, it might be compelled to provide these things or be dissolved. But until the State moves in the matter upon its own initiative or on relation of an interested person, it ha^ a valid status as a corporation, organized under the fraternal society law.

But one other question need be referred to. It is contended that the question discussed is not properly here on writ of error, and that the defendant should have moved by mandamus to review this motion. An answer to this is that the proceeding and judgment are void on the face of the record for want of jurisdiction. The declaration not only fails to show that plaintiff was a resident of Berrien county (which it should have done as shown by cases cited) but it fails to show that defendant is a corporation subject to the provisions of sections 10444 and 10445. Moreover it does show that it is the New Era Association of Grand Rapids, which Act No. 226, Pub. Acts 1901, shows to have been organized under section 7740. The defendant not having waived the question by appearing, now asserts the want of jurisdiction through a writ of error and proper assignments, which sufficiently raise the question, even if we should hold the motion and order denying the same not to be parts of the record proper (a question we need not decide). Turrill v. Walker, 4 Mich. 185; Denison v. Smith, 33 Mich. 155; Smith v. Bresnahan, 59 Mich. 346; McEwan v. Zimmer, 38 Mich. 765; Baxter v. Kent Circuit Judge, 92 Mich. 291.

The judgment is reversed, with costs of both courts, and no new trial is ordered.

Carpenter, C. J., and McAlvay, Grant, and Moore, JJ., concurred.


text:
    STONE v. POX MACHINE CO.

    1. Principal and Agent — Accounting—Closed Transactions.
    Where differences arising between a manufacturer and his agent are closed and settled at the time the agent enters into contract relations with the incorporated successor of the manufacturer, such differences cannot be made the basis of a claim against either the manufacturer or the corporation in a bill subsequently filed for an accounting.
    2. Same — Corporations — Transfer of Interest by Principal.
    Where the business of a manufacturer having an agent is merged into a corporation, and the agent continues dealing with it and its successor, the manufacturer is not a proper party to a bill for an accounting by the agent calling in question the transactions with the corporations.
    3. Same — Contract—Settlement of Differences.
    Where existing differences between principal and agent are settled at the time of entering into a new contract, such dif- . ferences cannot be subsequently called in question.
    á. Same — Contract—Exclusive Representation — Construction.
    A contract between a manufacturer and its foreign agent examined, and held, to contemplate that the agent should be the exclusive foreign representative of the principal, and that it should make its sales through him.
    5. Same — Expiration of Contract — Notice.
    A contract of agency for the term of three years and from year to year thereafter until terminated by six months’ written notice, examined in connection with the notices given, and held, to have terminated on the first anniversary of its making after notice given more than six months prior thereto, and not before.
    6. Corporations — Contracts Before Organization — Liability.
    Where a manufacturing corporation having a selling agent reorganized in the form of a limited partnership association, and thereafter did business with the agent in accordance with the terms of his contract with the corporation, the association is not liable to the agent for any breach of the contract committed by the corporation, nor is the corporation liable for breaches by the association.
    7. Principal and Agent — Contract—Construction.
    A contract appointing a selling agent, and providing that the principal shall not advertise in European papers without including the agent’s name and address as sole European agent, does not prevent the principal from advertising in American papers printed in this country without including the agent’s name.
    Appeal from Kent; Perkins, J.
    Submitted June 7, 1906.
    (Docket No. 46.)
    Decided September 20, 1906.
    Bill by James B. Stone against the Fox Machine Company, William R. Fox, and the Fox Typewriter Company, Limited, for an accounting. From a decree for complainant, defendants appeal.
    Reversed, and bill dismissed,

      Henry B. Fallass, for complainant.

      Butterfield & Keeney and Olapperton & Owen, for defendants.

       Rehearing denied November 7, 1906.

   Hooker, J.

William R. Fox was carrying on the business of manufacturing machinery tools, among which was a trimmer which he had invented, and Stone, the complainant, was his traveling agent. In 1890 Stone went to England to introduce the trimmers there, under an arrangement with Fox, which need not be stated in detail. Whatever it was, he found the opening such as to induce him to enter business there as an independent dealer, associating with one Stanton, whom he supposed and represented to Fox to be able and willing to furnish the necessary working capital, and business was after-wards done with them under the firm name of “ J. B. Stone & Co.” This arrangement began about March 1, 1891. The new firm difi business until some time in 1892, when Mr. Stone succeeded to its business and made a written contract with the Fox Machine Company, a corporation, which had been organized meantime, and which appears to have continued to do business with Fox and Stanton after it began business, as the successor of Fox. The date of its organization may be stated in the record, but we do not readily find it, and it is not very important.

The contract of October 11, 1892, was in writing and was made in pursuance of an adjustment of differences between the parties while Stone was in America in 1892, where he was sued by the machine company, or Fox, upon the Stone & Co. account. Stone did business under this writing for some years. It is claimed that this contract expired by its own limitation in 1894. However that may be, the parties continued to do business upon substantially unchanged terms until 1897. There was much complaint of Stone’s failure to pay for his purchases, and in 1897 the Fox Machine Company refused to give him further credit. This resulted in an arrangement whereby the Fox Machine Company made one Mahoney, of London, their agent; he becoming responsible to them for goods sold him. Mahoney made a contract with Stone, agreeing to continue the arrangement of the Fox Machine Company as to giving him the sale of trimmers in territory named, which, in this contract (which was in writing), did not include Germany. It is claimed that it was afterwards included under a later concession, which appears to have been oral, if it was made, so far as we can ascertain from the evidence. This arrangement ended in trouble between the Fox Machine Company and Mahoney in 1898, or 1899, and he became largely indebted to the Fox'Machine Company, a large portion of which indebtedness it never collected.

In 1899 Stone owed Mahoney $6,000 or over, and Stone also owed the Fox Machine Company something more than that, according to its claim. In June, 1899, Mr. Widdicomb, a director of the Fox Machine Company, went to London, carrying an assignment to his company of the Mahoney claim against Stone, and he and Stone made a settlement, whereby a new contract was made on June 14, 1899. At that time Stone paid in cash the assigned claim, and for all goods shipped him after Mahoney ceased to do business. All subsequent purchases were thereafter paid for in cash, as had been arranged prior to the making of this contract. The Fox Typewriter Company, Limited, was a-limited partnership association organized May 1, 1902, and succeeded to the business of the Fox Machine Company. It continued the sale of goods to the complainant. There was a steady falling off in his purchases and much correspondence grew out of this and of his claim that the company was selling goods to other persons and dealers in Europe, and otherwise breaking the contract. On November 7, 1903, a letter signed "Fox Typewriter Company, Ltd.,” was sent to complainant, stating that the contract had expired. This was in reply to some charge that the contract was not being lived up to by the company.

On February 9, 1904, a letter signed " Fox Machine Company,” was sent. It was received by Stone March 5, 1904. It was as follows:

“ Messrs. J. B. Stone & Co.
" Finsbury Pavement,
“ London, Eng.
" Gentlemen: In respect to the so-called agreement bearing date June 15, 1899, signed Fox Machine Company, by John Widdicomb, and J. B. Stone & Company, upon which you have commenced suit here, we desire again to state what we have heretofore repeatedly stated to you, that the Fox Machine Company went out of business in May, 1902; that the Fox Typewriter Company, Limited, an independent organization, purchased most of its assets and continued the manufacture of machinery theretofore made by the Fox Machine Company, but never knowingly took over or assumed any rights or obligations under the aforesaid agreement, and has not knowingly or intentionally recognized it in any manner. To avoid any possible future misunderstanding in regard to that agreement we hereby repeat the notice that has already been given to you; and in case said agreement should be held to be in any way binding upon the Fox Typewriter Company, Limited, it is hereby declared terminated and canceled, and further, that the prices and terms for goods as mentioned therein, are and will be changed in accordance with quotations already sent you or that may be sent from time to time.”

This suit had been commenced when the letter was written. The bill made Fox, the Fox Machine Company, and the Fox Typewriter Company, Limited, defendants.

It alleged that the several defendants failed to perform the contracts mentioned, and that by reason thereof the business of the complainant had been injured and crippled, and that he had suffered damage by reason thereof; that Fox was in reality the owner of all or substantially all of the stock in and controlled by the policy of the Fox Machine Company and the Fox Typewriter Company, Limited; and that the organization of the latter was a fraudulent device of Fox to avoid the contract between complainant and the Fox Machine Company. It prayed:

(a) That the defendants be ordered to come to a fair and just accounting, touching the amount due to complainant, by reason of the misconduct aforesaid, and that they, or some of them, be decreed to pay the amount found due him; (b) that the defendants be required to disclose the whole extent of their business in Europe in said trimmers since April, 1897, with persons other than’complainant and Mahoney; (c) that Fox be decreed to be a party to all of the contracts mentioned; (d) that the Fox Typewriter Company, Limited, be decreed to be a party to the contract of June 14, 1899, instead of the Fox Machine Company; (e) an injunction against the further sale of trimmers for sale in Europe, and the quotation of prices to any one except complainant; (/) that the injunction be continued in force until the contract should be terminated by proper notice; (g) that it be decreed that advertising by defendants in Europe was fraudulent in not mentioning complainant as “ sole agent in Europe,” and that each defendant be decreed to pay the amount of damage done by him to complainant.

The complainant obtained a decree for several thousand dollars damages against all defendants, and they have appealed.

As the defendants answered and went to hearing upon the merits without objection to the jurisdiction or pleadings, we shall discuss no such questions. This should not be construed as an intimation that this is a contract susceptible of enforcement specifically, or that equity is a proper forum for the recovery of damages for breach of contract. We do not pass upon these questions, as they have not been presented to us. An examination of the record has convinced us:

1. That the transactions with Fox were closed and settled at the time relations between the complainant and the Fox Machine Company began, and that complainant has no just claim arising out of such transaction against any of the defendants.

%. That the Fox Machine Company was a lawful corporation, and that after its organization the dealings of the complainant were with it, or its successor, the Fox Typewriter Company, Limited, and not with Fox personally. It follows that the bill of complaint should have been dismissed, with costs, as to Fox, whatever the conclusion should have been as to the liability of other defendants.

3, That the differences between complainant and the Fox Machine Company were settled at the time that the contract of June 14, 1899, was made. It follows that earlier transactions cannot be the subject of damage.

4. The writing of June 14, 1899, was made at a time when the parties were at variance over the delay of the complainant in paying for goods, and the question of his right to be the sole representative of the Fox Machine Company in Europe, which the latter had repeatedly and strenuously denied in its correspondence, on the grounds, first, that it had not agreed to make him its sole representative; and, second, that while it had been willing to forego selling to others so long as he should reasonably push sales in the respective countries he had not done so, although it had persistently and repeatedly urged him to do so.

At this time it was requiring payment for the goods, before delivery, and that practice was adhered to afterward. The writing is as follows:

“June 14th, 1899.
“It is hereby understood and agreed between John. Widdicomb, representing the Fox Machine Co., and J. B. Stone & Co., that the said J. B. Stone & Co. shall continue to be the sole agents for the Fox Machine Company for the sale of Fox trimmers throughout the United Kingdom and Europe, and that they are to prosecute the business of selling trimmers and further the interests of the Fox Machine Co. faithfully as in the past; such agency to continue for the term of three (3) years and from year to year thereafter until terminated by either party by giving six (6) months’ written notice posted in a registered letter in London by J. B. Stone & Co., or in Grand Rapids by the Fox Machine Co. The said J. B. Stone & Co. are not to handle any other conflicting machines, and they are to anticipate their wants in the line of goods to be furnished by the Fox Machine Co., as far in advance as possible, in order to give the Fox Machine Co. reasonable time in which to execute their orders.
“ The prices and terms at which goods have been sold to J. B. Stone & Co. so far during the present year, shall govern for the term of one year from this date, and no change shall be made at the expiration of the said one year unless three (3) months’ previous notice is given and a written notice to this effect posted in Grand Rapids, by registered letter, which letter shall be considered as received in London on that date, should the same be received and receipted for. After the expiration of such term, six (6) months’ notice must be given as above. It is the intent of the Fox Machine Co. that no advance is to be made in price unless the cost of labor and material increase over the cost of labor and material at the date of this agreement.
“ It is understood that the Fox Machine Co. do no advertising iii any European papers without including the name and address of J. B. Stone & Co. as their sole European agents, the intention being to bring before the public of the United Kingdom and Europe the fact that J. B. Stone & Go. are the sole agents for the Fox Trimmers in such territory, and that all inquiries from such territory received by the Fox Machine Co. shall be referred to J. B. Stone & Co. and that the Fox Machine Co. will not knowingly supply any trimmers to any person or persons in that territory excepting through J. B. Stone & Co.
“ It is further understood that the name and address of J. B. Stone & Co., as sole European agents, shall be by nameplate or other suitable manner affixed to each trimmer, furnished to J. B. Stone & Co. excepting it may be in the case of machines now on order in course of construction, which cannot be so labeled on account of lack of time.
“Fox Machine Company,
“ By John Widdicomb.
“ J. B. Stone & Co.
“Witness: E. M. Kennedy.”

We agree with the circuit judge that the contract of 1899 contemplated that complainant alone should be the representative of Fox Machine Company, to the exclusion of others, and obligated it to make its sales of trimmers through him, and that the notice given terminated such contract on June 14, 1905, and not before. The Fox Typewriter Company, Limited, was a legal partnership association, and it appears to have been willing to carry on the business of the machine company under its contract, and we think it made the performance of such contract, as to all sales made by it, its own, but we discover nothing warranting the inference that it can be made liable for any prior transactions. On the other hand, it gave complainant a right to understand that it was willing to continue business under such contract to which he appears to have consented, and therefore he can have no valid claim against the Fox Machine Company upon such transactions.

It is unnecessary to include in this opinion an analysis of the evidence. It would require many pages, and would not elucidate any legal question. We have endeavored to examine it critically, with a view to a disposition of the meritorious questions involved. We do not discover that the defendant “ Fox Typewriter Company, Limited,” ever refused to sell its trimmers to complainant, and we think that his claim that it unreasonably raised the price is not sustained by the proof. We are also of the opinion that the proof shows that the complainant did not use such diligence in the countries of the continent as the terms of the contract required, and that to this fact, and the further fact that he was unwilling to make a price upon the trimmers that would enable him to sell them in competition with other similar goods of other makes, his failure to obtain business upon the continent was due. The record is full of testimony indicating a sincere desire on the part of the defendants to protect complainant, and to aid. him, and not to undermine him, and that they made but few sales where the goods went to the continent, and that these in no sensible degree lessened his profits, or his prospective business.

The claim that the contract required the defendants to advertise complainant as sole agent in Europe is untenable. It did provide that they should not advertise in European papers without including his name and address as sole European agent. We construe this to mean papers printed and published in Europe, and not American papers printed in this country. We are of the opinion that the testimony shows no breach of this agreement entitling complainant to damages. There was no occasion for the preliminary injunction.

The bill will therefore be dismissed as to all defendants, with costs of both courts.

Carpenter, C. J., and McAlvay, Grant, and Moore, JJ., concurred.


author: Carpenter, C. J.

text:
    JULIUS KESSLER & CO. v. ZACHARIAS.
    1. Sales — Warehouse Receipts — Passing of Title.
    The issuance by the seller of whisky, and acceptance by the buyer, of a warehouse receipt stating that the whisky is held in the seller’s bonded warehouse subject to the order of the buyer, on payment of tax and storage charges, transfers title to the whisky.
    2. Witnesses — Person Singe Deoeased — Transactions—Competency.
    In assumpsit by a corporation on a promissory note given for the purchase price of goods sold by an agent of plaintiff, since deceased, defendant cannot testify to fraudulent representations made by the agent to induce the sale (section 10212, 3 Comp. Laws).
    3. Sales — Action for Price — Promissory Note — Defense.
    In an action on a promissory note given for the purchase price of goods, defendant is not entitled to show that the goods were not worth the price agreed to be paid for them.
    Error to Saginaw; Beach, J.
    Submitted June 7, 1906.
    (Docket No. 49.)
    Decided September 20, 1906.
    Assumpsit by Julius Kessler & Company against Henry J. Zacharias on a promissory note. There was judgment for plaintiff on a verdict directed by the court, and defendant brings error.
    Affirmed.

      Arthur W. Ganschow, for appellant.

      Weadock, Purcell & Weadock, for appellee.
   Carpenter, C. J.

February 10, 1904, a salesman of plaintiff, an Illinois corporation, delivered to defendant a warehouse receipt purporting to transfer to him the title to five barrels of whisky. (This receipt is, except in names, date, and description of distillery, an exact counterpart of that described in Julius Kessler & Co. v. Veio, 142 Mich. 471.) Defendant thereupon executed to plaintiff several promissory notes for the purchase price of said whisky. This suit was brought upon one of those promissory notes. It was tried in the circuit court before a jury, and a verdict was directed in plaintiff’s favor. Defendant asks us to reverse the verdict entered on said judgment.

Defendant’s principal complaint relates to the form of the receipt delivered to him. He contends that it did not transfer the title. This contention is answered by the decision in Julius Kessler & Co. v. Veio, above referred to. There we held that the delivery of the warehouse receipt did transfer the title.

It is contended that the court erred in refusing to permit defendant to testify that plaintiff’s agent — who died before the trial occurred — made fraudulent representations in effecting the sale. This ruling was correct. The death of the agent made this evidence inadmissible. See section 10212, 3 Comp. Laws.

It is also contended that error was committed by the trial court in refusing to permit defendant to show that the whisky purchased by him was not worth what he promised to pay for it. This ruling was also correct. No authority need be cited for the proposition that one is not released from an obligation to pay for property merely because he agreed to pay too much for it.

No other complaint demands discussion.

The judgment is affirmed.

McAlvay, Grant, Hooker, and Moore, JJ., concurred.


text:
    FIRST STATE SAVINGS BANK OF THREE RIVERS v. McMURTRIE.
    Municipal Corporations —Officers—Public Funds —Care— Liability.
    On the issue whether a former city clerk was indebted to the city for funds collected during his term of office, evidence examined, and held, to show that at the time he deposited funds conditionally, to be repaid him in case he should be found not so indebted, he had already overpaid the city.
    Appeal from St. Joseph; Yaple, J.
    Submitted June 8, 1906.
    (Docket No. 60.)
    Decided September 20, 1906.
    Bill by the First State Savings Bank of Three Rivers against Fred J. McMurtrie, John H. McMurtrie and the city of Three Rivers to foreclose a lien upon certain certificates of stock. Defendants filed separate cross-bills praying for an accounting. From a decree for defendant Mc-Murtrie, defendant city appeals.
    Affirmed.

      H. O. Bliss and H. P. Stewart, for defendant city of Three Rivers.

      B. E. & L. F. Andrews and Dallas Boudeman, for defendant McMurtrie.
   Moore, J.

This is a proceeding to foreclose a lien upon certain bank stock assigned to complainant by defendant McMurtrie. Both defendants concede the complainant is entitled to what it claims in the bill of complaint. The real contest is between the two defendants. From a decree in favor of one of them, the other appeals.

In the decree made by Judge Yaple there are statements of fact which disclose the questions involved, and for that reason we quote from it:

“ In the answer filed by the city of Three Rivers, it claimed the right to the said bank stock through the assignment from said Fred J. McMurtrie to it to secure certain moneys which it alleged and claimed were due. to it from said Fred J. McMurtrie, and it prayed the benefit of a cross-bill as against Fred J. McMurtrie, and that any balance on the sale of said stock, after satisfying the claim of said bank, should be turned over to said city upon any moneys which the court might find was owing by said Fred J. Mc-Murtrie to said city of Three Rivers, and praying for an accounting between said city of Three Rivers and said Fred J. McMurtrie touching the amount remaining due to said city of Three Rivers from said Fred J. McMurtrie. In the answer filed by said Fred J. McMurtrie, he alleged, amongst other things, in substance, that as between himself and the city of Three Rivers he was not owing said city anything, and denied that said city had any interest whatever in said bank stock; that at the time when he assigned the bank stock to the city of Three Rivers, said city claimed that he was short in his accounts as city clerk of said city, and for moneys which had come into his hands as such clerk; that on account of ill health at the time, he was unable to examine the accounts and to determine whether or not there was anything owing to the said city on the aforesaid matters; that the city employed a bookkeeper to examine his account and said McMurtrie agreed with the city to pay any sum which he was owing (if any), to the city, and he claimed that he placed certain moneys in the hands of the city and assigned the bank stock to it to pay and secure any moneys that might be found on a future accounting to be due (if anything) from himself to the city. He further claimed that he was, in fact, owing said city nothing, or, if anything, only a small amount; that he had deposited or paid under this arrangement with the city several hundred dollars; that said city had refused to return him such money, or the bank stock assigned to it. He also prayed the benefit of a cross-bill for the purpose of having a surrender of said bank stock and a cancellation of the assignment of it, and for an accounting and repayment of the moneys which he had deposited with said bank for the purposes aforesaid. When this cause came to a hearing the contest was entirely between the said city of Three Rivers on the one hand, and said Fred J. McMurtrie upon the other, and evidence was taken covering several years, during which said McMurtrie was acting as clerk of said city, and the said parties submitted to this court the determination of the question of whether or not the said Fred J. McMurtrie was, in fact, owing the city, and if so, how much, or whether the city was owing him for the moneys, or any part thereof, deposited by him with the city, and if so, how much, and whether or not the city had any claim upon the bank stock, and said parties submitted to the court the question of decreeing the amount to be paid from the one party to the other, in order to fully settle the said controversy between them, it being understood and agreed that the decree entered in this cause should settle all matters embraced in a certain action then pending in the circuit court for the said county of St. Joseph, wherein said Fred J. McMurtrie is plaintiff, and the said city of Three Rivers is defendant. * * *
“The court sustains the claims generally of defendant Fred J. McMurtrie. It finds that under the arrangement made between himself and the city of Three Rivers, it was agreed that he would pay to or deposit with said city of Three Rivers to pay or secure the payment of any amounts of money which might be found to be owing by him to said city and said McMurtrie deposited with and paid to said city moneys to the amount in the aggregate of $1,359.70, and it was agreed by the said city of Three Rivers with said McMurtrie that if upon an investigation of the matters between said city and said McMurtrie, it was not found that said McMurtrie was owing said city the amount of money turned over to said city, then that he should be repaid by said city such an amount as was not shown that he was so owing.”

Following the language we have quoted is an elaborate statement of the claims of the two defendants. The learned judge reached the conclusion that the city of Three Rivers was indebted to Mr. McMurtrie in the sum of $1,323.61, and made a decree accordingly. The record discloses that Mr. McMurtrie claimed all the time that he was not indebted to the city. The stock in controversy was assigned to the mayor. He was a witness in the case. He has the following to say of the arrangement when the payments were made and the stock assigned.

Q. You testified once before in this matter, did you testify then that it was your understanding that there was an arrangement that he should pay these amounts, and if they did not prove they were owing by him to the city, the city should repay them ?
“A. Of course, that is true, there is no question about that.”

It will be observed that the question involved is purely one of fact. It will also be observed that the trial was, in effect, a trial of the law case then pending as well as the chancery case. The hearing was in open court. The testimony was all taken before the circuit judge. We have had an exhaustive oral argument and have two carefully prepared briefs of each side.

The claim of Mr. McMurtrie’s counsel is as follows:

“ Receipts.
Water Rates. Licenses. Other Sources. Taps, etc. Totals.
189^5 $1,649 47 $14 00 $72 09 $114 00 $1,849 56
1896-7 3,159 53 102 50 457 94 48 75 8,768 72
$4,809 00 $116 50 $530 03 $162 75 $5,618 28
“ The foregoing was shown by the testimony of Mc-Murtrie. The first period, that of 1894-5 covering the four upper items of this statement with the total of $1,849.56 was referred to on the trial as the “Herndon Regime” and included, as will be noted, the entire year of 1895 and a part of 1894, although until June 18th, 1895, when Mc-Murtrie was made deputy for the collection of water rates, he was in no way chargeable with the matter at all as until that date it was the duty of other officials to receive money under the charter and not McMurtrie, he being simply clerk or recording officer and nothing more. The four lower items cover the second, that of 1896-7, with a total of $3,768.72. As before stated, the foregoing table No. 1 includes the amount collected by Mr. Herndon and for which he, and not McMurtrie, was responsible, and shows the sum of all receipts, both village and city, with which McMurtrie was connected or with which he had anything to do. The whole amount being as above $5,618.28.
“ Statement No. 2 shows the credits to both Herndon and McMurtrie for the same periods as statement No. 1, and as follows:
Receipts and Herndon’s report...................$1,781 30
Check allowed McMurtrie........................ 6 55
Sundry receipts hereafter noted------------------ 457 94
Sundry receipts payment to city hereafter given.. 3,312 28
Receipt_________________________________________ 47 71
Receipt $10 and $4 in hand of city clerk.......... 14 00
$5,619 78
—or one dollar and a half too much, instead of a deficit.”

Mr. Herndon was the successor to Secretary Lenhart as collector of water rates. Mr. McMurtrie, in Mr, Herndon’s absence from the office, sometimes made collections.

The claim of counsel for the city is as follows:

“We maintain, therefore, that defendant, at the time his term of office as city clerk expired, was indebted to the city for the sums of money hereinbefore stated, viz.: For water rates, collected and not accounted for between November 1, 1895, and the time defendant went out of office, in April, 1897, as appears on a preceding page of this brief, $563.02; for water rates collected and not accounted for prior to November 1, 1895, when defendant was assisting James W. Herndon in collecting water rates, $334.52; for fees collected for taps and tapping and not accounted for by defendant, $51; for money received by defendant on orders drawn apparently for salary, but in excess of the amount of salary to which he was entitled, $206.25; for money received by him on orders drawn to Ihling Brothers & Everard and the Kalamazoo Publishing Company, as hereinbefore stated, $237.20; and for fees collected for licenses, not accounted for, as herein-before shown, $109.75. The total amount of the above items of indebtedness is $1,501.74. This amount we claim is established beyond controversy, and if the defendant is entitled to recover back from the city any sum of money whatever, he is entitled to recover only the difference between $1,670.69, the amount paid over by him during said investigation of his accounts, as herein-before shown, and the said $1,501.74, which is $168.95.
“Now we do not concede that defendant is entitled to recover anything against the city, but on the contrary, we contend that defendant is still indebted to the city for a large amount beyond the $1,670.69, paid over by him, and that the city is still entitled to hold a lien on said bank stock. However, we realize that we have not been able to produce positive evidence showing actual appropriation by defendant beyond the above amount, and do not expect this court to grant us a decree oh the strength of suspicious circumstances alone. * * *
“In any event the decree of the court below should be modified, and materially altered. The amount which the said city of Three Rivers is hereby ordered to pay back to the defendant, Fred J. McMurtrie, should be greatly reduced, and we insist that the said city of Three Rivers should not be required to pay to said Fred J. McMurtrie, any more money than $168.95.”

We have quoted enough to show how disagreed the counsel are as to what the record contains. Notwithstanding the fact that the hearing involved the disposition of the law case as well as a chancery case, and was in open court, where the learned judge had the great advantage of hearing and seeing the witnesses, we do not base our conclusion as to what should be done upon those facts, but upon a careful examination of the voluminous record. There were a large number of witnesses sworn, among them Mr. Herndon and Mr. McMurtrie, the latter of whom was subjected to a long and severe cross-examination. As the question involved is one of fact, it would profit no one to set out the testimony in detail. We shall content ourselves with saying that the examination we have made leads us to the conclusion that when this stock was assigned Mr. McMurtrie had overpaid the city. The circuit judge rendered a decree that we are not inclined to disturb.

Decree affirmed, with costs.

Carpenter, C. J., and McAlvay, Grant, and Hooker, JJ., concurred.