Case Name: MOSHER v. LANSING LUMBER CO.
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1897-05-11
Citations: 112 Mich. 517
Docket Number: 
Parties: MOSHER v. LANSING LUMBER CO.
Judges: Montgomery and Moore, JJ., concurred with Long, C. J.
Reporter: Michigan Reports
Volume: 112
Pages: 517–544

Head Matter:
MOSHER v. LANSING LUMBER CO.
1. Trusts and Trustees—Contracts—Consideration.
Complainants sold certain standing timber to a lumber company under a contract which provided that the title to all logs, timber, and lumber should remain in the vendors until full payment of the purchase price. While a large amount remained due, the purchaser became financially embarrassed, and executed a trust deed of all of its assets for the benefit of creditors. By the terms of the deed, the trustee was authorized to pay up the land contract, and to advance or borrow moneys for this purpose. Complainants wrote several letters to the trustee, urging payment of their claim, stating that the same was secured by land contracts covering, not only the standing timber, but the logs and lumber as well, and declaring that, unless the matter should be taken up at once, they would be obliged to protect themselves by due process of law. In reply the trustee assured them that he had their claim in mind, and hoped, in a reasonable time, to pay them something thereon, urged them to let the matter rest quietly, and suggested that, their security being perfectly good, it would be unjustifiable for them to take the measures threatened. Held, that this amounted to a promise to pay complainants’ claim if they would forbear taking possession of the property, for which promise the forbearance of the complainants constituted a sufficient consideration.
3. Same—Insurance—Equitable Liens.
The property having been destroyed by fire, payment of the claim was compelled from the proceeds of insurance effected in the name of the trustee.
Hooker and Grant, JJ., dissenting.
3. Conditional Sale—Insurance—Rights of Vendor.
Under a contract of sale reserving title in the vendor until payment of the purchase price, and authorizing him to insure the property, and charge the cost to the vendee, the vendor has no equitable claim upon the proceeds of insurance procured by the vendee to protect his own interest, even though the vendee had upon several occasions, at the request of the vendor, obtained insurance for the latter’s benefit, and forwarded the policies to him. Per Hooker and Grant, JJ.
Appeal from Clare; Dodds, J.
Submitted November 19, 1895.
Original opinion December 30, 1895.
Rehearing granted July 21, 1896.
Reargued November 18, 1896.
Final opinions May 11, 1897.
Bill by Alfred Mosher and Spencer O. Fisher against the Lansing Lumber Company and the Michigan Trust Company, to compel the latter company, as trustee, to apply the proceeds of certain insurance policies to the payment of an amount due complainants from the Lansing Lumber Company under certain land contracts, and to foreclose said contracts. From a decree for complainants, defendant the Michigan Trust Company appeals.
Affirmed.
The complainants in this case owned in fee the descriptions of land set forth in the bill of complaint. On the 21st day of November, 1887, complainants entered into a contract with O. M. Barnes and W. H. Dodge to sell to the latter parties certain lands in the county of Clare. On the 2d day of July, 1888, this contract was assigned by Barnes and Dodge to the Lansing Lumber Company, a corporation, one of the defendants. On the 5th of December, 1888, complainants entered into another contract with the Lansing Lumber Company to sell it other lands in the said county. By the terms of each of the said contracts, the second parties were not permitted “to cut or carry away from the lands any timber, wood, or other material, without the consent, in writing, of complainants being first had and obtained therefor; and, in case of any such wrongful cutting, second parties shall be considered as trespassers.”
The Lansing Lumber Company, being unable to cut timber off the land under these contracts, about the 24th day of September, 1890, entered into a third written contract with the complainants, whereby it was provided that the Lansing Lumber Company might cut and manu facture the timber from these lauds into lumber, and mark the logs and lumber with complainants’ mark, and that—
“The entire title, ownership, and right of possession in and to all logs, timber, and lumber manufactured from the said lands shall be and remain in complainants until the full payment of all moneys due or to become due on either or both contracts, and the notes executed in connection therewith, or any notes executed in renewal of such notes, are paid.”
“Said first parties may insure same in their own names, or otherwise, as they may deem advisable, and said second parties shall pay the expense thereof; and in case second party shall fail to pay for such insurance, and first party shall pay the same, second parties shall pay to first parties such cost and expense of insurance, together with interest thereon at the rate of 7 per cent, per annum, which amount shall be added to the sums to become due and payable under this contract, and be considered as a part thereof.”
All the logs and lumber then cut were marked with the marking iron of the complainants, as provided, and all logs and lumber thereafter cut were so marked. After the making of this contract, insurance held by the Lansing Lumber Company on the lumber cut and piled at the mill, to the amount of $60,000, was indorsed, “Loss, if any, payable to the complainants,” which insurance was kept renewed; but such renewals, after the second year, were not made payable to the complainants. In May, 1893, the Lansing Lumber Company executed to defendant the Michigan Trust Company a deed of trust for the benefit of the creditors of the Lansing Lumber Company, dated May 1st, but executed later. The trustee was authorized “to advance or borrow money to pay up these and other land contracts, and perfect the title to the land so held.” The trust deed also contained a further provision for the payment of these land contracts out of moneys received by the trustee, “before applying any to the payment of the bonds issued with the trust deed.” After giving the trust deed, the Lansing Lumber Company continued to carry on the business under the provisions of the trust deed, and effected insurance on all the logs and lumber of the Lansing Lumber Company, payable to the Michigan Trust Company as trustee. There was due complainants, at the time of giving the said trust deed, about $12,000 upon said contracts, which, with the interest, is the indebtedness upon said contracts for which this suit is brought. On or about the 10th of March, 1894, the mill in which the lumber was manufactured, together with the lumber in the yard", including the lumber the title of which was in complainants, was consumed by fire, and the Michigan Trust Company was paid by the insurance companies insurance thereon to the amount of $60,000. This suit is to foreclose the said contracts, and to have the amount due thereon paid by the trustee out of the moneys received on the insurance policies that cover complainants’ lumber. Decree was rendered for complainants.
T. F. Shepard and M. V. Montgomery, for complainants.
Fletcher & Wanty, for appellant.

Opinion:
Grant, J.
(after stating the facts). This case is ruled by First Nat. Bank of Ionia v. Michigan Trust Co., 105 Mich. 107, unless the provisions of contract No. 3 bring the complainants without it. Neither the trust company nor any of the creditors of the Lansing Lumber Company had knowledge of the existence of this contract at the time the compromise was effected between that company and its creditors which resulted in the execution of the trust deed, nor did either know of its existence until after the fire. A committee of creditors was appointed to examine into the affairs, and report upon the assets and liabilities, of the company. They went to Dodge, the place where the mill plant and the lumber and logs were situated, and reported to the creditors. Among the assets so reported was an item of lumber amounting to $43,533, and logs amounting to $71,864.55, in which were included the lumber and logs in contro versy. The committee for the creditors, as well as the creditors themselves, made this settlement upon the basis that the lumber and logs in the mill yard and boom at Dodge were the property of the lumber company. The complainants stood by, knowing the situation, and made no claim to it, and did not inform the committee or any of the creditors of the existence of contract No. 3. The trust company obtained insurance upon this property as its own, and without any knowledge of that contract. After the property was destroyed, Mr. Fisher said to Mr. Withey, the president of the trust company:
"I sat by, and let the Lansing Lumber Company make this mortgage, and never said a word about my claim, because I always had a high regard for Mr. O. M. Barnes, and did not want to do anything that would stand in his way."
Mr. Barnes was largely interested in that company. Complainants cannot therefore be now permitted to set up this contract as creating a lien upon the insurance money, as against other creditors. This is not the case of the ordinary assignee, who acquires no greater rights than his assignor. The trust deed was a compromise between the company and the creditors, made by the latter without knowledge of the complainants' claim, and in reliance upon this property as constituting a part of the assets, and for a good consideration.
Decree reversed and bill dismissed, with costs of both courts.
The other Justices concurred.