goods in the possession of one Bromley, from whom they were replevied, after futile efforts to adjust the matter and an offer to reimburse him for money paid for the stock. Bromley made the claim to the plaintiff that he had purchased the goods, and had paid 50 cents upon the dollar, as per an alleged inventory which he said was taken. No testimony was offered upon behalf of the defendant, and the learned circuit judge directed a verdict for the defendant. The brief of counsel for the appellee concedes that, "if the plaintiff had shown any fraud on the part of Bothwell in obtaining the goods, the defendant would have had, under the law, to prove the bona fides of his purchase," and proceeds to argue that fraud in the purchase of the goods was not shown.

We are of the opinion that there was evidence from which the jury might have inferred fraud, as the testimony indicated that Bothwell deliberately planned to establish a fictitious reputation for his firm, by applying embezzled funds in part payment for purchases. The large quantity of goods purchased was disproportionate to the business of the concern, and the disposition of the property for a price much below its value, followed by the absconding of Bothwell, are significant facts, and leave little doubt that the scheme was a fraudulent one from its inception.

Whether the burden of showing his bona fides was upon the defendant we need not inquire, as the testimony shows that he admitted that he had suspicions regarding the proposed sale of the stock, and waited to see if any one would assert rights against the goods; and, although he knew that the goods were nearly all bought from the plaintiff, and thought it strange, he took no steps to ascertain whether it had a claim upon them, but, after waiting for a time, concluded to take his chances and close the deal. He did not take the witness stand himself, or offer any proof as to the bona fides of his purchase or the payment for the goods. This testimony was sufficient to raise a question for the jury. "To constitute good faith, there must not only be an absence, not alone of participation in the fraud or collusion with the vendee, but also of knowledge or even notice of the fraud, or of facts and circumstances calculated to put an ordinarily prudent business man on inquiry, so that he would ascertain the truth." See 8 Am. & Eng. Enc. Law, 481, and cases cited. In this case the defendant admitted, not only that there were facts calculated to make a man suspicious, but that they actually raised his suspicions; yet he took no means to ascertain whether they were well founded, and allowed his suspicions to be allayed by the fact that Bothwell was working for a reputable house. The case should have gone to the jury upon both questions. The judgment is reversed, and a new trial ordered. The other justices concurred.

SMITH v. GEORGE T. SMITH MFG. CO. et al.

(Supreme Court of Michigan. PARTIES

Dec. 13, 1898.)

- INTERVEN

ACTION FOR ACCOUNTING TION BY GENERAL CREDITOR. How. Ann. St. c. 281, authorizing courts of chancery to entertain bills and petitions in behalf of any creditor of a corporation or stockholder or judgment creditor, does not authorize a general creditor to intervene in an action by a stockholder against the corporation and other stockholders for an accounting.

Appeal from circuit court, Jackson county; Erastus Peck, Judge.

Bill by George T. Smith against the George T. Smith Manufacturing Company and others, in which the George T. Smith Mill Building Company filed a petition of intervention. From a decree dismissing the petition of intervention, the petitioner appeals. Affirmed.

John W. Miner (Grove H. Wolcott, of counsel), for appellant. T. E. Barkworth, for appellees.

LONG, J. The bill of complaint in this cause was filed by George T. Smith, a stockholder, and also claiming to be a creditor, of the George T. Smith Manufacturing Company, a corporation organized under Act No. 232 of the Public Acts of 1885, and the acts amending the same. It is claimed by the bill that the capital stock of such company was $200,000, consisting of 20,000 shares, of the par value of $10 each, and the articles of association were executed by Dwight S. Smith (who subscribed for 4,500 shares), Henry H. Smith (who subscribed for 3,000 shares), and the complainant (who subscribed for 4,000 shares), on the 17th day of February, 1897; that the complainant turned over to the company certain patents and designs and appliances in payment of his stock subscription; and he claims that Henry H. and Dwight S. Smith were, by their agreement, to convey to the company real estate of the value of $75,000 in settlement for their respective subscriptions, but that such transfer of real estate was never made. The bill also sets forth that, at the date of the filing of the same, the debts of the corporation amounted to $9,826.57, which did not include the sum of about $1,500 remaining due to complainant for salary and expenses. Complainant charges that defendant Hiram H. Smith purchased of the company 1,000 shares of socalled "treasury stock," at the par value of $10 per share, but that such stock was never paid for, and such defendant is still indebted to the corporation on that account in the sum of $10,000; that defendant Henry H. Smith caused to be entered in the books of the company false and fraudulent entries, amounting to about $10,000, in favor of himself and brother, Dwight S. Smith, deceased, and against the corporation; that the company has ceased to carry on business, and has sold the aforesaid patents. The bill charges that the report of the company made February 26,

1898, was false, fraudulent, and untrue in fact, and known to be so by Henry H. Smith, one of the directors; and also that Henry H. Smith attempted to cheat and defraud the company out of its rights and equities as to the aforesaid land, and by means of said false charges of $10,000 due from Hiram H. Smith for the 1,000 shares of stock assigned to him. The bill asks to have defendant Henry H. Smith and Thomas E. Barkworth account for their official action in the management of the effects and the disposition of the funds of the corporation, and that they be required to account to the corporation and its creditors for all sums of money and the value of all property they have acquired or transferred or lost or wasted through any violation of their duties as directors and officers, and that a re ceiver be appointed, and the corporation dissolved. The George T. Smith Manufacturing Company filed its answer to such bill, neither admitting nor denying the averments of the bill in regard to the sale of patents mentioned, the land of the value of $75,000, and whether or not Hiram H. Smith was president and a stockholder, as charged, but admits that Hiram H. Smith has never paid the sum of $10,000, to the knowledge of the corporation. Defendant company neither denies nor admits that omissions of entries from the books of the company have been made, or that Henry H. Smith made a fraudulent entry in such books, and that the company would not recognize any liability on account of such entry. Defendant alleges that the charge that its annual report was false and fraudulent was not known to the company. Defendant denies that it is necessary to protect creditors and stockholders; that a receiver should be appointed; and also that complainant has any right to such relief. Defendant sets forth a release by the complainant of all claims against the other stockholders of the company, and authorizing R. M. Newman to collect and settle claims, and cancel and annul a contract with Smith Bros. regarding the organization of the aforesaid company. The defendants Barkworth, Henry H. Smith, Hiram H. Smith, and Zoe M. Smith, administratrix of the estate of Dwight S. Smith, also filed their answers to such bill, defendant Barkworth denying that the report of the company was false or fraudulent, or that he had any knowledge that Hiram H. Smith was a stockholder, and also that said Henry H. Smith had agreed with him that the indebtedness standing to the credit of Smith Bros. ($10,000) should not be considered until all the indebtedness to creditors had been paid. The answer of Henry H. Smith admits that complainant conveyed certain patents, etc., to the company, but denies that the same were received in full payment of his stock, and insists that the land in question had been conveyed by himself and Dwight S. Smith to the Jackson Vehicle Company at the time articles of association were executed; also denies that there was any agreement by which the land should be conveyed to the cor

poration in consideration of the stock issued to him and his brother. He also denies making any fraudulent entries in the books of the concern, and that Hiram H. Smith was a stockholder therein. Hiram H. Smith, by his answer, denies that he purchased any stock in the company, or that he is indebted to it, and claims that the land mentioned was the property of the Jackson Vehicle Company. The defendant Zoe M. Smith neither admits nor denies the averments of the bill, and leaves complainant to his proofs.

On the 21st day of April, 1898, the George T. Smith Mill Building Company of Cleveland, a corporation, by David Morison, its president, filed its petition in this cause, setting forth therein that it was a creditor of the George T. Smith Manufacturing Company, holding two notes of such company, each for the sum of $3,756, dated March 18, 1897,-one payable on or before one year from date, and the other payable on or before two years from date, with interest at 6 per cent. These notes were indorsed by Smith Bros. (composed of Henry H. and Dwight S.), and by George T. Smith. It is asserted in the petition that the petitioning company became aware of the charges of fraud and mismanagement from the bill of complaint in this cause, and charges that the land of the value of $75,000 was contributed by Henry H. and Dwight S. Smith in payment of the stock issued to them, and that Hiram H. Smith was a stockholder of the company, holding 1,000 shares for which he was indebted. The petition sets forth that the debts of the company amount to about $22,000, and the total personal estate to about $14,000, and that, if such real estate and indebtedness could be recovered, such company would be insolvent. Petitioner claims that its rights as a creditor (such notes and interest therein, so far as due, being wholly unpaid) entitle it to be heard in the case, and asks that it may be made a party complainant, and that it may have the benefit of all allegations in the bill, and that defendant may make further answer to the petition, and that Hiram H. Smith may be decreed to pay to the George T. Smith Manufacturing Company the sum of $10,000 which he owes for stock, and that the title to said land may be decreed to be the property of such company. To the petition defendants entered their general demurrer. The petitioner moved to strike such demurrer from the files for irregularity, but such motion was waived. Hiram H. Smith, one of the defendants, died on the 15th of May, 1898; and, on July 9th following, an order was made reviving the cause against his administrators; and, on the same date, the decree was entered, sustaining the demurrer, and dismissing the petition, from which decree the petitioner appeals.

It is claimed that the statute gives the petitioner the right to intervene. This is the only question involved. Chapter 281, How. Ann. St., in addition to the general jurisdic

tion of courts of chancery over matters concerning corporations, gives authority to such courts to entertain bills and petitions in behalf of the state under the direction of the attorney general; also bills in behalf of any creditor of a corporation, or any director, trustee, or officer having general supervision of the affairs of a corporation, or any stockholder or judgment creditor. Section 8150, How. Ann. St., being a part of the same chapter, prescribes the relief to be given upon a proper application by any person entitled to file a bill or petition. It is therefore contended by counsel for the George T. Smith Mill Building Company, which seeks to intervene, that if, under this statute, any creditor, whether a judgment creditor or not, may file a bill or petition to compel the officers of a corporation to account, and for other purposes mentioned in the statute, then such creditor is entitled to intervene in a proceeding such as this. In Iron Works v. Hosmer, 100 Mich. 124, 58 N. W. 693, the petitioner sought to intervene and answer and file a cross bill, resisting the petition filed under this same chapter. The petition was denied in this court. It was said that petitioner could gain no advantage over the other creditors, and that any equities sought to be reached would not be disturbed by the sequestration; that the petitioner was entitled to such relief as the parties filing the bill asked for. In the present case, if the petitioner is allowed to intervene, then any general creditor might be so permitted. Whatever may result from the original proceedings will belong to the creditors. The petitioner has not shown that it has any other or greater rights than any other creditor, or any specific right in the thing which forms the subject of the controversy. General creditors are not permitted to intervene in such cases. Horn v. Water Co., 13 Cal. 62; Welborn v. Eskey, 25 Neb. 193, 40 N. W. 959; Lewis v. Harwood, 28 Minn. 428, 10 N. W. 586. See, also, Heap v. Manufacturing Co., 97 Mich. 147, 56 N. W. 349. We think the statute cannot have the construction contended for. Such construction would permit all creditors to intervene, and might cause endless delays and confusion in the settlement of the questions in litigation. We do not say that a case might not arise in which a general creditor would be permitted to intervene to prevent a collusive adjustment between the petitioning creditors and the corporation, but no such showing is made here. The order below must be affirmed. The other justices concurred.

fraudulent as agrinst a subsequent judgment creditor, who extended credit on the faith of the mortgagor's apparently unincumbered title to the land.

2. A judgment against a firm on confession by one partner only cannot be collaterally attacked as not binding on the co-partners for lack of authorization, where there is nothing in the record to show that the consent of the co-partners was lacking.

3. A judgment creditor who levied on land on which was a prior unrecorded mortgage, fraudulent as to him, cannot bid in the land, and afterwards defeat the priority of said mortgage, where he allowed other bidders and junior lienors to remain ignorant of the fact that he intended to dispute such priority, since that would permit him to gain an unfair advantage in bidding.

Cross appeal from circuit court, Eaton county, in chancery; Peter F. Dodds, Judge.

Bill by Fred S. Belcher, executor, against Jonathan J. Curtis and others. There was a decree for complainant as to all defendants except Swift & Co., from which complainant, and also defendants Wenzel Schrenk and others, a co-partnership, severally appeal. Affirmed.

Huggett & Smith, for complainant. Garry C. Fox (A. W. Brickwood, of counsel), for defendants.

MOORE, J. The defendants Curtis & Son were in May, 1894, engaged in a manufacturing business at Charlotte. May 19, 1894, they gave a mortgage of $15,000 to Frank S. Belcher, deceased, to secure present and future indebtedness. The mortgage was not recorded until the 5th of June, 1895. In the interval between the giving and recording of the mortgage, Curtis & Son purchased goods upon credit from Swift & Co., and from Schrenk & Co., defendants herein. Neither of these companies knew, at the time the credit was given, of the existence of the Belcher mortgage. March 17, 1896, Swift & Co. obtained a judgment against Curtis & Son for $166.20 and damages and costs of suit. A transcript of this judgment was taken to the circuit court. An execution was issued, and a levy made upon the property covered by the mortgage, but no sale of the property was made. June 15, 1896, Schrenk & Co. commenced suit against Curtis & Son, upon which they obtained judgment November 16, 1896, for $2,012, and damages and costs. A levy was made upon the property covered by the mortgage, and it was sold by the sheriff to Mr. Reigleman, the agent, for Schrenk & Co., and for their benefit for the amount of the judgment. No money was paid except the costs, and the execution was returned satisfied. This is a proceeding to foreclose the Belcher mortgage, to which Swift & Co. and Schrenk & Co. are made parties. The circuit judge found that the withholding of the mortgage from the record was a legal fraud against Swift & Co. and Schrenk & Co. He also found that Schrenk & Co. are not in a position to challenge the priority of the mortgage, but that Swift & Co. may chal

lenge its priority. He granted a decree in favor of the complainant against all the defendants except Swift & Co., and postponed the mortgage as to their claim. The complainant appeals from that portion of the decree affecting the claim of Swift & Co. Schrenk & Co. also appeal from the decree.

It is claimed on the part of the complainant that the testimony of Curtis & Son was not competent evidence, as Mr. Belcher is dead, and had knowledge of the same facts about which they testified. We do not think it important to discuss that question. While there is nothing to indicate any moral turpitude, it is not possible to read the record, omitting their testimony, without coming to the conclusion that the mortgage was withheld from the record because it was believed to record it would affect the credit of Curtis & Co. The withholding it from the record enabled them to obtain credit of Swift & Co. and Schrenk & Co., when they would not have been able to do so if the mortgage had been recorded. The failure to record the mortgage operated as a legal fraud upon these creditors.

The complainant attacks the judgment of Swift & Co.-First, because of its form; and, second, because the confession of judgment was signed only by Henry Curtis. We do not think the form of the judgment is fatally defective. The property which is sought to be reached by the execution issued upon the judgment is partnership property. There is nothing in the record to show Jonathan Curtis ever questioned the right of Henry Curtis to confess judgment. In Black, Judgm. § 57, it is said: "A member of a firm has no authority, by virtue of his mere relationship to the partnership or his general power, to act as its agent to confess a judgment against the firm; and, if judgment be entered on such a confession, it will be void as against his co-partners, though binding as a personal charge upon himself." In 17 Am. & Eng. Enc. Law, 1042, it is said that one partner cannot confess judgment without the consent of his co-partners, and the court will relieve the nonassenting partners either by setting aside the judgment or by restraining execution when issued against their individual property. "But it will not be inferred without proof that the confession was unauthorized, and the judgment cannot be ** * collaterally impeached.

* Prior parol

assent is sufficient, however, to authorize such a confession, and a subsequent ratification may be established by proof of circumstances indicating assent." In the note to 1 Lindl. Partn. (2d Ed.) 644, it is said: "Though one partner cannot confess a judgment against another partner, even for a partnership debt, yet a creditor of the firm cannot be permitted to make objection to the judgment on that account; and a sale of partnership property, on an execution issuing from such a judgment, will pass a perfect title to the purchaser, and, if the first lien, will be entitled to the pro

ceeds of the sale, but the judgment will not affect the persons nor the separate property of the other partners. Grier v. Hood, 25 Pa. St. 430." And in Ross v. Howell, 84 Pa. St. 129, it was held that "the interest of all the partners in the partnership property may be sold under an execution upon a judgment confessed by a single partner in the firm name and for a firm debt." There is no question about the indebtedness. The other partner is not questioning the judgment. We do not think the complainants are in a position to successfully do so.

Was the decree wrong as to Schrenk & Co. ? The questions involved are not new in this court. When these defendants learned of the Belcher mortgage, they did not levy upon the property, and then seek to set aside the mortgage before making a sale. The mortgage was good between the mortgagor and the mortgagees, and as to every one else, except creditors who had been induced to give credit, who would not have done so had it been recorded. No one but Schrenk & Co. knew whether they intended to attack the validity of the mortgage. Other bidders at the sheriff sale found the property with what appeared to be a valid mortgage upon it. In making their bids, they would necessarily take that fact into consideration. Would it not be unfair to other bidders and to the mortgagees to enable the judgment creditor to make his bid, and then allow him to have the mortgage set aside?

There is a full discussion of the principles involved, in the case of Messmore v. Huggard, 46 Mich. 558, 9 N. W. 853: "It cannot plausibly be claimed that the law will suffer the judgment creditor to occupy any more favorable position as bidder at his sale than do all other persons. Judicial sales are required to be public for the purpose of inviting full and free competition, with the primary object of producing for the benefit of parties concerned as large a price as public biddings can secure for them. A secondary object is to give all who may desire the property an equal opportunity to compete for it. But full and free competition implies that all parties have equal knowledge of the state of the title; and the policy of the law is defeated if some one party may bid with such advantages as render competition impossible. Ledyard v. Phillips, 32 Mich. 13. But nothing can be plainer than that if the judgment creditor could bid with the secret assurance that he was to have an unincumbered title, when others must suppose they were buying subject to the mortgage, this assurance gave him an advantage in bidding to the full amount of the mortgage, and practically put competition entirely out of the question. Not only would this be unfair to other bidders, and for that reason inadmissible, but it would be particularly unfair to the mortgagee. When the sale appears to be of the equity of redemption only, the mortgagee has no occasion to trouble his mind about it; but, if he were distinctly no

tified that it was made in hostility to his mortgage, he might, even if conscious of his good faith, prefer to redeem, rather than encounter the risks of litigation. This would be his legal right, and it cannot lawfully be taken from him through a secret understanding between the officer and the creditor, of which he has neither actual nor implied notice. It is true that if the defendant Francis Huggard had knowingly accepted a fraudulent mortgage, and becomes a loser thereby, he is entitled to no sympathy; but even voluntary fraud does not put one's interests out of the protection of the law, or entitle the party defrauded to confiscate them. A fraudulent conveyance is good as between the parties (Cleland v. Taylor, 3 Mich. 203; Millar v. Babcock, 29 Mich. 526; McMaster V. Campbell, 41 Mich. 513, 2 N. W. 836); and even creditors are not permitted to assail it, except by judgment and execution (Fox v. Willis, 1 Mich. 321). And there may be equities between the parties which will support a mortgage, void as to creditors, when the creditors do not attack it by proper proceedings. While, therefore, the complainant had an undoubted right to have the bona fides of the mortgage tested before sale, there can be no equity in permitting him to purchase the land apparently subject to the mortgage, and then to have its lien annulled afterwards. He has a right to reach his debtor's property, and have it sold for what it will bring at a fair and open sale; but he has no claim to speculate out of his debtor's fraud, and, by using the mortgage to keep others from competing, obtain the property for so much less than its value. A purchase under such circumstances must be held to be what it appeared to be at the sale,-a purchase subject to the mortgage." See, also, Cranson v. Smith, 47 Mich. 189, 10 N. W. 194; Wolf v. O'Conner, 83 Mich. 301, 45 N. W. 1117. Decree is affirmed, with costs.

HOOKER, J., did not sit. The other justices concurred.

PEOPLE, to Use of WINKLE TERRACOTTA CO., v. COTTERAL et al. (Supreme Court of Michigan. Dec. 13, 1898.) PUBLIC BUILDINGS-SUBCONTRACTOR-MECHANIC's LIEN.

One who furnishes terra-cotta work for a public building, manufacturing it in another state into the designs required by the plans and specifications, which are a part of his contract, and then shipping it to where the building is being erected, where it is taken and put into the building by the contractor, is a subcontractor, and not a material man, within 3 How. Ann. St. § 8411a, requiring contractors of public buildings to give security for the payment of material furnished for such building.

Error to circuit court, Wayne county; Robert E. Frazer, Judge.

Action by the people, for the use and benefit of the Winkle Terra-Cotta Company,

against Joseph W. Cotteral and others. There was a judgment for defendants, and plaintiff brings error. Affirmed.

Warner, Codd & Warner, for appellant. Elliott G. Stevenson, for appellee Bresler.

MOORE, J. In March, 1895, Cotteral & Co. contracted to build the Central High School Building in Detroit. The usual bond given in cases of contracts for the construction of municipal buildings was given by Cotteral & Co. It is claimed the other defendants are sureties upon the bond. The plaintiff furnished the terra-cotta work in the building under a contract made with Cotteral & Co. The contractors failed before the building was completed. The terra-cotta company was not paid for the work which had been furnished by it at the time of the failure, and it brought this suit to recover upon the bond. The defenses were: First, that plaintiff was a subcontractor, and not a material man; second, that plaintiff had granted an extension of time of payment, which released the sureties. Charles E. Bresler claimed he never signed the bond. The circuit judge directed a verdict in favor of the defendants, upon the grounds: First, that plaintiff was a subcontractor; and, second, that an extension of the time of payment had been granted, which released the sureties. Cotteral & Co. took the contract for the entire construction. The plans and specifications required the use of a good deal of terra-cotta work. Much of this was of an ornamental character. The arrangement made between the plaintiff company and the contractors is shown by the following correspondence:

"Cincinnati, O., June 4th, 1895. Winkle Terra-Cotta Co., St. Louis, Mo.-Gentlemen: We would like to receive from you your best quotations on the ornamental terra cotta for the Detroit Central High School, furnished and set complete in accordance with the plans and specifications on file in our offices, room 84, Home Bank Building, Detroit, Mich., and Blymyer Building, Cincinnati. The plans and specifications for this material have not been changed since the time of the awarding of the work, but the architects will allow you to furnish your own designs for the construction, provided they maintain the same exterior faces, and the work will be guarantied strong and secure. We would also like your price on the above material f. o. b. cars Detroit, so that we may figure our own setting, should we think it to our interest. Respectfully, J. W. Cotteral & Co."

men:

"St. Louis, Mo., June 6, 1895. Messrs. J. W. Cotteral & Co., Cincinnati, Ohio-GentleWe have at hand your favor of the 4th inst., regarding the job at Detroit, Mich. We have notified our representatives at Detroit to see your firm in person at Detroit. Messrs. Holmes, Strachan & Co. are at present representing us. We did not make price set in building, as we found, on a building of this kind, and the way the work runs, the