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this latter decision does not expressly decide that the statutes aforesaid are unconstitutional in that they impose on stockholders a larger liability for corporate debts than the Constitution of the state permits, yet it may be fairly inferred therefrom that such is the fact, and such the effect of the local decisions.
It is unnecessary, we think, to consider the second ground upon which a judgment is demanded against the defendant Richey at greater length. It seems clear that under the local decisions, which, in a matter of this sort, are binding upon this court, the liability which the complainants seek to impose on the defendant Richey because the requisite notice of all existing liabilities was not published cannot be enforced in this proceeding, because the complainants have not as yet reduced their demands to judgment and exhausted the corporate assets. Upon the whole we conclude that the judgment below was for the right party, and that it should be affirmed. It is so ordered.
CITY OF DETROIT v. GRUMMOND.
The failure of a defendant to file an affidavit denying the execution of the contract sued on, as required by a rule of the courts of Michigan and of the Circuit Court of the United States in that state, to put plaintiff upon his proof, cannot be urged in the appellate court to exclude consideration of the question of the due execution of the contract, where the objection was not made in the trial court, which, under the construction placed upon the rule by the courts of the state, might have permitted
the filing of the affidavit at any time before the close of the trial. 2. MUNICIPAL CORPORATIONS-CONTRACTS-EVIDENCE OF RATIFICATION.
Where a city was sought to be held on a written contract for the hiring of a vessel to be used for hospital purposes, purporting to have been made on its behalf, but which was not authorized by anything appearing on its records, on the ground that the contract had been ratified by the acceptance and use of the vessel and the payment of the rental therefor, but the delivery of the vessel and payment of rental took place prior to the execution of the contract, evidence was admissible to show the previous passage of a resolution by the board of health, acting under authority given by the city council, accepting a proposition made by one of its members for the hiring of a vessel then owned by him, but subsequently transferred to plaintiff (the contract made by such resolution being void under the city charter), it being a question for the jury whether the alleged acts of ratification had reference to the con
tract with plaintiff sued on, or to the prior void contract.
When the evidence shown by a bill of exceptions points distinctly to a definite result, although the bill does not purport to contain all the evidence, if the defendant in error purposes to deny the rence to be drawn from it he should see that enough is stated at least to show that
there was other evidence on the point which might affect the conclusion. CONTRACT FOR PROCURING INSURANCE-CONSTRUCTION.
Under a contract by which the hirer of a vessel agreed to "pay the insurance" thereon for a certain sum, the duty of procuring the insurance devolved upon the owner, who would then have recourse upon the hirer for the amount of the premium.
6. INSURANCE CONTRACT INSURING MOURED VESSEL Against FIRE-LAW
A contract for the insurance against fire of a vessel while lying moored and in use as a hospital is not maritime, and the measure of liability for a loss by fire which partially destroyed the vessel is not governed by the rules of marine insurance, but by those of fire insurance, and is limited to the amount which the value of the property was depreciated by the fire, not exceeding the sum insured for. The entire sum would not be recoverable merely because it would cost more to repair the
vessel than she would be worth when repaired. 6. CONTRACT FOR HIRING OF VESSEL-CONSTRUCTION.
Under a provision of a contract for the hiring of a vessel to be moored and used for a hospital, binding the city, which was the birer, to pay a stipulated sum as the value of the vessel in case she should be "lost or destroyed” by the fault of the hirer, the city did not become bound to pay for the vessel because of a damage by fire through the negligence
of its servants, not amounting to a total loss or destruction of the vessel. 7. SAME.
A stipulation, in a contract for the hiring of a vessel for a specified time, binding the hirer to return her in as good condition as when taken, reasonable use, wear, and tear excepted, does not entitle the owner to refuse to accept the vessel when tendered back, and to recover her value, because of a breach of such stipulation, but only to recover the damages arising from the breach.
In Error to the Circuit Court of the United States for the Eastern District of Michigan,
This is a suit brought by the defendant in error against the city of Detroit upon a contract alleged to have been made between the parties November 30, 1892, for the hiring by the city of the steamboat Milton D. Ward of the plaintiff in the suit for the term of two years from the 14th day of September, 1892, for the purpose of being used by the city as a hospital in which persons suspected of bringing germs of cholera from abroad could be isolated and cared for.
It appears from the record that on August 30, 1892, the health officer of the city, apprehending an epidemic of cholera, presented to the common council a communication upon that subject, wherein he referred to the danger from immigrants, and said that he found "that the only hope of keeping the city is in having a quarantine hospital built on a scow which we can keep in the stream.” This was “referred to the committee on ways and means and health and the city counsellor." On September 2d, the committee having reported and recommended prompt action, the common council passed the following resolution: “Resolved, that the board of health and health officer be and are hereby empowered and directed to adopt such measures and plans as, in their judgment, are wise and expedient to prevent the introduction and spread of cholera into the city, and that any and all expenses necessary to carry into effect such plans and regulations as they may adopt is hereby authorized." On September 13th the health officer reported to the common council the steps which had been taken by him and the board of health at special sessions held on September 6th, 7th, and Sth, in which he said, among other things, that, although scows had been offered, it would take time to fit them up, and they lacked a steam boiler, and that the committee turned their attention to some boats; and he further stated that “at another special meeting held in the mayor's office, Controller Black stated that a boat could be procured for $5,000 for two years, the board to pay insurance on $12,000.' The party selling the boat would caulk her up and put her in shape. In case the city wished to buy the boat, $7,000, without the engine, was the price. That Controller Black moved the proposition be accepted, which was seconded and carried. The board passed a resolution that the controller and health officer be a committee to look after the expenditures," etc. This report was referred to the committee on ways and means, who reported that, as the common council had granted full power to meet all
emergencies to the board of health, the committee did not see that any further action was necessary, which report was adopted by the common council.
While these proceedings were taking place, Stephen B. Grummond was the owner of the steamer Milton D. Ward, and he was a member of the board of health, participating in its proceedings. On the 14th of September, 1892, he gave a bill of sale of the steamer to U. Grant Grummond, his son, who is the plaintiff in this action. The record does not clearly show at what time possession of the steamer was given to the city, but apparently it was as early as the 14th of September, 1892.
On the trial the defendant in the court below read in evidence from the record of the board of health the following entry: “Mayor's Office, September 8, 1892, at 2 o'clock p. m. Adjourned meeting. The board of health met pursuant to adjournment in the mayor's office. Present: His honor, the mayor, Controller Black, President of the Police Commission Grummond, Dr. C. C. Miller, Dr. Duncan McLeod, Dr. Jos. Schulte. President Miller in the chair. Controller gave as his figures on the boat $5,000. Capt. Grummond will caulk her and put her in shape and rent her to the board for two years, the board to pay the insurance on $12,000, and, in case the city buys the boat, $7,000, without the engine. Controller Black moved that this proposition be accepted. Seconded and carried. President Miller asked how the transfer was to be made. It was. stated this should be made to the controller. Capt. Grummond said he would fit up stoves, and said also that the best place to anchor would be in the neighborhood of Zug Island. It was resolved that the controller and the health officer be a committee to look after the expenditures, etc. On motion, the board adjourned. Samuel P. Duffield, Secretary.” Counsel for the plaintiff objected that this was incompetent evidence, and moved that it be stricken out. Counsel for defendant, in answer to a question from the court in regard to its competency, said: “It is part of the history of this transaction by which the board of health got possession of this boat, and it is important in this way: That the first record we have of any dealings with the boat, which will identify it as this boat, was on the 8th day of September, 1892, at the time when Capt. Grummond was a member of the board of health of the city of Detroit, and at the time when Capt. Stephen B. Grummond was the owner of the Milton D. Ward. The only contract or arrangement that was ever made, as we expect to show, between the board of health and Capt. Grummond, or by authority of the board of health and Capt. Grummond, or any one else, was contained in this record.” The court excluded the entry, and counsel for defendant excepted.
On the 22d of November, 1892, the common council approved and allowed the following account: “U. Grant Grummond, rent for steamer Milton D. Ward, two years from Sept. 14, 1892, $5,000.00.”
On the 30th of November, 1892, the contract upon which th suit is founded was executed, as follows:
"It is hereby agreed between U. Grant Grummond, of the city of Detroit, Michigan, of the first part, and the city of Detroit, of the second part, as follows:
"The said party of the first part, in consideration of the sum of five thousand dollars ($5,000) to him in hand paid, the receipt of which is hereby acknowledged, and of the agreements hereinafter contained, doth hereby let and charter to the said party of the second part the sidewheel steamer Milton D. Ward, for the term of two (2) years from and after the fourteenth day of September, A. D. 1892, to be used by said party of the second part as a hospital ship, hereby covenanting with the said party of the second part, and that at the time of the delivery of these presents he is the sole and true owner of said steamer, and that she is staunch, seaworthy and fit for use as a hospital ship and for navigation upon the rivers.
"And the said party of the second part hereby hiring and chartering the said steamer for the term of two years aforesaid, doth covenant and agree that it will at its own expense keep said steamer insured to the satisfaction of the party of the first part in the sum of twelve thousand dollars ($12,000) against any loss by fire, and against any loss from any marine risks, at such
times as said vessel may be exposed to danger from any such risks, and at the end of said term will return the said boat to the said party of the first part, his representatives and assigns at the port of Detroit, in like good condition as when taken, reasonable use, wear and tear excepted.
“Said insurance to be for the benefit of the said party of the first part and the payment of the insurance in case of loss shall be taken in lieu of return of the vessel, provided that if said vessel be lost or destroyed by reason of any peril, risks or cause not insured against and by the fault of the said party of the second part, said party of the second part shall pay to the said party of the first part the sum of twelve thousand dollars ($12,000) as the value of said vessel.
"It is hereby mutually agreed that the said second party shall have the right to purchase said steamer at any time within the said two years, for the sum of seven thousand dollars ($7,000), but if such sale be made, the party of the first part shall have the right of removing the engine of said steamer.
“In witness whereof, the said party of the first part hereto sets its hand and seal and the said second party hereunto sets its corporate seal and causes these presents to be subscribed in its behalf by the president of the board of health and the health officer, this 30th day of November, 1892.
“U. Grant Grummond. [Seal.] “[Seal.]
The City of Detroit, “By C. C. Miller, President of the Board of Health.
“Samuel P. Duffield, M. D., "Attest:
Health Officer. “John R. Schmid, Deputy City Clerk.”
The city clerk testified that the records of the common council did not show that a contract of that kind was at any time submitted to the common council. The secretary of the board of health testified that there was no entry in the records of the board concerning any contract between U. Grant Grummond and the city in relation to the steamer.
The defendant called as a witness Dr. Jos. Schulte, who testified that he was a member of the board of health on September 8, 1892, and afterwards through that year. Counsel for defendant asked this question: “While you were a member of the board of health in the year 1892, did your board authorize the making of any contract with U. Grant Grummond concerning the steamer Milton D. Ward, either on behalf of the board of health or of the city of Detroit ?" The question was objected to, but no ground for the objection was stated. The court, however, sustained the objection, and counsel for defendant excepted. There being no statement of the answer expected, we cannot review this ruling. There was testimony showing that the boat was never used as a hospital, but was kept by the city, moored near an island in the Detroit river, the caretaker being paid by the city on bills rendered from time to time during the time the city had possession.
On August 15, 1894, the boat took fire (from the carelessness of the men employed to put up a stove in her), and was somewhat damaged thereby. In respect to the extent of the damage the witnesses were widely apart; some saying the vessel became a total wreck thereby, and others that the damage was slight either to the boat or her machinery. The boat was an old one, built about 1870, of a sidewheel pattern.
On September 14, 1894, U. Grant Grummond demanded of the city that it either return the boat to him in as good condition as when taken, reasonable wear and tear excepted, or pay him the sum of $12,000. The city tendered back the boat to him as it was, but refused to pay the $12,000 demanded. Grummond refused to accept the boat, and brought suit. The declaration contains three counts, all declaring upon the special contract of November 30, 1892, and claiming to recover $12,000 damages. The plea, as amended, consisted of the general issue and a notice added, pursuant to a statute of the state, authorizing it, stating that the defendant would prove thereunder that during the time while the negotiations for the boat were pending she belonged to Stephen B. Grummond; that he was a member of the board of health at the time when the proposition to let her to the board of health was made to the board and when the proposition was accepted by it, and par
ticipated in its proceedings; and thereupon, after referring to certain provisions of the charter of the city forbidding, under penalties, its officials from making contracts with the city in which they should be interested, averred that the contract for the hiring of the vessel was made with Stephen B. Grummond, and not with U. Grant Grummond, and was contrary to public policy, and void.
The case was tried by the court and a jury, and the result was a verdict and judgment for $16,366.66, being the amount of $12,000 and interest.
Certain rulings of the court on the trial respecting the admission of testimony and in the instructions to the jury are assigned as errors, and are noted in the opinion which follows.
Timothy E. Tarsney, for plaintiff in error.
SEVERENS, Circuit Judge, having made the foregoing statement of the case, delivered the opinion of the court.
A question in its nature preliminary should first receive attention. It is contended for the defendant in error that by the failure of the city to file an affidavit denying the execution of the contract set out in the declaration it admits the execution and the authority of those signing it in behalf of the city, and reference is made to rule 28 of the court in which the trial was had, and which is also a rule of the circuit courts of the state, by which it is provided that, "upon the plea of the general issue in an action upon any written instrument, under seal or without seal, the plaintiff shall not be put to the proof of the execution of the instrument or the handwriting of the defendant, unless the defendant, or some one in his behalf, shall file and serve a copy of an affidavit denying the same." This rule has been given a broad construction by the Supreme Court of the state, and has been held to require an affidavit when the contract in suit purports to be executed in behalf of the defendant by attorney, if the defendant proposes to deny that the instrument was duly executed as its contract. Peoria Ins. Co. v. Perkins, 16 Mich. 384; Inglish v. Ayer, 92 Mich. 370, 52 N. W. 639. And, notwithstanding such a construction may not be due in all circumstances, we were, upon the argument, much impressed by this objection to that part of the defense upon which the plaintiff in error relies. But upon more careful examination of the record we do not find that this objection was made in the court below, and it is quite clear that the trial proceeded without regard to the rule, as if the question of authority was an open one; and the case was submitted to the jury upon the assumption that the contract derived its validity from the ratification of the city. In these circumstances we ought to deal with the case in accordance with the position taken by the parties and the action of the court upon the trial. The course pursued amounted to a waiver by the plaintiff of the affidavit required by the rule. If the plaintiff or the court had stood upon the rule, it would have been competent for the defendant to have then applied for leave to file an affidavit, and the court might have granted it; for it is held by the state Supreme Court that the affidavit may be filed at any time before the trial is ended. In Freeman v. Ellison, 37 Mich. 459, the Supreme Court, Judge Campbell delivering the opinion, reversing the