Clement v. Buckley Mercantile Co.

137 N.W. 657, 172 Mich. 243, 1912 Mich. LEXIS 908
CourtMichigan Supreme Court
DecidedOctober 2, 1912
DocketDocket No. 117
StatusPublished
Cited by26 cases

This text of 137 N.W. 657 (Clement v. Buckley Mercantile Co.) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clement v. Buckley Mercantile Co., 137 N.W. 657, 172 Mich. 243, 1912 Mich. LEXIS 908 (Mich. 1912).

Opinion

Steers, J.

This is an appeal from a decree of the [245]*245"Wexford county circuit court, in chancery, requiring defendant to return certain money, retransfer certain stock, and reconvey certain real estate, previously paid, transferred and conveyed to defendant by complainants in settlement of an alleged shortage of complainant George Clement, while in defendant’s employ. Complainants’ claim of right to such decree is based upon the charge that they were induced and impelled to make over said property to defendant through fraud and misrepresentation as to the amount of such alleged shortage and threats of criminal prosecution against complainant George Clement for embezzlement; also, that, as to complainant Mildred Clement, who joined in a conveyance of their homestead, there was absolutely no consideration.

Defendant, the Buckley Mercantile Company, is a corporation organized in October, 1908, with a capital stock of $20,000, engaged in general mercantile business at the village of Buckley, in Wexford county. Complainant George Clement participated in its organization. He was awarded 50 shares, $500 worth, of its capital stock, and entered its employ, being elected a director and secretary of the corporation. He was experienced in mercantile business and bookkeeping, had resided in Buckley for some years, where he had a general acquaintance, was on friendly terms with the members of the new organization, and was regarded as a desirable person to be actively employed by the organization. He did not pay for his stock at the time of taking it, but the necessary funds to purchase it were advanced to him by Glen A. Brigham, one of the principal stockholders, whom he was to repay within a year. He made the repayment at the end of 18 months. The directors elected at the time of organization were said Brigham, Carl S. East, Wilbur Earl, and said Clement, who continued in office up to the time Clement ceased his connection with the concern. East was chosen president and general manager, being also in active employ of the company. Clement, a secretary and bookkeeper, was put in charge of the books, accounts, and [246]*246office work in general. Both of them went upon the floor with the clerks, acting as salesmen when time from other duties permitted and business demanded.

According to the by-laws of the corporation, Clement’s duties as secretary were to make reports to the directors and stockholders, issue notices, and keep minutes of meetings, and to countersign all certificates, contracts, checks, and other papers and instruments of the company. A treasurer was elected, as provided for in the by-laws, but does not appear to have performed the duties of such office, which were attended to for the most part in the office at the store by Clement, or under his direction. He was in charge of the cash, signed checks, kept the books, and looked after the accounts and business details of the concern. Defendant began business October 17, 1908. The following December a “ cash carrier system ” was installed and maintained until July 1, 1910, when it was abandoned, and replaced by a cash register. While the cash carrier system was used, a cashier’s desk was located in the office at the rear of the store, where a cashier was stationed to attend to the business as it was sent in over the carriers from the clerks on the floor. Slips were used by the clerks, on which business transactions with customers were minuted, and transmitted, together with any money received, to the cashier, who took the slips and money from the carriers, made change when required, looking after the cash, and preserving the slips during business hours. Four kinds of slips were used, indicating different transactions, known as “cash sales,” “charge sales,” “ cash paid out,” and “credit slips.” The cashier had separate spindles on which to put the slips of each clerk. These slips were furnished in pads of 50, each slip being numbered, running from 1 to 50 on each pad. The pads were issued to the clerks as needed. They could be, and were supposed to be, made in duplicate when the business minuted on them was transacted; a carbon copy being given to the customer. These slips, so made out, were the first and original records of the business. At [247]*247the close of each day, the sorted slips would be gone over in the office, the cash counted and the day’s business figured up, balanced when possible, and eventually entered on the books. The cashier usually arranged and classified the slips, and footed up the cash sales the same evening, or the next morning.

Clement was usually the first one at the store in the morning, and it \yas his custom to then make a computation of the previous day’s business, count the cash, and put figures on a slip of paper, showing cash on hand, less items of cash paid out and change placed in the cashier’s drawer, and then attach this memorandum to the cash carrier slips of the day, which were subsequently laid away. Discrepancies between the cash received and the records were of common occurrence, and frequent errors arose, which were a topic of general discussion in the office. Clement was the responsible party in charge of the cash and books. He admits that such errors and discrepancies developed and continued, but attributes them to conditions existing in the store and the system of doing business; points out that different persons were employed as cashiers, some with and some without previous experience; that the safe containing the money, except that carried in the cashier’s till to make change, was left open during the day; that at times, when the cashier was absent, the clerks went to the desk and made their own change; that some of the slips issued to the clerks were never returned to the cashier’s desk, and no account was kept of those missing, without which a complete check on the business was impossible. It is contended in his behalf that, with the methods followed, it would be at least equally probable that some one else was, or might have been, responsible for any shortage which arose. The testimony as to the manner in which business was conducted is voluminous. Without going into further details on that branch of the case, it can fairly be said that, under the system adopted, and method of executing it, discrepancies naturally arose, and opportunities for leaks, [248]*248difficult of detection, developed. Though Clement was in authority and had charge of these matters, he offers no testimony imputing dishonesty to, or raising suspicion against, any other employé.

Whether well founded or not, certain things done by Clement, and reports of goods taken from the store, and money received by him for the store of which they found no record in the books, resulted in other officers of the corporation becoming suspicious of him. They finally called a meeting on August 2, 1910, when he was told of their lack of confidence in his integrity, and asked to resign. Conditions and reasons were discussed with him, and he was told of certain things which were unsatisfactory and had aroused suspicion. He gave his explanation of such matters and protested his innocence, but stated he was willing to resign, and did so. He asserted his books were correct, and cash would balance within $2 or |3. It was proposed that his books be audited. He testified that he demanded that they be audited, offering to pay part of the expense of so doing. Others present at the meeting testified that, when the subject was broached, he asserted the books were right, and it was foolish to install a new set or to have his audited. It was subsequently decided to have an audit of the books and accounts.

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Cite This Page — Counsel Stack

Bluebook (online)
137 N.W. 657, 172 Mich. 243, 1912 Mich. LEXIS 908, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clement-v-buckley-mercantile-co-mich-1912.