224 Mich. 240 | Mich. | 1923
This action is brought to recover money paid to defendant by plaintiffs and their assignors, some 15 in number, for stock in an Oklahoma oil company and which stock was sold in violation of the so-called blue sky law (3 Comp. Laws 1915, § 11945 el seq.). Plaintiffs had judgment on a directed verdict for $6,600. The sales were of stock owned by defendant, numbered at least 17, and were made in the course of continued and successive transactions of a similar nature. The validity of the act was
Upon the trial defendant was called for cross-examination under the statute by plaintiffs’ counsel, and over objections and protests of his counsel was by the ruling of the court required to testify to the facts that the stock sold by him had not been approved by the Michigan securities commission; that he had no dealer’s license; and to give in detail the various sales made by him. Defendant’s counsel here insist that this was in violation of defendant’s constitutional and statutory rights, and that without some of the testimony so given a case was not made by plaintiffs. Plaintiffs’ counsel insists that they supplied proof of the sales later and that the question is not properly saved for review and not reviewable in this proceeding, and that in any event they were entitled to the testimony. It is true that plaintiffs did later establish the sales to witnesses called by them, but they did not prove the basic fact necessary to recovery, i. e., that the stock had not been approved or that defendant was not a licensed dealer, except by such testimony. The statute is a penal one (3 Comp. Laws 1915, §§ 11958, 11967), and as soon as plaintiffs’ counsel commenced to ask defendant questions the answers to which would establish that defendant had violated its provisions, defendant’s counsel promptly interposed the proper objection. This objection was repeated several times and finally it was agreed between counsel and the
This necessitates the determination of whether defendant’s constitutional or statutory rights were invaded. We think both were violated. Section 16, article 2, of the State Constitution provides:
“No person shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty or property, without due process of law.”
This is similar to the constitutions of the other States of the Union and to the Federal Constitution.
Section 12547, 3 Comp. Laws 1915, provides:
“Any competent witness in a cause shall not be excused from answering a question relevant to the matter in issue, on the ground merely that the answer to such question may establish, or tend to establish, that such witness owes a debt, or is otherwise subject to a civil suit; but this provision shall not be construed to require a witness to give any answer which will have a tendency to accuse himself of any crime or misdemeanor, or to expose him to any penalty or forfeiture, nor in any respect to vary or alter any other rule respecting the examination of witnesses.”
In 40 Cyc. p. 2539, it is .said:
“A number of authorities adopting a literal construction of the language of the constitutional provisions under discussion have held that the protection against disclosure is available only in a criminal proceeding against the person who claims such protection and not in a proceeding of a civil nature; but there is*244 also authority for the view that the witness is protected against disclosure in any proceeding or investigation whether such disclosure is sought directly to establish his guilt or indirectly and incidentally for the purpose of proving facts involved in an issue between other parties, and is applicable in civil as well as criminal proceedings.”
This State has aligned itself with those States which have given the constitutional provision a liberal construction. In Re Moser, 138 Mich. 302 (5 Ann. Cas. 31), it was said by this court, speaking'through Mr. Justice Grant:
“Under the Constitutions of Michigan and the United States, no witness can be compelled to give’ testimony which might tend to criminate himself or expose him to criminal prosecution. The provision in each Constitution is the same.”
See, also, In re Mark, 146 Mich. 714; People v. Maloy, 204 Mich. 524. Compelling defendant to give testimony which would clearly establish that he had violated the penal provisions of the blue sky law and basing a directed verdict on such testimony constituted reversible error.
The theory upon which plaintiffs may recover is that they and their assignors have rescinded the sale made to them in violation of the blue sky law. They seek to recover what they have paid under a void contract. So to do they must tender or offer to return what they have received. They cannot retain what they have received and recover what they have parted with. They must tender or offer to place the defendant in statu quo. This is settled by numerous cases; among them see Hinchman v. Matheson Motor Car Co., 151 Mich. 214; Galvin v. O’Brien, 96 Mich. 483; Crippen v. Hope, 38 Mich. 344; Niederhauser v. Railway Co., 131 Mich. 550; Crawley v. Studebaker Corporation, 183 Mich. 462. The testimony discloses that before bringing this suit
“The counsel for plaintiff argues upon the supposition that the note wag worthless, and therefore a tender of the same on the trial would have been sufficient under the authorities in this State (see Dayton v. Monroe, 47 Mich. 194; Stubly v. Beachboard, 68 Mich. 401); and that the defendant had the note upon the trial, and actually received it before the trial, but after the writ of replevin was served. But the court did not treat the note as worthless, as it could not well be so treated in the light of the testimony*246 in the case. * * * If the defendant had exchanged property for the horse in question, it is clear that the plaintiff could not have replevied the horse without a tender back to the defendant of such property. If the plaintiff elects to rescind the contract, he must do so altogether. He cannot retain what he has received, and claim what he exchanged for it also. In such a contract, the title to the property passes to the vendee, subject to the right of the vendor, upon discovering the fraud, to elect whether he will rescind the contract by returning or offering to return whatever of value he may have received and reclaim his property, or whether he will retain the consideration, and treat the bargain as subsisting. Until he makes such election the contract continues, and the title to the property remains in the purchaser. Wilbur v. Flood, 16 Mich. 40 (93 Am. Dec. 203); Moriarty v. Stofferan, 89 Ill. 528; Thompson v. Peck, 115 Ind. 512 (18 N. E. 16, 1 L. R. A. 201); Powers v. Benedict, 88 N. Y. 605; Farwell v. Hanchett, 120 Ill. 573 (9 N. E. 58); Wells on Replevin, § 331; 2 Parsons on Contracts, p. 780. If the vendor has received nothing of value, there is nothing to return, and the bringing of the suit is a sufficient disaffirmance of the contract. If, therefore, the note taken upon such a sale is worthless, a tender upon the trial in court has been held sufficient. But in this case I think the defendant was entitled to have a tender of the note made to him, and a demand for the horse, before replevin could be maintained."
In the instant case the undisputed testimony establishes that the stock was worth over $5 a share so that a case of worthless paper is not involved. Obviously if the paper is of no value it need not be returned and it is equally obvious that if it is of value it must be returned. In the recent case of Randall v. Railway Co., 215 Mich. 413, deceased had executed a release upon payment to him of $250. It was claimed that the settlement should be rescinded for fraud. The $250 was not tendered until the trial. It was held to be too late. It should be further stated that the evidence in the instant case did not excuse a tender.
For the errors pointed out the case must be reversed and a new trial granted. Defendant will recover costs of this court.