Mack v. Engel

Brooke, J. (after stating the facts). We will first dispose of the questions raised by the motion. We are of opinion that the statute relied upon by complainant contemplates the payment of but one fee to the register. When this fee is once paid by either party, the opposite party may seasonably claim an appeal, and the costs, including the appeal fee, will be taken care of by the final decree. The other reasons'assigned by complainant for the dismissal of defendant’s appeal have been examined, but we find them to be without merit. The motion to dismiss is therefore denied. The next question raised is that of interest on sums due from the Mack Sleigh Company to George Engel, computed from time to time at the rate of 6 per cent, per annum. On behalf of complainant it is urged that no interest should be allowed. On the other hand, defendant Engel contends that it was error to reduce the amount charged from 6 to 5 per cent. As between partners, there is no doubt that a partner who makes advances for partnership purposes beyond the amount of his agreed contribution is entitled to collect interest thereon, at the customary legal rate, even in the absence of any express agreement therefor with his co-partners. 30 Cyc. p. 444, note 19; Bundy v. Youmans, 44 Mich. 376 (6 N. W. 851). A member of a partnership association, limited, would certainly be in no worse position as to interest upon advances than a member of an ordinary partnership. 2 Cook on Corporations ( 6th Ed.), § 692. Assuming, therefore, the right of George Engel to collect interest on his advances, to the Mack Sleigh Company, at what rate should it be computed ? Act No. 207, Pub. Acts 1899, fixes the legal rate at 5 per cent., but provides that it shall be lawful for the parties to stipulate in writ [551] ing for the payment of any rate of interest, not exceeding 7 per cent, per annum. It was claimed by defendant that it was agreed between him and complainant John Mack that a rate of 6 per cent, should be charged. We are disposed to believe that this agreement was made as claimed, in view of the undisputed testimony that Engel, himself, was borrowing money for the Sleigh Company, and paying that rate for it, and further, that he rendered monthly statements to Mack showing the balance due which included interest charges. 'It would be entirely equitable, therefore, to make the allowance at 6 per cent.; but, inasmuch as there is no claim made that the agreement for that rate was in writing, as required by the statute, we must hold that the learned circuit judge was correct in reducing the rate to 5 per cent. Defendant’s second position, in which he now seeks, as between himself and the Macks, to avoid the effect of the sale of the Mack Sleigh Company to the Doxtator Company, is untenable. He himself procured the interlocutory order confirming that sale, and we think he is now estopped from questioning its validity, so far as it affects the status of the Macks. It is claimed by complainant that George Engel should not be permitted to make a profit on his sales of lumber to the Mack Sleigh Company. 2 Cook on Corporations (6th Ed.), § 662, discussing such contracts, says: “ Such contracts as these are investigated very closely by the courts. They are not necessarily void, and are not constructively fraudulent. But if there is actual fraud, or if.there has been an undue advantage taken, or an unconscionable bargain made, the court will'set it aside. If the transaction is fair, the court will sustain it; if it is unfair, the court will undo it.” We have examined the record carefully and are convinced that Engel dealt with the Mack Sleigh Company in good faith, and charged no more for the lumber sold to it than the current market price for such stock, and that [552] the prices charged were at all times agreed to between himself, or his subordinate Miller, and Mack. Complainant invokes section 6088, % Comp. Laws, and claims that, as several of the purchases of lumber amounted to more than $500, Engel may not recover. As before pointed out, the transactions were in good faith, were fully executed, and the lumber, the subject-matter of the contracts, appropriated to the use of the Mack Sleigh Company. Aside from this, the association is not a party to this proceeding, and the acts of the complainants, covering a period of seven years, during which they acquiesced in the course of dealing, should now be held to estop them from questioning the validity of the transactions. As bearing upon this question, it may be noted that each year reports were made to the secretary of State as required by law, which reports were signed by George Engel and John Mack, and verified upon oath by John Mack. The indebtedness due from the company to Engel was truthfully shown in these reports, and included in such balances were the sums charged by Engel for the lumber sold and delivered, as well as those charged for interest and keeping the books. The disposition made by the court below of the claim that Engel compelled the Mack Sleigh Company to do re-sawing for him at a loss during the first months after the association was formed is affirmed. Engel’s account, therefore, as fixed by the circuit judge, will be permitted to stand. Complainant claims that she should be permitted to participate in the profit made by Engel on lot 6, which he bought for $1,400, and sold to the Doxtator Company for $3,000. We agree with the court below in holding that this was an individual transaction on the part of Engel but, aside from that, the sale to the Doxtator Company, now having fallen through, there are no profits. Engel has bought and paid for lot 6, and he now has it on hand, and has offered to turn it over to complainants for $1,400, the price at which he purchased it. [553] Complainant Ida Mack, whose stock in the association had been presented to her by her husband at the time of the organization, evidently intrusted her interest to her husband. His salary, as manager, during the eight years of operation just about equals the amount of the indebtedness to Engel. After the lapse of all these years, she cannot be heard to say that, in conducting the business as he did, he acted without her authority. By compelling Engel to stand by his proposition to credit his account with $6,000 for the Doxtator stock, it is apparent he will lose a considerable sum on the re-transfer of the property to him. The record shows that lot 5, together with the building thereon, is probably worth not to exceed $3,000 or $4,000. Aside from this loss, the original investment of over $2,000 is a total loss. To further penalize Engel for an attempt, made in good faith, to put new life into a, moribund concern, would, in our opinion, be inequitable. Although the Mack Sleigh Company is not a party to this proceeding, we can see no reason why the order for its dissolution should not stand. All parties in interest ask for such a decree, and the rights of creditors are protected by its terms. The decree of the court below is affirmed, and the cause remanded for further proceedings in accordance therewith. No costs will be allowed either party upon this appeal. Hooker, Moore, MoAlvay, and Blair, JJ., concurred.