author: Mr. Justice Paxson

text:
    Watkins versus Workingmens’ Building and Loan Association of Hyde Park.
    1. In an action by a building association upon a judgment note given by one of its members, where the defence is payment, the burden of proof that the association has matured is on the defendant.
    2. Where in such an action, it appeared that the association had passed a resolution permitting members who were debtors to cancel their obligations by paying their monthly dues in advance a certain number of months, and also all arrears, of which permission it appeared defendant had not availed himself: Held, that he could not derive any benefit or advantage from said resolution.
    3. The passage of such a resolution will not be deemed to constitute an alteration by the association of the par value of its stock, hut to be based merely on the supposition that at the expiration of the number of months for which permission was given to pay in advance, the stock would at any rate have been wholly paid up and the association reached maturity.
    4. Where in an action by a building association against a member for an amount borrowed by him from the association, for which amount the association holds the defendant's shares therein as collateral security, the defendant having defaulted in the payment both of premiums and interest on his loan, seeks to apply the value of his stock on account of his indebtedness, lie will be entitled to credit only for the amount paid in by him on account of tire said stock, and not to the value of the stock at the time of the trial.
    5. Evidence as to the market value of the shares, of the amount of the assets of the association as affecting said value, or as to the number of members who, having defaulted in payment of premiums, have increased the value of the capital stock by failing to reclaim the premiums already paid by them, and rendering their stock liable to forfeiture, when offered by the defendant in such case, is therefore wholly irrelevant and should be excluded.

      6. A defendant thus seeking to set off the value of his stock held in pledge as aforesaid, is not a withdrawing member within the terms of the Act of April 12th 1859, Parnph. L. 544, and is therefore, not entitled to the privileges conferred by said act.
    7. Where stock is by the terms of the charter or by-laws of the association forfeitable for any cause, it will not be deemed as having been forfeited until action to that effect is taken by the corporation.
    8. Where a jury in addition to their verdict find matter which is merely surplusage, the court is justified in disregarding the surplusage and entering judgment on the verdict.
    9. Where the debtor of a building association, being sued for the amount of his debt, is allowed credit for the amount of the premiums already paid by him upon his stock, said stock having been transferred to the association as collateral security for the debt, the law will regard the transaction as a virtual extinguishment of the stock.
    10. North American Building Association v. Sutton, 11 Casey 463, followed and approved.
    March 29th 1881.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Error to the Court of Common Pleas of Lackawanna county: Of July Term 1880. No. 95.
    Feigned issue, wherein The Workingmens’ Building and Loan Association of Hyde Park, was plaintiff and Tilomas T. Watkins was defendant, to determine the amount due upon a judgment entered in favor of the plaintiff upon a judgment-note given by the defendant for $800, waiving inquisition, &c., which judgment was opened by the court and the defendant let into a defence.
    It was agreed, by writing filed, that the note should stand as a declaration, and that the defendant’s pleas should be nil debet, payment with leave, defalcation and want of consideration.
    The facts, as developed on the trial, before Hand, A. L. J., were as follows: In June 1869, Thomas T. Watkins owned four shares of stock in the said building and loan association, the par value of which at maturity was $200 por share. On June 24th 1869 he bid for and obtained a loan of $800, at a premium of 52 per cent., viz., $416. lie received in cash $384, the difference between $800 and $416. For this loan he gave his judgment-note to the association for $800, and at the same time assigned to the association as collateral his four shares of stock. Judgment was entered of record on the note. Watkins paid monthly dues upon his four shares for 87 months, amounting to $376; and he paid interest upon the loan during the same period, $348, and thereafter neglected or refused to pay anything more.
    At a meeting of the association in January 1875, the stockholders passed the following resolution : “ Resolved, That parties who have taken out loans are permitted to cancel their obligations to the association by paying theiv monthly dues as many months in advance as is sufficient to make the duration of the society 100 months, all arrears to be paid in addition.” At this time Watkins had paid dues and interest for 72 months.
    Prior to the trial, the defendant served on the plaintiffs this notice: “ To the Workingmen’s Building and Loan Association of Hyde Park: I hereby notify you that I desire you to apply the payments made by me upon four shares of stock of your association, assigned by me to you as collateral security for the loan for which the note in the above case was given, to the payment of said note, and upon your so applying them, you may cancel said stock.”
    Under this notice, he claimed credit at the trial, for the value of his stock at the date of the trial, and called upon the officers of the association, on cross-examination, to show its then value. They replied that as the assets consisted of real estate, judgments, forfeited stock, &c., it was impossible to fix the then value; that it could only be determined upon a sale of the assets or upon the winding up of the company.
    It appeared in evidence that a number of non-borrowing stockholders had failed for several years to pay their monthly dues, and the defendant claimed that their stock was ipso facto forfeited under the by-laws of the association, which provided that non-borrowing stockholders who neglected to' pay monthly dues for six months “shall cease to be members of the association,” and that unless application be made within six months from, the time of such cessation of membership for the repayment of the net amount paid in by them, “ such stock to be forfeited to the association.” And the defendant claimed that the payments upon such forfeited stock became a source of profit to the association, making its stock Avorth at least its par value, viz., §200 per share, and as a result thereof his obligation Avas cancelled. It was stated on the argument that the failure of certain stockholders to continue their monthly payments was caused by a doubt existing as to the validity of the charter of the association, which resulted in litigation, and Avas settled in the case of the Workingmen’s Building and Loan Association v. Coleman, 8 Norris 428, in which this court decided that the defects of the charter were cured by the Act of May 11th 1874, Purd. Dig. 1851, pl. 60.
    The plaintiff presented, inter alia, the following points :
    2. That the burden of proof of the maturity of the association, as in other cases Avhere the defence is payment, is upon the defendant. Affirmed. (Eirst assignment of error.)
    3. That the defendant cannot avail himself at this time of the benefit of the resolution passed by the association to accept advance payments up to 100 or 103 months, since the defendant did not accept or act under them. Affirmed. (Second assignment.)
    The defendant presented the folloAving points :
    1. If the jury believe from the evidence that the note in this case was given for the sum of §800, being §200 per share upon the four shares of stock upon which loans were made by the defendant, because that was the par value of the stock per share, and that afterwards the plaintiff duly changed the par value of the stock per share, the principle of the note must be changed proportionately. Ans. [“ We answer this point in the negative We qualify it as follows: The §800 note is given not solely because that was the par value of the stock, but because the defendant proposed to borrow §800 from the association. We say to you that the resolution in evidence passed by the plaintiff, did not change the par value, but was based upon the supposition that the value of the stock would reach $200 in either 100 or 108 months, as the resolution contemplates, and if it had, and this defendant had availed himself of the provision granted by that resolution and paid in advance, he would only have to pay to 100 or 103 months, to which the resolution fixed it. He would have had the benefit of that resolution under his connection with the association.] (3d assignment.) There is no evidence that he did that; the evidence is that he did not do it. This resolution was a very unwise one in our estimation for a regulation governing this association ; but with that wo have nothing to do in this case. If parties have suffered by it there may be an accounting hereafter. Courts will possibly allow parties who have been injured to seek it, but that is a question that does not enter into this case at present.”
    8. The jury must deduct from the note the worth of the stock assigned to the plaintiff as collateral security for the payment of the same. Ans. “ We have already answered this. It is a proper point provided the facts of the case warrant it. But there is no evidence in the case as to what the value of the stock is, consequently the point is not pertinent to the case. (4th assignment.)
    4. In computing the worth of the stock assigned as collateral security for the loan for which the note in this case was given, the collectable assets of the association plaintiff must be divided among the stock of the association. Ans. “ As a rule this is correct law. There are no facts in this case from which you can make this division.”
    5. Stockholders not having taken a loan, who have neglected or refused to pay their monthly dues or fines upon their stock for six months, cease to be members of the association, and if they have not made application to the association for the amount paid in by them upon this stock, less fines and forfeitures incurred within six months after they cease to be members, their stock is forfeited to the association. They are therefore not entitled to any share in the distribution of the assets of the association. Ans. [“ We have already answered this point in the negative during the progress of this case. Wo answer it in the negative now. If by the by-laws of the association parties fail to pay for a certain length of time they forfeit their stock, and if the association act upon it and forfeit the stock, or recognize it as forfeited by an act, then it is forfeited, but if they do not it does not, without other evidence, become forfeited.] (6th assignment). It would be a hard rule to apply to the members of the association, and if we applied it to this member we don’t know where he would be in a defence to this case.”
    The court in the general charge, said :
    “ And we say to you, under the evidence, the undisputed evidence of the case — of course facts are for you — that a proper calculation, as we understand it, is to take the note of $800,' as of the 24th of June 1869, calculate the interest upon that for eighty-seven months down to the time he made the last payment upon the stock, eighty-seven months, then add that interest to the $800, make a principal of it, deduct from that $387 interest which he has paid, which Mr. Clark testified to; after deducting that, calculate the interest on that down to-day for whatever time it is, and from that principal deduct the amount he has paid upon his stock, which the defendant has notified the plaintiff to-day he elects to have applied thereto, to wit, $376; the balance will be a proper verdict for you to render.” (7th assignment.)
    The eighth assignment of error was as follows:
    8. The learned judge erred in rejecting the evidence in answer to the question by defendant’s counsel: Upon how many shares of stock unencumbered in your association, have the stockholders neglected or refused to pay dues for more than a year last past ? Offered for the purpose of computing how many shares of stock there are at present in the plaintiff association for the purpose of computing the worth of the stock per share, the defendant having given notice that he desires the worth of the stock assigned as collateral security to be applied to the payment of this note.
    Ans. “ The evidence is rejected. We will permit the defendant to show how many shares are actually forfeited, but cannot admit this testimony because it is not proposed to show that the association did forfeit these shares by a vote of the association.”
    The ninth assignment, filed at bar, is referred to below.
    The jury found the following verdict in writing: “ We find for the plaintiff in the sum of $518.84, provided that defendant’s four shares of stock in the association (less $376 here credited) is not forfeited.”
    Before the verdict was recorded the court stated to the jury that under the law and the evidence of the case, there was no forfeiture of stock, and that, therefore, their verdict would be taken for the amount as rendered by them for the plaintiff without the proviso. The clerk then read the verdict as so recorded, to which the jury assented. Afterwards the defendant’s counsel asked to have the whole verdict read, which the court allowed to be done.
    A motion for a new trial was discharged by the court, Hand, A. L. J., saying in an opinion filed:

      “We consider that the real verdict in the case, and the only one, is for the plaintiff for §518.87, and is the proper verdict under the law and evidence of the case. But that defendant’s counsel may have the full benefit of the technicality raised, we will pass upon the whole matter read at his request. In view of the testimony adduced by the defendant himself, we consider under the authority of Cavene v. McMichael, 8 S. & R. 441; Fisher v. Kean, 1 Watts 259; Bickham v. Smith, 12 P. F. Smith 45, that the proviso may he treated as surplusage. It shows the ground of the verdict, viz., the allowance of §876, asked by the defendant to be applied to the debt (under his notice) as payment on stock. We consider this notice is equivalent to a surrender of his stock, which we compelled the plaintiff' to accept, under the authority of Early’s Appeal and Spring Garden Association v. Tradesmen’s Loan Association. This is very different from a forfeiture of stock. The testimony nowhere raises that question. It was raised by defendant’s counsel as to non-borrowing stock, but even on that question he did not furnish the evidence of a proper calculation, if wo had decided it in his favor. There being no question in the case as to forfeiture of defendant’s stock, and the verdict showing he was allowed his payments on it by the jury, that part.of the verdict is mere surplusage. The verdict is in exact accordance with the figures proved on the trial, and the calculation is on the same basis as the calculation found in Spring Garden Association v. Tradesmen’s Loan Association, 10 Wright 495, and we deem it is exact equity between the parties.”
    Judgment was thereupon entered on the verdict, and the defendant took this writ of error, assigning for error, the answers to points and portion of the charge, as above set forth.
    Counsel for plaintiff in error, by leave of this court, filed at bar an additional assignment of error, that the verdict of the jury, as rendered, is not according to law, and is void.

      Lemuel Amerman (Henry H. Hess with him), for the plaintiff in error.
    By the terms of the verdict the association has a judgment against Watkins for §518, and Watkins still has some interest in the stock, which he does not want and cannot be compelled to keep. The verdict is not valid to support the judgment.
    The real value of the stock assigned as collateral security is applicable to the payment of the judgment at the election of the shareholders: Early and Lane’s Appeal, 8 Norris 411. Whenever the stock matured or became par in value, the note, for the payment of which the stock was assigned as collateral security, would be paid and the borrower’s obligations cancelled, notwithstanding the reduction of the par value of the stock by the stockholders by their resolution of January 1875. Watkins’s stock was eighty-seven months old, it therefore lacked thirteen months of being matured, or of the par value as fixed by the resolution making the duration of the society one hundred months. The court should have instructed the jury that Watkins should have paid dues for these thirteen months amounting to $104,. which would have satisfied his obligation. It is said the dues were payable monthly in advance. But even if not so paid, it is inequitable that holders should lose the value of their stock.
    The burden of proof as to the worth of the stock, or of the maturity of the same, is upon the association as the only party possessed of the means of proof: 1 Whart. on Ev., 2d ed., sect. 367.
    The unencumbered stock, on which the holders defaulted, became ipso facto forfeited, and, we contend, raised the value of the association stock to par, whereby the association matured. The rule given to the jury to calculate the amount of their verdict was on any theory erroneous

      S. B. Price (with him C. R. Pitcher and E. B. Sturges), for the defendant in error.
    If a man joins a building association, pays one month’s dues and ceases, he will not be entitled, seven or eight years afterwards, to his proportionate value of the stock as represented by the assets. Here Watkins paid eighty-seven months and stopped. He now asks to be credited with the value of the stock, as of one hundred months, less his dues for thirteen months. The trouble is there never can be an ascertainment of such value until the association finally winds up. Under the Act of April 12th 1859, Pamph. L. 544, and in equity, all he is entitled to credit for is what he has actually paid less fines, &c., and that is just what he got in the calculation of the verdict under the instructions of the court. In his notice to us before trial, he only claimed to have his payments set off, and his claim to have the value of the stock set off was an afterthought: Early and Lane’s Appeal, 8 Norris 411; North American Building Association v. Sutton, 11 Casey 463.
   Mr. Justice Paxson

delivered the opinion of the court, May 2d 1881.

The plaintiff below was a building association. The defendant was a member, and had subscribed to four shares of its stock. The par value of said stock was $200 per share. By the law of the association each member was entitled to borrow $200 for each share of the stock so held by him. The defendant obtained a loan of $800, for which he was to pay a premium of 52 per cent. He received for said loan the sum of $384 in cash, the balance, $416, was the premium at which he bought the loan. To secure the money so borrowed he gave a judgment in the sum of $800, and also as a further security transferred his four shares of stock to the association as collateral. He then continued his payments to the association, as required by its charter, until he had paid $348, as interest on the loan, and the further sum of $376 on account of his stock, when his payments ceased, and the association issued an execution to collect the amount of the judgment. Upon the application of the defendant the court below opened the judgment, and an issue was framed to ascertain the amount due. This writ of error was taken to review the rulings of the court below upon the trial of said issue. A number of assignments of error have been filed by the defendant which will be considered in their order.

1. The court instructed the jury, in answer to the plaintiffs second point, that the burden of proof of the maturity of the association, as in other cases where the defence is payment, is upon the defendant. We are unable to perceive any error in this ruling. The defendant had no reason to complain of it in any event, as there was neither allegation nor proof that his stock had matured.

2. Nor was there error in affirming the plaintiff’s third point. It was no defence to the judgment that the association passed a resolution to accept advance payments up to 10S months, as it was not alleged the defendant ever availed himself of the privilege. Had he accepted the offer and made the advance payments required he would have brought his stock to par and thus paid his loan. Instead of doing this he defaulted in his payments, and his rights must be measured from tiiat standpoint.

3. The answer of the learned judge to the defendant’s first point was entirely accurate. There was no evidence of a change of the par value of the stock. That remained at $200 per share. The resolution which was referred to as affecting this change, as correctly stated by the court below, was based upon the supposition that the value of the stock would reach $200 in either 100 or 103 months, and it was for this reason the privilege was given to pay up in advance to that time. If the defendant had accepted the offer the par of his stock would not have been changed; it would have been paid up.

4. 5 and 6. These assignments may he considered together. They raise the really important question of the case, viz., was the defendant entitled to deduct from the judgment the value of the stock assigned by him to the association as collateral security, and if so, how was its value to bo ascertained? The learned judge conceded the right of the defendant to have the value of the stock deducted, but held that inasmuch as there was no evidence in the case of the value of the stock, the point, as presented, was not pertinent. The defendant further contended that certain shares of stock held by non-borrowers were forfeited for non-payment of duos by the rules of the association, and that the value of this stock should be taken into the estimate of the value of the remainder of the shares. The court negatived this claim in its answer to defendant’s fifth point.

These rulings, if not strictly accurate, were more favorable to the defendant than he was entitled to. All that he had a right to claim was allowed by the court. Upon the trial below the defendant offered in evidence the following notice :—

“ To the Workingmens’ Building and Loan Association of Hyde Park : I hereby notify you that I desire you to apply the payments made by me upon four shares of stock of your association assigned by me to you as collateral security for the loan for which the note in the above case was given, to the payment of said note, and upon your so applying them you may cancel said stock.

“(Signed) ThomIs T. Watkins.”

That the defendant had the right to so apply his stock was settled by Early and Lane’s "Appeal, 8 Norris 411. Nor did the court below deny him this right. Evidence was received showing the extent of his payments, and the precise amount — $376—under the charge of the court, was allowed by. the jury as payment pro tanto of the judgment. The defendant was not satisfied with this. He attempted to prove, by the secretary of the association, the actual value of the stock — i. e. how much it would be worth to wind up. This information the secretary could not give. Pie said he did not know the value of the stock; it would depend entirely upon what could be'collected upon the judgments held by the association. The failure of this attempt was natural. The secretary had not been notified that such an inquiry would be made, and had not therefore examined his books with reference thereto, while the notice given by the defendant to the company of his intention to apply the stock refers only to the payments thereon.

It needs but a moment’s reflection to see that the question of the value of the stock was irrelevant. Its value for the purposes of this case was just what the defendant had paid on account thereof. This was all the defendant claimed to apply on the judgment by his notice before referred to, and it was all the law gave him the right to apply. The value of the stock beyond this consisted mainly of the profits, in which a defaulting borrower has no right to participate. This arises from two causes — 1. The peculiar nature of the contract between building associations and their members; and, 2. The difficulty, if not absolute impossibility, of ascertaining the profits until the association is ready to wind up. A venture in a building association is a peculiar investment. It is much to be feared that many persons of slender means embark in such enterprises without a clear understanding of their practical working. The present case furnishes an apt illustration of the results in one class of cases. The defendant received but $384 in cash on his loan. At the end of eighty-seven months, a little over seven years, he had paid into the treasury the sum of $794. He now has a judgment against him in addition for the sum of $518.84. This disastrous result is a legitimate outgrowth of our building-association laws. Yet it is not worse than many other ventures in partnership and other transactions where persons embark in enterprises beyond tlicir means. The loss is not necessarily the fault or result of the law, but of the inability of the defendant to keep his contract with the association. Such investments are profitable or otherwise according to circumstances. Where the association is prudently managed, and is wound up within the prescribed period, it is always profitable to the non-borrowing members. They participate in the premiums which they do not pay. If the association were composed exclusively of non-borrowers there would be no profits ; they would get hack what they put in, with whatever interest had been earned, less the expenses of the management. If, on the other hand, it were composed exclusively of borrowers, the gain of the individual member would depend upon the amount of his premium. If he had paid less than the average there would bo a profit; if he had paid more there would be a loss. Where the association is composed of both classes of members the result to the borrowing member must depend to a great extent upon the relative proportion of the two classes, and upon the amount of premium which he has paid. There are of course other matters which in a minor degree affect the result, hut the foregoing are the two cardinal principles which underlie the whole matter. And it is further to be observed that the profits are reserved for those members who continue to the end. Eor borrowing members, who drop out by the way, there is nothing but disaster.

The defendant dropped out by the vray. There is nothing in the charter of the association, nor in his contract to entitle him at this stage to a share of the profits. The law provides for but one such caso and that is a withdrawing member. The Act of 12th April 1859, Pamph. L. 544, declares that a withdrawing' member, after having given thirty days’ notice of such intention, shall be entitled to receive the amount paid in by him or her, and such proportion of the profits as the by-laws may determine, less all fines and other charges: Provided, that at no timo shall more than one-half of the funds in the treasury of the corporation ho applicable to the demands of the withdrawing stockholders without the consent of the hoard of directors, and that no stockholder shall be entitled to withdraw whoso stock is held in pledge for security. Upon the death of a stockholder, his or her legal representatives shall be entitled to receive the full amount paid in by him or her, and legal interest thereon, first deducting all charges that may be clue on the stock. The provisions of the Act of 29th April 1874, Pamph. L. 96, as to associations incorporated under said act, are not essentially different, excepting that there is no provision that withdrawing stockholders shall be entitled to a share of the profits.

The defendant was not a withdrawing stockholder, nor could he have been so long as his stock was held in pledge. He is not entitled to the rights which the law confers upon such stockholders. Yet his claim far exceeds what the Act of Assembly gives to them. Withdrawing stockholders can only" claim of the profits such proportion as may be fixed by the by-laws. Such proportion might readily be fixed by a by-law so as not to work injustice to remaining stockholders. At most it would be an approximation. Here the defendant claims an absolute right to participate in the entire profits up to the hour of the trial of his case.' Such right is nowhere to be found. And if it existed, how can it be ascertained with accuracy at this stage of the association’s business ? Its assets consist chiefly of judgments for money loaned including some houses which were evidently bought in upon executions. The exact value of the houses can be ascertained only by a sale, and the judgments are worth only what can be realized therefrom. As such loans are made usually upon small margins they cannot be regarded as securities having a fixed value. In view of the fact shown by the evidence that a large number of members had ceased paying up their dues by reason of a supposed defect in the charter of the association, the difficulties of realizing the face of the judgments may be readily appreciated. The ascertainment of the real value of the stock can only be arrived at by closing up the affairs of the corporation. This the defendant has no right to demand. If, as was contended, he was entitled to it in this proceeding, the most that could be done would be to approximate it. The jury, and even the officers of the company might place a much higher value upon the securities than could be realized therefrom. In such case the defaulting member would receive more than the members who paid up to the end. Beside, the profits are composed chiefly of the premiums. They are made up in part of the premium which the defendant agreed to pay. I say agreed to pay, for it is a mistake to suppose,' as was claimed by the defendant, that he has paid the premium. He only promised to pay it; it was inserted in the judgment-note, and is now being collected. The building association law expressly authorizes the plaintiff to recover the premium from a defaulting borrower. Yet the defendant’s position if sustained would defeat this right in part.

We are of opinion that the right to apply the stock in such a case as this means only the right to apply the payments made thereon. This is all that was decided in Early and Lane’s Appeal.

7. We see no error in the portion of the charge referred to in this assignment. It was an instruction to the jury as to the method of arriving at their verdict upon the undisputed facts of the case. The ruling was fully warranted.

8. This assignment is practically covered by what has been already said. It was not error to reject- the evidence for the reason that the inquiry to which it referred was irrelevant. Aside from this the stock of the defaulting members could not be forfeited in this summary way by a jury. That could only be done by the association. When stock is in default by the charter or by-laws of a corporation, it may not be forfeited -without action on the part of the corporation itself. Non'constat that it will enforce such right, but may allow the defaulting member a day of grace.

We allowed an assignment to be filed at bar to the form of the verdict. As rendered it was: We find for the plaintiff in the sum of §514.84, provided that the defendant’s four shares of stock in the association (less §876 here credited) is not forfeited.” The court below struck out the clause referring to the stock, and entered judgment on the verdict for §514.84. We have no doubt of the power of the court to so mould the verdict. It is fully warranted by the rulings in Cavene v. McMichael, 8 S. & R. 441; Fisher v. Kean 1 Watts 259; and Bickham v. Smith, 12 P. F. Smith 45. That portion of the verdict referring to the stock was surplusage. Moreover it was erroneous. For how could the defendant possibly have a credit for the stock and yet retain it ? The learned judge correctly held that there was no question of the forfeiture of the stock before the jury. The allowance of a credit therefore upon the judgment compelled the plaintiff to accept the stock nolens volens. The legal effect was its extinguishment. This is fully sustained by the reasoning of the court in North American Building Association v. Sutton, 11 Casey 463.

We find no error in this record.

Judgment affirmed.

Sharswood, C. J., and Gordon and Trunkby, JJ., dissented.


source: Caselaw Access Project

license: Public Domain

text:
    Milligan’s Appeal.
    1. Where the facts found by an auditor are not materially disputed, but his conclusions from them are based wholly upon inferences drawn from those facts, the Supremo Court will reverse a decree of the court below confirming the auditor’s report, if, in their opinion, the conclusions are not warranted by the facts.
    2. A., an old woman in feeble health, owned $4000 in United States coupon bonds which she kept in a tin box under her bed. She made a will whereby, inter alia, she bequeathed said bonds and nominated B. as her executrix. B. acted as A/s nurse, lived with her, had free access to the box, was in the habit from time to time of cutting off the coupons and collecting them, paid A.’s bills, and otherwise attended to A.’s business affairs. Some short time before A.’s death, B. exhibited the box to a servant, telling her there were but §1700 dollars worth of bonds in it, hut without mentioning other valuables belonging to A. deposited therein. B. assigned as her reason for this conduct the fact that she was sick and fearing that she might die wished a third person to know where the box and the bonds were. Subsequently, upon A.’s death, B. filed her account as executrix, wherein she charged herself with only §1700 worth of the bonds; she accounted satisfactorily for the disposition of §800 worth of them during testatrix’s lifetime, but did not attempt to explain the disappearance of the residue. In settling up the estate she misconducted herself in various ways as to other portions of testatrix’s property. Held (reversing the decree of the court below), that the circumstances did not warrant the finding as a matter of fact that the accountant had taken the missing bonds, and that she should not be surcharged with the value of them.
    3. Misconduct on the part of an executrix in converting her testatrix’s property to her own use, in attempting to buy real estate at her own sale, and in making use of trust funds for her own benefit, will constitute sufficient ground to warrant the court in refusing to allow her the usual commissions.
    March 31st 1881.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey and Sterrett, JJ. Green, J., having been of counsel, did not sit.

    Appeal from the Orphans’ Court of Northampton county: Of January Term 1881, No. 219.
    This was an appeal by Sarah Milligan, executrix of the estate of Euphemia Dawes, deceased, from the final decree of the said Orphans’ Court, dismissing her exceptions to the report of the auditor of her account as executrix, and confirming the said report.
    The facts proved before the auditor were as follows : Mrs. Euphemia'Dawes died July 2d 1872, in her eighty-first year; she had made her will November 17th 1866, whereby she appointed Sarah Milligan her executrix, and bequeathed to her three shares of Delaware Bridge stock, and bequeathed the remainder of her personal estate, and the proceeds of her real estate, to various relatives. For many years- before her death, Mrs. Dawes was more or less incapacitated by physical infirmity from attending to household or business matters; she was paralyzed in her feet and practically helpless, although not mentally imbecile. Sarah Milligan lived with the testatrix from 1865 to her death, nursed her carefully with constant attention, and attended to her business matters, such as the collection of rents, payment of bills, &c., at her direction. They boarded together with a brother-in-law of Miss Milligan, in a house which the latter had purchased from Mrs. Dawes in 1866, for $3500, and which Miss Milligan’s brother-in-law7 rented from Miss Milligan in consideration of their board. In February 1869, proceedings in lunacy were commenced at the instance of Mrs. Dawes’ brother, who feared that Miss Milligan was mismanaging her estate. Pending these proceedings, in 1869, Miss Milligan exhibited to Henry Green, Esq., counsel for Mrs. Dawes, at his office, Mrs. Dawes’s tin box, containing her securities, of which Mr. Green made a list. Among the securities in the box at that time were $4000 in United States 5-20 bonds. A proposition was made and accepted by the counsel in the lunacy proceedings that the box and securities should be placed in the possession of Mr. John Stewart, president of the First National Bank of Easton, and the lunacy proceedings were discontinued. Mr. Stewart subsequently declined to take charge of the box, which was then taken from the bank and given back to Mrs. Dawes. The evidence showed that she kept it under her bed, and that Miss Milligan would occasionally, at her request, hand it to her in bed, when she would cut off coupons, &c. This she was in the habit of doing until about two years before her death, when she became too feeble. During this period, and after Mrs. Dawes’s death, Miss Milligan had free access to the box and its contents.
    Upon Mrs. Dawes’s death, in July 1872, Miss Milligan proved the will and took out letters testamentary, and on August 2d 1872, she filed an inventory, in which she charged herself, among other assets, with only $1700 United States 5-20 bonds.
    The executrix filed her account in April 1873, showing a balance due the estate of $11,047.36. Before the auditor John Wall, a nephew of the deceased, testified that in October 1872, he saw the accountant and talked about the estate. 141 said to her, 4 Miss Milligan, I understood, throe years ago, that there were $4000 of government bonds, and now I see by the inventory there are only $1700 of them.’ Then she started to tell me $300 was paid to the church : $500 given to her; $500 were her own ; and I said, 4 There is $1000 missing yet.’ There she stopped a bit and said, ‘ I guess it will be settled up satisfactorily.’ That was about all on that subject.” -
    Mrs. Mary R. Dodd testified that she was engaged as a domestic and lived with Mrs. Dawes and Miss Milligan for several weeks in 1871, and again in 1872; that in March 1872, Miss Milligan brought the box or the bonds into the kitchen and showed them to her. Her testimony on the subject was as follows: 441 did not count the bonds myself. I had never seen any before. I don’t know how many bonds in number there were. I only know howr much they were from what she told me. She told me there were $1700 worth of bonds. I did not take them and add them up to see how much they were. I took her word for that. I never saw the bonds but this once.”
    Q. What is the reason Mrs. Milligan showed you these bonds ? Ans. She was sick at the time. She wanted some one to know where the box and the bonds were, so that some one could take care of them for Mrs. Dawes. She had the neuralgia at the time, and she was afraid she might die in the night. I staid there during the night, but I always slept up stairs. I slept up stairs that night. I think it was in the morning when she showed me the bonds. Miss Milligan was around in the room during the day, but at times she was very sick. She did not tell me she was afraid she might die during that night particularly, but that she might be taken away suddenly. She was taking medicine. I think she got it from Dr. Green. I don’t know whether she did or not. She had no doctor attending her at the house that I know of. I did not have to sit up with her any night. She was not confined to her bed at all at this time, nor afterwards. She did not show me anything else but the bonds. She did not tell me of any certificates or stock, nor of anything else that was in the box except the bonds.
    The executrix proved that Mrs. Dawes, prior to her death, donated $300 to a church in course of erection, and that three $100 government bonds were sold by Mrs. Dawes’s direction, and $300 of the proceeds paid to the church; this was not denied. The accountant further testified that she was to receive from Mrs. Dawes, for her board and rent, $500 a year, and that Mrs. Dawes told her she should make her charges for taking care of her, and should be well paid for it; that Mrs. Dawes paid no rent, but gave her a $500 bond for her services from 1865 to 1869.
    The accountant gave no explanation of the disappearance of the $1500 government bonds not included in the inventory or accounted for.
    The auditor, after reviewing the evidence, reported on this subject as follows : “ We have, therefore, traced, by the admission of the accountant, the whereabouts of $800 worth of government bonds, and adding this sum to the $17 00 of bonds charged in the inventory, there is still missing and unaccounted for $1500 of the same securities.
    “ The testatrix and the accountant were living together for a period of a number of years prior to the death of Mrs. Dawes, the testatrix, and the accountant was acting in the capacitj1- of nurse, housekeeper and as the financial agent of Mrs. Dawes. It is proven by an abundance of testimony, that during the last two years of the testatrix’s life, and some time prior to that, Mrs. Dawes was physically and also mentally incompetent to transact any business, and that the accountant did attend to and transact her business, such as cutting off the coupons, collecting the interest, rents, paid bills and exercised general supervision over Mrs. Dawes’s affairs. Government bonds such as these, payable to bearer, are like any species of money ; they pass by mere delivery. No written transfer is necessary. No acknowledgment before some public officer is required, nor does the name of any holder appear upon them in any way. They are payable to bearer, and the facilities for acquiring them are therefore equal to the facilities in disposing of them in the same manner as the acquirement of money or notes, and hence the same inference from circumstances arise with respect to them that would arise as to money or notes.
    “ The bonds were in the possession of the accountant during the pending of the lunacy proceedings when she brought them to Mr. Green’s office, returned them to the residence of Mrs. Dawes, and were locked in the box by Mrs. Dawes, afterwards taken by the accountant to the bank and subsequently removed by her from the bank to the residence of Mrs. Dawes. And from that time until Mrs. Dawes’ death, the box containing the securities was in the care and under the surveillance of the accountant. She opened the box at her pleasure, cut the coupons off whenever they fell due, and the only recollection she has of the removal of any were the three $100 bonds, the proceeds of which were given to the Episcopal Church, and one $500 bond appropriated by herself for services rendered to Mrs. Dawes from 1865 to 1869 with Mrs. Dawes’s assent.
    The witness, Mary R. Dodd, testifies that the accountant said (when she showed her the bond in March 1872), she was afraid she (herself) might die that night or be suddenly taken away, and she wanted some one to know about the box and the bonds. But her cross-examination shows that the accountant was not sick, was not confined to her bed. or her room, had no doctor in attendance, and showed no symptoms of dangerous disease then or afterwards. Therefore, it can be inferred that the reason given was a false one, and it might be further inferred that the accountant was trying to manufacture evidence for herself, to be used after Mrs. Dawes’s death. If her reason given to Mary R. Dodd for wanting some one to know about the box and the bonds was true, and a genuine one, why did she not count the bonds ? or let the witness count them ? Only in that way could the witness have knowledge. Or why did she not take the witness in the next room, where Mrs. Dawes was, and in her presence produce the bonds, and let the witness ascertain by personal inspection what amount was there, if the reason given by the accountant was the real and genuine reason ? Nor does the accountant say anything to the witness about the other securities in the box, which were of greater value than the $1700 in government bonds. The circumstances strongly indicate that the accountant was only seeking to guard against any subsequent allegation that there were $4000 instead of $1700 in United States government bonds.
    <! Upon the whole testimony in the case, the conduct of the accountant and the circumstantial proof adduced before the auditor, it is a moral certainty that the accountant either has these bonds or their proceeds, and under all the facts in this case, your auditor is clearly of that opinion, and accordingly so finds, that the accountant should be surcharged with $1500 of United States government bonds, together with the legal interest due thereon from the time of the testatrix’s death.”
    The accountant claimed credit “ for services in taking care of decedent and services rendered unto and for said decedent during her lifetime $700. The accountant further claimed, before the auditor, as additional compensation for her care, nursing and attendance from February 1869 to her death, the sum of $1200. The auditor allowed the credit of $700 claimed in the account, but disallowed the claim for additional compensation.
    The accountant also claimed in her account “for her commissions, compensation and services in making settlement of the estate $753.60.” The legatees objected to this item on the ground that the misconduct of the accountant in her administration of the estate had been such as to deprive her of the right to commissions. Considerable testimony was taken on this subject, the main points of which are referred to in the opinion of this court. The auditor disallowed the claim for commissions.
    Exceptions filed by the accountant were dismissed by the court, Meyers, P. J., saying in an opinion filed: “We have examined the large mass of testimony returned by the auditor, as well as the reasons and authorities given by the auditor in support of his conclusions of law and facts, and we are of the opinion that all the exceptions to the report (except the thirtieth, relative' to the collateral inheritance tax) must be dismissed. In reaching this conclusion we do not adopt all the reasoning of the auditor, while, in other respects, his conclusions might have been materially strengthened by a more elaborate presentation of the testimony, to some of which he failed to make any reference whatever.
    “ The most important question of appeal raised by the record is the surcharge of the accountant by the auditor of $1500 United States bonds, interest, &c. The evidence on this branch of the case is wholly circumstantial, and while we are of the opinion that the finding of the auditor is fairly sustained by the evidence, we are free to say that the circumstances are not very strong, and are of such a character as might fail to produce conviction in other minds.”
    A decree was accordingly entered confirming the auditor’s report. The accountant, Sarah Milligan, took this appeal, assigning for error, inter alia, the decree surcharging the accountant with $1500 of U. S. -5-20 bonds, with interest; and refusing to allow the accountant commissions as executrix.

      B. F. Fackenthall, for the appellant.
    There is no disputed question of law on this appeal, nor is any material question of fact disputed. We complain that the auditor and court erred in their inferences from the facts found. The auditor found as a fact that Miss Milligan was the nurse of Mrs. Dawes, and that as such she had access to the box containing Mrs. Dawes’s securities; he infers from those facts that she was Mrs. Dawes’s financial agent, and as such was responsible for bonds missing from the box, without any proof how they disappeared.

      Although, as a general rule, this court will not re-examine questions of fact found by an auditor and confirmed by the court below, there are exceptions, and the court will not permit injustice to be done if it appears that an auditor’s findings of fact or inferences from facts are unsupported by evidence: Speakman’s Appeal, 21 P. F. Smith 25; Phillips’s Appeal, 18 Id. 130; Moyer’s Appeal, 27 Id. 482; Hindman’s Appeal, 5 W. N. C. 347; Glendon Iron Co. v. Uhler, 25 P. F. Smith 467. The court below, while confirming the report, expressed such hesitation as to deprive its action of corroborative weight. The finding practically is, that Miss Milligan stole the bonds. There is no evidence to overcome a presumption of innocence, but the auditor found the fact upon circumstantial evidence which would give rise to a mere suspicion.

      W. S. Kirkpatrick, for the appellee.
    The finding of an auditor on questions of fact confirmed by the court will not be reversed on error, except for flagrant mistake, such as would be sufficient to set aside a verdict of a jury: Mengas’s Appeal, 7 Harris 221; Speakman’s Appeal 21 P. F. Smith 25; Whiteside’s Appeal, 11 Harris 114; Yohe’s Appeal, 5 P. F. Smith 122. Even were this court to consider the entire evidence de novo, though without the advantage of seeing and hearing the witnesses, we contend the same conclusion must be reached. If Mrs. Dawes had sold or given away the bonds, Miss Milligan, who was in constant attendance on her, would have known it. If a thief had stolen them, he would have taken all. The appellant really had charge of the securities from the time they were returned from the bank, and she was bound to produce them or account for them.
   Mr. Justice Paxson

delivered the opinion of the court, May 2d 1881.

We are called upon in this case to review the rulings of the auditor and court below upon questions of fact. The principal matter of contention was the surcharge of the accountant with |>1500 of United States bonds arid with the coupons and interest thereon. These bonds were shown to have belonged to, and to have been in the possession of the testatrix prior to her death. The auditor, upon what he regarded sufficient evidence, surcharged the accountant with' said bonds, as will appear by the following extract from his report: “ Upon the whole testimony in the case, the conduct of the accountant, and the circumstantial proof adduced before the auditor, it is a moral certainty that the accountant either has these bonds or their proceeds, and under all the facts in this case, your auditor is clearly of that opinion, and accordingly so finds.” The learned judge of the Orphans’ Court sustained this ruling, yet it is evident he felt the strain of this branch of the case when he said, “ While we are of opinion that the finding of the auditor is fairly sustained by the evidence, we are free to say that, the circumstances are not very strong, and are of such a character as might fail to produce conviction in other minds.”

There was no direct evidence before the auditor that the accountant had either the bonds or the proceeds. The conclusion to which the auditor arrived was based wholly upon circumstantial evidence. It is not a question whether he has found the facts correctly, but whether his inferences from facts, which in the main are not disputed, were accurately drawn.

Much that was said about the accountant being the agent of the testatrix may be dismissed with the single remark that she was not liable to account qua agent. She had no such possession of the bonds as agent as would render her liable for their non-production. As a matter of fact and as a matter of law, the bonds were in the possession of the testatrix down to the time of her death. Nor was the accountant her agent in the sense of involving liability. She was the servant and nurse of the testatrix, and did what she was directed to do. Sometimes it was to collect a coupon, at others to nurse her mistress and attend to household duties.

The only ground upon which this surcharge can be sustained is that the accountant embezzled or stole the bonds. This is a serious charge. It ought not to be made lightly, nor without clear evidence to sustain it. When a person is charged with crime it matters little what the form of the charge may be or on which side of the court. It is true the result is different, but the difference is only in degree. It may be more agreeable to be branded as a thief in the Orphans’ Court or Common Pleas than in the Quarter Sessions. Wherever the charge is made, its gravity requires a careful consideration of the evidence upon whiqh it is founded.

We have examined the auditor’s report, and all the testimony in the case with care, and are of opinion that the facts and circumstances from which the auditor draws his opinion are too weak and inconclusive to justify his inferences. Beyond the admitted fact of the opportunity to purloin the bonds, there is not a scintilla of proof that the accountant took them. And the presumption, if there be one, arising from the mere opportunity is weakened, if not destroyed, by the fact that others had opportunities of stealing the bonds, and the testatrix of giving them away or otherwise disposing of them.

It appears reasonably certain that, in February 18G9, the testatrix had $4000 in United States bonds, which were kept in a tin box. At that time they were exhibited by the accountant to counsel, under circumstances not material to narrate. We have no trace of them subsequently until some time in 1872, when Mary R. Dodd testifies that the accountant showed them to her at the house of the testatrix, and informed her that there were $1700 of them. The witness saw the bonds, but did not examine them, and had no knowledge of the amount beyond what the accountant told her. The testatrix died during that year, and after her death the accountant, who was her executrix, produced $1700 of the bonds as all that there were remaining. When asked what had become of the residue, she accounted for $300 as having been used to pay a subscription to a church. This was shown to have been correct, and was allowed. She further claimed the testatrix had given her a $500 bond for her services as nurse, which the evidence shows were faithful, laborious and of long continuance. This was allowed. The whereabouts of the balance of the bonds she did not attempt to explain. There was still a deficiency of $1500, and with this the auditor surcharged her.

Conceding there to be circumstances of suspicion surrounding the case, there is not enough to sustain the verdict of a jury against the accountant on either the civil or criminal side of the court. It would be dangerous to infer guilt from the mere opportunity to commit a crime.

The first, second and third assignments of error are sustained.

We are unable to see any serious error in the remaining assignments. The principal one is to the refusal of the court to allow the accountant commissions. After reflection, we have concluded not to disturb this ruling. While we have relieved the accountant from the surcharge of the bonds, there is yet much in her conduct in the management of this estate that does not meet our approval. The ruling of the court below upon this point was not based exclusively upon the bonds. There were other matters, such as the conversion of the "'bank stocks to her own use, the attempt to buy a portion of the real estate at her own sale, and the admitted use of the trust-funds. These matters, coupled with her general conduct in her dealings with the estate, are sufficient to prevent our disturbing the ruling of the court below upon the question of commissions.

The decree is reversed at the cost of the appellees, and it ordered that distribution be made in accordance with the foregoing' views.


author: Mr. Justice Mercur

text:
    Hagerman et al. versus Empire Slate Company.
    1. Suit may be instituted against a foreign corporation by the service of process upon an agent of said corporation within this Commonwealth in the mode prescribed by the Act of Maxell 21st 1849, sect. 3, Pamph. L. 216, notwithstanding the fact that said corporation has failed to establish an office in this Commonwealth and to report tho name of its agent, in compliance with the provisions of art. XVI., sect. 5, of tho Constitution and of the Act of April 22d 1874, Pamph. L. 108, passed in pursuance thereof.
    2. Although the transaction of business by said corporation without compliance with said last-named provisions is undoubtedly illegal, the corporation can not take advantage of this illegality to escape service of process.
    3. Liblong v. Kansas Fire Insurance Company, 1 Norris 413, distinguished.
    4. A return of service under the said Act of March 21st 1849, sect. 3, PamphL. 216, which omits to set forth the character of the agent served, is prima facie evidence of a good service. But this presumption may he rebutted by proof to the contrary.
    5. Where the foreign corporation sued was a slate company owning real estate in this Commonwealth, which real estate was leased to others for the quarrying of slate on payment of a royalty : Held, that an agent of that company not appointed by regular resolution of its board of directors hut requested by the president to attend to its affairs, who did business near the quarry, who looked after shipments of slate made to the company by agreement with the lessees until within a year of the service of process, who received the royalty due from thorn, who leased houses on the premises and gave his receipt as agent, who sent statements to tho company from time to time, who accounted to it for the money he received and generally attended to its interests both before and after the service of process, and who appeared moreover to he the only agent of the company within the Commonwealth, was such an agent as was contemplated by tho Act of March 21st 1849, sect. 3, Pamph. L. 216, and that suit could be instituted against said company by the service of process on said agent.
    March 31st 1881.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trtjnkey, Sterrett and Green, JJ.
    Error to the Court of Common Pleas of Northampton county: Of January Term 1881, No. 264.
    Scire facias sur mortgage, by Francis S. Hagermann and Henry L. Rider, trustees, against the Empire Slate Company, a corporation organized under and pursuant to the laws of the state of New York. The sheriff endorsed on the writ the following return:
    “ Made known by giving J. E. Long, agent for the Empire Slate Company, the within named defendant, notice of the contents and a true and attested copy of the within writ, personally, on November 16th 1880. So answers,
    “James Young, Sheriff.”
    On motion of defendant’s attorney, the court granted a rule to show cause why the sheriff’s return of service should not be set aside. The depositions taken under this rule showed that the officers of the company lived in New York, where the office of the company was located; that the company own a tract of land and slate quarry in Northampton county, Pennsylvania, which had been leased to one Williams, in consideration of a royalty payable in slate. The company had never filed any certificate at Harrisburg, Pennsylvania, nor had they filed a statement appointing an agent, on. whom process might be served in Pennsylvania, in pursuance of the Act of April 22d 1874, Pamph. L. 108. It did not appear that James E. Long, upon whom service was made, had ever been formally appointed agent for the company, but at the verbal request of tho president, he looked after the company’s interests at the quarry, received the royalty, sold and shipped slate on commission, rented a house on the land, received the rents, and made returns and statements to the company.
    After hearing, the court made the rule absolute and set aside the return of service, on tho ground that Long was not an agent on whom service could bo lawfully made to bind the company.
    Tho plaintiff took this writ, assigning for error the order and judgment of the court setting aside the sheriff’s return of service.

      Jacob S. Stewart, for tho plaintiff in error.

      Morris and W. S. Kirkpatrick, for the defendant in error.
   Mr. Justice Mercur

delivered tho opinion of the court, June 13th 1881.

The mortgage on which this scire facias issued shows,tho defendant to he “ a corporation organized under and pursuant to the laws of the state of New York.” It is therefore a foreign corporation holding lands in Pennsylvania covered by the mortgage.

The third section of the Act of 21st March 1849, inter alia, declares that in the commencement of any suit against any foreign corporation, the process may be served upon any officer, agent, or engineer of such corporation, either personally or by copy. Tho act is silent as to the character or grade of the agent.

In tho present case the sheriff returned, endorsed on the writ, that ho had “made known by giving J. E. Long, agent for the Empire Slate Company, the within named defendant, notice of the contents, and a true and attested copy of the within writ, personally, on November 16th 1880.” The statute authorizes a service on the agout either personally or by copy. This return shows it was served on the agent personally and by copy. Why then is not the service good ?

It is contended that tho Act of 1849 is superseded by sect. 5, art. XVI., of the Constitution of 1874, and the Act of 22d April of same year. The Constitution does declare that no foreign corporation shall do any business in this state without having one or moro known places of business, and authorized agent or agents in the same upon whom process may be served. After substantially reenacting this section, the Act of 22d April further requires such corporation, before it shall do any business herein, to file in the office of the secretary of the Commonwealth a statement showing the title and object of the corporation, the location of its office or offices, and the name or names of its authorized agent or agents therein, and imposes a penalty on any person, agent, officer, or employé of such corporation who shall transact business herein for such corporation without the provisions of the act having been complied with.

Undoubtedly it is illegal for a foreign corporation to transact business in this state without having complied with the requirements of the Constitution and the Act of Assembly; yet when it has actually done so, and received a substantial benefit from the transaction, whether it can retain the whole fruits thereof, and avoid its liability resulting therefrom, presents a different question. Hence, although a corporation cannot hold lands in Pennsylvania without a license by law, yet the Commonwealth alone can object to its want of capacity: Leazure v. Hillegas, 7 S. & R. 313; Goundie v. Northampton Water Co., 7 Barr 233. So where a corporation executed a mortgage on lands in which it had a qualified interest only, and its title was inalienable, it was held to be no defence to a scire facias on the mortgage. The question of title would arise with the purchaser: St. John’s Church v. Steinmetz, 6 Harris 273. Such title as the corporation had was pledged.

When a foreign corporation transacting business in this state has failed to establish an office, and report the name' of its agent to the secretary of the Commonwealth, but has some person residing therein who acts as its agent, it must be presumed that the corporation has substituted such agent as one on whom service is authorized to be made to the extent at least of its unfinished business in this state.

It is further argued that the service in the present case is bad under the authority of Liblong v. Kansas Fire Ins. Co., 1 Norris 413. The facts of that case are very different from the facts in this. There the corporation had appointed an agent according to the Act of Assembly. Here none such was appointed. There having complied with the statute and furnished a general agent on whom service could be made, it was held that service was not good on one whose authority was limited to effecting insurances and receiving premiums therefor, under the directions of the agent designated by the statute. The strength of that case rested on the fact that inasmuch as the corporation had provided an agent under the Act of Assembly, on whom service could be made, it ought not to be made on an agent who was not so designated. In this case the company had not appointed an agent under the statute.

It may be conceded that a return which omits to set forth the character of the agent served, is not conclusive that he possesses the necessary qualifications; yet where the act authorizes the service on an agent of the corporation without imposing any further qualifications, a return of service, in the words of the act, is prima facie evidence of a good service. Hence in this case the service on Long was presumptively good. The evidence taken on the rule to show cause why the return of service should not be set aside, did not rebut that presumption. The business of the company was the manufacturing of slate in the borough of Bangor. The quarry was let to one who was to manufacture the slate and give the company a royalty payable in slate. It is not shown that Long was appointed agent by any resolution of the company, yet he acted as such for several years. He testified that the president of the company requested him to look after the shipment of slate, and the royalty, and things generally around the quarry; that he did so ; that he shipped and sold slate for the company ; let its house and barn ; paid taxes; gave receipts in its name as agent; sent statements to the company at different times, and accounted to it for money he received; when the writ was served on him he supposed he was the agent of the company ; continued to so act after the service, and has no notice that his authority has ended. Although no slate was manufactured during the preceding year, yet he continued to receive rents for the property every month.

Thus it appears in fact he acted as an agent of the company. His place of business was about one-fourth of a mile from the quarry, and appears to have been the only agent of the company residing within this state. Under all the facts proved wc think he was shown to be such an agent as to make the service on him valid. The learned judge, therefore, erred in setting aside the return thereof, and in making the rule absolute.

Judgment reversed, rule discharged, return of service reinstated, and a procedendo awarded.


author: Mr. Justice Gordon

text:
    The Pennsylvania Globe Gaslight Company versus The City of Scranton.
    1. The councils of a city of the third class passed an ordinance which was presented to the mayor for approval and by him returned within fifteen days, to the president of the common council, vetoed. No meeting of councils was held.until after the lapse of more than fifteen days from the passage of the ordinance. The mayor’s veto was then read but no further action was taken, and a contract was entered into on behalf of the city in pursuance of the pro-ions of the ordinance. In a suit upon this contract: Held, that under the terms of the Act of May 23d 1874, Pamph. L. 246, sect. 29, the ordinance was effective, and that the contract entered into in pursuance thereof was a valid one.
    2. Whether it was competent for a member of the common council, who was also a citizen and taxpayer, to take an appeal from an award of arbitrators in the said suit, councils having instructed the city solicitor not to appeal, not decided.
    April 1st 1881.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett and Green, JJ,
    Error to the Court of Common Pleas of Lackawanna county: Of January Term 1880, No. 321.
    Assumpsit. Case stated, showing the following facts: By an ordinance passed by the councils of the city of Scranton on November 17th 1877, the president of the select council was authorized to execute a contract for supplying certain wards of the said city with gas-lights for the term of two years. This ordinance was presented to the mayor for approval on November 20th 1877. On December 4th 1877, the mayor returned said ordinance to the president of the common council without his approval, with a statement of his reasons and objections for refusing to sign the same. There was no meeting of councils on December 4th. At the next meeting, December 8th 1877, the said ordinance with the mayor’s objections were presented and read before the common council; “ being more than fifteen days after it was presented to the mayor, no further action was taken thereon.” On December 13th 1877, the president of the select council entered into a contract with the Maloney Manufacturing & Gas Light Company, Limited, of Scranton, to light a portion of the city in pursuance of the ordinance. This contract was assigned to the Pennsylvania Globe Gas Light Company, the plaintiff, who furnished the lights and presented hills for the contract price. The councils recognized the liability of the city under the contract and ordinance, and were willing to pay said claim, but were restrained an injunction issued upon the prayer of a taxpayer, until the validity of the said contract should be passed upon by the courts. The plaintiff thereupon brought this action of assumpsit against the city of Scranton, in which, under a rule of reference, the arbitrators awarded in favor of the plaintiff for the full amount of the claim, and judgment was entered upon the award. Thereupon, one C. J. Johnson, a taxpayer and a member of the common council, by his praecipe directed the prothonotary to “ enter an appeal from award of arbitrators in this case, on the part of C. J. Johnson.” Upon a rule taken to show cause why this appeal should not be stricken off on the ground that Johnson, not being a party to the record, had no right to take the appeal, the depositions showed that by a vote of councils, the city solicitor had been instructed not to enter an appeal from this judgment. This rule was discharged by the court, and the appeal allowed to stand, on the ground that Johnson, as a taxpayer, had a right to protect, by appeal, the. rights of the city.
    There being no dispute as to the facts, a case stated, showing the foregoing facts was submitted for the opinion of the court on the question whether the plaintiff was entitled to recover. The court, Hand, A. L. J., was of the opinion that the mayor’s veto of the ordinance under which the contract was made, was, under the circumstances, effective to defeat the ordinance, and that the contract being based on the ordinance, had no validity. The court, therefore, entered judgment on the case stated, for the defendant. ’’
    The plaintiff thereupon took this writ of error, assigning for error, (1) the order of the court discharging the rule to show cause why the appeal on the part of G. J. Johnson from the award of arbitrators should not be stricken off; (2} the order of the court in entering judgment on the case stated for the defendant.

      W. Nelson West and J. G. Johnson (Lemuel Amerman with them), for the plaintiff in error.
    1. The right of appeal from an award of arbitrators is statutory, under the Act of June 16th 1836, sect. 37, Purd. Dig. 85, pi. 56, which provides that “ either party may appeal,” &c. Johnson was not a party, nor was his appeal entered on the part of the defendant, but in his own behalf as an individual. He paid no costs, and did not give the recognizance required by the statute as a prerequisite to an appeal. He makes no allegation of fraud on the part of the city or its officers. By the Act of May 23d 1874, sect. 40, Purd. Dig. 1918, pl. 111, 112, the city solicitor is the law officer of the city of Scranton, whose duty it is to defend all actions against the city; and the city councils expressly instructed him not to appeal from the said award. If a third party he allowed to interpose by appeal against his consent, why may not a third party prosecute a suit, compromise a claim, or satisfy a judgment and thus virtually abolish the office of city solicitor ?
    2. Matters in relation to the passage of an ordinance cannot be inquired into: Killgere v. Magee, 4 Norris 401. But there was no irregularity in the passage of the ordinance in question. It was regularly passed by the councils and presented to the mayor. The Act of May 23d 1874, Purd. Dig. 1914, pi. 86, provides, that if the mayor “ shall not approve, he shall return it with his objection to the council, who shall proceed to reconsider it. * * * Every ordinance which the mayor shall not return within fifteen days, shall have the same force and effect as if it had been approved by the said mayor. The said mayor may approve ordinances in vacation of council, and may call special meetings of council, to reconsider ordinances which he does not approve, on one day’s notice to each member of the said council.” The mayor did not within fifteen days return this ordinance to council, but he did return it, with his objections, to the president of the common council, who submitted it to councils at their next meeting, more than fifteen days after the ordinance had been presented to the mayoi’. In the meantime, the ordinance had taken effect by limitation of time, and the councils recognized’ and acted under it as a valid ordinance. The failure to return it in time was a statutory approval. In order to have given effect to the veto, the mayor should have summoned a special meeting of councils, on one day’s notice.
    3. The eity ratified the contract by receiving the light and approving the bills under it, and is thus estopped from denying her liability; and an individual taxpayer can have no other defence than the city might have: McKnight v. Pittsburgh, 10 Pitts. L. J. (N. S.) 72; Lane v. School District, 10 Metc. 462; Pickard v. Sears, 6 Ad. & El. 469; 1 Dillon on Municipal Corp., sect. 385, and cases cited.

      R. W. Archbald (I. H. Burns, City Solicitor, with him), for the defendant in error.
    1. The provision in the Act of 1874, authorizing the mayor to call special meetings of councils, is permissive, to meet emergencies. That he must do this or lose his veto is unreasonable and against the analogy of the system of our state and federal legislative powers. He would be obliged to summon such special meeting in advance for the fifteenth day, on all occasions when a regular meeting of councils would not fall on that day, otherwise his statutory veto period of fifteen days would be abridged to fourteen or less.
    2. The ordinance itself was fatally defective, and plaintiff showed no right to recover thereunder. There could therefore be no ratification by the city. Councils had no right to delegate to the president of select council the discretion to make the contract: Dillon on Municipal Corp., sect. 60; Cooley on Const. Lim. *204, *205; Findley’s Appeal, 3 W. N. C. 423. The contracting party, the Maloney Manufacturing arid Gas Light Company, Limited, is not a party to this suit, and a partial assignment of a contract with a municipal corporation cannot be enforced: City of Philadelphia’s Appeal, 6 W. N. C. 193.
   Mr. Justice Gordon

delivered the opinion of the court, May 2d 1881.

On the 13th of December 1877, a contract was executed on the part of the city of Scranton by Joseph P. Phillips, president of the select council, with the Maloney Manufacturing Gaslight Company, assignor of the plaintiff, by which the company agreed to furnish the city with a certain number of street lights for the period of two years, from the 20th of December 1877, at the rate of thirty dollars per year for each light.

It is admitted by the case stated, which the parties submitted to the court, that this contract was fully performed on the part of the company, and that if this contract is valid and binding on the part of the city, the plaintiff is entitled to $6160, with interest from the 1st of March 1879.

The single question then is, had Joseph P. Phillips, as president of the select council, power to bind the city by the contract, as above stated ? The court below thought not. The power of Phillips depends upon the ordinance of November 17th 1877; if it was valid, his power was undoubted, for it authorizes just what was done, and the power of the councils to furnish the city with gaslights, by contract or otherwise, is expressly conferred by the 20th section of the Act of May 23d 1874, Pamph. L. 240.

Why then was the ordinance not valid? The learned judge of the common pleas answers this interrogatory by saying it was vetoed by the mayor. But this answer is, in turn, met by the plaintiff’s allegation, that though vetoed it was not returned to the council within the statutory period of fifteen days, hence the veto was nugatory and the ordinance became a law.

As the facts of the case are not disputed, this controversy may be readily settled by reference to the certificate of the clerk of the common council, and the 29th section of the act above cited. The following is a copy of the certificate : “I do certify that the bill entitled ‘An Ordinance to supply portions of the city of Scranton with Gaslights, No. 18, filo of Common Council,’ was passed by the Common Council November 17, 1877, presented to the Mayor for approval the 20th of November 1877, returned, vetoed with objections, to the president of the Common Council, December 4, 1877, and now, December 8, 1877, read before the Common Council, being more than fifteen days after presented to the Mayor: no further action taken.”

The act reads as follows: “Any ordinance which shall have been passed by the councils shall be presented to the mayor, if he approves, he shall sign the same, hut if he shall not approve, he shall return it with his objections to the council who shall proceed to reconsider it. * * * Every ordinance which the mayor shall not return within fifteen days shall have the same force and effect as if it had been approved of by the said mayor; and the said mayor may approve ordinances in vacation of council, and may call special meetings of council to reconsider ordinances which he does not approve, on one day’s notice to each member of the said council.”

This definitely settles this controversy in favor of the plaintiff. The ordinance not having been returned by the mayor, with his objections, to the council within the statutory period of fifteen days, it became a law as effectually as though it had been approved by him. The court below endeavored to break the force of this conclusion by the application of that part of the 4th section of the act which prescribes that “ the mayor shall sign the said resolution or ordinance if he approve it, or return the same, to the branch of councils wherein such resolution or ordinance originated within ten days, or at the next meeting of councils after ten days have expired-if he does not approve it, with the reasons therefor.”

But it is manifest that this section, though the act does not so state, must be confined to cities of the first and second classes; otherwise there is a direct and unnecessary conflict between it and the 29th section, which is expressly limited to cities of the third class. It is, indeed, only under a construction such as this that the former section can stand, otherwise the latter, being the last expression of the legislative will, must repeal the former.

But the patchwork which is attempted in order to save the defendant’s case, by taking part of the 4th and engrafting it on the 29th section, cannot be sustained.

The court thought there was a necessity for such a construction, but in this we do not agree with. it. The 4th section gives the mayor ten days, or the further period intervening between the expiration of the ten days and the next meeting of the council, within which to return the vetoed ordinance. The reason for this is obvious enough, since this part of the statute gives the mayor no power to convene the councils for the purpose of considering the rejected ordinance.

The 29th section, on the other hand, gives the mayor fifteen days and no more, in which to consider an ordinance, -with the power to convene the council for the special purpose of reconsidering those ordinances which he refuses to approve. Thus the necessity for an extension of time beyond the period of fifteen days is fully provided for, and the statute requires no judicial implication or construction for its perfection.

We are, therefore, satisfied that the ordinance under which Phillips acted in the execution of the contract -with the assignor of the plaintiff was valid, and as a consequence his act bound the city. •

This conclusion, as Avell as the fact that the parties submitted their contention to the court below, in the shape of a case stated, renders a consideration of the question whether C. J. Johnson had the right to appeal, on the part of the city, from the award of arbitrators unnecessary.

The judgment of the court below is now reversed and set aside, and it is ordered that judgment be entered for the plaintiff, on the case stated, in the sum of $6160, with interest from the first day of March 1879, and costs.