text:
    Wood's Appeal. Wood versus Smith.
    1. One who has conferred upon another, by a written transfer, all the indicia of ownership of property, is estopped to assert title to it as against a third person who has in good faith purchased it for value from the apparent owner.
    2. A certificate of stock accompanied by an irrevocable power of attorney, either filled up or in blank, is in the hands of a third party presumptive evidence of ownership in the holder.
    3. One of four executors placed in the hands of his brokers certain certificates of stock which belonged to the estate of his testator. These certificates were pledged as collateral security for the personal indebtedness of this individual executor, and were accompanied by a blank hill of sale and a power of attorney signed by him as acting executor. The brokers in turn pledged the stock to one who advanced money to them in the belief that the brokers were the real owners of the stock. The remaining executors filed a bill in equity to recover the stock. Held, that the same principle which prevails in the case of an absolute owner applies in the case of an executor who invests the holder of certificates of stocks with apparent ownership, and that there could he no recovery of the stock until the advances made thereon were paid.
    4. The fact that the legal title to the stock was known to have previously been in the executor, and that the title of the holder appeared on its face to have been derived from him in his representative capacity, does not raise a suspicion or put a purchaser on inquiry, for the reason that it is the executor’s primary duty to dispose of the assets and settle the estate.
    5. The law casts no duty upon a purchaser to ascertain if the trusted executor of a decedent’s will is mismanaging the estate in fraud of creditors or legatees.
    January 4th 1880.
    Before Sharswood, 0. J., Mercur, Gordon, Paxson, Trunket and Sterrett, JJ. Green, J., absent.
    „ Appeal from the Court of Common Pleas, No. 4, of Philadelphia county. Of January Term 1878, No. 72. In Equity.

      Bill in equity filed by R. Francis Wood, Charles Steward Wurts and John B. Packard, executors of the will of Charles S. Wood, deceased, against George R. Wood, James J. McDowell, Joseph R. Wilkins, Jr., The Cambria Iron Company and D. 0. Wharton Smith.
    The object and purposes of the bill were to compel the restoration and delivery to the plaintiffs, as executors of the will of Charles S. Wood, deceased, of certain certificates of shares of stock in the Cambria Iron Company, which, at the time of the filing of the bill, stood in the name of Charles S. Wood, their testator; and were in the possession of D. C. Wharton Smith, one of the defendants.
    The case was referred to an examiner to take testimony, and upon the filing of his report was referred to Peter McCall, Esq., as master, who, inter alia, .found the following facts:
    “ Charles S. Wood, of Philadelphia, died on the twenty-seventh day of May 1873, leaving a last will, of which he appointed his sons, George R. and Richard Francis Wood, and his sons-in-law, Dr. John II. Packard and Dr. Charles Stewart Wurts, the executors. All the executors proved the will and took letters testamentary.
    “Mr. Wood, at the time of his death, was the owner of 20,385 shares of the stock of the Cambria Iron Company,' of which company he was president, the certificates of which stood in his name.
    “ There was no understanding among the executors that any of the functions of the other executors should be transferred or delegated to George R. Wood, although there was a general understanding that he and R. Francis Wood should pay bills, collect income and keep an account. The estate kept a separate bank account in the Western National Bank, on which George R. Wood drew checks, ■with the knowledge of his co-executors, as acting executor. Some checks were also drawn by R. Francis Wood, whose signature and that of George R. Wood were given to the bank as of those qualified to draw.
    “ At the time of Mr. Wood’s decease and afterwards, the certificates of the Cambria Iron Company stock were kept in a box in the fire-proof of that company. The key of this fire-proof was kept in the office by a clerk of the company, and George R. Wood, who was in the employ of the companies owned by the Cambria Iron Company, and had a desk in one of the suite of rooms in which was the office of that company, had free access to the fireproof.
    “ The key of the box containing the certificates of stock belonging to his father’s estate was kept by him, and he had free access by himself, uncontrolled by the other executors, to the certificates.
    “ The other executors were not in the habit of going to the box in -which the securities were kept. No precautions were taken by them to prevent George R. Wood from disposing of any of the securities. But there was a distinct understanding among all the executors before leaving town for the summer of 1873, that there should be no sales until the autumn. .
    “ In that summer, without the knowledge of his co-executors, George R. Wood speculated in Lehigh Navigation and Pennsylvania Railroad stocks, through the medium of MacDowell & Wilkins, stock brokers on Third street, who carried for him large amounts of these stocks, being protected by margins of stocks deposited with them as collateral security by George R. Wood.

      “ Among these securities were certificates of seven thousand two hundred and seventy-six shares of stock of the Cambria Iron Company, belonging to the estate of Charles S. Wood, which were abstracted by George R. Wood from the fire-proof without the knowledge of his co-executors. Each of these certificates stood in the name of Charles S. Wood, and was accompanied by a blank bill of sale and power of attorney to sell and transfer, signed ‘ George R. Wood, acting executor.’
    “ Two of these certificates, for one thousand and thousand one one hundred and seventy-two shares respectively, were used by MacDowell & Wilkins in certain transactions with the defendant, D. C. Wharton Smith, carrying on the business of broker and banker which have given rise to the present controversy. Those transactions were as follows.
    “ On the 20th September 1873, the defendant sold to MacDowell & Wilkins, two hundred shares of Lehigh Navigation stock at $30 per share, deliverable in sixty days. On the 2d October following, he sold to them six hundred shares of the same stock at $27 per share, deliverable in thirty days; and on the sixth of the same month, he sold to them two hundred more shares of that stock at $29.50 per share, deliverable in thirty days. The defendant called upon them for a margin, as the market declined during the Jay Cooke panic, and received from them certificate No. 110, of one thousand shares of stock of the Cambria Iron Company, belonging to the estate of Charles S. Wood. MacDowell & Wilkins failing to take the stock when their contracts fell due, the stocks were sold out on their account.
    “ Besides these stock transactions, MacDowell & Wilkins, on the 29th September 1873, borrowed from the defendant $12,000 on call, giving him their due-bill for that amount and certificate No. 638, for one thousand one hundred and seventy-tw'o shares of stock of the Cambria Iron Company, belonging to the estate of Charles S. Wood, as collateral.
    “ Attached to each of these certificates was a blank bill of sale and power of attorney, under seal, signed ‘ George R. Wood, acting executor,’ in the words following:

      “ Know all Men by these Presents, that
    for value received, have bargained, sold, assigned and transferred, and by these presents do bargain, sell, assign and transfer unto shares of the capital stock of the standing in name on the books of the and do hereby constitute and appoint true and lawful attorney, irrevocable for and in name and stead; but to use, to sell, assign and transfer, and set over, all or any part of the said stock, and for that purpose to make and execute all necessary acts of assignment and transfer, and one or more persons to substitute with like full power, hereby and confirming all that said attorney or substitute or substitutes shall lawfully do by virtue hereof.
    have hereunto set hand and seal, 1873. “ In witness whereof, the day of
    “George R. Wood, [seal.]
    “Acting Executor.
    “ Sealed and delivered in the presence of
    “ The bill of sale and power attached to the certificate No. 110, of one thousand shares, as surrendered to the plaintiffs, has the number of shares of Cambria Iron stock, and number of the certificate and date (16th September) filled in the blanks, in the handwriting of Mr. MacDowell, and is witnessed by him. The other has the name Charles S. Wood, the number of shares (1172), the name of the company, the number of the certificate 638, and the date 22d September filled in the blanks, in whose handwriting did not appear, and is witnessed by Mr. Wilkins, the other member of the firm.
    “ The defendant in his answer declares, that in dealing with MacDowell & Wilkins in these transactions, he believed the stock to have been sold to them, and that he received the certificates in perfect good faith. In his examination he testified, that he dealt with them as principals, not as agents; and that he had no doubt, or reason to doubt, that the certificates were their property when he received them. He received them from Wilkins, but made no inquiry as to how they became possessed of the stock.
    “No money has come into Charles S. Wood’s estate by reason of these transactions, nor has it derived any benefit therefrom.
    “ The plaintiffs’ bill was filed October 16th 1873, and an injunction was granted by the court, restraining the defendant from selling, &c., the certificates. From this decree an appeal was taken to the Supreme Court.
    “ On the 8th of April 1874, the plaintiffs filed an amendment to their bill, praying that if the special injunction theretofore awarded should be dissolved before final decree, they might redeem the certificates, by paying to the defendant the amount of the debt or advances claimed to be owing to him by MacDowell & Wilkins.
    “ Saving their right to have back the moneys so paid, with interest, in substantial accordance with the interlocutory order next mentioned.
    “ And on the same day the Court of Common Pleas made an order that the defendant, on payment to him by the plaintiffs, out of the assets of the estate, of $17,055.39, the amount of the indebtedness of MacDowell & Wilkins to him, for which he claimed to hold said stock as security, should surrender the certificates for two thousand one hundred and seventy-two shares of the Cambria Iron Company stock; such payment and delivery in nowise to prejudice whatever rights the plaintiffs might have to enforce restitution of the moneys so paid with interest, if it should be finally decided that the defendant had no right to hold the certificates as against the plaintiffs, for the debts for which he claimed to have taken the same in pledge from MacDowell & Wilkins.
    “ On the 8th of April 1874, the plaintiffs paid to the defendant $17,055.39, and got back the certificates.”
    Upon the foregoing facts the master reported, inter alia, as follows:
    “ I am not aware of any reported decision of our Supreme Court establishing that the giving possession of the certificate, accompanied by blank assignment and power, confers upon the the holder an apparent title to and power of disposition over it, so as to entitle an innocent third person, who has dealt bona fide with the holder on the faith of this apparent ownership and without notice of the claims of the true owner, to protection.
    “In other states of the Union and by courts of high authority, it is well settled that such is the effect of the delivery of the certificate with blank assignment and power.
    “ In New York, Kortright v. Commercial Bank of Buffalo, 20 Wend. 91; Commercial Bank of Buffalo v. Kortright, 22 Id. 348 ; Fatman v. Lobach, 1 Duer 354; Leavitt v. Fisher, 4 Id. 1; McNeil v. Tenth National Bank, 46 N. Y. 325; Mount Holly Turnpike Co. v. Ferree, 2 C. E. Green (N. J.) 117.
    “ The principle on which these cases rest, appears to me to be sound, and worthy of adoption by our courts, namely, that where the owner of stock confers on the holder an apparent ownership by delivering to him, not merely the possession of the certificate, but also a blank assignment and power of attorney to transfer, he ought to be precluded from asserting his real ownership as against an innocent third party who has given value for the stock on the faith of such apparent ownership. * * *

      “ It was strenuously contended that, however it might be in the ease of an absolute owner, the doctrine of these cases has no application where the person who executes the bill of sale and power to transfer is an executor; that an executor in this state is emphatically a trustee, and it is the duty of a party claiming title through a trustee to inquire and see that the act of the trustee is in the line of his duty. Otherwise, he takes it at his peril, and is liable to make restoration of 'the trust property where there has been an attempt to dispose of it in fraud or violation of the trust, and that nothing short of a bona fide sale by the executor and receipt of the purchase-money can divest the trust.
    “ But there is an obvious and well-settled distinction between an executor and an ordinary trustee, in this, that there is no presumption of a trustee’s right to sell as there is in the case of an executor. In the former case, as said by Judge Davis, in Duncan v. Jaudon, 15 Wall. 165, the property is held for custody, in the latter, for administration. Or, as Judge Strong expresses it, in Bayard v. The Bank, 2 P. F. Smith 235, 'The primary duty of administrators is to dispose of the personal property, and therewith pay the debts of the intestate, and make distribution among his next of kin. A sale and transfer of stock by them is, therefore, in the line of their duty. A trustee of an insolvent debtor would seem to stand on the same footing, and so generally does an executor. His primary duty is administration. He is to pay debts and legacies out of the personal estate, and use even specific legacies to pay debts if necessary. His letters testamentary, therefore, show an apparent right to dispose of the stocks of the testator.’
    “Now, while it is true that the will of Charles S. Wood gives all the residue of his estate, after the payment of debts, funeral expenses and certain bequests, to his executors in trust for the purposes therein mentioned, yet, until the settlement of his estate in the usual course of administration, the executors held the stock in their capacity of executors, and not as trustees, with all the duties and all the povrers of executors.
    “ The transactions of the defendant with MacDowell & Wilkins, which gave rise to the contention in this case, took place within six months after the decease of Mr. Wood.
    “ He had, therefore, a pei’fect right to infer that the act of George R. Wood was in the line of his duty as executor. There was nothing on the face of the document to excite suspicion or lead to inquiry. It was in .the usual form. The names of MacDowell & Wilkins were not filled in the blank as purchasers. But that fact was not at all inconsistent with their being purchasers, for the evidence shows that it is quite customary for the certificate and blank assignment and power to pass from hand to hand without the blanks being filled.
    “ MacDowell & Wilkins were, at the time of these transactions, in good standing, and the defendant had the right to act on the presumption that they had come honestly by the certificates.

      “ It seems to me that the same principle which prevails in the -case of an absolute owner applies in the case of an executor who invests the holder with apparent ownership.
    “ But are the plaintiffs precluded from asserting their title to the stock which has been abstracted from the estate by the misconduct of their co-executor ?
    “ It is laid down in the books that co-executors, however numerous, are regarded in law as an individual person, and consequently the acts of any one of them in respect of the administration of the effects are deemed to be the acts of all. The sale or gift of one of several executors is the sale and gift of all: Williams on Executors 811. By statutes 8 and 9 Victoria, the Bank of England may require all the executors who have proved the will to join and concur in any transfer of stock standing in the name of their testator.
    “ Now, while it may very well be that the plaintiffs could have recovered the certificates from MacDowell & Wilkins, who were parties to the wrongful act of George R. Wood, it seems to me that they have no equity to recover against the defendant, who is a bona fide purchaser, without notice. Where one of several executors, clothed by law with full power to transfer stock without the concurrence of his co-execútors, has held a person out to the world as the owner of the stock ■ by investing him with the indicia of ownership, and a third person relying on such apparent ownership and the law which gives that executor power to sell the stock has dealt with the holder as owner, he is, in my opinion, entitled to protection. Indeed, by not requiring the certificates to be transferred into the joint names of all the executors, the plaintiffs put in the power of George R. Wood to hold out MacDowell & Wilkins as owners of the stock. * * *
    “ Upon the whole, I am of opinion that McDowell & Wilkins, by the delivery to them of the certificates of the Cambria Iron Company stock, accompanied by the blank bills of sale and powers of attorney, acquired an apparent ownership, which justified the defendant in dealing with them as the actual owners.
    “That there was nothing to put him on inquiry. He was an innocent purchaser for value, and is entitled to the protection of the court.”
    The master recommended a decree dismissing the plaintiffs’ bill. To this report the plaintiffs filed exceptions before the master, and these not resulting in any change in his opinion, his report and the plaintiffs’ exceptions thereto, were filed in the court below; and having been argued, they were overruled by the court, and a final decree entered in conformity with the recommendation of the master, that the plaintiffs’ bill be dismissed. From said decree this appeal was taken.

      J. B. Townsend and R. C. McMurtrie, for appellants.
    The master’s report recognises what most of the cases he cites clearly declare, that certificates of stocks accompanied with such blank transfers as were used here, are not negotiable. And yet, in spite of this recognition of what the authorities state upon the subject of their non-negotiability, the master reaches a conclusion which cannot be attained, except by attributing to them the very character of negotiability which he has denied them ; for while he yields to the overwhelming proof of the fact, that MacDowell & Wilkins never had any interest in the stock in question and recognised that their possession and use of them was wrongful, still he finds them as able to invest the appellees, by the mere delivery of these papers, with an interest and right as pledgees, superior to what George R. Wood himself could have given and conferred upon them.
    The cases cited and relied on by the master are expressly put on the doctrine of agency, which enables the holder to pass the title of the signer under circumstances which make the assignee a purchaser, not that the papers do, per se, pass or confer title.
    The authority and power of the agent is limited to the power that his principal is able to convey to him, through his power of attorney: Kortright v. The Bank, 22 Wend. 360; Fatman v. Lobach, 1 Duer 361; Leavitt v. Fisher, 4 Id. 1; McNeil v. Tenth National Bank, 46 N. Y. 325.
    The vice of the argument on the other side is, that they take the authorities which rest the title on agency, apparent and acted upon which gives the title, and then contend that a title passes irrespective of the limited extent of the powers of the signer of the blank. They forget, that a power by an executor to sell and dispose of such property, does not apparently give the holder the right to pledge for his own debt. ' .
    Where certificates get out of the owner’s possession, without his knowledge or laches, by fraud or otherwise, he does not lose his title thereto, although they may have found their way into the hands of an innocent purchaser : Biddle v. Bayard, 1 Harris 150 ; Swan v. North British Association Co., 32 Law Jour. Rep. Exc. 273; Tyler v. Peninsular Railroad Co., 28 Law Jour. Rep. Eq. N. S. 285.
    A careful reading of the facts and judicial opinions in each of the cases- decided in this country and in England, where owners of stock have lost their title through such papers (where they did not intend that result), will show that a living owner of the stock voluntarily placed the certificates and blank transfers in the hands of a broker or agent; then, whatever the owner’s instructions might be, the broker or agent had an apparently unrestricted power and authority to do in the owner’s behalf, whatever he, the owner himself, could do. And if there was anything done in respect to the stock beyond the owner’s instructions, he would yet be bound by the act of his agent, in favor of a bona fide purchaser or pledgee without notice, and estopped from denying that his agent had not authority to do what had been done.
    The master erred in holding, that the same rules apply to these stocks as if they belonged to a living owner, who had signed such blanks and delivered the same and the certificates to MacDowell & Wilkins.
    The interest in and power of an executor over his testator’s assets and personalty, is very different from that which he has in his own- proper securities and property; the latter he'holds in proprio jure; the former en autre droit.

    If then, George R. Wood was clothed with no right or title jure proprio in these stocks, but held over them the power of sale and disposal which the law confers upon him by virtue of-his being one of four qualified executors, and in fact never did sell them, then he could at most delegate to his agents, MacDowell & Wilkins, the power to sell the same on his account to a bona fide purchaser; that was not done. But neither George R. Wood nor his agents (who, of course, were limited by the same limitations which the .law puts on his powers if he had executed them in person), could pledge these stocks for money borrowed without placing the pledgee in this position, viz., he must show that the money he advanced actually went to the purposes of the trust; and the burthen, rests upon him to do this, or failing it, he will be deemed to have notice of and Become a participant in a breach of trust by the executor. Selling his testator’s securities and choses in action, is in the ordinary course of administration by an executor of the estate of the decedent. Pledging them for money borrowed, is extraordinary and outside of his course of customary duties. It is not disputed that he may pledge, if necessity for that course be shown and conclusive proof be furnished, that the money raised went to the use of the trust; but without such proof, the inflexible inference drawn by the law is, that the executor was borrowing for his own- purposes, and that the lender, by the very transaction itself, is deemed to have knowledge that such was the case: Petrie v. Clark, 11 S. & R. 377 ; Miller v. Ege, 8 Barr 352 ; Garrard v. Railroad Co., 5 Casey 154; Lowry v. Commercial and Farmers’ Bank, 1 Taney’s C. C. Decisions 310 ; Bayard v. Farmers’ and Mechanics’ Bank, 2 P. F. Smith 232; Shaw v. Spencer, 100 Mass. 389; Duncan v. Joudon, 15 Wallace (U. S. S. C.) 165; Walsh v. Stille, 2 Parsons’s Eq. Cases (judgment by King, J.) 17 ; Christmas v. Mitchell, 3 Ired. 535; Simons v. Southwestern Railway Bank, 2 Am. Law Reg. 546; Dodson v. Simpson, 2 Randolph 294; Field v. Schiefflin, 7 Johns. Chan. 155; Williamson v. Branch Bank, 7 Ala. 906 ; Williamson v. Morton, 2 Maryland Chan. 94 ; Collinson v. Lister, 7 DeGex, M. & G. 634; Cubbidge v. Boatright, 1 Russell’s Chan. Cases 549; Hill v. Simpson, 7 Ves. 152 ; Redfield on Wills, part 2, p. 214; 2 Williams on Ex’rs 824.
    The alleged want of notice on the part of the appellees, cannot be recognised in the eye of the law, because 1. The only inscribed owner was the decedent; and the trust inhered in the property itself, and was patent on the face of the papers. 2. If an actual sale by the executor had not preceded or accompanied the delivery by him to the brokers of the papers — of which the appellees took the risk — then they were dealing -with George R. Wood through his agents; and notice necessarily came to them, that, if agents and not owners, the brokers could not by the’ pledging divest the trust.

      Lewis Wain Smith and Wm. Henry liawle, for appellees.—
    Upon the death of a testator, his personalty vests in his executors, who have an inherent right to sell and convert the same, being responsible to the distributees for an improper use of this power ; and a fortiori is this so of illegal investments : Bayard v. The Bank, 2 P. F. Smith 235 ; Perry on Trusts, sect. 809.
    One of several executors has the same power over his testator’s personalty as all the executors have jointly ; and a fortiori is this so where to the executor disposing of the estate has been committed the sole disposition thereof: Williams on Ex’rs., sect. 946; Chew’s Estate, 2 Pars. Eq. Cas. 153.
    Where one, whether an executor or living owner, is legally possessed of stock with power of disposition, and delivers tin? certificates accompanied by absolute bills of sale and blank powers of attorney to transfer, the prima facie presumption is that the transaction imports a sale, and that all the title of the inscribed owner is vested in the holder: The United States v. Vaughan, 3 Binn. 394; Commonwealth v. Watmough, 6 Whart. 117; Building Assoc. v. Sendmeyer, 14 Wright 67; Finney’s Appeal, 9 P. F. Smith 398.
    The legal presumption flowing from the possession of a certificate, bill of sale and blank transfer, is that of ownership, and not of agency.
    A certificate of stock, accompanied by an irrevocable power of attorney, either filled up or in blank, is, in the hands of a third party, presumptive evidence of ownership in the holder: Prall v. Tilt, 1 Stewart (N. J.) 479; Moodie v. Bank, 33 Leg Int. 400 ; Robinson v. Hodgson, 23 P. F. Smith 202; Holbrook v. New Jersey Zinc Company, 57 N. Y. 624; Mount Holly Turnpike Company v. Ferree, 2 C. E. Green 117.
    And the defendant was justified in presuming that the holder was the owner of the shares, and had a perfect right to make an absolute or conditional transfer, to sell or hypothecate them : Fatman v. Lobach, 1 Duer 355, 361.

      Where a third person innocently and in good faith advances money to a holder of stock upon the faith of the certificates, thus accompanied with absolute bills of sale and powers to transfer, without any actual notice of the private equities existing between such holder and the executor, he will be protected to the extent of his advances as a bona fide purchaser for value without notice.
    It cannot be denied that the appellee by his advance became a purchaser to the extent of the amount advanced: Petrie v. Clark, 11 S. & R. 377; Lancaster v. Dolan, 1 Rawle 231.
    But it is submitted that neither the doctrines of agency nor of negotiability affect the question. The principle rests upon entirely distinct and well-established grounds, and it applies to the least negotiable of all securities, such as title deeds.
    Where one is invested (either by the act of the law or of the parties) with the possession and authority to dispose of stock of an inscribed owner, and voluntarily delivers that possession and authority to others, and third persons deal upon the faith of such possession without actual notice, all claimants under the inscribed owner (by whose act alone the party in default acquired possession) are estopped from avoiding the title thus subsequently obtained: McNeill v. The Bank, supra; Fatman v. Lobach, supra; Leavitt v. Fisher, supra; Denny v. Lyon, 2 Wright 98; Persch v. Quiggle, 7 P. F. Smith 247; Moodie v. The Bank, 3 W. N. C. 118; Ryall v. Rowlens, 2 Leading Cases in Equity, part 2, p. 1673, 4th Am. ed. This principle applies whether the stock stands in the name of a living owner or of a decedent. The only distinction is when one deals directly with the executor, and knows, or ought to have known, that the latter was using the securities of the estate for his own purposes.
    So far and no further is there a distinction between stock of the dead and stock of the living. But when the former comes upon the market, n'ot offered by the executor, but by a third party, there is no distinction whatever between them: Pratt v. Tilt, 28 N. J. Eq. R. 70; Prall v. Hamil, Id. 66; Jarvis v. Rogers, 13 Mass. 105; Stinson v. Thornton, 56 Georgia 377; Nutting v. Thomason, 46 Id. 34; Pennsylvania Railroad Co.’s Appeal, 5 Norris 80 ; Weaver v. Barden, 49 N. Y. 288.
   Mr. Justice Trunkey

delivered the opinion of the court, May 3d 1880.

The able and elaborate report of the master so well sustains his conclusion and the decree of the court, as to obviate labor in affirmance.

The appellants concede 1. That where the owner sells stock and gets his price, and delivers the certificate, together with a blank bill of sale and irrevocable power of attorney, signed by himself, the title vests in the purchaser ; and 2. When a living owner signs such papers in blank, if he has not actually sold and got his price for the stock, by intrusting them to another, he delegates all his powers in respect to the stock, which being unlimited, he by estoppel will lose his property, if his agent abuses his confidence. They deny that such papers pass title by delivery, and allege, they are only symbols in the 'hands of the holder, affording no presumption that he is the owner of the stock, but-are consistent with an agency to act for the signer.

The rights of a bona fide holder, as against the true owner of the stock, to whom the apparent owner has either sold or pledged, do hot depend on a negotiable character in the certificates, but rest on another principle; namely, that one who has conferred upon another by a written transfer all the indicia of ownership of property, is estopped to assert title to it as against a third person, who has in good faith purchased it for value from the apparent owner.” As a general rule, the vendor or pledgor can convey no greater right or title than he'has. Simply intrusting the possession of a chattel to another as a depositary, pledgee or other bailee, is insufficient to prevent the real owner reclaiming his property in case of an unauthorized disposition of it by the person so intrusted. The mere possession of chattels, without evidence of property or authority to sell from the owner, will not enable the possessor to give good title. But if the owner intrusts to another the possession of property, and also written evidence of title and power of disposition over it, as respects innocent third persons, he is deemed as intending it shall be disposed of at the pleasure of the depositary. If there be conditions on which this apparent right of control is to be exercised, not expressed on the face of the instrument, the case, in principle, is like that of an agent who receives secret instructions qualifying or restricting an apparent absolute power. If the owner of the stock voluntarily give certificates with blank assignment and power to make transfers, to his brokers, who betray the confidence reposed in them, such owner must suffer the loss, rather than innocent strangers whose money the brokers wmre thereby enabled to obtain. The principle applies to pledges of stock, and one who purchases from the pledgee may hold against the pledgor. And if the pledgee pledge it to secure payment of his own debt, the second pledgee may hold it as security till his debt be paid. “ A person loaning money on such certificate and power, has a right to believe that the borrower from whom he receives them has an absolute right to pledge the stock.” By commercial usage, a certificate of stock accompanied by an irrevocable pow'er of attorney, either filled up or in blank, is, in the hands of a third party, presumptive evidence of ownership in the holder. And where the party in whose hands the certificate is found is a holder for value, without notice of any intervening equity, his title cannot be impeached: Moore v. Metropolitan National Bank, 55 N. Y. 41; McNeil v. Tenth National Bank, 46 Id. 325; Pratt et al. v. Tilt et al., 28 N. J. Eq. 480; Bridgport Bank v. New York and New Hampshire Railroad Co., 30 Conn. 275 ; Mount Holly Turnpike Co. v. Ferree, 2 C. E. Green 117.

The doctrine of these and kindred cases is notin the least shaken or qualified by the late decision in Shaw et al. v. The Merchants’ National Bank of St. Louis, S. C. U. S., 37 Leg. Int. 135, where the distinction between negotiable paper and bills of lading is pointed out with great clearness. Between such paper and certificates of stock, the distinction may be as wide. Perhaps, under similar circumstances, like rule would be applied to the holder of a stolen certificate as to the holder of a stolen bill of lading, but such is not this case. There the court say, “ It may be that the true owner, by his negligence or carelessness, may have put it in the power of a finder or thief to occupy ostensibly the position of a true owner, and his carelessness may estop him from asserting his right against a purchaser who has been misled to his hurt by that carelessness. But the present is no such case. It is established by the verdict of the jury that the' bank did not lose its possession of the bill of lading negligently. There is no estoppel, therefore, against the bank’s right.” The bill of lading having been stolen without fault in the owner, he was held entitled to recover against a purchaser who had reason to believe that his vendor was not the owner, but held it to secure the payment of an outstanding draft. Nothing in the case tends to show that if the owner had voluntarily given that bill of lading to another, he coüld have recovered against a purchaser for value who took it in good faith.

We are convinced that the master adopted the true principle applicable to the papers in question; he neither held that they were negotiable, nor that it was a mere matter of the actual agency or authority of MacDowell & Wilkins. t

Bo the same rules apply to these stocks as if they belonged to a living owner ? An executor holds under a trust; he is the minister or dispenser of the goods of the dead. He has the same property in the personal effects as the deceased, had when living. It is a general rule of law and equity, that an executor has an absolute power of disposal over the personal effects of his testator, and they cannot be followed by creditors nor legatees into the hands of the alienee. This results from the fact that in many instances the executor must sell in order to perform his duty in paying debts, &c.; and no one would deal with him if liable after-wards to be called to an account. Co-executors are regarded in law as an individual person ; and the acts of any one of them, in respect to the administration of the effects, are deemed to be the acts of all; as where one releases a debt or settles an account of a person with the deceased, or surrenders a term, or sells the goods and chattels of the estate, his act binds the others. An exception to this general power will be found in those cases only when collusion exists between the executor and purchaser. That the executor may waste the money is not alone sufficient to invalidate the sale; it must further appear that the purchaser participated in the devastavit or breach of duty in the executor. Thus, when the person to whom the executor passes the property, knows that the executor is acting in violation of his trust and in fraud of those interested in the due administration of the assets, the fraud vitiates the transaction, and the attempted transferís void. These familiar elements, the base of the master’s reasoning, are its sure support.

Were McDowell & Wilkins defendants instead of their pledgees, the appellants’ argument, would be irresistible; for they participated in the wrongful act of George R. Wood. As executor, he could not make a valid sale or pledge of the stock as a security for or in payment of his own debt to them ; the transaction itself gave them notice of the misapplication, and involved them as participants in the breach of duty. Where money was obtained on the security of stock belonging to an estate, the borrowers, sons of the testator, represented that they owned and had the right to pledge it, but the transfer was made by the executrix to the lenders, who gave her a receipt stating the purpose for which they held it, and that it was to be returned to the estate if their debt was paid, the transaction gave the lenders notice, and the trust was not divested : Prall v. Hamil, 28 N. J. Eq. 66.

An executor’s duty is not like that of a trustee, in whom property is vested, not for administration or sale, but custody and management for his eestuis que trust The party taking stock oil pledge from such trustee deals with it at his peril, for there is no presumption of a right to sell it, as there is in the case of an executor: Duncan v. Joudon, 15 Wall. 165; Shaw v. Spencer, 100 Mass. 382.

“ The executor has the right to sell and transfer, and one who buys of him in good faith, and pays in money the price agreed upon, is not responsible for the application of the purchase-money:” Per Hunt, J., Leitch et al. v. Wells et al., 48 N. Y. 585. Letters of administration are always sufficient evidence of authority to transfer, because a sale, and transfer of stock is in the line of the duty of an administrator. The powers of an executor or administrator differ from those of an ordinary trustee; the duty of the latter being custody and management, of the former to dispose of the personal property, to pay debts, &c. Executors may use specific legacies to pay debts, if necessary: Bayard v. Farmers’ and Mechanics’ Bank, 2 P. F. Smith 232. The fact that the legal title to the stock was known to have previously been in the executor, and that the title of the holder appeared on its face to have been derived from him in his representative capacity, will not raise a suspicion, or put a purchaser on inquiry, for the reasoii that it is the executor’s primary duty to dispose of the assets and settle the estate: Prall v. Tilt, supra. We think the master was right in holding “that the same principle which prevails in the case of an absolute owner applies in the case of an executor who invests the holder with apparent ownership.”

The defendants had a right to infer that MacDowell & Wilkins were the owners of the stock, although the certificates showed title in Challes S. Wood, and the blank assignments and powers were signed by George R. Wood as acting executor. They found McDowell & Wilkins clothed with apparent ownership. The testator had given George R. Wood the strongest expression of confidence in making him an executor of his will, thereby vesting absolute power in him to sell and transfer the stock in the line of his duty. He was acting executor. Neither his co-executors, nor others interested in the estate, had taken a step to prevent him from committing waste. The law casts no duty upon a purchaser to ascertain if the trusted executor of the decedent’s will is mismanaging the estate in fraud of creditors or legatees. The defendants had no knowledge of the collusive transaction between the executor and MacDowell & Wilkins, nor reason to believe that they, the pledgors, were not the real owners, as they appeared. If it be that the perfidious conduct of the executor results in loss to innocent persons, either those interested in the estate or the pledgees of the stock, it must fall on those whose interest he betrayed.

Decree affirmed, at the cost of appellants, and appeal dismissed.

Justice Paxson, dissented.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Rahter versus First National Bank of Lancaster.
    1. S., who owned a distillery and a quantity of whiskey; sold the same to R., taking in payment a promissory note which he subsequently had dis counted at a bank. S. had no license to sell whiskey, nor were the barrels when sold marked as required by the United States laws. The bank brought suit against R. on the note, who contended that it was void because of these violations of the law by S. Held, that it was not void, as the United States Statutes did not prohibit the sale of whiskey, but only imposed a penalty for their violation. Held, further, that S., by this single transaction, was not a dealer within the meaning of the statutes.
    2. Holt v. Green, 23 P. F. Smith, distinguished.
    January 7th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey and Sterrett, JJ. Green, J., absent.
    Error to the District Court of Philadelphia county: Of January Term 1877, No. 178.
    Assumpsit by the First National Bank of Lancaster against Henry Rahter. Defendant pleaded non-assumpsit, set-off, Sc.

      At the trial, it appeared that in 1872 David G. Swartz had a quantity of whiskey, the product of his distillery, which, together with his distillery, he sold to Rahter. In payment therefor he received from Rahter a certain amount of cash, a house in Baltimore, and the note in suit. A draft, also in suit, was given by Rahter to pay arrears of ground-rent and taxes on the Baltimore property. The note was drawn payable in one year after date. Before it came due Rahter failed, and the note was not paid. Six days before the note came due, Swartz, who was a director in the First National Bank of Lancaster, had it discounted by the hank, who brought this suit upon it. It appeared that the note had been, in effect, paid to the bank, it having charged the same up to Swartz, and there being sufficient funds to his crpdit to pay it. Swartz also admitted that at the time of this transaction he had no United States license as a dealer in whiskey, nor a license under the laws of Pennsylvania; that the barrels were not branded with the words “containing no deleterious drugs or added poison,” and that he did not certify these facts to the purchaser.
    The Act of July 20th 1868 (15 Statutes at Large) provides: “ Sect. 44. That any person who shall carry on the business of a distiller, rectifier, compounder of liquors, wholesale liquor dealer, retail liquor dealer, or manufacturer of stills, without having paid the special tax as required by law, or who shall carry on the business of a distiller without having given bond as required by law, or who shall engage in or carry on the business of a distiller with intent to defraud the United States of the tax on the spirits distilled by him, or any part thereof, shall, for every such offence, he fined not less than $1000 nor more than $5000, and imprisoned not less than six months nor more than two years.”
    The Act of 14th April 1863, sect. 2, is as follows: “ It shall be the duty of any person or persons engaged in the manufacture and sale of intoxicating malt or alcoholic liquors, or in rectifying or preparing the same in any way, to brand on each barrel, cask, or other vessel containing the same, the name or names of the person or persons manufacturing, rectifying, or preparing the same, and also these words, ‘containing no deleterious drugs or added poison,’ and shall also certify the fact or facts to the purchaser over his, her, or their owrn proper signature.”
    “ Sect. 5. Any person offending against any of the provisions of this act shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be sentenced to pay a fine not exceeding $500, and to undergo an imprisonment not exceeding twelve months, or both or either, in the discretion of the court.”
    The defendant submitted, inter alia, the following points: 3. “If the jury find that the note and draft sued upon, or either of them, were given in a transaction of the sale of whiskey by David G. Swartz, in April or May 1872, and that the whole, oi any part of the consideration of them, or either of them, was the price of the whiskey, unless the said David G. Swartz had paid a special tax, under the Act of Congress, as a dealer in distilled liquors, arid had received a receipt therefor, under which he would have been entitled to make the sale, the consideration was illegal, and he or any one standing in his place, and possessing, only his rights, cannot recover on them, or any of them, whose consideration is affected by this illegal consideration.”
    5. “If the jury find that the note and draft sued upon, or either of them, were given in a transaction of the sale of whiskey by David G. Swartz, in April or May 1872, and that the whole or any part of the consideration of them, or either of them, was the price of the whiskey, unless the barrels containing the whiskey were branded with the words, ‘ containing no deleterious drugs or added poison,’ and unless he certified the same fact to the defendant over his own proper signature, the consideration was illegal, and he or any one standing in his place, and possessing only his rights, cannot recover on them, or either of them, whose consideration is affected by his transaction.”
    The court, Briggs, J., directed a verdict for the plaintiff, reserving the questions of law submitted by the points. He subsequently entered judgment for the plaintiff on the points reserved, which was assigned for error by defendant, who took this writ.

      Rudolph M. Shiek, for plaintiff in error.
    We submit that the true construction of the statute is that every person who sells or offers for sale the liquors named, though it may be but a single transaction, renders himself liable to the penalty for doing so without license, and makes him a dealer within the terms of the statute: United States v. Harbison, 13 Int. Rev. Rec. 118; United States v. Barnhart, 20 Id. 137 (1874). This case is governed by Maybin v. Coulon, 4 Yeates 24; Holt v. Green, 23 P. F. Smith 198.
    The Act of 8th May 1854, sect. 7, is as follows: “ No action shall be maintained or recovery bad in any case for the value of liquors sold in violation of this or any act; and defence may be taken in any case against such recovery without special plea or notice.” Swartz testified on the trial that the .¿whiskey was not stamped as required. He has, therefore, failed to comply with this law. The law prescribes that it shall be the duty of any person. There is no room for defining Mr. Swartz out of the operation of the law. The language is as broad as it can be made. The act provides that any one “ offending against any of its provisions shall be deemed guilty of a misdemeanor, and subject to fine and imprisonment.” By the Act of 8th May 1854, the legislature has declared the common law to be what we have contended it is.

      Alexander Simpson, for defendant in error.
   The judgment of the Supreme Court was entered January 19th 1880,

Per Curiam.

In Holt v. Green, 28 P. F. Smith 198, the Act of Congress expressly prohibited any person from engaging in or carrj'ing on the business of a commercial broker without a license. That is not this case. Swartz may have made himself liable to the penalty imposed by the act, but we see nothing which made it unlawful to sell the whiskey which he had distilled, nor do we think that the particular transaction here in question made him a dealer within the true meaning of the law.

Judgment affirmed.'


author: Mr. Justice Gordon

text:
    Craig's Appeal. Assigned Estate of Citizens' Bank.
    1. The powers and duties of the officers of an insolvent bank cease when it makes an assignment for the benefit of creditors. After its dissolution said officers are neither the agents nor trustees of the bank, and they may lawfully buy up outstanding claims against it, if in so doing they act fairly and with an honest intent. Hill o. Frazier, 10 Harris 320, distinguished.
    2. Where stockholders of a bank are liable, under an act of incorporation, for an amount equal to the stock subscriptions, their liability is not that of sureties, but is special and sub modo only. It is limited to an amount equal to their subscriptions, and it accrues only where the assets of the bank have been exhausted; neither can it be enforced except by a judicial decree first obtained. Means’s Appeal, 4 Norris 75, followed.
    3. The liability of stockholders being no more than a ratable share of the debts of the bank, proportional to the amount of their stock, an auditor of an account of the bank’s assignee cannot compel an advance contribution from them by disallowing their claims against said estate.
    4. The contributory share of the stockholders is to be ascertained, apportioned and enforced either by process analogous to that prescribed for the benefit of note holders in the 32d and 33d sections of the Banking Act of 1850, or by bill in equity. But an auditor has no such power. The authority to estimate the value of the property of the bank and apportion the deficit among the stockholders is committed by law to the assignee.
    January 8th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey and Sterrett, JJ. Green, J., absent.
    Appeal from the Court of Common Pleas, No. 8, of Philadelphia county: Of January Term 1878, No. 114.
    Appeal of William Craig and others, from the decree of the court confirming the report of the auditor appointed to audit the account of the assignee for the benefit of creditors of the Citizens’ Bank, of Philadelphia.

      Said bank was incorporated by a special Act of Assembly, approved June 2d 1870. On December 2d 1874, the bank closed its doors, owing its depositors over $39,000, and shoitly afterwards it made an assignment for the benefit of its creditors to the Hon. D. Newlin Fell. At the date of the assignment, George DeB. Keim ' was the vice-president, and Crawford Miller one of the directors of the bank, and both of them were stockholders. By the twelfth section of the charter of incorporation, it is provided, “ That the stockholders shall be personally liable to an amount equal to the capital stock in addition thereto.” Soon after the assignment a fund was created by contributions from a large number of the stockholders, for the purpose of purchasing the claims of the depositors against the bank. With this fund claims of the depositors to the amount of $24,182.65, were purchased by Keim and Miller, at a discount of fifty per cent., and they took assignments of the claims so purchased. October 25th 1875, the said assignee filed his account, which was referred to an auditor to adjust and settle the same, and to state a distribution of the funds. Before the auditor, Keim and Miller presented the claims so assigned to them, and contended that they were entitled to a pro rata distribution with the depositors, upon the face value of the said claims. The depositors objected to them participating in the distribution of the fund until the depositors had been paid in full, for the following reasons: 1. If the said Keim and Miller presented the said claims in their own right, they were not- entitled to any portion of the fund, because at the time of their purchase of the claims they were officers of the bank. 2. If they presented the claims as agents of the stockholders, they could not participate in the distribution until all of the depositors had been paid, because, by the charter of the bank, the stockholders accepted the position of sureties to the depositors.
    It was not alleged that Keim or Miller had been guilty of fraud or want of good faith in the purchase of the claims, and it was conceded that if said claims had remained in the hands of the original creditors they would have been entitled to share in the fund ratably with the other creditors.
    The auditor allowed the claims of Keim and Miller, and awarded distribution to them on. their face value. Exceptions were filed to the report, which the court (Ludlow, P. J., dissenting,) dismissed, and confirmed the report. From this decree this appeal was taken.

      Theodore F. Jenkins and JS. Franklin Fisher, for appellants.
    — The liability. of the stockholders can be enforced in the mode attempted by the depositors in the proceedings before the auditor: Erb’s Appeal, 2 P. & W. 296; Himes v. Barnitz, 8 Watts 39; McGowen v. Remington, 2 Jones 56; Souder’s Appeal, 7 P. F. Smith 498; Rice’s Appeal, 29 Id. 168; Worrall’s Appeal, 5 Wright 524; Vierheller’s Appeal, 12 Harris 105; Kelly’s Appeal, 4 Id. 59; Kramer & Rahms’s Appeal, 1 Wright 71; Moore v. Bray, 10 Barr 519; Huston’s Appeal, 19 P. F. Smith 485; Fesler v. Hickernell, 1 Norris 150; Cooper’s Appeal, 2 Casey 262.
    The Act of April 16th 1850, sect.'39,1 Br. Purd. 148j pi. 116, provides : “ The said assignees shall pay out of the assets and property of the said bank, in case of an assignment, the debts and liabilities in the following order: First, noteholders; second, depositors; third, all other creditors, except stockholders, who shall be last paid.
    These authorities clearly demonstrate it to have been the duty of the auditor to have stated an account as against the stockholders, for whose use the said claims were purchased, and when the amount of their liability to the appellants was determined, it would appear whether or not they were entitled to any portion of the fund. See Hogg’s Appeal, 7 Norris 195; Gunkle’s Appeal, 12 Wright 13.
    Can directors of an insolvent bank participate in the distribution of the estate in the hands of its assignee for the benefit of its creditors, on account of a claim purchased by them subsequent to the insolvency, until the depositors have been paid in full ? By the assignment the corporate functions did not cease. A corporation is not necessarily dissolved by its insolvency, nor by a writ of sequestration, much less by a voluntary assignment for the benefit of creditors : Germantown Passenger Railway Company v. Fitler, 10 P. F. Smith 124; Schrimpf v. Insurance Co., 5 Norris 373.

      Alfred Moore and George W. Thorn, for appellees.
    When one who was once a trustee becomes disconnected with the trust, he is at liberty to buy the property, which was the subject of the trust equally with any other person. There is no evidence in the record that Miller or Keim, at the time of their purchase of the claims were directors in the bank, if they were in fact so. As the assets of the corporation had passed out of their control, by law, into the possession of the assignee, they stood in no respect as trustees of it. Their power over the property, if they ever had any, had passed away.
    It is submitted that a stockholder in a bank has as much right to acquire a claim of a bona fide creditor of it as any stranger, and that there is nothing in his relation to the corporation which forbids him to take, by gift or purchase, such a claim, and to recover it from the corporation as the creditor himself might have done.
    The cases cited by the appellant are not applicable to the present case. In them the points decided arose where the liability of the parties secondarily liable was fixed and determined, and not as here, where there is now no liability, nor can there be any, if at all, until the assets of the corporation are exhausted, which is not this case, as the account filed purports to be only on the first account of the assignee: Means’s Appeal, 4 Norris 75.
    In Hill v. Frazier, 10 Harris 320, the action was by the treasurer of a corporation who had purchased a claim against the same. The relation of trustee and cestui que trust then still existed, and the purchase by him of a claim against the corporation was held to be a violation of his duty thereto, as well as to the defendant, who was a member and director thereof.
   Mr. Justice Gordon

delivered the opinion of the court, January 26th 1880.

When Keim & Miller purchased the claims in controversy, they were neither agents nor trustees of the bank, neither did they occupy the position of sureties or partners, hence the authorities quoted by the counsel for the appellant do not apply to the case. They had, indeed, been officers of the bank, but their powers and duties as such ceased when the assignment was made: In fact, the

corporate powers of the bank itself then ceased, saving and excepting such of those powers as might be necessary to give effect to the provisions of the 27th section of the Act of the 16th of April 1850. There is, therefore, no doubt about the right of the appellees to buy up outstanding claims against the corporation if, in so doing, they acted fairly and with an honest intent.

The case of Hill v. Frazier, 10 Harris 320, was very different from the case in hand. Not only when the claims were bought, but also at the time of the bringing of the suit and at its trial, Eldred, the equitable plaintiff, was the treasurer of the company, and it was we'll said that, as he was the confidential agent and trustee of the company, he could not create other relations which would put him in an attitude of hostility to his principal or cestui que trust. But had that relation been dissolved, either by operation of law or the act of the parties before the purchase of the claim, this rule would not have applied, since the reason for it would rhen have had no existence. Just so in the case in hand; by the act of the bank and the operation of law, the trust relation of the appellees had ceased to exist when the claims in controversy were purchased, and their relation to the corporation was that of stockholders and nothing else. Such being the case, they were as free to buy up outstanding claims against the corporation as any outside parties.

Then as to the other question: it is urged that the appellees should have been postponed to other creditors, because they are made liable by the act of incorporation for an amount equal to their stock subscriptions; that in consequence, they occupy the position of sureties, and, therefore, they ought not to have been permitted to participate in a fund which was not sufficient to meet in full the claims against the bank. If, indeed, the assumption of their suretyship were correct, this would be true. But they are not sureties ; their liability is special and sub modo only. It is limited to an amount equal to their subscriptions, and it accrues only when the assets of the bank have been exhausted, neither can it be enforced except by a judicial decree first had and obtained : Means’s Appeal, 4 Norris 75. The effort here, however, is to compel contribution from the appellees before such decree, and hence, before there is any legal liability. This cannot be done.

Certain it is, these men can be compelled to pay no mpre than a ratable share of the debts of the bank proportioned to the amount of their stock; but in this case that share has not yet been ascertained. It may be more or less than the amount of their claims, or it may be nothing at all, depending upon the amount and final disposition of the property of the bank.

It is asked: how is this contributory share to be ascertained, apportioned or enforced? We answer either by process analogous to that prescribed for the benefit of note-holders in the 32d and 33d sections of the Banking Act of 1850, or by a bill in equity; but however this may be, one thing is certain, that is, that an auditor has no such power. It is not his business to estimate the value of the property of the bank and apportion the deficit among stockholders; that power is by law committed to the assignee. If, however, the claims of these appellees may be pushed aside by other creditors, it is, in effect, imposing upon them an advance contribution which may far exceed that which the statute would compel them to pay. This, however, would be neither lawful nor just, and the court below did right in refusing its sanction to an attempt of this kind.

The decree is affirmed; the appeal is dismissed, costs to be paid by appellant.


author: Mr. Justice Trunkey

text:
    Parker versus City of Philadelphia.
    1. Neither the Board of Health nor any other department of the city of Philadelphia can make a debt or contract, binding the city, unless an appropriation to pay the same has previously been made by councils.
    2. By the procurement of the Board of Health certain nuisances were removed for the public good. There was not a sufficient appropriation to pay
    . for the work done under the contract. Assessments were made on the property and about one-half thereof were paid into the city treasury. Held, that in equity the money belonged to the contractor, and that he had the right to recover the same from the city, on the ground that the money was received for his use.
    January 8th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey and Sterrett, JJ. Green, J., absent.
    Error to the Court of Common Pleas, No. 3, of Philadelphia county: Of January Term 1878, No. 133.
    Case stated wherein Joseph Parker was plaintiff and the city of Philadelphia defendant. The case, as stated, was as follows : “ Plaintiff did the work set forth in the exhibit hereto attached, at the times and for the amounts therein specified. The sums paid into the treasury of the defendants and the amount returned to the solicitor of the defendants that claims might be filed according to law, are accurate.
    “ At the time that plaintiff contracted to do said work, there was appropriated for the removal of nuisances a sufficient sum to pay for the sum due him, but not enough to pay for like debts due others.
    “ If the court shall be of opinion that defendants are liable to pay for the whole sum due by said exhibit, or any part thereof, then judgment to be entered for the plaintiff, the prothonotary to assess the damages in accordance with said judgment, but if the court shall be of opinion that defendants are in nowise liable, then judgment for them.”
    The exhibit referred to therein set forth a number of properties from which the plaintiff had removed nuisances, the assessments on the properties therefor, the amounts paid into the city treasury on this account, and the amounts which still remained as liens on the properties. The health officer of the city certified that the work was properly performed, and that the charges were correct. The court entered judgment for defendant, when plaintiff took this writ and assigned this action for error.

      David W. Sellers, for plaintiff in error.
    As will be seen by the case stated, the plaintiff had removed nuisances prejudicial to the public health at the instance and request of the Board of Health. Although in contemplation of law such a debt incurred to preserve the public health is recoverable from the owners of the estate, and although in fact more than a moiety had been actually paid before suit was brought, yet the court below held that the plaintiff was wholly precluded from a recovery for his work by virtue of the Act of April 21st 1858, Pamph. L. 386. It is contended that work done by the Board of Health in the removal of nuisances is not within the statutory law applicable to the city of Philadelphia as municipal work, and that the prohibitions do not apply. The removal of nuisances is of the same category as expenses incurred in the administration of justice; that is, a function of the Commonwealth and of the county contra-distinguishable from the city or district or borough and paramount thereto: Smith v. City, 5 Phila. 1; or the opening of highways, which is a state function, though intrusted to the city: City v. Dickson, 2 Wright 247; City v. Dyer, 5 Id. 468; Smedley v. Erwin, 1 P. F. Smith 448. It is suggested that the true interpretation of this statute is that a debt incurred for purposes municipal in its nature and by officers subject as such to municipal regulation and control are alone meant: Tatham’s Appeal, 30 P. F. Smith 470.
    It is contended, however, that a previous appropriation had been made in the meaning of the law. The case stated admits that “at the time plaintiff contracted to do said work, there was appropriated, for the removal of nuisances, a sufficient sum to pay him, but not enough to pay for debts due others.”
    What had plaintiff to do with debts due others ? If the knowledge of the law and the appropriation is to be imputed to him; is it not going far enough to hold that if at the time of’ the contract there is existing an appropriation sufficient to cover the same that the power is full and legal ? Must an inquiry be made into all outstanding accounts which thereafter may resort to the same appropriation ? Where is the legal power to make such inquiry ? See McGlue v. City, 32 Leg. Int. 188.

      O. JE. Morgan, Jr., Assistant City Solicitor, and Wm. Nelson West, City Solicitor, for the City.
    The Board of Health is a department of the city of Philadelphia, and as such is subject to the provisions of said Act of Assembly of April 21st 1858. The effect of the Acts of Assembly to limit the power of the Board of Health and the other departments of the municipality, to bind even by contract has been expressly decided by this court: City v. Flanigen, 11 Wright 21; City v. Johnson, Id. 382; Bladen v. City, 10 P. F. Smith 464; Constitution of 1874, art. 15, sect. 2; Perkins v. Slack, 5 Norris 270.
    The decision of the Court of Common Pleas, No. 1, in McGlue v. City of Philadelphia, supra, cited by the plaintiff in error, is, in no way, applicable to this case. In that case a sufficient appropriation had been made by councils prior to the date of the contract ; subsequently thereto, and after the commencement of the work by the contractor, councils diverted the appropriation to others. The court held, that the vested rights of McGlue, under a valid contract, could not thus be taken from him; that having authorized the contract by a sufficient appropriation, in accordance with the law, councils could not thereafter at their pleasure annul it, and divest him of his rights thereunder.
   Mr. Justice Trunkey

delivered the opinion of the court, January 19th 1880.

That neither the Board of Health nor any other department can make a debt or contract, binding the city of Philadelphia, unless an appropriation to pay the same be previously made by the councils, is settled by statute and judicial authority: Act April 21st 1858, Pamph. L. 386 ; Bladen v. Philadelphia, 10 P. F. Smith 464. It is admitted that, at the date of the contract, there was not a sufficient appropriation to cover it, and pay like debts due to others. The action of the executive officers did not obligate the city as a party to the contract. To so hold would render the statute nugatory.' It forbade the contract; and laying and collecting assessments was not a ratification. The treasury is carefully hedged against all inroads by officers of the several departments; exclusive right to open it is vested in the councils; and its safety would be jeoparded the instant it be permitted to others, directly or indirectly, to bind the city for a debt, when there has not been an appropriation.

A single question is presented, namely, whether the money assessed on lots and paid by their owners, for work actually done by the plaintiff, shall swell the city treasury, or go toward compensation of him whose labor gave color of right to the municipal officers to collect that money ? The city has money in its treasury, obtained without consideration in fact on its part, which those officers were not bound to levy or receive. By procurement of the Board of Health, nuisances were removed for the public good; and, had an appropriation been made, the land-owners would have been liable to the city for costs of abating them, and the city to the contractor. The sole consideration for the payment of said money, was the work done by the plaintiff. In equity and good conscience it belongs to him. The city is holding it without semblance of moral right, and, we think, contrary to law. It was justly paid by the land-owners, for they enjoyed the labor which authorized the special tax on them; the city is not liable to pay for the labor, and how can it be entitled to the tax ? Were a natural person standing in the place of the defendant, none would question the plaintiff’s right to recover, on the ground that the money was received for his use. The same principle should be applied to the specific facts in this case.

Judgment reversed, and now, on the case stated,, judgment for the plaintiff for the amount which the “Exhibit” shows the defendant received. The damages to be assessed as provided in the case stated.


text:
    City of Philadelphia, to use of Johnson, versus Wistar.
    1. Where a plea sets up but a single defence, although suggesting several facts, it is not demurrable for duplicity.
    2. If one of several pleas raise a sufficient defence to the plaintiff’s whole right of action, and that plea was admitted in fact by a demurrer, the court were clearly right in entering judgment for the defendant on the whole record, although there were other issues pending, and others had been decided in favor of plaintiff.
    January 9th 1880.
    Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey and Sterrett, JJ. Green, J., absent.
    Error to the Court of Common Pleas, No. 4, of Philadelphia county: Of January Term 1879, No. 37.
    Scire facias sur claim for curbing, filed by the city of Philadelphia, to the use of Joseph Johnson and others, against a lot of ground on the east side of Broad street, above Race street, and Richard Wistar, owner. The claim was for work done and materials furnished in laying one hundred and twenty-one feet of curbstone in front of said lot.
    The defendant, in brief, pleaded, 1. Nil debet. 2. Payment with leave. 3. That the work was done without authority of law. 4. That before the work was done by claimants, the sidewalk in front of defendant’s lot had been well and properly paved and curbed in accordance with the city ordinances; that the curb laid-by claimants cost three times as much as that in general use throughout the city; that the work done by claimants was part of a scheme by which it was intended to make Broad street a great public and ornamental thoroughfare and public drive, and was therefore without authority. 5. That at the time the work was done, the front of the lot was paved and curbed as required by the city ordinances, and that the repavement was without authority. 6. That the ordinance under which the work was done was repealed on May 9th 1873, and the lien was not filed until some time thereafter.
    The plaintiffs joined issue on the first and second pleas, demurred to the third, fourth and sixth, and to the fifth pleaded specially “that the defendant had not, before the filing of said claim, set curbstones. on the line of Broad street in front of the property described in said claim, as the said line was duly established at the time claimants did said work.’'’ The defendant demurred to this replication on the ground that it did not traverse, confess or avoid the allegations in the plea, and that it was argumentative. The court gave judgment for plaintiffs on their demurrer to third and sixth pleas, and judgment for defendant on demurrer to fourth plea, and on his demurrer to replication to fifth plea.
    Subsequently the court made absolute a rule to enter judgment for the defendant on the whole record, when the plaintiff took this writ, and alleged that the court erred, 1. In entering judgment for the defendant on the demurrer to • the fourth plea; 2. In' entering judgment for the defendant on his demurrer to the replication to the fifth plea; 3. In entering judgment on the whole record.

      David W. Sellers, for plaintiffs in error.
    The fourth plea is double and cannot be replied to issuably. It avers several facts which are immaterial. It purports to plead as to matters of fact but vaguely suggests matters of law. And the material matters therein are at issue in the first and second pleas.
    In reading the fifth plea, it will be perceived that it is doubtful if defendant meant to aver that the curb laid by him was on the line at which the curb was set by claimants. The claim referred to a curb-line fixed under the ordinance of 1872. The plea does not aver that the curb was on a different line. To avoid mistake, the replication made a new assignment, that the curbing done was not on the line for which the claim was filed. If claimants had traversed plea on the theory that it meant to traverse the claim, a departure might have taken place in pleading, according as the j udge at Nisi Prius might have construed it. As, however, from the demurrer the defendant construes his plea to mean that he had curbed his footway when it was of a different width, judgment should have gone for the plaintiff on the whole pleading, unless it be held that the city is powerless to change the width of a footway on a public street, and if she does so, it cannot be curbed at the expense of the owner.
    It may be conceded that the court below was right in entering judgment for the defendant on the whole record, if it was right in entering judgment in his favor on the other pleas : 1 Saund. Rep., 80 a, Note 1; but it is error, unless the first plea, to wit.: nil debet, and the second plea, to wit: payment with leave, be considered as withdrawn. To allow these to stand, and yet pass judgment on the whole record, is error.

      J. Howard G-endell, for defendant in error.
    Local assessments are only constitutional when they are imposed for local improvements, which clearly confer special benefits on the property assessed, and to the extent of that benefit. Where, in compliance with the law for the time being, a pavement is laid down by an owner which is of proper and sufficient width, similar in style to those in other parts of the city, well laid, remaining in good order and condition and properly curbed, no existing act or ordinance authorizes the city to tear such a pavement or curbing up and require the owner to pay for laying a similar or better one down again: Hammett v. The City, 15 P. F. Smith 146; Washington Avenue, 19 Id. 352; Wister v. The City, 30 Id. 505; Seely v. City of Pittsburgh, 1 Norris 360.
    It is difficult to see what advantage it would be to the plaintiff to go on and try other issues when there is an ascertained valid defence to his whole action: 1 Saund. Rep. 80 a, note 1.
   The judgment of the Supreme Court was entered, January 19th 1880,

Per Curiam.

This case is ruled by Wistar v. The City, 30 P. F. Smith 505. If any plea raised a sufficient defence, and that plea was admitted in fact by a demurrer, the court were clearly right in entering judgment for the defendant upon the whole record. Now the fourth plea set up the facts which, in Wistar v. The City, were held to constitute a good defence to the claim. It was objected that the plea was double and could not be replied to issuably. But a plea may suggest many facts when they all go to make up a single defence: Blair v. Singerly, 7 Phila. R. 230; Crogate’s Case, 8 Rep. 67. It was accordingly held in Robinson v. Bayley, Burrows 316, that to a plea of a right of common, the replication might deny that the cattle belonged to the defendant, that they were levant and couchant upon the premises, and were commonable cattle. Lord Mansfield said: “ It is true you must take issue upon a single point; but it is not necessary that this single point should consist only of a single fact.” Now the point is that the city could not recover the cost of the curbing from the properties, on the street. The whole plea might have been traversed, or, if the plaintiff had so chosen, he might have traversed any one of the facts necessary to constitute the defence. There is no general issue to a scire facias on a municipal claim, and it cannot, therefore, be objected that this plea amounts to the general issue.

Judgment affirmed.