to the company by Collin; that the agreement between Elwell and Hovey & McCracken has been twice renewed and is still in force; that no payment has been made to Hovey & McCracken for lumber so purchased or thereafter purchased from them by said company or said Collin or said Elwell, except from the proceeds of the sale of the stock acquired by said company; that the annual reports were false and misleading, and were filed for the purpose of enabling the company to extend its credit; that all the statements made by the company relative to its business standing were intentionally and designedly for the purpose of misleading, deceiving, and taking a fraudulent advantage of those who should sell it lumber; that the defendants the Lumberman's National Bank and Hovey & McCracken were cognizant of the true condition and status of the company; that, by reason of the premises, the Collin & Parker Lumber Company never existed as a corporation, and is not now, and never was, a corporation, but now is, and since the date of its pretended incorporation has been, a copartnership; and that Collin, Parker, and Elwell are now, and since July 30, 1890, have been, copartners, and are jointly and severally liable as such. The bill also alleges that on December 20, 1892, the bank and Hovey & McCracken took possession of the company's property by virtue of their mortgages, and proceeded to collect all outstanding accounts; that complainants were refused access to the books of the company, and claim there is yet sufficient assets to discharge the indebtedness due to them; that there is now due them on the mortgage executed to them by the company $5,500, with interest on $3,000 at the rate of 8 per cent. from December 12, 1892; that there is now due complainants on the mortgage given by the Collin & Parker Lumber Company to Bacon & Co. $1,900, with interest as follows: On $1,500 from December 19, 1892, and on $400 from December 25, 1892; that there is due complain 109 MICH.-4. ants on the mortgage given by the company to Austin & Co. $531; that the remaining sums secured by said mortgages will become due as therein respectively stated; that no payments have been made on any of said mortgages, nor has any proceeding at law been had for the recovery of the debts, or any part thereof, secured thereby. The complainants ask that the pretended incorporation of the Collin & Parker Lumber Company be declared to be void, and that the stockholders be decreed to be partners, and liable for the debt of the complainants, and that the court determine how much is due complainants; that the Collin & Parker Lumber Company, William W. Collin, Charles H. Parker, and John A. Elwell may be decreed to pay that amount, with costs; that the Lumberman's National Bank and Hovey & McCracken be required to disclose the true status of their business relationship with the company, and to disclose if the company has given them other security than the first and second mortgages mentioned before; for a writ of injunction restraining the bank and Hovey & McCracken from disposing of any of the property of the company, and that they apply what they have received from the assets of the lumber company on their mortgages; for the appointment of a receiver for the Collin & Parker Lumber Company, and the application on complainants' mortgages of the assets of the company; for a personal decree for any deficiency against Collin, Parker, and Elwell, and a prayer for general relief. Defendant Elwell demurred to the bill, and the demurrer was sustained. Complainants failed to file an amended bill, and the court ordered the dismissal of the bill of complaint. The case is brought here for review. The complainants seek to have the corporation known as the Collin & Parker Lumber Company declared invalid and void, and its stockholders held to be partners, and liable for the indebtedness due the complainants. Are the complainants in a position to make that claim and to seek that relief? The company, in form, was duly incorporated, was recognized by the public authorities, and filed its annual reports, and did business as a corporation. The complainants dealt with it as a corporation, and accepted its mortgages, made as a corporation. In the case of American Mirror & Glass-Beveling Co. v. Bulkley, 107 Mich. 447, it was held that, where an association was recognized by the public authorities as a duly-organized corporation, and did business and filed its annual reports as such, a creditor who dealt with it as a corporation could not attack its corporate existence, and hold its stockholders liable as partners. See Swart wout v. Railroad Co., 24 Mich. 389; Merchants & Manufacturers' Bank v. Stone, 38 Mich. 779, and cases there cited. The case at issue must be governed in that respect by the above-mentioned cases. The complainants urge that, if it be conceded that they cannot raise the question of the validity of the corporation, and that the defendant Elwell cannot be held liable on the complainants' mortgage as a copartner, the bill will still lie as against him. They urge that the bill is primarily one for the foreclosure of a mortgage, and an accounting, an injunction, and a receiver; that, as such, it was properly filed, and that Elwell is a necessary party if the complainants obtain the relief they are entitled to. They urge that the capital stock of the company, as between it and its creditors, should have been fully paid by its incorporators; that the creditors dealt with the corporation relying upon all its capital stock being paid in. They argue that, as the capital stock was in fact paid by the lumber furnished by Hovey & McCracken to the amount of $20,000, which was to be paid for by Collin with his notes, guaranteed by Elwell, the creditors have a right to say that those notes shall be paid by Collin and Elwell from other funds than the assets of the company. They further argue that, to allow the notes guaranteed by Elwell to be paid out of the assets of the corporation, would leave the corporation in the position of never having had in fact any capital stock. They insist that upon the facts stated in the bill the complainants are entitled to call on Mr. Elwell to furnish the full amount of the guaranteed $20,000, to meet the claims of the creditors of the Collin & Parker Lumber Company, and that Elwell should be compelled to answer. They cite, in support of their position, Doyle v. Mizner, 42 Mich. 332; Attorney General v. Hanchett, 42 Mich. 436. In addition to the reason we have already mentioned, growing out of the fact that by their dealings with it the complainants have recognized the existence of the corporation, there are two difficulties in the way of this contention. One is that the facts stated in the bill do not necessarily establish the inference that the $20,000, or any part of it, which was to be paid to Hovey & McCracken for the lumber sold Collin, previous to the organization of the corporation, has been paid out of the assets of the corporation. The mortgage-which is a part of complainants' bill-which Hovey & McCracken took from the corporation shows upon its face that it was given for some other debt than that of Collin. The notes, the payment of which is secured by the mortgage, bear date two years subsequent to the organization of the corporation, and the notes were the notes of the corporation, and were executed as such. The other difficulty is that the mortgages complainants are seeking to foreclose all mention and recognize the preceding mortgages. Can the complainants affirm the mortgages in part, as they seek to do by attempting to foreclose them, and disaffirm them in important particulars, by asking this court to set aside the lien established by the prior mortgages, which liens are recognized in the mortgages sought to be foreclosed by the complainants? It is a well-established principle of law that a party cannot affirm such parts of a contract as will inure to his benefit, and rescind that part which is disadvantageous. The rescission must be entire. The contract cannot be treated as valid for one purpose and void for another. Galloway v. Holmes, 1 Doug. (Mich.) 330; Jewett v. Petit, 4 Mich. 508; Sloan The demurrer is sustained, with costs. HELLER v. CHICAGO & GRAND TRUNK RAILWAY CO. 109 53 866NW 667 s63ASR5411 133 1637 109 53 f137 114 109 1. COMMON CARRIERS-TRANSPORTATION OF LIVE STOCK. 2. SAME CUSTOM-CARE TAKER. It is the custom of shippers of live stock to send a care taker with the stock, and, in the absence of an agreement on the part of the carrier to perform the duties of a care taker, a shipper assumes all risks arising from his failure to comply with such custom. 3. SAME-NEGLIGENCE-BURDEN OF PROOF. It is incumbent upon the plaintiff in an action for injuries to live stock during shipment to show what injury, if any, resulted after the act of negligence by the company upon which the claim for recovery is based, where it appears that most, if not all, of the injury was done before such act. 53 2596 139 1599 |