author: Mr. Justice Potter,

text:
    Owens, Appellant, v. Thomas Kent Manufacturing Company.

      Negligence—Master and servant—Dangerous machine—Bisk of employment—Nonsuit.

    In an action by a woman against her employer to recover damages for injuries sustained to her hand while working at a dangerous machine, a nonsuit is properly entered where it appears that the plaintiff was familiar with the machine, had frequently cleaned it, knew that it was dangerous, and that if she put her hand into it, when it was in motion, she would be hurt; that there was no occasion for her to put her hand into it, and that stop handles used on such machines could not have been applied in time to prevent the accident even if they had been attached.
    Argued Feb. 7, 1905.
    Appeal, No. 315, Jan. T., 1904, by plaintiff, from order of C. P. Del. Co., Dec. T., 1904, No. 177, refusing to take off nonsuit in case of Lizzie H. Owens, by her next friend and father, Robert J. Owens, and Robert J. Owens in his own right v. Thomas Kent Manufacturing Company.
    Before Mitchell, C. J., Dean, Blown, Mestbezat, and Potteb, JJ.
    Affirmed.
    Trespass to recover damages for personal injuries. Before Savtdoe, P. J., specially presiding.
    The circumstances of the accident are stated in the opinion of the Supreme Court.

      Error assigned was refusal to take off nonsuit.

      William A. Gfray, with him William I. Schaffer for appellant.
    There can be no doubt that it was the duty of the defendant to instruct the plaintiff as to the dangerous nature of her work, especially as she was young and inexperienced, and that it was negligence on the part of the defendant not to do so : Rummel v. Dilworth, 131 Pa. 509; Cargill v. Philadelphia Towel Supply & Laundry Co., Limited, 185 Pa. 269; Doyle v. Pittsburg Waste Company, 204 Pa. 618; Welsh v. Butz, 202 Pa. 59; Sheetram v. Trexler Stave and Lumber Co., 13 Pa. Superior Ct. 219 ; Royer v. Tinkler, 16 Pa. Superior Ct. 457; Williams v. Clark, 204 Pa. 416; Tagg v. McGeorge, 155 Pa. 368; Parker v. Ry. Co., 207 Pa. 438; Dynes v. Bromley, 208 Pa. 633.
    Where from the facts and reasonable inferences to be drawn from them negligence may be presumed, its determination rests distinctively with the jury. When such conflict of facts and inferences arise, a court has no right to transcend its province and decide the question of negligence: Calhoun v. Holland Laundry Co., 208 Pa. 139.
    Ail employee has the right to expect his employer to provide machinery, tools and appliances that are reasonably safe for his use, and he assumes no risks growing out of their defective character unless he has been fully advised that they are defective and dangerous: Rummel v. Dilworth, 131 Pa. 509 ; Doyle v. Pittsburg Waste Co., 204 Pa. 618 ; Bannon v. Lutz, 158 Pa. 166.
    Whether the defendant had performed his duty to provide safe means of employment for the plaintiff is a question for the jury: Winters v. Boll, 204 Pa. 41.
    When the plaintiff’s case shows negligence on the part of the defendant and there is doubt as to the inference of contributory negligence to be drawn therefrom, the case is one for the jury : Young v. Mercantile Steam Laundry, 198 Pa. 553.

      H. H. Hall, for appellee.
    It cannot be a question for the jury to determine whether this young woman “ had knowledge of the dangerous character ” of the machine when she says herself she became perfectly familiar with the machine and knew how to operate it, and could see from an examination of it, that the porcupine, if you put your hands on it, was a dangerous thing.
    There was no evidence that this machine did not come up to the standard stated by the present chief justice in Titus v. Railroad Co., 136 Pa. 618. See also Ford v. Anderson, 139 Pa. 261; Keenan v. Waters, 181 Pa. 247; Higgins v. Fanning, 195 Pa. 599; Service v. Shoneman, 196 Pa. 63 ; Spees v. Boggs, 198 Pa. 112; Wilkinson v. Johns Mfg. Co., 198 Pa. 634; O’Keefe v. Thorn, 24 W. N. C. 379; Ehni v. Tube Works Co., 203 Pa. 186.
    It is submitted that Higgins v. Fanning, 195 Pa. 599, rules this case.
    April 10, 1905:
   Opinion by

Mr. Justice Potter,

The error here alleged, was the refusal, by the court below, to take off a compulsory nonsuit. The plaintiff in this case was injured while working in the defendant’s worsted mill. Her duty was to operate a drawing frame. In the language of the trial judge, “ The work of this frame is to draw out the wool in process of preparation for twisting and spinning. The wool, in the shape of long filaments or slivers, is wound upon creels, which are placed upon the back of the frame, whence the slivers, two together from separate creels, are passed over a hook, through what has been termed a funnel, or eye, between rolls, a part known technically as the porcupine, some six inches back of the rolls and wound upon securing creels at the front of the frame.” The porcupine seems to have been a cylindrical apparatus faced with sharp hooks, whose purpose was to straighten the strands of wool. It was the dangerous part of the machinery and the plaintiff knew it. She says so, and that she had cleaned the porcupine frequently, and knew that if she put her hand into it, when it was in motion, she would be hurt. There is no evidence that she was not properly instructed in the use of the machinery. Whatever danger there was in its operation was open and apparent. She had entire charge of this machine for a period of about three months. She admitted that in the performance of her duty there was no occasion for her to put her hand into the porcupine. Tet in straightening out a snarl, she accidentally did get her hand into the porcupine. The instant it was in, the damage was done. The testimony does not show how long her hand was in contact with the porcupine, nor how the machine was stopped. It is manifest that the stopping of the machine after her hand went into the porcupine would not have avoided the accident. Plaintiff testified that her hand -went in practically instantaneously. If it had been shown that the accident occurred, as is suggested in the argument, because no stop handles were attached to the machine, at a place where stop handles were usually placed, and should have been placed to make the machine reasonably safe to operate, the case for the plaintiff would stand on firm ground. But as the trial judge again puts it, “the accident could not have been prevented, after the snarled sliver caught the hand of the plaintiff, because she distinctly testified that her hand was so quickly drawn into the porcupine that she could not even cast her free hand up to assist in breaking the sliver to free her caught hand. She testified that her hand passed almost instantly into the porcupine, hence the handles could not have been used to prevent the accident had they been attached. It is plain that the negligence complained of, namely, the absence of the handles, did not cause nor contribute to the accident.”

We do not find anything in the evidence to support the charge of negligence as set forth in the plaintiff’s statement.

The assignment of error is overruled and the judgment is affirmed.


source: Caselaw Access Project

author: Mb. Justice Potteb,

license: Public Domain

text:
    Donner v. Donner, Appellant.

      Equity—Accounting—Profits—Trust and trustees—Corporation.

    Where a corporation is organized with a large capital, and the organizers pay in in cash only one tenth of the capital stock, and thereafter one of the. organizers sells to his brother a portion of his stockholdings at par, paying himself with moneys which he had received from his brother for investment and subsequently the organizers develop the company by means of moneys borrowed on the company’s notes with their own indorsements, and thereafter the company, together with certain subordinate companies which it owned, are sold at a very large profit, the organizer who sold stock to his brother must account to him for profits received in proportion to their respective holdings of capital stock, and not in the proportion of the funds furnished by the brother to all the money invested in the enterprise whether paid on account of stock, or borrowed on the company’s notes.
    Argued Feb. 15, 1905.
    Appeal, No. 200, Oct. T., 1904, by defendant, from decree of C. P. No. 1 Allegheny Co., Sept. T., 1908, No. Ill, on bill in equity in ease of Frank Donner v. William H. Donner.
    Before Dean, Fell, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Bill in equity for an account.
    Brown, J., filed the following opinion:
    Upon June 16, 1903, Frank Donner filed a bill against William H. Donner, alleging:
    1. That in March, 1901, under a contract between them, the plaintiff purchased from the defendant a $25,000 stock interest in defendant’s stock interest, at par, in three corporations, namely, Union Steel Company (incorporated November 13, 1899, with a capital of $1,000,000, divided into 10,000 shares of the par value of $100 each) ; Union Improvement Company (incorporated April 23, 1900, with a capital of $100,000, divided into 2,000 shares of the par value of $50.00 each) ; River Coal Company (incorporated July 3, 1900, with a capital of $1,000, divided into ten shares of the par value of $100 each), but never received stock certificates therefor.
    2. That the number of shares of capital stock (in said three companies) purchased by plaintiff, as aforesaid, was: Union Steel Company 227 shares; Union Improvement Company 45 40 /100 shares; River'Coal Company 227 /1000 of a share; it being the agreement between plaintiff and defendant, at the time of the purchase, that the number of shares so purchased in each of said companies should be in the proportion that said $25,000 purchase money bore to the aggregate capital stock of the companies at the date of said purchase.
    3. That subsequently the assets of the Union Steel Company were used by the defendant and others in purchasing the corporate stock and property of the Republic Coke Company; in the formation and incorporation of the Donora Mining Company and purchase of its mines and property ; and in purchasing freight vessels for shipping ores and other products.
    4. That about December 15, 1902, the defendant and the other owners sold said freight vessels and stock, property and assets of all of said companies (except the Union Improvement Company) to the United States Steel Corporation for upwards of $22,300,000—the defendant receiving a profit—the exact amount of which plaintiff is unable to state, but believes to have been about $1,825,000 (in which the plaintiff’s share was a 1/10—$182,500).
    5. That in addition to said $182,500, plaintiff is entitled to his share of the Union Improvement Company’s stock held by defendant and to dividends thereon received by defendant.
    The defendant filed an answer denying the plaintiff’s $25,000 investment was of a definite number of shares, or fraction of shares, of stock in the Union Steel Company, River Coal Company and Union Improvement Company, at par; or that it was a stock investment based upon the proportion that $25,000 bore to the original charter capital of said companies, but averring that it was simply a $25,000 interest in defendant’s interest, to this extent; that when the amount of money required by the enterprise should be ultimately and finally determined, and the manner in which it should be financed and settled, the plaintiff would be entitled to receive shares of the capital stock, or bonds, or both—in such proportion as the $25,000 paid by him bore to the total amount contributed to the enterprise—■ upon the same basis as the defendant and other parties interested therein.
    The answer set up other matters of defense (inter alia, denying that the stock and property of the Republic Coke Company and Donora Mining Company were assets of the Union Steel Company, or purchased by said company, and therefore denying that plaintiff’s trust right included an interest in said companies).
    As the other defenses—not specifically referred to—relate largely to matters involved in the accounting, they will only incidentally be referred to in disposing at this stage of the proceedings, the main issue upon which the controversy turns, namely: What was the contract (contractual intent) of plaintiff and defendant touching the $25,000 investment made by plaintiff with defendant in March, 1901 ? And with that ascertained the trust—as applied to the corporate investments through which it passed—may be traced and measured with reasonable certainty by an accounting.
    What was the contract ? As part of the consideration (between plaintiff and defendant) inducing its execution, the clear weight of the testimony establishes that the plaintiff, until the spring of 1900, was manager of the American Tin Plate Company, in Indiana, and that he agreed to resign from that position and accept a new position in the enterprise projected by the defendant, provided he were allowed to invest his money in the stock thereof. To make a long story short (for the testimony is very voluminous) the defendant finally acceded to plaintiff’s request for stock by selling him in March, 1901, $25,000 worth of defendant’s interest in the Union Steel Company, Union Improvement Company and River Coal Company. And said sum was paid by plaintiff to defendant in two installments of $12,500 each—one in March, the other in July, 1901.
    The testimony likewise clearly establishes that plaintiff was buying $25,000 worth of stock in defendant’s interest in said three companies, and was to receive certificates of stock therefor. Numerous letters and conversations confirm that such was the agreement. The following letters (and other letters, prior and subsequent), strongly sustain this view:
    “ (Exhibit No. 19.)
    “ Union Steel Company.
    “ Pittsburg, Pa., 3-21-1901.
    “ Dear Frank :—Please send me check for $12,500 to apply on a $25,000 interest in my interest in Union Steel, River Coal & Union Improvement Co.
    “ It will probably be some time before stocks are issued, and I can not give you more than receipt for present.
    “ Yours truly,
    “W. H. Donner.”
    “ (Exhibit No. 34.)
    “ Union Steel Company.
    “ Donora, Pa., Mar. 25", 1901.
    “ W. H. Donner, Pittsburgh, Pa.
    “ Dear Will :—Enclosed find check for $12,500, to apply on my interest in U. S. Co., U. I. Co. & River Coal stock. Hope before stock is issued you will take the matter up with stockholders and can arrange to let me have the $50,000 instead of the $25,000 portion of yours. As they have talked of setting aside a portion of stock for employees the matter could be brought up o. k. You might explain that you had promised me stock & that I wanted 50M, or if you prefer make it 60,000, and I will take care of Perce. (Believe he wants 10M.)
    “ Kindly arrange if possible.
    “ Yours truly,
    “ Frank.”
    With these facts established, the next issue of fact to be determined is, What was defendant’s interest in the Union Steel Company, Union Improvement Company and River Coal Company in March, 1901 ?—for that was the date of sale by defendant to plaintiff of the $25,000 stock interest in defendant’s interest in said companies.' At that time the defendant’s interest was $343,750. ' That was the sum he then had invested in the companies. And the proportion that plaintiff’s $25,000 bore to defendant’s $343,750 was the ratio of his stock interest in defendant’s interest in the corporate projects. In other words, 25,000/343,750 (4/55) of defendant’s interest was plaintiff’s stock share of the investment—an investment between them, in that ratio, running through the enterprise to its sale to the United States Steel Corporation. No other just inference of fact can be drawn from the testimony.
    It is true that the $343,750 interest of the defendant (which included plaintiff’s $25,000 proportional interest), was ultimately increased by funds raised by the defendant; but the testimony shows that plaintiff was willing to carry his portion of any increase, and so informed the defendant. And the testimony further shows that the impression he got from the defendant was that the Mellons—interested in the enterprise— were going to carry any additional amounts required. Plaintiff was never called upon by defendant to make further payments.
    Were the Donora Mining Company and the Republic Coke Company portions of the Union Steel enterprise ? That they were portions of it—portions accruing after plaintiff’s purchase of the interest in defendant’s interest—there cannot be a doubt:
    (a) The testimony of S. H. Waddell, former secretary and assistant treasurer of the Union Steel Company, shows that hundreds of thousands of dollars were advanced, loaned or paid by and through the Union Steel Company in the formation and operation of the Donora Mining Company and the Republic Coke Company plants—the exact amount he is unable to state. It is clear that the credit of the Union Steel Company was used in raising said funds and in promoting the success of those companies.
    (5) In referring to the Republic Coke Company defendant says:
    “ Messrs A. W. Mellon and R. B. Mellon owned two-thirds of the corporate stock of that company; and about July, 1901, they purchased the remaining one-third of the capital stock. The authorized capital stock of the company was 112,000. Thereafter, it being thought desirable that the properties of this company might be added to the Union Steel Company enterprise, I was permitted to acquire a one-quarter interest in the property of this company.”
    (e) And again—in referring to the Donora Mining Company, organized in the latter part of 1901—defendant says:
    “ In the same way, during 1901 and 1902, we were making efforts to acquire the ore necessary to protect the company in its supply of raw materials ; and finally we purchased and leased a large amount of ore property in the states of Minnesota and Michigan and organized the Donora Mining Company.”
    (d) And again-—in referring to the freight vessels—defendant says: “ Said vessels were transferred to and were owned by the Donora Mining Company for use in transporting ore.”
    (e) From the Union-Sharon agreement of November 20, 1902, executed by defendant and the Mellons (parties of the first part) the following extracts are drawn:
    “ Whereas, The parties of the first part own or control all of the capital stock of the Union Steel Company (hereinafter called Union) and certain companies connected in interest therewith, to wit: the Republic Coke Company, the River Coal Company .... Donora Mining Company ....
    ********
    “ Sixth. There are purchase money obligations on some of the properties of Union, namely: Republic Coke Company, River Coal Company and the Donora Mining Company . . . .”
    (/) About December 15, 1902, defendant and the other holders of stock of the Union Steel Company sold and transferred the stock and assets of the Union Steel Company, River Coal Company, Republic Coke Company and Donora Mining Company—including the interest of plaintiff therein—to the United States Steel Corporation for upwards of $22,300,000 ; on which the profits were upwards of $7,300,000—defendant receiving one fourth thereof.

      (g) Prior to said sale to the United States Steel Corporation defendant and the other holders of stock of the Union Steel Company effected the sale and transfer to the Union Steel Company of the stock and assets of the River Coal Company, Republic Coke Company and Donora Mining Company; and the title to the stock and assets of all of said companies (as the property of the Union Steel Company) was sold and transferred to the United States Steel Corporation.

      (Ji) After said sale by defendant and the other holders of stock of the Union Steel Company to the United States Steel Corporation, the defendant, on March 10, 1903, submitted to plaintiff a statement of the profits of the sale of all the properties (including those of the Republic Coke Company and Donora Mining Company) for the purpose of settling with plaintiff—and admitted plaintiff’s right to share in the profits of all of said companies (including the Republic Coke Company and the Donora, Mining Company).
    The interest of the defendant in the Union Steel Company •—and in each of the subsidiary companies (Union Improvement Company, River Coal Company, Republic Coke Company and Donora Mining Company) was one fourth.
    CONCLUSIONS ON LAW.
    Prior to March, 1901, plaintiff’s hoped-for stock interest in defendant’s interest—as to amount—had not been agreed upon ; for the minds of the parties were widely apart upon that subject. Non constat that they would ever agree. True, the defendant had previously offered plaintiff $20,000 worth of defendant’s interest; but that offer had not been accepted. In the meantime the value of defendant’s interest had been steadily advancing. And necessarily plaintiff’s purchase was based upon the value of defendant’s interest at that date (March, 1901).
    In March, 1901, the defendant’s interest in the Union Steel Company, Union Improvement Company and River Coal Company was $343,750—$25,000 of which sum passed to plaintiff by the sale to him at that date; so that from that time the interest of the plaintiff was $25,000, of the defendant, $318,750 ; and in this ratio the joint venture of plaintiff and defendant coursed to its sale to the United States Steel Corporation in December, 1902. Any other measure would be inequitable— violating not only the fair presumption to be drawn from the testimony, but the well-settled legal presumption applicable to joint ventures, joint-stock interests and partnerships.
    If the defendant’s intent in the sale was to give plaintiff not a $25,000 interest in his $343,750 interest, but a $25,000 interest in defendant’s ultimate interest—ultimately exceeding many times that sum—it was his duty before closing the deal to have expressed that intent. But failing to disclose such intent, the legal presumption of their joint ratio of interest followed. And thereafter, so far as the joint interest was increased by advancements by the defendant, the proportion chargeable to plaintiff’s share may be ascertained and adjusted in the accounting.
    In the care of plaintiff’s interest the defendant, as trustee, was bound to exercise the utmost good faith. And good faith meant that in the ratio the trust bore to defendant’s $343,750 interest (of which it was a part) it would share in the ultimate disposition of the property. Good faith meant lojuilty to all the interests of the beneficiary.
    The trust relation of an agent is well stated in Meehem on Agency, sec. 469 :
    “ All profits made and advantage gained by the agent in the execution of the agency belong to the principal. And it matters not whether such profit or advantage be the result of the performance or of the violation of the duty of the agent. If his duty be strictly performed, the resulting profit accrues to the principal as the legitimate consequence of the relation; if profit accrues from his violation of duty, that likewise belongs to the principal, not only because the principal has to assume the responsibility of the transaction, but also because the agent cannot be permitted to derive advantage from his own default. It is only by rigid adherence to this rule that all temptation can be removed from one acting in a fiduciary capacity to abuse his trust or seek his owu advantage in the position which it affords him.”
    Decree.
    1. That the defendant, William H. Donner, is the trustee of the plaintiff, Frank Donner, for the interest of the plaintiff in the proceeds and profits of the sale of the stock, holdings and property of Union Steel Company, River Coal Company, Rerpublic Coke Company and Donora Mining Company to United States Steel Corporation ; which said interest of the plaintiff in said proceeds and profits is four fifty-fifths (4 /55) of one fourth (i) thereof.
    2. That the defendant, William H. Donner, is the trustee of the plaintiff, Frank Donner, for the interest of the plaintiff in the stock of Union Improvement Company, which was sold bj”- the defendant to the plaintiff; and for the interest of the plaintiff in all sums of money, dividends, proceeds and profits which heretofore have been received, and which may have accrued to and hereafter may be received by the defendant, on account of said stock; which said interest of the plaintiff in said stock is four fifty-fifths (4/55) of one fourth (£) of the total capital stock of said company; and which said interest of the plaintiff in said sums of money, dividends, proceeds and profits is four fifty-fifths (4/55) thereof.
    3. That the defendant, William H. Donner, is liable to account, and is required to account to the plaintiff, Frank Donner, for the interest of the plaintiff in the proceeds and profits of the sale of the stock, holdings and property of Union Steel Company, River Coal Company, Republic Coke Company and Donora Mining Company to United States Steel 'Corporation ; and for the interest of the plaintiff in all other sums of money, dividends and profits which accrued to the defendant on account of said stocks and property; and for the interest of the plaintiff in all sums of money, dividends, proceeds and profits which heretofore have been received, ’and which may-have accrued to and hereafter may be' received' by the defendant, on account óf the interest of the plaintiff in the stock of Union Improvement Company. ' :
    4. That the defendant, William' H. Donner, deliver to the plaintiff proper certificates for four fifty-fifths (4/55) of one fourth (I) of the total capital stock of Union Improvement Company.

      Error assigned among others was the decree of the court.

      John Cr. Johnson, with him J. H. Beal, for appellant.
    The contract averred by the bill, and which it sought to enforce, was a purchase by appellee from appellant, for the price .of §25,000, of a specified number of shares in three companies. The profits realized upon these shares, also those upon certain other shares alleged to have been purchased with the funds of the three first companies, were demanded.
    The testimony overwhelmingly established a contribution by appellee of §25,000 in payment of an interest of that amount in appellant’s interest in a total enterprise. The profit to which appellee was entitled was the proportion which his contribution bore to the appellant’s contribution to the whole enterprise, completed.
    If the contract had been such as was averred by appellee, he would only have been entitled to the profits realized upon the shares by him purchased. The holders of the residue of shares issued by the corporations for legitimate expenditures would have been entitled to all the profits thereon.

      John O. Bane, with him I). P. Patterson, for appellee.
    April 10, 1905:
   Opinion by

Mb. Justice Potteb,

This is a bill for an accounting. The defendant admits that he has occupied a fiduciary relation to the plaintiff, but the terms of the contract, under which he accepted from the plaintiff the sum of §25,000, for investment, are in dispute. In accounting for the profits of the transaction in which both were interested, the defendant is not willing to share with the plaintiff, in proportion to the amount paid by each in cash, into the capital stock of the corporation which was organized, and whose properties were developed and sold. He claims that his obligation only requires him to give to the funds furnished by the plaintiff, the proportionate shares of profits, which would accrue, if all the money invested in the enterprise, most of which was borrowed by the company, be considered as capital stock. But in dividing among themselves the net results of this transaction, the defendant and his associates shared the profits in exact accordance with their holdings in the stock of the Union Steel Company, and it was upon this basis that the defendant received one fourth of the amount. Large sums of money were loaned to the company through the good offices of the two principal stockholders and by means of their indorsements. Presumably, compensation for the loans was made by the payment of interest to the lenders. The plaintiff here contends, that the money he gave to the defendant was in payment for a definite number of shares of the capital stock of the Union Steel Company, in which the defendant was at the time interested to the extent of one fourth of the entire capital stock. The authorized capital of the Union Steel Company was $1,000,000, and the defendant was entitled to take and pay for one fourth of this amount, or $250,000 of the stock, divided into shares of the par value of $100 each. According to the view of the plaintiff, the amount which he paid in cash to the defendant, which was $25,000, was equal to just one tenth of the entire interest owned by the defendant, so that as he estimated it, he was buying the one tenth of a quarter interest in the entire capital stock of the Union Steel Company.

It seems that in the latter part of the year 1899, the defendant and a few associates organized the Union Steel Company for the purpose of building a plant, and manufacturing steel near Pittsburg. The authorized capital was $1,000,000, and ten per cent of this amount, or $100,000, was paid into the treasury of the company in cash by its organizers before the charter was granted. It does not appear from the evidence that anything more than this was ever paid in as capital stock. The additional funds needed were raised by borrowing, upon the demand notes of the company, indorsed by individual stockholders. The defendant, who was entitled to one quarter of the stock, paid in his one fourth of the cash subscription, which-was $25,000, and it does not appear that he ever paid anything more as subscription to the capital stock of the Union Steel Company. In order to facilitate the work of the steel company, and to strengthen its position, various subsidiary companies were organized in connection with the Union Steel Company. The Union Improvement Company was intended to acquire real estate to be bought and sold in connection with the works, for dwellings and otherwise. The River Coal Company was intended to purchase coal and coke land for the supply of the mills and furnaces. The Donora Mining Company was organized for the purpose of holding mining lands to supply ore. The Republic Coke Company was acquired to insure that form of fuel. But these companies were managed and financed through the agency and offices of the Union Steel Company and with the exception of the Improvement Company were all sold to, and vested in, the Union Steel Company prior to the sale of its entire capital stock to the United States Steel Company.

The relation of the defendant to these various companies was the same as it was to the chief factor in the aggregation— the Union Steel Company, and it was through his ownership in that, that his share of the proceeds of the entire transaction was worked out.

The trial court has found as a fact, that “ the clear weight of the testimony establishes that the plaintiff, until the spring of 1900, was manager of the American Tin Plate Company in Indiana; and that he agreed to resign that position and accept a new position in the enterprise projected by the defendant, provided he were allowed to invest his money in the stock thereof.” That “the defendant finally acceded to plaintiff’s request for stock by selling him in March, 1901, $25,000 worth of defendant’s interest in the Union Steel Company, Union Improvement Company and River Coal Company. And said sum was paid by plaintiff to defendant in two installments of $12,500 each—one in March, the other in July, 1901. The testimony likewise clearly establishes that plaintiff was buying $25,000 worth of stock in defendant’s interest in said three companies, and was to receive certificates of stock therefor.”

This is the crucial point in the case. What was the understanding upon which the $25,000 was paid to the defendant, and received by him? Was it for the purchase of capital stock in the corporation ? Or was it simply to be invested in an interest in the enterprise, proportioned to the whole money cost of the entire undertaking ? The court below has found the former to be the fact, and that the defendant received the money from plaintiff in payment for that amount of capital stock.

Our examination of the evidence has satisfied us, that this finding of fact and the conclusion based thereon, is amply justified. It is supported by the testimony of Frank Donner, and by that of his wife, and is very strongly corroborated by the correspondence between the parties. In a series of letters the plaintiff asks to buy stock. The defendant says there will be but one kind of stock, and encouraged plaintiff by saying he will let him have some of his, if other cannot be had. Then finally, after several months, upon March 21, 1901 (exhibit No. 19), the defendant writes as follows: “Dear Frank: Please send me check for $12,500 to apply on a $25,000 interest in my interest in Union Steel, River Coal and Union Improvement Company. It will probably be some time before stocks are issued, and I cannot give you more than receipt for present.”

In reply to this letter, the plaintiff writes as follows (exhibit No. 34), dated March 25, 1901: “Dear Will: Enclosed find check for $12,500 to apply to my interest in U. S. Co., U. I. Co., and River Coal stock.” There were other significant statements which we do not take space to quote. But we do not doubt, that during the preliminary correspondence and when the money was actually paid by the plaintiff to the defendant, both parties had in mind the actual purchase by the plaintiff of a definite amount of capital stock. Otherwise, the repeated references to stock and to the issue of the certificates therefor, are utterly meaningless. It is perfectly apparent from the evidence that what was before the minds of the parties was the organization and development of the Union Steel Company, which had been incorporated with an authorized capital of $1,000,000. In this company, the defendant, it was agreed, had a one fourth interest, and this would entitle him to subscribe and pay for 2,500 shares the par value of $100 each, or $250,000 in all. In the other subsidiary companies, the defendant had the same proportionate interest, but it is admitted that the enterprise was substantially all one, and was controlled by and through, and in the interest of, the Union Steel Company, and that the interest held in it by the stockholders, measured the interest they held in all.

. We agree with the trial court, that the defendant is trustee for the plaintiff for the amount of $25,000 of the capital stock of the Union Steel Company, sold to him not later than March 21, 1901.

But in taking the next step, to fix the amount of the holding of tlie defendant in the Union Steel Company, at that time, so as to get at the relative proportions in which to divide the profits arising from the sale of the entire assets of the companjq the trial judge assumed as a fact that W. H. Donner had paid in at the time he received the funds from his brother, the sum of $343,750 for capital stock. How this could be, is not shown. He was only entitled to subscribe for $250,000 in all, of the stock, so that if he did as a fact pay more than this amount into the treasury of the company, he must have occupied to that extent the position of creditor rather than that of stockholder. As a matter of fact, the most careful scrutiny of the evidence fails to show that he had at that time paid more than $25,000 cash into the Union Steel Company, upon account of his subscription to its stock. He seems also to have paid the same amount into the Union Improvement Company upon account of his subscription to its stock, and there stopped. Outside of these two payments his so-called contributions to the funds of this enterprise were apparently made up of the proceeds of demand notes made by the steel company, and indorsed by him. These notes could not in any sense be considered as payments to the company. They created indebtedness by the company. These demand notes were not paid, but were taken up by the issue of the company’s bonds upon the final sale to the United States Steel Company. So that the defendant did not pay anything to the company by means of the issue of these notes. Defendant was evidently under the impression that the giving of these notes by the company, indorsed in part by him, constituted payment by him. He so treated them in his testimony. He says: “ The cash advancements that I made were called bills payable, whereas the cash advancements that were made by Mr. A. W. Mellen and Mr. R. B. Mellen, in which I was charged on their books with a quarter, were called bills payable special, and those notes were made payable in first mortgage bonds.” An inspection of the notes themselves as shown by the exhibits, shows that they were all bills payable of the Union Steel Company,, and the evidence is further that they were all paid by the issue of bonds by the corporation and were not paid by the defendant or by the Mellons. We are therefore unable to find in our analysis of the evidence any support for the statement by the defendant that he paid into the treasury of the Union Steel Company the sum of 1843,750. But the trial judge has accepted the statement of the defendant in that respect, apparently without question. As to this point he says: “ At that time the defendant’s interest was $343,750. That was the sum he then had invested in the companies. And the proportion that $25,000 bore to defendant’s—$343,450 was the ratio of his stock interest in defendant’s interest in the corporate-projects. In other words, 25,000/343,750 (4/55) of defendant’s interest was plaintiff’s stock share of the investment—an investment between them, in that ratio, running through the enterprise to its sale to the United States Steel Corporation. No other just inference of fact can be drawn from the testimony.” This was a mistake, for defendant was only entitled at the outside to subscribe for $250,000 of the stock, and he had not availed' himself of his right to do that. But conceding his ownership to that extent, then the denominator of the fraction adopted by the court should have been 250,000 instead of 343,750.

But this finding as to the amount paid in by defendant does not affect the principle adopted by the trial judge ; it only affects the proportion. It did not meet the view of counsel for the plaintiff, as appears from their tenth request for findings of fact, which was refused by the court below. However no exception was filed, and no appeal was taken by the plaintiff, and we cannot further consider this feature of the case here.

Much has been said in the argument about a difference in the apparent percentage of profit derived by the parties. It is urged that the plaintiff upon his comparatively small investment was awarded over 500 per cent, while, measured by percentage, the defendant gets one tenth as much or less. But this discrepancy is apparent rather than real, and is only made to appear by giving to the defendant credit personally for having contributed the funds which were as a matter of fact loaned by other parties to the corporation; and denying any part of this credit to the plaintiff. This is a mistaken view. The corporation was in strong hands and they provided for it an astonishing extent of credit. But in so doing, they stood in the attitude of creditors, and not as stockholders; and the plaintiff as a shareholder was entitled to participate in the benefit resulting, in accordance with the amount of stock he held. In that respect, he was the.only stockholder who paid in full, the par value in cash of his holding of stock in the company. The others, including the defendant, for reasons best known to themselves, did not pay for their stock, but chose to aid the company in borrowing funds, rather than pay into the .treasury the full amount of their subscriptions. Of course, those who loaned money to the corporation, charged and were paid interest for the accommodation. But when it came to dividing the profits of the transaction, it was only as shareholders that they could participate in the results.

The culmination of the matter is thus set forth in the following finding by the court below: “ About December 15, 1902, defendant and the other holders of stock of the Union Steel Company, sold and transferred the stock and assets of the Union Steel Company, River Coal Company, Republic Coke Company and Donora Mining Company—including the interest of plaintiff therein—to the United States Steel Corporation for upwards of $22,300,000; on which the profits were upwards of $7,300,000, defendant receiving one fourth thereof.” It should be noted, however, as it appears in the evidence, that this consideration of $22,300,000 was paid not in money, or outside securities, but by means of bonds issued by the Union Steel Company; and the funds which had been temporarily advanced upon its demand notes were repaid by the substitution of these bonds. So that the liability which the defendant and his associates had assumed was thus Aviped out.

The difference betAveen the amount of this indebtedness and the amount of bonds received, constituted the profits upon the transaction. This sum being the proceeds of bonds issued by the corporation, was of course assets in the hands of its stockholders, and could only be properly distributed to them as such.

The United States Steel Company gave no consideration for the stock and assets of the Union Steel Company, which passed entirely to it, except to place its guarantee of payment upon the outstanding bonds of the Union Steel Company, issued before the transfer.

We have no doubt as to the right and duty of the court to grant the relief sought by this bill. The case was heard broadly upon its merits; upon bill and answer, and cross bill and answer. By filing his cross bill, the defendant indicated his desire for a complete determination of the whole matter.

When the defendant undertook to act as agent for his brother, the plaintiff, in the investment of his money in the stock of the Union Steel Company, he became thereby charged with the duty of protecting that interest, which was combined with his own, quite as fully as he could his own. The legitimate consequence of the relation of trust which he had assumed, was that the resulting profits which followed the investment made for the plaintiff in the capital stock of the Union Steel Company, accrued to the principal and must be accounted for, to him.

As the trial judge well said: “ In the care of plaintiff’s interest the defendant, as trustee, was bound to exercise the utmost good faith. And good faith meant that in the ratio the trust bore to defendant’s interest (of which it was a part), it would share in the ultimate disposition of the property. Good faith meant loyalty to all the interests of the beneficiary.”

The assignments of error are all overruled. The decree of the court below is affirmed and this appeal is dismissed at the cost of the appellant.


author: Mr. Justice Elkin,

text:
    Shepp, Appellant, v. Reading Belt Railroad.

      Railroads—Eminent domain—Road—Damages.

    Where a railroad company takes a strip of land through a farm and the owner has no access from one part to the other, except by a public road at the end of his property, the jury in assessing the damages cannot take into consideration, as against the landowner’s claim for damages, the fact that the railroad has a viaduct upon the farm under which there is a passageway for wagons, where it appears that such passageway was in the exclusive possession of the company and could be closed at any time.

      Argued Feb. 27, 1905.
    Appeal, No. 86, Jan. T., 1904, by plaintiff, from judgment of C. P. Berks Co., Feb. T., 1902, No. 35, on verdict for plaintiff in case of John Shepp v. Reading Belt Railroad.
    Before Mitchell, C. J., Fell, Brown, Mestrezat and Elkin, J J.
    Reversed.
    Appeal from award of jury of view. Before Endlich, J.
    The facts are stated in the opinion of the Supreme Court.

      Error assigned was answer to plaintiff’s first and second point, quoted in the opinion of the Supreme Court.

      Cyrus Gf. Derr, with him Ira Gf. Kutz, for appellant.
    The damages for land appropriated by a railroad company, under the general railroad laws, must be assessed upon the basis of the rights which the landowner loses, and which the railroad company acquires, and of the depreciation of market value of the entire tract of land resulting from such loss of right by the landowner and acquisition of right by the railroad company: Pa. Schuylkill Valley R. R. Co. v. Paper Mills, 149 Pa. 18; Pittsburg, etc., Ry. Co. v. McCloskey, 110 Pa. 436.

      Jefferson Snyder, of Snyder Zieber, for appellee,
    cited: Earle v. Arbogast, 180 Pa. 409; P. & R. R. R. Co., v. Getz, 113 Pa. 214; Fox v. Fox, 96 Pa. 60; Mineral R. R. Mining Co. v. Auten, 188 Pa. 568.
    April 10, 1905:
   Opinion by

Mr. Justice Elkin,

The appellee under the power of eminent domain condemned certain lands belonging to the appellant to be used as a right of way on which to construct a railroad. The parties not being able to agree as to the value of the lands appropriated, viewers were appointed for the purpose of assessing damages. The viewers filed their report in the customary way and fixed the damages to the plaintiff at $3,986. The defendant appealed from the report of the viewers. Upon petition, the court directed the form of issue and ordered a jury trial. The jury returned a verdict in favor of the plaintiff for $1,950.53. Judgment having been entered on the verdict, the appellant took this appeal.

At the trial the plaintiff submitted the following points, and asked the court to affirm the same for the consideration of the jury:

1. The interest which the defendant company has acquired in the land of the plaintiff described in the petition embraces a right to the exclusive possession of the surface of the land, and there is left in the plaintiff and his successors in title no right to cross from one side of the railroad to the other on the lands so described, excepting upon the public road known as River road, with this qualification, that where there is no public road crossing the railroad the landowner is entitled to a private crossing.

2. Where a public road crosses a railroad a person owning land through which said public road passes is not entitled to require the railroad to erect or keep in repair any crossing for the accommodation of the occupant of the land.

The court below in its instructions to the jury answered these points as follows : “ The above points are affirmed with the qualification that whilst it is true as an abstract proposition that the company, having condemned the entire strip down to the River road, has a right to fill it up if it wants to, and to prevent plaintiff from crossing over it; that it pays for the whole; that whatever it pays will be payment for the whole, and that its right is an exclusive one; the jury must also consider what the construction of the company indicates as its purpose in permitting or not permitting plaintiff to use the open space as a means for getting around from one part of the ground to the other, and what it has done in the past in that particular, and whether it is at all likely, in view of all this, that this arrangement will be disturbed in the future.”

The appellant contends that he was entitled to an unqualified affirmance of the two points submitted. In this he is clearly right. The points correctly stated the law in reference to this matter, and the court should have affirmed them without qualification. The only question, therefore, for the consideration of this court is whether injury was done the plaintiff by reason of the failure of the court to affirm these points without qualification. If injury was done the appellant by the error, the case should be reversed. What are the facts ?

The plaintiff owned a tract of land. The defendant appropriated a strip of said land for use as a railroad right of way. This right of way divided the lands of appellant into two parts, leaving one parcel on one side and one on the other. To reach his land on one' side of the right of way the plaintiff will be required to go to a public road at the end of his property, drive along that road, cross over the railroad, and then drive back again over that portion of his land in order to reach his buildings. This condition of things would make it necessary to grade a road from his land on one side of the railroad down to the public road which lies at a lower level, and on the other side grade a road from the public road up to his land lying at a higher elevation. He would therefore lose the use of the land taken for private roads, and be at the expense of making and maintaining these roads, besides suffering inconvenience .from driving down and up steep grades. The points submitted were intended to give the counsel for appiellant the opportunitj'of' discussing the exact situation to the jury. It appears, however, that the company had constructed for its own uses a viaduct supported by abutments on the lands of the plaintiff, the opening under same making a passageway through which plaintiff could drive from his lands on one side to those on the other side of the railroad. His tenant had made use of this passageway occasionally as a convenience in crossing the right of way. The qualification made by the learned court was intended to point out the fact that the plaintiff might be permitted to go under this viaduct from time to time by the defendant and if so, the inconvenience suggested by the appellant’s points would not be very great. In this view there was manifest error. The railroad had the exclusive use and enjoyment of the right of way and could at any time refuse to permit the appellant or any other person the use of the passageway under the viaduct for any purpose whatever. The fact that the tenant of the plaintiff had sometimes made use of it has no bearing on the case. The appellee had the exclusive possession of the strip of land condemned, and the appellant or his tenant would be a trespasser if he attempted to use the same. He was, therefore, clearly entitled to have the law applicable thereto specifically brought to the attention of the jury. The court by its qualified affirmance of the points submitted has denied him this right. In view of the fact that the jury rendered a verdict for only one half of the amount of damages reported by the viewers, and less than the lowest amount fixed by the witnesses of defendant, we cannot say that no injury was done the plaintiff by the erroneous ruling of the court. This being our view of the law it is unnecessary to discuss the remaining specifications of error.

Judgment reversed with a venire de novo.


author: Mr. Justice Fell,

text:
    Cromley v. Pennsylvania Railroad Company, Appellant.

      Negligence—Railroads—“Stop, look and listen.”

    In an action against a railroad company to recover damages for the death of plaintiff’s husband, it appeared that plaintiff approached a grade crossing, in a borough, driving a sled. There was evidence from one witness that he stopped at a point about twenty feet from the crossing from which place he could have seen the train that struck him, if it had been within 800 feet of the crossing. Five witnesses for the defendant testified that the deceased did not stop, but drove at a slow trot on the track in front of the train. Held, that the case was for the jury and that a judgment and verdict for plaintiff should be sustained.

      Evidence—Scintilla—Conflict in testimony—Province of court and jury.

    Where the testimony in support of an action is a mere scintilla and that opposed to it is so overwhelming that no real controversy is raised, and where the jury could not find for the plaintiff without a capricious disregard of apparently truthful testimony, probable in itself and not at variance with any admitted or proved facts, a verdict may be directed for the defendant. Such cases are rare and they do not arise where there is a real conflict of testimony.
    Argued Feb. 28, 1905.
    Appeal, No. 353, Jan. T., 1904, by defendant, from judgment of C. P. Montour Co., Sept. T., 1902, No. 58, on verdict for plaintiff in case of Sarah C. Cromley v. Pennsylvania Railroad Company.
    Before Mitchell, C. J. Fell, Brown, Mestrezat and Elkin, JJ.
    Affirmed.
    Trespass to recover damages for death of plaintiff’s husband. Before White, P. J., specially presiding.

      The facts appear by the opinion of the Supreme Court and by the previous report of the case in 208 Pa. 445.
    Verdict and judgment for plaintiff for $7,428. Defendant appealed.

      Error assigned among others was in submitting the case to the jury.

      II. M. Ilinekley, with him I. X. Grier, for appellant.

      E. S. Gearhart and James Scarlet, with them W. J. Baldy, for appellee.
    April 10, 1905:
   Opinion by

Mr. Justice Fell,

At a former trial of this case it was shown by testimony in behalf of the plaintiff that her husband and son were killed at a diagonal crossing of the defendant’s road by an express train which was running about sixty miles an hour. They were riding in a sled drawn by two horses, and approached the tracks at an acute angle. The horses were stopped a moment at a place nearest the tracks from which a view of them could be had, but this view extended only 500 feet in the direction of the train. They went on at a walk twenty/ or thirty feet and the sled was struck on the first track. Gravel and cinders mixed with the snow at the side of the crossing made the passage of a sled difficult, and the horses reared an instant before the collision. A judgment of nonsuit entered at the trial was reversed for the reasons (1) that there was not only the presumption but affirmative evidence that the plaintiff’s husband stopped at what was apparently the proper place at which to stop, and whether he should have stopped longer or stopped again were questions for the jury; (2) that it was not so clear that he drove on the tracks in the presence of a manifest danger, which he saw or should have seen, that the court could say he was negligent, because the train may have come into view after he looked, and he may have been detained by the condition of the crossing and the rearing of his horses. See Cromley v. Penna. Railroad Co., 208 Pa. 445.

At the second trial the testimony offered by the plaintiff was substantially the same as at the first, but the distance at which the train could have been seen at a point twenty feet from the crossing was shown to be over 800 feet. Five witnesses called by the defendant testified that the plaintiff’s husband did hot stop but drove at a slow trot on the track in front of the train. The case was submitted to the jury, and all the assignments of error relate to the refusal of the court to direct a verdict for the defendant.

The weight of the testimony as to stopping was with the defendant. Only one witness testified that there had been a stop ; five witnesses, who had a better opportunity to see what happened, testified that there had been no stop. If there was nothing in the manner of the defendant’s witnesses to throw doubt on their testimony, the preponderance of the evidence should have led the jury to find for the defendant, and on their failure so to find the court should have granted a new trial. But if there was error in this regard we cannot correct it unless we assume the decision of a disputed question of fact from conflicting testimony. This we cannot do without falling into greater error. Where the testimony in support of an action is a mere scintilla and that opposed to it is so overwhelming that no real controversy is raised, and where the jury could not find for the plaintiff without a capricious disregard of apparently truthful testimony, probable in itself and not at variance with any admitted or proved facts, a verdict may be directed for the defendant: Holland v. Kindregan, 155 Pa. 156 ; Lonzer v. Lehigh Valley Railroad Co., 196 Pa. 610; but such cases are rare and they do not arise where there is a real conflict of testimony.

Holden v. Penna. Railroad Co, 169 Pa. 1, was correctly decided on its facts. The uncontradicted testimony was that there was a clear view of the tracks for the distance of half a mile from the crossing and the collision occurred as the horse stepped on the track. The rule established by Carroll v. Penna. Railroad Co., 12 W. N. C. 348, and the long line of cases that have followed it, governed the case and entitled the defendant to peremptory direction in its favor. The statement in the .opinion that the plaintiff’s testimony- should have been disregarded by the court because it stood alone'and was positively contradicted by the testimony of five wholly disinterested and unimpeached witnesses who had equally good opportunities of observation, was only one of the reasons given for reversing the judgment, and was not essential to the decision of the case. It has not since been approved and it cannot be on principle, because it overlooks the well-defined distinction between the province of the court and that of the jury.

The only effect of the testimony for the defendant was to raise a controversy as to facts which, however wrongly decided, was for the jury alone. The greater distance at which it was shown that a train could have been seen from a point near the tracks did not make it clear that the train did not first come into the view of the driver after he was on the track, and the rule that negligence will be imputed under such circumstances is applicable to clear cases only, where neither the facts nor the inferences to be drawn from them are in doubt.

The judgment is affirmed.


author: Mb. Justice Mestbezat,

text:
    Muhlenberg v. Mutual Fire Insurance Company of Sinking Springs, Appellant.

      Insurance—Fire insurance—Charter of company—Act of May 11, 1881, P. L. 20.
    ■ Where a fire insurance policy declares the charter of the company issuing the policy to be a part of the contract, the charter must, under the Act of May 11, 1881, P. L. 20, be attached to the policy, and if the charter is not attached to the policy, any defense based upon the charter must fail.
    Elkin, J., dissents.
    Argued March 1, 1905.
    Appeal, No. 34, Jan. T., 1905, by defendant, from order of C. P. Berks Co., April, T., 1903, No., 85, making absolute rule for judgment for want of a sufficient affidavit of defense in case of Henry A. Muhlenberg and Kate S. Muhlenberg v. The Mutual Fire Insurance Company of Sinking Spi'ings, Bei'ks County.
    Before Mitchell, C. J-, Fell, Brown, Mestrezat and Elkin, JJ.
    Affirmed.
    Assumpsit on a policy of fire insurance.

      Rule for judgment for want of a sufficient affidavit of defense.
    The affidavit of defense was in effect that the plaintiff prior to the fire had neglected to pay an assessment legally made. The only authority for making the assessment and declaring a forfeiture for nonpayment was contained in the charter of the company, which was not attached to the policy.
    The court made absolute rule for judgment for want of a sufficient affidavit of defense.

      Error assigned was the order of the court.

      Gyrus G. Derr, for appellant,
    cited: State v. Overton, 24 N. J. L. 435; Supreme Lodge, K. of P. v. Knight, 20 N. E. Repr. 479.

      Frederick W. Eicolls, for appellees,
    cited : Lenox v. Ins. Co., 165 Pa. 575; New Era Life Assn. v. Musser, 120 Pa. 384; Zimmer v. Accident Ins. Co., 207 Pa. 472; Haverstick v. Penn Twp. Mut. Fire Assn., 156 Pa. 333; Mitchell v. Lycoming Mut. Ins. Co., 51 Pa. 402 ; Susquehanna Mut. Fire Ins. Co. v. Oberholtzer, 172 Pa. 223; Shoemaker v. Whitehall Mut. Fire Assn., 23 Pa. C. C. Rep. 174; Fahey v. Empire Life Ins. Co., 5 Lacka. Legal News, 377.
    April 10, 1905:
   Opinion by

Mb. Justice Mestbezat,

The opinion of the learned president of the court below amply vindicates his conclusions on both questions raised by this appeal. In speaking of the act of 1881, he correctly says: “ The intention of the law is to have attached to the policy copies of such papers, writings and instruments as will correctly enable the policy holder to understand the entire contract with its rights, duties and obligations.” This is in accord with the views of this court on the purpose of the statute as expressed by the present chief justice in the opinion in Lenox v. Insurance Co., 165 Pa. 575, wherein he says: “It is well known that the evil aimed at in this legislation was the custom of insurance companies to put in their blank forms of application long and intricate questions or statements to be answered or made by the applicant, printed usually in very small type, and the relevancy or materiality not always apparent to the inexperienced, and therefore liable to become traps to catch even the innocent unwary. The general intent was to keep these statements before the eyes of the insured, so that he might know his contract, and if it contained errors, have them rectified before it became too late.”

The acts of assembly creating the defendant corporation, its charter, provide the manner in which an assessment shall be made on a shareholder’s insurance and the minimum of the amount of the assessment, to whom and when the assessment shall be paid, the penalty for a default, and when a member “ may, by the managers for the time being, be excluded and debarred from any benefit or advantage from his, her, or their insurances respectively and all right to the stock of this company ; and shall, notwithstanding, be liable to said rates, pursuant to his, her, or their covenants and agreements.” The policy declares that the plaintiffs have become members of the company pursuant to its charter and by-laws and that the insurance is made “ on the terms, conditions and provisions in the charter and by-laws contained.” The policy, therefore, not only contains a distinct reference to the charter, but makes it, in the language of the act of 1881, “ a part of the policy or contract between the parties thereto.” It is obvious that the provisions of the charter of this company are a material part of its contracts of insurance, regulating, as they do, the levying of assessments and the forfeiture of the policy and thereby providing the only method of canceling a policy. It is, therefore, clearly within the spirit of the act of 1881, and the legislative intent in the enactment of that statute, that a copy of such a charter of an insurance company, created by special act of assembly, should be attached to the policy issued to its shareholders. In no other way, as observed in Lenox v. Insurance Co., supra, can these statements of his duties and obligations be kept “ before the eyes of the insured so that he might know his contract, and if it contained errors, have them rectified before it became too late.”

The defendant company having failed to attach a copy of the charter to the policy as required by the act of 1881, the charter itself was no part of the contract of insurance and could not be received in evidence in support of a defense to this action. The only authority to make an assessment and to declare a forfeiture for nonpayment of it is contained in the charter and that instrument not being available to the defendant company by reason of a copy not having been attached to the policy, the defense interposed to this claim must necessarily fail.

The trial court was clearly right in holding that the alleged unwritten custom as to the manner of notifying the insured of an assessment and of declaring the policy canceled could not supersede or take the place of the method provided in the charter. As pointed out above, the policy declares the charter to be a part of the contract, and hence its provisions must be observed in order to give validity to an assessment or to warrant the canceling of the policy.

The assignments of error are overruled and the judgment is affirmed.

Elkin, J., dissents.


author: Mr. Justice Mestrezat, Mb. Justice Elkin,

text:
    Wagner, Appellant, v. Fehr.

      Equity—Equity jurisdiction—Fraud—Reconveyance of real estate—Consideration—Worthless stock—Corporations.

    A court of equity in all cases of actual fraud, has a concurrent jurisdiction with a court of law in remedying the fraud; and the remedy in equity is frequently more beneficial than at law, by means of its power to compel discovery and to cause fraudulent deeds and securities to be canceled or conveyance to be made, thus effectually putting an end to future litigation.
    A court of equity will sustain a bill against two defendants for the reconveyance of real estate and the repayment of purchase money which charges that the plaintiff was induced to convey his real estate to one of the defendants for a part consideration of cash, and the balance in the stock of a corporation which was worthless, by reason of the fraudulent organization of the corporation by the defendants, and that the first defendant had conveyed the property to the second defendant, who had full knowledge of the fraud.
    Elkin, J., dissents.
    Argued March 1, 1905.
    Appeal, No. 48, Jan. T., 1905, by plaintiff, from decree of C. P. Berks Co., equity docket 1903, No. 846, dismissing bill in equity in ease of John S. Wagner v. Horace Fehr and Francis F. Seidel.
    Before Mitchell, C. J., Fell, Brown, Mestrezat and Elkin, JJ.
    Reversed.
    Bill in equity for a reconveyance of real estate. Before EndLICH, J.
    The material averments of the bill and the grounds of demurrer are set forth in the opinion of the Supreme Court.

      Error assigned was decree dismissing the bill.

      Isaac Hiester, with him D. Nicholas Schaeffer, for appellant.
    The remedy at law is not adequate for it falls short of giving the plaintiff what he is entitled to have: Independent B. & L. Assn. v. Real Estate Title Co., 156 Pa. 181.

    The remedy at law is not complete for it does not attain the full justice of the case: Griswold v. Gebbie, 126 Pa. 353; 1 Story’s Equity Jurisprudence, sec. 193; Cocking v. Pratt, 1 Ves. 400 ; Mays v. Dwight, 82 Pa. 462.
    ' The uniform practice of the courts of Pennsylvania has been to sustain a bill in equity for rescinding and canceling a deed of real estate procured by fraud and for ordering a reconveyance where the deed has been recorded. To affirm this decree would establish a new practice in this respect: Meurer’s Appeal, 119 Pa. 115; Mortland v. Mortland, 151 Pa. 593; Williams v. Kerr, 152 Pa. 560; Lower’s App., 1 Walker, 404; Kingsland v. Cavanagh, 31 Pitts. L. J. (N. S.) 378.

      II. P. Keisar, for appellee.
    We submit that the plaintiff and appellant should be remitted to his remedy at law, and cite in support of our contention: Young’s Appeal, 3 Penny. 463; Mackintosh v. Tracy, 4 Brews. 59 ; Way’s Appeal, 8 Atl. Repr. 173; Edelman v. Latshaw, 159 Pa. 644.
    April 10, 1905:
   Opinion by

Mr. Justice Mestrezat,

The purpose of the bill filed in this case is to annul and set aside a contract for the conveyance of real estate and to compel a reconveyance of the property. The bill avers that the defendants and certain other parties procured a charter for a corporation under the name of the American Match Company; that by the certificate it was made to appear that the capital stock of the corporation was $200,000, divided into 2,000 shares, and that defendant Fehr had subscribed for 180 shares and defendant Seidel for 532 shares, and that $20,000, ten per cent of the capital stock, had been paid in cash to the treasurer; that early in September, 1902, Fehr called upon the plaintiff and offered to purchase from him a certain house and lot for $3,350, of which $1,216.67 was to be paid in cash and $2,133.33 in thirty-two full paid shares of stock of said company; that Fehr induced the plaintiff to sell and convey to him the house and lot on the proposed terms by representations which were false, and known to him to be false, that another party was willing to take said stock at the same price in exchange for a property belonging to him but less convenient for Fehr’s purpose, and that the company was legitimately organized and was doing a prosperous business, was earning six per cent on its capital stock, etc.; that Fehr took possession of the property, but instead of occupying it by himself and family as he had represented it to be his intention of doing, sold and conveyed, it on September 27, 1902, to Seidel for whom Fehr in fact made the purchase and who was fully aware of the facts and misrepresentations referred to; that “ plaintiff has but lately learned and now aArers that at the time said certificate for incorporation was made no money had been paid to the treasurer of the corporation on account of the capital stock, that none of the subscribers named in the certificate ever paid cash for any part of the stock subscribed by them, that ten per cent of the capital stock was never paid in cash at any time,” and that the stock was practically worthless at the time he sold and conveyed the house and lot to Fehr; that upon learning the facts, plaintiff notified Fehr of his election to rescind the contract because of the fraudulent representations and tendered a return of the thirty-two shares of stock and the sum of $1,216.67, paid in cash, and demanded a reconveyance, but the defendants refused to reconvey or to make any satisfaction whatever. The bill prays for a decree annulling and setting aside the contract between the plaintiff and Fehr and requiring the defendants to reconvey to plaintiff the house and lot clear of all encumbrances upon the return to them of the money and stock given for it, or, if the defendants are unable to reconvey the property, to pay plaintiff $2,138.88 with interest upon the return to them of the stock. .

The defendant Seidel demurred to the bill on the grounds (1) that the plaintiff is not entitled to the relief claimed, and (2) that he has a full, complete and adequate remedy at law. The court below sustained the demurrer and the plaintiff has appealed.

The constitution of 1874 provides that the courts of common pleas shall have and exercise “ such chancery powers as are now vested by law in the several courts of common pleas of this commonwealth, or as may hereafter be conferred upon them by law.” By the 39th section of the Act of June 13, 1840, P. L. 666, 1 Purd. 777, it was enacted that “ the equity jurisdiction .... of the court of common pleas for said county (of Philadelphia) shall be extended to all cases arising in said city and county, over which courts of chancery entertain jurisdiction on the grounds of fraud, accident, mistake or account.” By the subsequent Act of February 14, 1857, P. L. 39, 1 Purd. 777, the equity jurisdiction exercised by the common pleas of Philadelphia was extended to the courts of common pleas throughout the commonwealth. It will be observed, therefore, that in cases of fraud the legislature has conferred on the courts of common pleas of the state the powers and jurisdiction of courts of chancery. Of course, the constitutional provision above alluded to and the statutes conferring equity jurisdiction do not contravene or conflict with the 7th section of the bill of rights which declares that “ trial by jury shall be as heretofore, and the right thereof remain inviolate: ” North Penna. Coal Co. v. Snowden, 42 Pa. 488; Haines’s Appeal, 73 Pa. 169. As early as 1849, however, in Wesley Church v. Moore, 10 Pa. 273, Chief Justice Gibson, speaking for this court, said: “The equitable jurisdiction conferred by these statutes is a valuable —indeed, an indispensable one ; and it ought to be extended by every interpretation of which the words are susceptible.” In many subsequent cases, including Mortland v. Mortland, 151 Pa. 593, decided in 1892, this court has manifested a disposition towards a liberal exercise of the equity powers conferred by the statutes. In cases of fraud, where the remedy at law is inefficient and inadequate to do complete justice between the parties, the court will not refuse to exercise its chancery jurisdiction. In speaking of the general jurisdiction of chancery in cases of fraud, Mr. Bispham (Principles of Equity, sec. 200) says: “ Apart from statutory limitations, the better opinion would seem to be that the cognizance of every case of fraud, with the single exception of fraud in obtaining a will, belongs to the court of chancery even though there may be a complete remedy at law. The jurisdiction in such a case is concurrent. This is the opinion of Lord Eldon, Chancellor Kent and Mr. Spence. The true conclusion would appear to be that equity would have the power to entertain a bill in such cases, but that it is not according to the usual course and practice of chancery to do so. Where, however, the remedy at law is not full and adequate, the jurisdiction of chancery in cases of fraud is undoubted.” This excerpt is quoted in Mortland v. Mortland, supra, and it is there held that, “Under the acts of June 18, 1840, and February 14, 1857, the courts of common pleas as courts of equity have jurisdiction to entertain a bill to set aside a deed alleged to have been executed by an attorney in fact through the corrupt procurement of the grantee. And the fact that ejectment might lie will not oust the jurisdiction of equity.” In Williams v. Kerr, 152 Pa. 560, a bill for reconveyance of land was sustained on the ground that the owners were induced to sell it by the false representations of the vendee that an improvement would be immediately placed upon the property which would enhance the valúe of the other lands of the vendor. In that case it was claimed by the defendants that they had paid the plaintiff all the land was worth, and, therefore, he had suffered no pecuniary damage by reason of their false representations and hence was not entitled to relief. In reply to this contention, Mr. Justice Heydrick, in the opinion, says : “ But it is such injury as will be redressed to obtain from an owner, by a false representation of a fact which he deems material, prop-^ erty which he would not otherwise have parted with upon the terms which he is thus induced to accept.” In Sutton v. Morgan, 158 Pa. 204, the court rescinded a sale of real estate on a bill by the vendee, who was induced to purchase land on the false representations that there was a large demand for building lots on the property, that railroad shops were to be built in the neighborhood, and that a certain large sum had been offered for the property. As to adequacy of the remedy at law ousting the jurisdiction of equity, it is said in 24 Am. & Eng. Ency. of Law (2d ed.), 642 : “ To justify a court of equity in denying the relief by way of rescission or cancellation it is not enough that the complainant can avail himself of some remedy or defense in a court of law; but such remedy or defense must meet all the requirements of justice and of its prompt administration, and be in all respects as adequate and satisfactory as the relief furnished by a court of equity; and if it is in any way defective, relief in equity will not be denied.” In Garland v. Rives (Va.), 15 Am. Dec. 756, Green, J., delivering the opinion, says : “ A court of equity, in all cases of actual fraud, has a concurrent jurisdiction with a court of law in remedying the fraud ; and the remedy in equity is frequently more beneficial than at law, by means of its power to compel discovery and to cause fraudulent deeds and securities to be canceled or conveyances to be made, thus effectually putting an end to future litigation.”

A bill for rescission is not necessarily demurrable because the defendant has sold and conveyed the land to another and thereby put it out of his power to reconvey. If it contain proper averments conferring jurisdiction, compensation in damages may be awarded the plaintiff. “ It is well established,” says Sharswood, J., in Mason’s Appeal, 70 Pa. 26, “that wherever a court of equity has jurisdiction, if the relief prayed for cannot for some reason be granted, a compensation in damages may be awarded in lieu thereof.” In Reeder v. Trullinger & Co., 151 Pa. 287, it is said: “ The defendants having sold and conveyed the lands to another, the plaintiff is not for that reason without remedy in this action (bill for reconveyance) .... Where a defendant has put it out of his power to make a conveyance which otherwise the court would have decreed, by conveying the premises to another, the plaintiff may elect to treat the purchase money received by him as the measure of damages.”

Applying these principles to the case in hand, we think it is clear that the court erred in dismissing the plaintiff’s bill. The bill avers actual fraud by Fehr in procuring the contract and deed from Wagner and that the property was purchased for Seidel who had full knowledge of all the facts. The demurrer admits the truth of the averments. The jurisdiction of the court, therefore, attached and the plaintiff may maintain his bill unless he has a complete and adequate remedy at law for the injuries he has sustained. The learned trial judge refused relief on the ground that “ there is no distinct and substantial purpose to be served by the rescission, and that the real ' object of the plaintiff is simply to be made whole in pocket.” He and the counsel for the defendants, therefore, maintain that trespass or assumpsit will afford the plaintiff an ample remedy for the fraud which, by the pleading, is conceded to have been perpetrated by the defendants. With this position we do not concur. As appears by the numerous authorities cited above, the fact that the plaintiff would have a remedy by a common-law action will not of itself bar the remedy in equity. It is clear that the only complete and sufficient remedy for the plaintiff will be to restore the status quo. This will not only give him the house and lot, of which he was deprived by the fraud of the defendants, but will free him of the responsibility of the worthless stock transferred to him by Fehr and now standing in his name. The transaction was practically an exchange of the real estate for the stock, the supposed difference in value being paid in cash. By falsely representing that The American Match Company had been properly incorporated, and by misrepresenting the condition of its business and value of its stock, Fehr procured the conveyance of the plaintiff’s real estate to himself at about one third of its value. The stock was practically worthless, and hence the only consideration the plaintiff received for his property was the $1,216..67 paid him in cash. It is apparent, therefore, that the plaintiff was induced to convey his property to Fehr by the false representations of a material fact, and was injured thereby to the extent of nearly two thirds of the value of his house and lot. It scarcely needs the suggestion that he would not have made the conveyance on such terms if he had known the true condition of the company and the real value of its stock. The case, therefore, is within the cognizance of equity as appears by the authorities, and especially Williams v. Kerr, 152 Pa. 560, in which the court says : “ It is such injury as will be redressed by equity to obtain from an owner, by a false representation of a fact which he deems material, property he would not otherwise have parted with upon the terms which he is thus induced to accept.”

The plaintiff has the right to require the defendants to accept the retransfer of the stock of The American Match Company. An action at law would, of course, be totally inadequate to give him such relief. We must assume the averments of the bill to be true, and hence the stock of this illegally organized corporation, transferred to the plaintiff, is not only practically worthless, but may subject him to responsibilities from which he should be relieved. Any remedy which fails to give such redress will be inadequate as well as incomplete.

This is a triangular contest in which the plaintiff alleges, and of course expects to prove, actual fraud against both defendants. He must sustain his allegations against Fehr, with whom the contract for the sale of the premises was made and to whom the property was conveyed. Seidel, however, was not known to the plaintiff to be interested in the transaction during the negotiations between the parties, but the bill avers that he was cognizant of all the facts and participated in the fraud, and is now the holder of the legal title to the property. Seidel’s connection with the transaction and his assistance in committing the fraud must be ascertained and disclosed in order to give the plaintiff effective and adequate relief. This will doubtless require discovery and the exercise of some other equitable remedies unknown to, and unavailable in, an action at common law. Under such circumstances, the injured party may have redress in equity. In Independent B. & L. Assn. v. Real Estate Title Co., 156 Pa. 181, a bill for cancellation of the satisfaction of a mortgage on the ground that it was procured by fraud of the appellant’s agent, the present chief justice in delivering the opinion, said: “ Although an action of assumpsit might have been brought on the agent’s promise or for money had and received for plaintiff’s use, yet relief in a clear subject of equity jurisdiction is not barred by the existence of a remedy at law, even if, in view of the triangular nature of the contest here .... that remedy could be considered adequate.” And in Bierbower’s Appeal, 107 Pa. 14, a bill alleging fraud against two defendants to which a demurrer was sustained, this court reversed the decree, holding that although assumpsit might lie against the principal defendant, a bill would be sustained against him. In the opinion it is said: “ But in addition to this there is a charge against another party, not in the original transaction, who assisted in the fraud-lent disposition of the collaterals and their proceeds. In this view of the case, certainly no adequate or certain remedy can be found except in equity.”

Should the plaintiff fail to sustain his allegation of fraud against Seidel and thereby be unable to compel a reconveyance of the property, he would not be entirely remediless in this proceeding, but could still secure relief by a decree against Fehr for the damages he has sustained: Reeder v. Trullinger & Co., 151 Pa. 287. This, however, would be the full extent of his relief at law, the inadequacy of which compels him to invoke the aid of a chancellor. ■

The learned trial judge in the latter part of his opinion, anticipating the plaintiff’s evidence in the case, says: He (plaintiff) has planted his case upon the allegation of conscious fraud, not of unconscious mistake. He could not, under his bill, be permitted to prove to the latter as a ground of relief, nor could any decree be founded upon evidence of it.” In this stage of the proceeding we need not concern ourselves about the evidence which either party may produce at the hearing. The case, as now presented, requires us to determine the rights of the parties upon the pleadings. It is conceded that the bill avers actual fraud by defendants in procuring the conveyance to Fehr of the plaintiff’s property, and the demurrer admits the allegation to be true. If, therefore, the plaintiff’s right to equitable relief on the ground of actual fraud is sustained, as we think it must be, the demurrer should have been overruled. Whether the averments of the bill are broad enough to sustain an allegation of constructive fraud and to permit proof of it, we need not now determine.

The fraud averred in the bill is of the worst type, and Seidel by his demurrer admits the truth of the averments. Fehr and his confederates obtained a charter for The American Match Company by fraudulent practices, and he has used the corporation and its stock to further his fraudulent schemes. As disclosed by the pleadings, the plaintiff, without any fault or laches on his part, became Fehr’s victim, and the scheme of fraud concocted by the latter has with the active participation of Seidel been carried to the extent of defrauding the plaintiff of valuable real estate. Fora court of equity to close its doors against the injured party and to require him to redress his wrongs through the cumbersome and insufficient machinery of the law is an admission of weakness and inefficiency in our judicial system. Chancery, which supplements the law and furnishes remedies in which the law is deficient, will assume jurisdiction in such cases and compel the wrongdoer to make adequate amends for the injury occasioned by his fraudulent conduct.

We are of opinion that under the averments of the bill, a court of equity has jurisdiction and that the demurrer should have been overruled.

The assignment of error is sustained and the decree is reversed with a procedendo.

Mb. Justice Elkin,

dissenting :

The appellant in my opinion has a full, complete and adequate remedy at law. The court below so decided, and in this I see no error. The most that can be said in favor of the plaintiff here is that equitjr provides a more convenient procedure under the facts of this case. It is conceded that the word “ convenient ” has been sometimes used with approval by the courts in sustaining equitable jurisdiction. It has not always been aptly used and may be misleading. It was never intended as a definition of equity jurisdiction in the sense of saying an action of law is less convenient and a bill in equity more convenient. It is the convenience of the court, and not of the pleader, to which the term applies. In such cases, however, it is a matter of grace by the court and not of right to the pleader. It may be that equity jurisdiction should be enlarged, but in the absence of legislative authority the wisdom of opening the door just a little wider from time to time by judicial rule so as to unsettle professionally understood rules of practice may be seriously doubted.

I would affirm this case on the opinion of the learned court below.