Third Nat. Bank v. Steel

• Decision Date: 11 February 1902
• Citation: 88 N.W. 1050,129 Mich. 434
• Court: Michigan Supreme Court
• Parties: THIRD NAT. BANK OF NEW YORK v. STEEL.

88 N.W. 1050

129 Mich. 434

THIRD NAT. BANK OF NEW YORK v. STEEL.

Supreme Court of Michigan

February 11, 1902

Error to circuit court, Clinton county; Frank D. M. Davis, Judge.

Action by the Third National Bank of New York against George A Steel. Judgment for defendant. Plaintiff brings error. Affirmed.

Spaulding Norton & Dooling, for appellant.

H. E Walbridge, for appellee.

MONTGOMERY, J.

This is an action brought against the defendant to recover the amount of a loan made to Robert M. Steel, which loan, it is alleged was induced by the false and fraudulent representations of the defendant, George A. Steel. The declaration avers that on the 27th of June, 1895, the defendant represented that Robert M. Steel was worth a sum in excess of $1,000,000; that this representation was made through the instrumentality of an innocent agent, Gen. Spaulding, to whom was committed an unsigned statement of the resources and liabilities of Robert M. Steel under date of March 1, 1895. The plaintiff introduced testimony tending to support the averments of the declaration. The defendant offered no testimony in the case but rested his defense upon the legal ground that our statute (3 Comp. Laws 1897, � 9518) denies any remedy to the plaintiff in such case. The plaintiff shows that no such statute as that in question is in force in New York, and contends that, as it was expected that Gen. Spaulding would exhibit this statement to the plaintiff in New York, the law of New York should govern, and that the Michigan statute constitutes no bar. This is the first and most important question presented in the case. The authorities are not in harmony as to whether, under a statute such as the one in question, the transaction is wholly void, or whether the effect and force of the language is simply to exclude the remedy. There are not wanting authorities which sustain the contention of plaintiff, and which hold, in construing statutes similar to this, that the case is to be ruled by the law of the state where the transaction occurs or the contract is made, and that a contract valid in another state is not rendered invalid in the state where the action is brought. Plaintiff's counsel cite and rely upon the case of Kling v. Fries, 33 Mich. 275, in support of their contention. The question involved in that case was whether a contract valid in the state where it was entered into could be enforced in this state, in view of our statute (3 Comp. Laws 1897, � 9516), which provides that 'no contract for the sale of any goods, wares or merchandise, for the price of fifty dollars or more, shall be valid, unless the purchaser shall accept,' etc. It was held that this section of the statute had reference to contracts made within the state; and such, we think, would be the holding in any jurisdiction. There are, however, cases, like Cochran v. Ward, 5 Ind. App. 89, 29 N.E. 795, 31 N.E. 581, 51 Am. St. Rep. 229, which apply the same rule to a statute such as the one involved in the present case. Our statute reads as follows: 'No action shall be brought to charge any person, upon or by reason of any favorable representation or assurance, made concerning the character, conduct, credit, ability, trade or dealings of any other person, unless such representation or assurance be made in writing, and signed by the party to be charged thereby, or by some person thereunto by him lawfully authorized.' 3 Comp. Laws 1897, � 9518. The peculiar wording of this section distinguishes it from those sections of the statute which declare that a contract made without certain prescribed formalities shall not be valid, or shall be void. The cases which fail to note this distinction usually refer to Story, Confl. Laws, � 262. The first case in which the distinction between the two sections was noted is the carefully considered case of Leroux v. Brown, 12 C. B. 801. This case was argued at length. A separate opinion was filed by each of the justices, all concurring, and the conclusion reached that under the language of the statute (section 4 of the British act), which provides that 'no action shall be brought upon any agreement,' etc., the contract was not necessarily void, but that this provision affected the remedy, and that, as it affected the remedy, the lex fori governed. The views expressed by Judge Story in his work above cited were called to the attention of the court, but the chief justice answered by saying, 'Dr. Story puts the fourth and seventeenth sections together, as both avoiding the contract;' showing that, in the view of the court, Judge Story had failed to note the true distinction. This case of Leroux v. Brown was followed in Downer v. Chesebrough, 36 Conn. 39, 4 Am. Rep. 29, and was cited approvingly by Mr. Justice Matthews in Pritchard v. Norton, 106 U.S., at page 134, 1 S.Ct. 102, 27 L.Ed. 104. In Brandt, Sur. � 52, it is said: 'The statute of frauds does not provide that the contract to answer for another shall be illegal or void if not in writing. It says 'no action shall be brought.' The contract is just as legal since the enactment of the statute as it was before, but no action can be brought to enforce it. * * * As the prohibition is against the remedy, the courts of a country in which the statute prevails will not enforce an unwritten contract of suretyship or guaranty made in another country which was perfectly valid and enforceable in the country where the contract was...