text:
    Sefcik v. Pennsylvania Railroad Company, Appellant.

      Negligence — Grade crossings — “Stop, look and listen” — Case for jury.

    1. The rule that one who steps in front of a moving train, which he could have seen and heard if he had looked and listened, will be conclusively presumed to have been negligent, applies only to clear cases where no inference except that of negligence is possible from the facts.
    2. In an action against a railroad company it appeared that plaintiff’s husband approached a grade crossing of four main tracks and two sidings.' The crossing was at a curve, and from it trains could be seen only 500 feet in one direction, and 1,400 in the other. The deceased stopped, looked and listened four feet from the track and saw the watchman in his box. The night was cloudy and the air filled with smoke. Opposite the crossing were blast furnaces and steel works which gave out sheets of flame, and a great noise. There were also colored signal lights and electric lights within the range of view. The deceased was struck and killed when he was on the fourth track. Held, that the case was for the jury and that a verdict and judgment for plaintiff should be sustained.
    Argued Nov. 3, 1908.
    Appeal, No. 202, Oct. T., 1908, by defendant, from judgment of C. P. No. 2, Allegheny Co., April T., 1905, No. 352, on verdict for plaintiff in case of Anna Sefcik v. Pennsylvania Railroad Company.
    Before Fell, Brown, Mestrezat and Potter, JJ.
    Affirmed.
    Trespass to recover damages for death of plaintiff’s husband. Before Frazer, P. J.
    The facts are stated in the opinion of the Supreme Court.
    Verdict and judgment for plaintiff for $6,000. Defendant appealed.

      Error assigned was in refusing binding instructions for defendant.

      Thomas Patterson, of Patterson, Sterrett & Acheson, and James S. Crawford, for appellant.

      W. H. 8. Thomson, with him H. 8. Lydick and Frank Thomson, for appellee.

      January 4, 1909:
   Per Curiam,

The conditions at the crossing where the plaintiff’s husband.was killed were exceptionally dangerous and imposed upon persons using it and upon the defendant a very high degree of care. The crossing was at a curve and from it trains could be seen only 500 feet in one direction and 1,400 in the other. There were four main tracks on which trains ran frequently and two sidings. Directly opposite the crossing were the blast furnaces and rolling mills of steel works covering an area a half mile square. At intervals of two or three minutes sheets of flame issued from the stacks of the steel works. The noise was so great as to make it difficult to hear the sound of an approaching train or its signal by bell or whistle. At night there were a number of electric lights at different heights near the tracks and colored signal lights at the switches and at a signal bridge near by. The night was cloudy and the air filled with smoke. The watchman at the time when a fast express train was due, was in his box at the side of the tracks. His negligence was clear, and the court could not say that the deceased was negligent. He stopped, looked and listened four feet from the tracks and saw the watchman in his box. Presumably he continued to look and listen as he advanced to the fourth track, where he was struck, and was misled by the confusion of sounds and lights. The rule that one who steps in front of a moving train, which he could have seen and heard if he had looked and listened, will be conclusively presumed to have been negligent, applies only to clear cases where no inference except that of negligence is possible from the facts.

The judgment is affirmed.


source: Caselaw Access Project

author: Per Curiam,

license: Public Domain

text:
    Real Estate Trust Company of Philadelphia, Appellant, v. Riter-Conley Manufacturing Company.

      Corporations — Bonds—Underwriting agreement — Conditional subscription — Evidence.
    1. Where on a bill in equity to enforce a written subscription to an underwriting agreement for the purchase of the bonds of a corporation, one of the defendants in his answer to the bill claims that his subscription was a conditional subscription by reason of a parol collateral agreement made at the time of his signature, and the answer is supported by the testimony of one uncontradicted witness, strongly corroborated, a finding by the trial judge that the subscription was in fact conditional will be sustained.
    2. In such a case where it appears that the underwriting agreement was tripartite, the fact that one of the defendants’ subscription was conditional does not defeat the defense of such defendant where it appears from the very terms of the contract that if such subscription fails, the other subscribers are all released from liability; nor in such a case can the assignee of the original seller of the bonds claim that he is entitled to recover, although his assignor was not. The assignee in such a case takes no better title than the assignor, and is bound to inquire of the subscribers if they had any defense to their subscription.
    Argued Nov. 3, 1908.
    Appeal, No. 214, Oct. T., 1908, by plaintiff, from decree of C. P. No. 2, Allegheny Co., Oct. T., 1904, No. 612, dismissing bill in equity in case of The Real Estate Trust Company of Philadelphia v. Riter-Conley Manufacturing Company, Water Works Construction Company, J. B. Sammel, Jennie K. Sammel, Administratrix of the Estate of James E. Sammel, deceased, et al.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Bill in equity to enforce an underwriting agreement.
    Over, P. J., specially presiding, filed the following opinion:
    The plaintiff, a Pennsylvania corporation, is the holder of two promissory notes aggregating $75,000, made by the Eastern Tube Company, an insolvent corporation, and holds as collateral therefor $150,000 bonds of said company, and an assignment of a,one-half interest in an underwriting agreement for the purchase of bonds signed by the defendants. The prayer of the bill is that an account be stated between the plaintiff and defendants, the amount due from each on the underwriting agreement be ascertained, and the amounts due decreed to be paid to the plaintiff.
    FINDINGS OF FACT.
    1. The Eastern Tube Company, a corporation, issued bonds dated January 2,1901, of the par value of $1,000,000, $750,000 of these being delivered to the Water Works Construction Company, a corporation, for constructing the plant of the tube company.
    2. On November 30, 1901, all of the defendants to this bill except C. C. Corbett, James E. and J. B. Sammel, with others not defendants, signed an underwriting agreement with the tube company, each party agreeing to purchase and pay for at par on January 2, 1903, bonds to the amount specified, aggregating $250,000, being the amount of bonds in the treasury of the tube company, in case the same should not be sold by it in the meantime. It was also agreed that the contract could be assigned by the tube company as collateral security for loans to it. This agreement and the $250,000 bonds were pledged to the Mercantile Trust and Safe Deposit Company of Baltimore, to secure a loan made by it of $200,000 to the tube company.
    3. On October 2, 1902, a supplemental agreement was made between the tube company and all the defendants, except C. C. Corbett, in which it was agreed that each of the subscribers, if the bonds were unsold on December 15, 1903, would then take up and pay for fifty per cent of the bonds unwritten by it. The original agreement was then in the possession of the Mercantile Trust and Safe Deposit Company of Baltimore, and it was not a party to the supplemental agreement.
    4. The agreement on which the plaintiff claims was signed by all the defendants and the tube company, on October 8, 1902. It recites that the tube company has legally issued $1,000,000 of bonds; that: “It is now proposed to secure an underwriting of $300,000 of said bonds for the purpose of supplying the said company with additional working capital, and to retire certain of its outstanding obligations,” and then provides in part as follows: “Now the undersigned subscribers do hereby (each for himself and not for any of the others) agree with each other and separately with the tube company, to subscribe to such bonds to the extent set opposite our respective signatures hereto, and we agree to purchase the same and to pay therefor at par and accrued interest, at the time and in the manner and under the conditions hereinafter set forth: (1) This subscription shall become binding only when bonds equaling 1300,000 par value shall have been subscribed for; (VII) the subscribers consent to the assignment of this contract by the tube company to any financial institution or institutions as collateral security for a loan of money not exceeding the amount of the par value of said bonds at any time before December 1, 1903, and in the event of such assignment, such financial institution or institutions shall be subrogated to all the rights of the tube company under and pursuant to this agreement.” The aggregate subscription to the agreement is for $300,000 of bonds.
    5. After this agreement was made Turner A. Beall, president of the tube company, gave William T. Tiers a note of the tube company, dated December 8, 1902, payable in six months, to his order, for $25,000, and received this amount for the company, less a commission of six per cent, and six months’ interest on the note; and also assigned to him a one-sixth interest in the underwriting agreement. The money advanced on this note was obtained from the plaintiff, and the note and $50,000 of the tube company’s bonds, and the agreement, delivered to it as collateral for the loan.
    6. Beall also gave P. S. Dupont the tube company’s note for $50,000, dated December 8,1902, payable in six months to his order, and assigned to him a one-third interest in the underwriting agreement. Dupont paid the amount of this note, less six per cent commission and interest, to the Mercantile Trust and Safe Deposit Company of Baltimore on account of the note for $200,000 of the tube company held by it, and it surrendered $125,000 of the tube company’s bonds pledged to it, and $100,000 were delivered to Dupont as collateral for the loan. He subsequently delivered the note, agreement and bonds to the plaintiff.

      7. J. B. Sammel and James E. Sammel, two of the defendants, became parties to the original underwriting agreement of November 30, 1901, by assignment to each of them of $10,000 of the subscription thereto made by R. G. Gillespie and V. Q. Hickman, and both the Sammels signed the supplemental agreement thereto bearing date October 2, 1902, each for $10,000, which reduced the liability of the subscribers to one-half the amount specified in the original subscription.
    8. When the agreement of October 8, 1902, being the agreement under which the plaintiff seeks to recover in this case, was presented to J. B. and James E. Sammel, and their signatures thereto requested and obtained by T. A. Beall for subscriptions of $14,000 each, it was represented to them by T. A. Beall, the president of the Eastern Tube Company and its agent for securing the subscriptions, that their subscriptions to the agreement would cancel the $10,000 subscriptions for which each was liable on the agreement of November 30,1901, and that they should have the right, should they so desire, to be released from this agreement of October 8,1902, upon the payment of the sum of $10,000 each as called for by the terms of the original subscription, instead of $14,000 each as called for by this agreement, and it was by reason of these representations so made by the said Beall that the Sammels signed the agreement of October 8, 1902.
    9. The right of J. B. Sammel, tó be released from the contract of October 8, 1902, was subsequently confirmed by the Eastern Tube Company in a letter signed by its president, and on Deccember 21,1902, J. B. Sammel paid the $10,000 as agreed upon, and received the share of the bonds coming to him under the terms of the agreement. At the time this $10,000 was paid by Sammel and the bonds delivered to him by the Eastern Tube Company, his liability to said company under the original contract of November 30,1901, and its supplement, did not exceed the sum of $5,000.
    10. James E. Sammel did not pay the $10,000 to take up his share of the bonds, as was done by his brother, but on October 14,1902, he paid to the Eastern Tube Company the ten per cent of his subscription, amounting to $1,400, as called for by the terms of the agreement of October 8, 1902, and received from the company its receipt for said sum signed by its treasurer, bearing the date of October 21,1902, and containing the words: “ In case the said agreement shall not be and become effective by the completion of the underwriting thereunder, such payment shall be returned with six per cent interest.”
    11. At the time the agreement of October 8, 1902, was presented to J. B. Sammel and James E. Sammel, and their signatures thereto obtained by T. A. Beall, the agreement of November 30, 1901, was pledged to and in the possession of the Mercantile Trust and Safe Deposit Company of Baltimore, as collateral security upon a loan for $200,000, made by said Mercantile Trust and Safe Deposit Company of Baltimore to the Eastern Tube Company, and the Sammels were not relieved from liability thereon by reason of the subscription under .the agreement of October 8,1902, and whilst J. B. Sammel has paid the amount of his subscription under said agreement, and may be relieved from liability thereon, James E. Sammel’s estate has not been relieved.
    12. The agreement of November 30, 1901, is still in the possession of the Mercantile Trust and Safe Deposit Company of Baltimore, and subsequently in November, 1904, a suit was brought thereon in the circuit cuirt of the United States for the western district of Pennsylvania, by the Eastern Tube Company, for the use of the Mercantile Trust and Safe Deposit Company of Baltimore, at No. 54 of November Term, 1904, against Jennie K. Sammel, administratrix of the estate of James E. Sammel, deceased, to recover under said agreement, which suit is still pending and undisposed of in said court.
    13. The agreement of October 8,1902, contains the provision that: “ This subscription shall become binding only when bonds equaling $300,000 par value shall have been subscribed for.” Bona fide and binding subscriptions to an amount of more than $286,000 were never secured to this agreement.
    14. Under all the circumstances, the signature of J. B. Sammel was obtained to the agreement of October 8, 1902, under such misrepresentations and inducements, as amounted to a fraud upon the said J. B. Sammel.

      15. Under all the circumstances, the signature of James E. Sammel was obtained to the agreement of October 8, 1902, under such misrepresentations and inducements, as amounted to a fraud upon the said James E. Sammel.
    DISCUSSION.
    The only dispute as to the material facts of this case is in reference to the parol agreement and representations made to the Sammels when they signed the agreement upon which suit is brought. James E. Sammel died prior to the filing of the bill and his testimony was not available; J. B. Sammel, however, in his answer, avers the facts to be substantially as heretofore found, and his testimony supports the answer. It is corroborated as to his subscription being conditional, by the fact .that he paid the tube company on December 21, 1902, $10,000, receiving that amount in bonds, being the amount he was liable for under the agreement of November 30,1901, by reason of the assignment to him by Gillespie and Hickman of $10,000 of their subscription to that agreement. It was not necessary to take up these bonds under the agreement until January 2,1903; but he evidently paid for them on December 21,1902, in compliance with Beall’s request made in a letter of October 18, 1902, in which he recognizes Sammel’s right to cancel his underwriting under the agreement of October 8, 1902, by taking up and paying for bonds to the amount of $10,000, which strongly corroborates Sammel’s testimony, and in addition to this, it is not contradicted by Beall. We thus have the testimony of one uncontradicted witness, strongly corroborated, which is sufficient to support the findings of fact as to his subscription being conditional, and move a chancellor to reform or set aside the agreement. The only corroboration of J. B. Sammel’s evidence that Beall represented to his brother and himself that their subscriptions under the agreement of November 30, 1901, would be canceled by the subscriptions under the agreement of October 8,1902, is the inference from the facts of the case that the latter agreement was to supersede the former.
    It is contended by counsel for plaintiff that as the underwriting agreement is tripartite, the fact that Sammel’s subscription was conditional, is not a good defense. The cases cited on this question arise from subscriptions for stocks of corporations.
    Mr. Justice Green in Phila. & Delaware County R. R. Co. v. Conway, 177 Pa. 364, in discussing the question says: “If he (a subscriber to stock of a corporation) is to be released from his subscription because of a secret parol agreement made with the agent who procured the subscription and which is not expressed in the written contract signed by all, it would be clear fraud upon the others, and therefore under the decision in Miller v. Railroad, he is estopped from setting up such an agreement.” A number of cases on the subject are cited in this opinion, and it appears from all that the reason for the rule is, that it would be a fraud upon the other subscribers for stock to permit one to set up a secret agreement by which he would be relieved from liability, whilst they would not. This reason does not apply here, as if Sammel is not bound by his subscription, $300,000 of bonds were not subscribed for, and all the defendants are released from liability, on the agreement. It would certainly be inequitable under the facts of this case to hold Sammel liable, and as he can be relieved from liability without injury to his cosubscribers, there does not seem to be any reason why the rules of law governing ordinary agreements should not apply to this case.
    Caley v. Phila. & Chester County Railroad Company, 80 Pa. 363, we think, rules this case for the defendants. There Mr. Justice Gordon says: “Where one subscribes to the stock of a public corporation prior to the procurement of its charter, such subscription is to be regarded as absolute and unqualified, and any condition attached thereto is void: Bedford Railroad Company v. Bowser, 48 Pa. 29. The reason for this rule is obvious: the commissioners who are appointed to receive such subscriptions, are not the accredited agents of the corporation, for it is not yet in being, but .are rather the agents of the public, acting under limited and definite powers, which everyone is bound to know, and if he be misled by representations which such agents have no right to make, it is his own folly. Any other rule would lead to the procurement from the commonwealth of valuable charters without any absolute capital for their support, and thus give rise to a system of speculation and fraud which would be intolerable. When, however, the company is once organized, a different order prevails. Such a company may receive conditional subscriptions for its stock, and, when it does so do, it is bound to the performance of the conditions therein contained: Railroad Co. v. Stewart, 41 Pa. 54: Railroad Co. v. Hickman, 28 Pa. 318. . . . Nothing is better settled in this state than that not only can the ambiguities of a written instrument be explained by parol, but it may, in the same manner, be varied, added to, or even contradicted where it is shown that but for the oral stipulations, made at the time, the party affected would not have executed it. The authorities for, as well as the reasons given in support of this doctrine so abound in our books, that to cite the former, or to restate the latter, would be but a waste of time. But it is said this corporation was not bound by the declarations of its agent, they having exceeded their authority, and hence it was under no legal obligation to fulfill their undertakings. Grant this to be so, but how, then, can it hold the defendant to his part of the covenant? This plea would answer an excellent purpose were Caley seeking to enforce the contract against the company, but it so happens that the stick is in the other hand. ‘If one party be not bound neither is the other:' Strong, J., in the case of Railroad Co. v. Stewart, 41 Pa. 54. In this respect a corporation differs nothing from a natural person; if it would enforce the contracts of its agents, it must first agree to adopt and be bound by them.”
    This case is cited and approved in a number of subsequent cases.
    Under the law and facts of this case it seems clear that the Eastern Tube Company could not enforce the agreement against J. B. Sammel; but it is contended that the plaintiff, as assignee of the agreement, is in a better position than the tube company, because it accepted the agreement as collateral for money loaned, without notice that J. B. Sammel's subscription was conditioned. The plaintiff, however, as assignee, took no better title than its assignor, and subject to all defenses which could be made against the tube company by the subscribers: 3 Page on Contracts, sec. 1269. To protect itself, it was bound to inquire of the subscribers if they had any defense to their subscription, and had it done so in this case of J. B. Sammel’s it would have discovered that his subscription was conditional; that it had been canceled, and that the agreement was not binding on any of the subscribers, because the subscriptions for bonds did not amount to 1300,000, as provided in the agreement.
    CONCLUSIONS OP LAW.
    1. The Eastern Tube Company is bound by the representations of its president and agent, T. A. Beall, made at .the time the signatures of J. B. Sammel and James E. Sammel were secured by him to the underwriting agreement of October 8,1902, if it undertakes to avail itself of the benefits of said agreement, and it cannot enforce the agreement against them except subject to and upon the conditions and representations made with reference thereto by said agent, whether said agent, in making said representations, exceeded his authority or not.
    2. The plaintiff took the agreement of October 8, 1902, by assignment, and subject to all the equities and defenses existing thereto in the hands of the Eastern Tube Company, and took no other or greater rights therein or thereunder, than those possessed by the Eastern Tube Company at the date of the assignment.
    3. As the subscription of J. B. Sammel for bonds under the agreement of October 8, 1902, was conditional, and he had the right to and did cancel it, 1300,000 of bonds were not subscribed for as provided in said agreement, so that none of the defendants are liable under the agreement, and the bill must therefore be dismissed at plaintiff’s costs.

      Error assigned was decree dismissing the bill.

      H. B. Gill, with him Shiras & Dickey, John R. Read, Silas W. Pettit and Louis B. Runk, for appellant.

      A. Leo Weil, with him Charles M. Thorp, H. D. Montgomery and J. Rodgers McCreery, for appellees.

      January 4, 1909:
   Per Curiam,

The decree is affirmed at the cost of the appellant on the findings of fact and the conclusions of law by Judge Over, specially presiding.


text:
    White v. Connelly, Appellant.

      Landlord and tenant — Lease—Rebuilding by landlord — Rental—Defense.
    Where a landlord agrees to tear down an old hotel building and build a new one in accordance with certain plans, and to give to the tenant a lease for the new building for a term of years, and before the new building is completed a lease is made by which the tenant is not to pay rent for it until two weeks after the building was entirely completed as certified by the architect, and the defendant forthwith takes possession, and subsequently the architect certifies that the building is complete, the tenant cannot in an action for the rent allege that the building was not constructed according to the plans nor claim to set off sums of money expended for the removal of imperfections in the building. In such a case the tenant need not have taken the building if it did not conform to the plans, and could have held the plaintiff in damages for the breach of his contract. As to the imperfections in the building existing before the date of the lease, she must have seen them equally with the landlord; and as to those which were created afterwards she was bound by her contract as to the architect’s certificate.
    Argued Nov. 3, 1908.
    Appeals, Nos. 36, 37 and 213, Oct. T., 1908, by defendant, from orders of C. P. No. 2, Allegheny Co., April T., 1907, No. 639, Oct. T., 1907, No. 280, and Jan. T., 1908, No. 1,098, making absolute rules for judgments for want of sufficient affidavits of defense in case of Thomas L. White v. Mabel L. Connelly.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Assumpsit for rent.
    Rules for judgments for want of sufficient' affidavits of defense.
    Shaper, J., filed the following opinion:
    These three cases are actions of assumpsit for the rent of a building owned by the plaintiff and occupied by the defendant, and for successive installments of rent. The affidavits of claim and defense are substantially the same in each case, and the cases were argued together. The affidavits of claim alleged that in 1905 plaintiff was the owner of a certain hotel in the city of McKeesport, of which the defendant was tenant, and that it was agreed between himself and the defendant that this hotel should be torn down and a new building put upon the ground built in conformity with plans prepared by M. Rousseau, architect, and that the defendant should have a lease of the new building for five years at a certain rental. Part of the arrangement, although not contained in the agreement for the lease of the new building, was that the defendant should move her barroom and hotel into an adjoining building owned by the plaintiff while the new building was in course of construction, and that this was done; that it was expected that the new building would be finished by January 1, 1906, but that the same was not completed at that time, and on May 22,1906, was still not completed. That on that day it was agreed in writing between the parties that the defendant should remove her barroom from her temporary quarters into the new building within one week; that she should also remove into the basement kitchen as soon as it was plastered and painted, and vacate the kitchen then occupied by her, and that in consideration of making these changes she should not be required to pay any rent for any part of the new building until two weeks after the building was entirely completed and certified by the architect, except certain decorations; that in pursuance of this agreement the defendant did remove her bar and bar fixtures into the new building and shortly after-wards entered upon the use of the new kitchen, and that on July 18,1906, the architect certified to the plaintiff that the building was completed according to the plans and specifications, and that a copy of this certificate was given to the defendant on July 19, and that she was notified that she would be required to pay rental after two weeks from the time of serving notice, and that she is now and ever since that day has been in possession of the entire hotel building, but has refused to pay any rent. The contract calls for rental at 16,000 a year, but it is conceded by the parties that the arrangement was that this should be paid monthly. The action is for the monthly rent due up to the time of bringing the respective suits; and the affidavits of defense aver the building was not constructed in conformity with the plans of the architect, but that the plans were departed from in important respects, namely, that the kitchen was to have been on the first floor, but was in fact put in the basement; that no plans of this change were submitted to her, but it was agreed that a good and substantial kitchen would be provided in the basement, and she sets out that the floor in the basement is rough and uneven, and the drainpipes are above the floor, making it impossible to properly drain the cellar; that the motor for the elevator was badly placed; that the barber shop in the basement was left in an unfinished condition and not in keeping with the character of the hotel; that no lavatory was put in the basement, and that none can be, by reason of the drainpipes; that the sidewalk lift was left in such a condition that it could not be worked; that the electric motor running the pump is exposed to dampness, and was not painted; that there are no hardwood floors in the second story, no storm doors at the entrance, no lavatories for guests on the first floor; that the steam-heating plant is incomplete and not in such condition as to properly heat the room; that the roof is bad and leaks in several places; and a number of other similar allegations; and that the hotel was in fact when turned over to her practically useless; and she says that on May 22, when she made the agreement above mentioned, she did not know of these defects; that she has been put to an expense of $2,000 in replacing defective pipes, traps and resetting fixtures throughout the building and putting down a sewer in the basement and painting floors. She further alleges that plaintiff owes her $200 for water used through the -meter on her premises in the construction of the building, $120 for the rental of rooms occupied by him, $10.00 for the inspection of a boiler, expended by her at plaintiff’s request, and in certain sums set out in the affidavit for electric light, for which the plaintiff agreed to pay.
    As a further defense she alleges that she has been put to great loss and expense in this, that at the time of making the agreement of May 22, she was carrying on a prosperous business in the premises then occupied by her, and that when she was induced on May 25 to leave those premises and remove into the hotel now occupied by her, she lost that business because the present premises were absolutely unfit for the hotel business, and that she had invested in $15,000 worth of furniture to carry on the hotel, and that by reason of the failure above mentioned on the part of the plaintiff to keep his covenants, she has been unable to use fully the said furniture, and for a long time had to keep the same stored, and was compelled to pay interest on the price thereof, to wit: $825; and that by reason of the defects in the hotel she has been unable to entertain any considerable number of guests, and that the profits of her business have been greatly lessened, she having been deprived of the rental value of the barber shop and has sustained other losses to the amount of $20,000; and that the hotel is not of the rental value of $6,000, but is fairly worth no more than $2,000; and claims that the plaintiff is indebted to her in excess of all his rent in a sum of not less than $20,000.
    We are unable to see how the fact that before this hotel was built it was agreed between the parties that it should be built, has any effect upon the relations of the parties as landlord and tenant after it was built and the lessee entered. The bargain was in effect that the plaintiff would build a certain kind of house, and that after it was built defendant should be the tenant of it at a certain rent. If the plaintiff failed to perform substantially his contract to build the house, and the house built by him was not such as she had bargained for, she was not bound to take it, and might hold the plaintiff for such damages as she had sustained by the breach of his contract, but on May 22 she agreed to take the building as it then stood and to begin paying rent for it when the architect should certify that it was finished. The contract itself shows that the basement kitchen about which she principally complains, was then finished except the plastering and painting, and at any rate she agreed that it should be deemed finished when the architect should so certify. She does indeed allege that the architect’s certificate is false and fraudulent, but as to its falsity she means that the house was not finished in the particulars which she has set up in the affidavit, and she does not point out any fraud in the making of it; as to the imperfections in the building which existed before May 22 she must have seen them equally with the plaintiff. As to those which were created afterwards, she is bound by her contract as to the architect's certificate. We are of opinion, therefore, that she is not entitled to set up as against the rent any of these alleged imperfections in the building or any of the alleged consequences to her business. The rules must, therefore, be made absolute, except as to the amounts of $200, $125, $10.00, and the sums claimed for the electric light above mentioned, as to which the defense is sufficient. We do not undertake at this time to calculate the amount for which judgment ought thus to be entered in each case. These amounts ought of course to be counted against the rent first falling due. Counsel will no doubt agree upon the proper liquidation of the amounts in each case. We would respectfully suggest that matters would be simplified if counsel could agree upon a consolidation of these actions.

      Errors assigned were in making absolute rules for judgments for want of sufficient affidavits of defense.

      John S. Ferguson, for appellant.

      E. P. Douglass, with him, J. P. Fife for appellee.
    January 4, 1909:
   Per Curiam,

These appeals involve the same questions, and the parties in interest are the same. They are affirmed on the opinion of Judge Shafer.


text:
    McNutt, Appellant, v. Bakewell.

      Judgment — Foreign judgment — Service by publication — Assessment on stock.

    1. A defendant in a foreign judgment recovered in a proceeding to collect an assessment on stock, who has been served only by publication, cannot be sued on such judgment in this state, where it appears that in the foreign statute relating to service by publication, there is no authorization of service by publication in proceedings to enforce the liability of stockholders to creditors, and the statute by its very terms negatives the implication of the consent of stockholders to such a service because of their membership in a corporation.

      Statute of limitations — Liability—Remedy—Operation in other jurisdictions — Conflict of laws.

    2. Where a new liability is created by statute to be enforced only within a given period, the time within which suit must be brought operates as a limitation of the liability, and not merely as a limitation of the remedy, and the limitation is operative in any jurisdiction where it is sought to enforce the cause of action.
    Argued Nov. 3, 1908.
    Appeal, No. 235, Oct. T., 1908, by plaintiff, from order of C. P. No. 2, Allegheny Co., April T., 1906, No. 947, discharging rule for judgment for want of a sufficient affidavit of defense in case of John S. McNutt, receiver of assessments upon the statutory liability of stockholders of the Salem Church Organ Company, v. Thomas H. Bakewell.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Assumpsit upon a foreign judgment.
    Rule for judgment for want of a sufficient affidavit of defense.
    Shafer, J., filed the following opinion:
    The action is assumpsit upon a judgment of a court in the state of Ohio against the defendant in favor of the creditors of the Salem Church Organ Company for |9,200. From the pleadings it appears that the Salem Church Organ Company was a corporation of the state of Ohio and that the defendant was a stockholder therein; that the constitution of Ohio made the stockholders of corporations liable to creditors of the company for its debts and liabilities to an amount equal to the stock held by them; that the company was organized in November, 1888, and that shortly thereafter defendant removed from the state of Ohio and has not since been a resident of that state; that in 1897, the church organ company became insolvent and a receiver was appointed; and that in 1898 an action was begun on behalf of the creditors against the stockholders to enforce the constitutional liability above mentioned. It appears that there was no provision of law in the state of Ohio for service by publication or otherwise upon nonresidents until such provision was made by an act of the year 1900, and that thereafter the receiver appointed by the Ohio court proceeded against the present deféndant under the provisions of the act of 1900 by advertisement as therein directed, and upon a service by advertisement only, the defendant being out of the jurisdiction of the court, the case was so proceeded in that judgment upon which this suit was brought was rendered against the defendant herein for his share of the debts of the company owing to its creditors, not exceeding the amount of stock held by him.
    The defendant has set up quite a number of matters which he claims to constitute a sufficient defense to the claim of the plaintiff in this case. We do not deem it necessary to pass upon more than one of these, as it, in our opinion, is decisive against the plaintiff. It is of course conceded that while we must give full faith and credit to the proceedings of the Ohio court, we are yet bound to inquire whether that court had jurisdiction of the person of the defendant. It is conceded by the plaintiff that as a general rule no judgment in personam which is to have extraterritorial effect can be rendered without personal service, but it is claimed that there is an exception to that rule where constructive service may be considered to have been consented to by the defendant in advance, and that this is such a case. If the Ohio statute authorizing constructive service had been in force when the defendant became a stockholder, it would be easier to argue that the defendant by becoming a stockholder consented to such service, but aside from that we are not convinced that the mere purchase of stock in a corporation is a consent to be represented by the corporation or to be a party to anything more than the necessary adjudgment of the affairs of the corporation as between stockholders. The liability upon which the action in the Ohio court was based, is not a liability to the corporation but to the creditors of the corporation. The corporation itself has no interest in it. It seems to us that the defendant is in the position of one who by force of a statute became a surety for the corporation to its creditors. We are therefore of opinion that the judgment of the Ohio court having been rendered without service upon the defendant, it can have no extraterritorial effect, and is therefore not a sufficient basis of an action here.
    The rule is therefore discharged.

      Error assigned was the order of the court'.

      A. O. Fording, for appellant.

      Edvñn W. Smith, of Reed, Smith, Shaw & Beal, for appellee.
    January 4, 1909:
   Per Curiam,

A number of reasons on which the defendant relies to prevent judgment are set out in the affidavit of defense, in addition to the one on which the order of the court discharging the rule for judgment is based.

Two of these should be briefly noticed. One is that the defendant was not brought within the jurisdiction of the Ohio court by service by publication. The proceeding in which a constructive service was made was to enforce an assessment made on the stock to pay creditors by obtaining a personal judgment against the defendant. The action in this state was upon the judgment so obtained. In the parts of the Ohio statute recited in the statement of claim, there is no authorization of service by publication in proceedings to enforce the liability of stockholders to creditors, and the statute itself negatives the implication of the consent of stockholders to such a service because of their membership in the corporation, by expressly providing that “judgment shall be rendered against stockholders who have been served with summons for the pro rata amount for which they would be liable if all solvent stockholders residents of the state were served with summons; ” and by providing for service by publication in proceedings to collect the amount unpaid on stock.

Another reason presented by the affidavit of defense was that the action was not brought within the time to which the liability was limited by the Ohio statute, nor within the time fixed by the statute of limitations in Pennsylvania. The corporation was adjudged insolvent, and a receiver was appointed in November, 1897. The attempt to bring in the defendant by publication was made in January, 1901, and the action in the common pleas in this state was begun in March, 1906. An act of the legislature of Ohio amending a section of the revised statutes in relation to proceedings to enforce the individual liability of stockholders, provides that: “ An action upon the liability of stockholders can only be brought within eighteen months after the debt or obligation shall become enforceable against stockholders.” The statutory liability of stockholders of an Ohio corporation is complete when the corporate property has been placed in the hands of a receiver, and the statute of limitations runs in their -favor from that time: Younglove v. Lime Co., 19 Ohio, 663. Where a new liability is created by statute, to be enforced only within a given period, the time within which suit must be brought operates as a limitation of the liability and not merely as a limitation of the remedy, and the limitation is operative in any jurisdiction where it is sought to enforce the cause of action: Railway Co. v. Hine, 25 Ohio, 629; The Harrisburg, 119 U. S. 199.

Por these reasons as well as for that discussed in the opinion of the learned judge of the common pleas, the judgment of the court is affirmed.


author: Mr. Justice Potter,

text:
    McCaffrey v. Gibney, Appellant.

      Orphans' court sales — Sale by guardian — -Mistake—Sale to bar contingent remainders — Correction of mistake.

    Where a guardian makes a private sale of real estate under an order of court on a mistaken belief of all parties that he could convey an absolute estate to the purchasers, the orphans’ court has jurisdiction, five years thereafter, when it is made to appear that there were contingent remainders and executory devises affecting the title, to direct a second sale by a trustee appointed by the court, to the same purchaser and for the same price, and to make conveyance of the real estate free and divested of all contingent remainders and executory devises, and to hold the proceeds for the purposes stated in the will of the decedent.
    Argued Nov. 3, 1908.
    Appeal, No. 236, Oct. T., 1908, by defendant, from order of C. P. No. 4, Allegheny Co., Fourth Term, 1908, No. 222, making absolute rule for judgment for want of a sufficient affidavit of defense in case of James F. McCaffrey v. C. A. Gibney.
    Before Fell, Brown, Mestrezat, Potter and Eliíin, JJ.
    Affirmed.
    Assumpsit to recover a balance of purchase money on sale of real estate.
    Rule for judgment for want of a sufficient affidavit of defense.
    The facts appear by the opinion of the Supreme Court.
    The court entered judgment for $6,375.60 against defendant for want of a sufficient affidavit of defense.

      Error assigned was the order of the court.

      James B. Dunn, for appellant.
    — The interest acquired was the interest of the minors only, and the oversight in leaving out of consideration the interest of the contingents was a very material mistake, and the subsequent attempt to acquire same is too great a departure from the form of the proceedings to allow any so-called confirmation.
    In order that contingent remainders may be barred by a sale under the Price act, it is a condition precedent that the petition shall set forth such contingent remainder and that it is the purpose of said proceeding to bar the same: Smith v. Townsend, 32 Pa. 434; Westhafer v. Koons, 144 Pa. 26.

      John E. McCalmont, with him Henry A. Davis, for appellee.
    —A decree for the sale of real estate having been made, can either be ratified or confirmed, vacated or disapproved, if the court has all the parties interested in the property before it. The power given to a court to order a sale includes a power to ratify a sale already made, and jurisdiction attaches when the court makes a decree of sale: Mussleman’s Appeal, 65 Pa. 480; Bell’s Appeal, 71 Pa. 465; Gilmore v. Rodgers et al., 41 Pa. 120; Postlethwaite’s App., 68 Pa. 477; Smith v. Townsend, 32 Pa. 434; Westhafer v. Koons, 144 Pa. 26.
    January 4, 1909:
   Opinion by

Mr. Justice Potter,

In this action the plaintiff sought to recover the balance of the purchase money for certain real estate sold under an article of agreement. Defense was made on the ground that the title offered by defendant was not marketable. From the affidavit of defense filed the following facts appear:

John J. -McCaffrey died on March 23, 1900, leaving a widow and four minor children. An undivided one-eighth interest in the real estate in question was vested in him at the time of his- death. By his will he gave his entire estate to his wife for life and after her death “ to those persons who may then be entitled to take the same as distributees under the intestate law, or as heirs at law under the laws of the state of Pennsylvania.” M. B. Johnson was appointed guardian of the minor children of John J. McCaffrey, and on August 24,1900, presented a petition to the orphans’ court averring that Mc-Caffrey had devised all his estate to his wife for life, and upon' her death to her children, and praying for an order to sell the real estate here in question at private sale to purchasers,, and for a price named ; the proceeds of such sale to be substituted for the real estate and invested for the benefit of the widow, according to the provisions of the will. The court made the order prayed for, a bond was filed by the guardian, the money paid by the purchasers and a deed executed and delivered to them by the guardian, the widow at the same time releasing her interest to the purchasers.

On July 21,1905, M. B. Johnson filed a supplemental petition in which the surviving brothers and sisters of John J. McCaffrey joined, as did his nephews and nieces in esse, by their guardian, in which it was set forth that in and by the former proceeding the guardian of the minor children of John J. McCaffrey, and the widow, intended to convey an absolute estate to the purchasers; but that the grantees have been advised that the will of John J. McCaffrey created contingent remainders and executory devises, which were not affected by the former decree of the orphans’ court, or by the sale and conveyance made thereunder. The petitioners therefore prayed that the former order of sale be vacated, and that a decree be made nunc pro tunc as of August 4,1900, authorizing a trustee to be named “ to make sale and conveyance of the said real estate, free and divested of all contingent remainders and ex-ecutory devises limited in said will,” to the same purchasers and for the same price as set forth in the original petition; and that the proceeds be taken and held by the trustee according to the terms of the will. Upon the filing of this petition, the court appointed a trustee to represent the interests in posse, who subsequently filed a paper consenting to and joining in the prayer of the petition. On July 31,1905, the court made the decree prayed for, appointing M. B. Johnson, who as guardian was the original petitioner, trustee to make the sale. Subsequently Johnson, on his own petition, was relieved of the duties of trustee, and William A. McCaffrey was appointed trustee in his place.

The court below was of the opinion that under the facts set forth the orphans’ court had jurisdiction to act upon the supplemental petition, and to vacate its original decree, and to enter the second decree nunc pro tunc, and that the facts set up in the affidavit of defense did not in any way render the title to the real estate unmarketable. The soundness of this conclusion is the only question raised by this appeal. The power of the orphans’ court upon a proper petition to authorize a sale that will pass title to the real estate free and discharged of contingent remainders and executory devises, is not questioned. And under the Act of April 13, 1854, P. L. 368, see. 3, it has also full power to confirm and ratify a sale made without precedent authority. Why should it not then accomplish the same end, as in this case, by allowing a supplemental petition to be filed, vacating the original decree, and entering another decree nunc pro tunc? It would hardly seem that authority need be sought to justify action so plainly proper. But if we turn to Nimick’s Estate, 179 Pa. 591, we find that an error in a deed made by a trustee, under an order of the orphans’ court, was upon petition corrected by the court more than eight years later. And in Johnson’s Appeal, 114 Pa. 132, it was held, as is set forth in the syllabus, that “ the orphans’ court has jurisdiction to enter a decree vacating a private sale made by a guardian under an , order of court ordering a reconveyance of the same and directing a restitution of the purchase money for gross mistake — in this case the sale of fifty-two acres for 200 acres — upon the petition of the purchaser, even after the sale is confirmed, the purchase money paid, and the deed executed and delivered, where the rights of third parties have not intervened.”

The principle involved is so clearly sound that we have no doubt whatever as to the jurisdiction of the orphans’ court exercised in the present case, upon the supplemental petition. Upon a mistaken presentation of the facts, the first order authorizing the sale by the guardian was made. When the wrong done to the purchasers became manifest and was shown to the court, its action in response was only that which right and justice demanded; it proceeded to vacate its former decree in so far as the guardian was concerned, and substituted a trustee to make the sale, as of the same date, and upon the same terms and conditions as the previous sale made by the guardian, and ratified and confirmed the sale. It directed its trustee to hold the purchase money for the same uses and benefits, and for the same persons and estates, as the real estate had been held. We agree with the court below that the averments of the affidavit of defense were insufficient to render the title to the real estate in question unmarketable ; and the judgment is affirmed.


author: Mr. Justice Mestrezat,

text:
    Sharpsville Furnace Company, Appellant, v. Snyder.

      Contract — Sale—Breach by vendee — Measure of damages — Article to be manufactured.

    1. Where a specified number of tons of standard pig iron is sold to be delivered f. o. b. in installments of a specified number of tons per month, and it appears that the iron was not to be shipped to one and the same consignee, but to different parties as the vendee should direct, and it also appears that two-thirds of the tonnage delivered f. o. b. had been preceded by shipping directions given by the vendee to the vendor, the vendee cannot set up as a defense for a breach of the contract that the vendor had not delivered the remainder of the iron, if it appears that the vendor had repeatedly requested shipping directions, but had failed to receive them.
    2. A contract for the sale of ordinary standard bessemer pig iron which is not as yet manufactured, and is to be delivered in installments, is an executory contract; and there is nothing in such a contract to take it out of the general rule that for a breach of contract for the sale of personal chattels, yet to be manufactured, the vendor is entitled to recover the difference between the selling price and the market value at the time and place of the delivery of the chattels.
    Argued Nov. 4, 1908.
    Appeal, No. 237, Oct. T., 1908, by plaintiff, from order of C. P. No. 4, Allegheny Co., Third Term, 1908, No. 890, discharging rule for judgment for want of a sufficient affidavit of defense in case of Sharpsville Furnace Company v. W. P. Snyder, trading as W. P. Snyder & Company.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Assumpsit for breach of contract.
    Rule for judgment for want of a sufficient affidavit of defense.
    The facts are stated in the opinion of the Supreme Court.

      Error assigned was order discharging rule for judgment for want of a sufficient affidavit of defense.

      A. Leo Weil, with him C. M. Thorp and H. D. Montgomery, for appellant.
    — The claim made by defendant for the first time in its affidavit of defense that it was under no obligations to furnish shipping directions for the iron which under the contract was to be delivered to it f. o. b. Sharpsville, can hardly be seriously considered. After having recognized its obligation to furnish such shipping directions by its conduct under the contract, and after repeated promises to furnish such directions, as soon as it could find a market for the iron, and after reiterating that it did not repudiate the contract, and months after the time specified for the delivery, and after it had been notified by plaintiff that the iron was made and piled in the yards at Sharpsville at the disposal of defendant and subject to its order, it was only after this suit was brought that this defense was begotten. The court below was clearly right in holding that the affidavit of defense was insufficient; that the defendant was in default, and that the plaintiff was entitled to recover its damages. The court was in error as to the measure of damages. All of the courts generally, and this court particularly, have held that where the delivery is complete, that then the vendor is entitled to the contract price as the measure of damages: Puritan Coke Co. v. Clark, 204 Pa. 556; Ballentine v. Robinson, 46 Pa. 177; Keeler Co. v. Schott, 1 Pa. Superior Ct. 458.

      George E. Alter, of McKee, Mitchell & Alter, for appellee.
    — It is well settled that a contract to sell and deliver goods at a certain place gives no cause of action unless there be a delivery at the place agreed upon: Norris v. Clark, 29 Pa. Superior Ct. 562.
    Under the state of facts the plaintiff, with the iron remaining in its possession, asks for the price to which it would be entitled, under the contract, if the iron had been delivered to the defendant. This it cannot have: Newport, etc., Railroad Co. v. Seager, 7 Pa. Superior Ct. 270.
    January 4, 1909:
   Opinion by

Mr. Justice Mestrezat,

The learned judge of the court below was entirely, right in discharging the rule for judgment for want of a sufficient affidavit of defense. The action was assumpsit for the contract price of pig iron. In April, 1907, the plaintiff sold 6,000 tons of standard Bessemer pig iron to the defendant to be delivered f. o. b. cars at Sharpsville, Pennsylvania. About 1,000 tons were to be delivered during each of the last six months of that year. The shipments for July, August, September and October were received and paid for by the defendant company, but it declined to accept the balance of the 6,000 tons.

The court below held that the refusal of the defendant to receive the remainder of the iron was a breach of the contract for which it was responsible in damages to the plaintiff. The only defense set up in the affidavit was that plaintiff had not delivered the remainder of the pig iron on board the cars at Sharpsville according to the contract, and hence there could be no recovery in this action. This defense has no merit whatever, and, as the learned trial judge in his opinion properly observed, if there was nothing more in the case judgment should be entered against the defendant. The plaintiff time and again had requested shipping directions from the defendant with the view of placing the iron on the cars according to the contract, but the defendant company replied that it had' no shipping directions to give, and asked for a cancellation of the contract. The iron was not to be shipped to one and the same consignee, but to different parties, just as the defendant should direct. Each of the several shipments aggregating the 4,000 tons which had been delivered on board the cars was preceded by shipping directions given the plaintiff by the defendant company. This was the course of dealing between the parties and was an interpretation of the contract which the court will enforce. It is the only reasonable construction to be placed upon the agreement. It would be idle, in fact absurd, to hold that the contract required the plaintiff to place the 2,000 tons of pig iron on board the cars at Sharpsville before the plaintiff could sustain an action for the breach of the contract for failure of the defendant to receive the iron. The defendant was not in a position to allege a breach of the contract by the plaintiff for failure to deliver the iron until it had given shipping directions as requested by the plaintiff. This is the reasonable interpretation of the contract, and the one placed upon it by the parties themselves.

Under the facts disclosed by the pleadings, the plaintiff has a remedy for the breach of the contract, and the measure of damages, as held by the trial judge, is the difference between the contract or selling price of the pig iron and the market price or value at the time and place of delivery. In disposing of this branch of the case the learned trial judge said in his opinion: “The pig iron which is the subject of this contract was not in a deliverable state when the contract was made, as appears from the admissions above quoted. It had not yet been manufactured and was to be delivered in monthly installments. Therefore the title to the pig iron did not pass by the making of the contract, and the title thereto would not pass until there was an actual — not merely constructive — delivery. When title has not passed the vendor’s -action is to recover damages for nonacceptance; and these damages are to be measured by the loss which has been sustained and not by the full price stipulated in the contract. That is to say, the vendor can only recover the difference between the contract price and the market value at the time of the breach. This is the measure of damages which has been adopted in Pennsylvania, as we understand it, in the case of a breach of contract such as this one.” This is the rule adopted in this state by an unbroken line of decisions. The statement discloses the fact that at the time of the contract the pig iron which was sold to the defendant was not in existence, but was to be manufactured by the plaintiff. This brings it within the rule that declares the contract to be executory and that the title does not pass until the manufacture is completed and the property is made ready for delivery. In Winslow, Lanier & Co. v. Leonard, 24 Pa. 14, involving the title to pig metal sold under a similar contract, Lowrxe, J., delivering the opinion, said (p. 16): “If it appear in the contract or ab extra that the vendor did not then own the article contracted for, or that it was not then in existence, or not yet manufactured, .... then the subject-matter of the contract remains undefined and unspecified, at least to some degree, and it is incompatible with the very nature of things to call it a perfect sale.” The same case was again in this court, Leonard’s Exrs. v. Winslow, 2 Grant, 139, and in the charge of the trial judge, adopted by this court “as containing a sound exposition of the law,” it is said (p. 143): “If the metal sold to the plaintiffs .... was not manufactured, no title passed to the plaintiffs upon the delivery of the bill of sale.” The same doctrine was approved and enforced in Jones v. Jennings Bros. & Co., 168 Pa. 493, and Guillon v. Earnshaw, 169 Pa. 463. In this last case the late Mr. Justice Dean delivering the opinion says (p. 471): “It will be noticed, from the contract, plaintiffs were to deliver the ore to the defendant, not on the wharf, but f. o. b. cars at Cartagena, from time to time, defendant to furnish vessels on advices of quantity ready for shipment. The breach of contract of defendant, was in the neglect to furnish the vessels to receive the ore; it was not his ore, and was not to be in his possession until loaded. It follows, then, it was at the risk and charge of plaintiffs, while at the wharf; as long as it was in their possession, their damages could not be the contract delivery price, unless the ore became absolutely valueless because of their failure to take it, and this last is not pretended. Then, the plaintiffs having been ready and willing to deliver at the appointed timé in the contract, of which defendant had full notice, and the ore still belonging to plaintiffs, they were bound to get the market price at the time and place appointed for delivery. . . . The measure of damages was the actual loss, and they lost the difference between what defendant had contracted to pay for the ore, and the market price at Cartagena, when they discovered, definitely, he would not receive it. They had a right to sell it at Cartagena, not for any price, but for the market price, to German or any other buyers.”

This was a contract for the sale of standard Bessemer pig iron. There is nothing special or peculiar about it which would bring it within the rule which permits the vendor who is the manufacturer to recover the price of the manufactured article after it is ready for delivery. It is not, therefore, within the class of cases which hold that the price may be recovered for a suit of clothes or a pair of shoes made to order, a portrait and the like, which have no value except to the person or for the purpose for which they are manufactured. Pig iron is bought and sold and kept in stock like,other merchandise. It has a value to others as well as to the defendants in this case. There is, therefore, no reason for taking it out of the general rule recognized in this state that for a breach of contract for the sale of personal chattels, yet to be manufactured, the vendor is entitled to recover the difference between the selling price and the market value at the time and place of the delivery of the chattel.

The judgment is affirmed.


text:
    Guarantee Title and Trust Company, Appellant, v. Gillespie.

      Principal and agent — Authority of agent — Stipulation as to keeping deposit in bank.

    Where a mother addresses a letter to her son offering to sell him for a sum stated her stock in a corporation, and also authorizing him to deposit the proceeds of the stock at four per cent interest, in any bank that will aid him in the deal, such letter confers no authority upon the son to contract with a bank, as agent for his mother, to leave her money on deposit until the son’s loan to the bank is paid, and as collateral therefor.
    Argued Nov. 4, 1908.
    Appeal, No. 238, Oct. T., 1908, by plaintiff, from decree of C. P. No. 2, Allegheny Co., April T., 1908, No. 542, dismissing bill in equity in case of Guarantee Title & Trust Company v. Alan K. Gillespie et al.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Bill in equity for the rescission and cancellation of a contract, and to compel the defendant, Ada R. Gillespie, to deliver up a bank book for cancellation, and for an injunction restraining Ada R. Gillespie from asserting any right or claim by reason of the entry to her credit in the bank book.
    Miller, J., specially presiding, filed the following findings of fact and conclusions of law:
    FINDINGS OF FACT.
    1. Alan K. Gillespie was the vice president, treasurer and a director in the Gillespie-Curll Company, a corporation doing business in the city of Pittsburg. W. F. Brown was an employee and stockholder in said company. Mrs. Gillespie was the holder of 325 shares therein, and in addition had large claims against her son for money advanced to him. She desired to dispose of her stock and in connection therewith to adjust her claims against her son and had submitted to him in pursuance thereof the proposition contained in the next finding.
    2. By letter dated April 5, 1907, written by C. F. Evans, a banker in Wilmington, N: C., a son-in-law of Mrs. Gillespie and with whom she was then staying, and who was acting in her behalf, appears, after a number of references to the condition of her health, inter alia, the following:
    “ I told her that I thought she should make a proposition to take over her entire interest including the $11,000 of stock held as collateral against your note and to make this proposition upon such a liberal basis that you should have no difficulty in financing the deal through your banking friends and making a quick turn of the whole transaction. In brief, I suggested that she offer to you $42,500 which includes the note as you know on a basis of $75.00 per share for the stock which would mean a bonus to you of say $10,875 and that she then agrees to place the funds in any bank or banks which may aid you in the deal, thus furnishing you quite a good argument to them in case one be needed. They would pay her four per cent upon the deposit. Of course she has no need for the money. All she wants is to be free of any other details than the simple act of drawing her interest through the bank when it is due. She feels, too, that in bringing this about she will greatly relieve you and her of countless worries incident to long and frequent correspondence concerning details of the business.”
    3. On the receipt of this letter Alan K. Gillespie went over its contents with the other defendant, W. F. Brown, whom he desired to interest in the purchase of this additional stock. As a result of the letter and his agreement with Brown he entered into negotiations with the plaintiff company, a trust company doing a banking business in the city of Pittsburg, through its vice president, R. J. Davidson, and F. W. Brown, an employee and brother of the defendant W. F. Brown, that it should loan to them $25,000, taking as collateral security these 325 shares of stock in the Gillespie-Curll Company to be purchased with his thirty additional shares; that the amount of the loan should be deposited in the savings department of the plaintiff company to the credit of Mrs. Gillespie and that the deposit should remain there as collateral security for the loan until it was paid.
    4. On or about April 11, 1907, this was carried into effect. A demand note for $25,000 with said stock as collateral, to the order of said Brown, signed by said Gillespie and indorsed by Brown, was delivered to plaintiff’s bank; it handed to Gillespie a duplicate deposit slip to the credit of Mrs. Gillespie’s savings account in the said sum of $25,000, which slip he at once mailed to his mother. On her return to Pittsburg this deposit slip was returned to the plaintiff, and a savings book was given in lieu thereof, with the entry of $25,000 to the credit of Mrs. Gillespie as of the date of April 13,1907. This book contains certain regulations, among others providing that interest should be paid semiannually on the deposit, and that no portion thereof nor the whole could be withdrawn without certain notices therein specified. Mrs. Gillespie did not know at that time that Brown was interested in the purchase or had entered into the negotiations with the plaintiff company.
    5. The shares of stock in the Gillespie-Curll Company, collateral for the payment of said notes now in the possession of the plaintiff, are not the identical shares belonging to Mrs. Gillespie; 325 shares of the total number were issued by the Gillespie-Curll Company to Alan K. Gillespie with the knowledge and consent of the plaintiff company and without the knowledge of Mrs. Gillespie, and the shares belonging to her when received by Alan K. Gillespie were taken up and canceled by the Gillespie-Curll Company.
    6. At the time the loan was negotiated Alan K. Gillespie at the request of the plaintiff made a financial statement of the condition of the Gillespie-Curll Company showing assets over liabilities of $7,234, exclusive of the capital stock $75,000 paid in. Later, in November, the plaintiff ascertaining that Alan K. Gillespie’s financial statement was not true, and before Mrs. Gillespie refused to make an agreement pledging her deposit as collateral, demanded and obtained from Alan K. Gillespie 1,125 shares of the capital stock of the Elizabeth Ice Company as further security for said loan.
    7. Shortly after the loan was obtained in April the plaintiff prepared a form of agreement for Mrs. Gillespie’s execution, providing for the pledging of her deposit in accordance with the representations made by her son. It made frequent requests for this paper. Alan K. Gillespie agreed to forward it to his mother for execution, she being then in Europe. There is no evidence that she ever received it.
    In November, 1907, a similar paper" was presented to her in Uniontown, Pennsylvania, by her son, Alan K., Gillespie, and F. W. Brown of the plaintiff company, for execution. She said it was the first time she ever heard of such alleged arrangements and declined to execute the paper.
    8. Shortly after her refusal to execute the paper submitted to her or to be bound by the promise made by her son the plaintiff gave notice of its rescission of said contract, electing to retain Mrs. Gillespie’s deposit in payment of said loan. The plaintiff has in its possession the said note and all the collateral. Alan K. Gillespie paid the interest on said note quarterly as demanded to January 1, 1908, when the plaintiff company declined to receive further interest; Mrs. Ada R. Gillespie has not been credited with nor has she received any interest on her deposit made April 13.
    9. The letter from Evans, acting for Mrs. Gillespie, to Alan K. Gillespie, contained no authority, expressed or implied, to make any agreement whereby her money should remain on deposit with the plaintiff company until the note was paid and as security therefor.
    CONCLUSIONS OF LAW.
    1. Alan K. Gillespie was not the agent of his mother, Ada R. Gillespie, with authority, to bind her to leave the deposit of. $25,000 in the plaintiff’s bank until the Gillespie-Brown note was paid and as security therefor; and she is not bound by any representations he made or any conditions he attached to the deposit.
    2. The agreement set up by plaintiff company between it and Alan K. Gillespie, not being authorized by Ada R. Gillespie as to the pledging of her savings account for the payment of the loan, and not being within the scope of the authority contained in Evans’ letter to' Gillespie, or any other authority shown in this case, is insufficient in law and equity to hold her money liable for the payment of the ■ note, or to warrant the plaintiff in rescinding the transaction and attempting to cancel on its books the credit of $25,000 to Mrs. Gillespie’s account.
    3. The only contract existing between Ada R. Gillespie and the plaintiff is that contained in the regulations governing her deposit, which, as said before, provided, inter alia, that the plaintiff shall pay her four per cent interest semiannually in January and July, and that certain notices must be given before she can withdraw her money or any portion thereof.
    4. Even if an implied contract has been made out binding Mrs. Gillespie, as contended for by the plaintiff, it could not rescind, having made no demand upon either Gillespie or Brown for the payment of the note, nor offering to pay Mrs. Gillespie any interest on her deposit or credit it with the same, or offering to refund the interest paid on the loan to Gillespie and Brown, and because having not demanded payment of the loan it has refused to receive the interest due as tendered by the obligors.
    5. It follows that the plaintiff’s bill shall be dismissed at its cost.

      Error assigned was decree dismissing the bill.

      A. Leo Weil, with him C. M. Thorp and H. D. Montgomery, for appellant.- —
    Alan K. Gillespie was authorized by his mother to agree with the bank to leave on deposit the $25,000 until his note on which he obtained said $25,000 was paid. Even if Alan Gillespie exceeded his authority when he agreed on behalf of his mother to deposit .this money with the bank on the express terms and conditions that it should not be withdrawn until his note upon which the $25,000 had been obtained should be paid, Mrs. Gillespie cannot claim the $25,000 obtained upon these express terms and conditions and at the same time repudiate the act of her agent and son in making the agreement upon which the money was thus obtained and deposited: Singer Mfg. Co. v. Christian, 211 Pa. 534; McNeile v. Cridland, 168 Pa. 16; Gaines v. Miller, 111 U. S. 395 (4 Sup. Ct. Repr. 426); Caley v. Phila. & Chester County R. R. Co., 80 Pa. 363; Miller v. Hanover June., etc., R. R. Co., 87 Pa. 95; Keough v. Leslie, 92 Pa. 424; Penna. Nat. Gas Co. v. Cook, 123 Pa. 170; Spath’s Estate, 144 Pa. 383.

      John S. Ferguson, for appellee.
    January 4, 1909:
   Per Curiam,

The decree is affirmed at the cost of the appellant on the findings of fact and the conclusions of law by Judge Miller, specially presiding,


author: Mr. Justice Elicin,

text:
    Black’s Estate.

      Wills — Legacies—Specific legacy — Proceeds of bonds.

    Where a testator bequeaths the proceeds of two bonds to legatees, and it appears that during his lifetime the bonds were paid off, the proceeds invested in a mortgage, and, after testator’s death the mortgage was paid off, and the proceeds came into the hands of the accountant, the legatees are entitled to the proceeds, and a claim that the legacies were adeemed cannot be sustained, because the proceeds traced out and identified are intact and ready for distribution to the parties entitled thereto under the will.
    Argued Nov. 4, 1908.
    Appeal, No. 189, Oct. T., 1908, by William H. Black, from decree of O. C. Allegheny Co., Dec. T., 1907, No. 94, dismissing exceptions to distribution in estate of Alexander M. Black, deceased.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Exceptions to distribution. Before Miller, J.
    From the record it appeared that testator died November 5, 1905. By his will dated January 31, 1900, he directed his executor, the Safe Deposit & Trust Company, it having been his committee also, “to pay to David R. Kennedy one-half of the proceeds of bonds I hold in the National Life Insurance Company of Vermont. To Mrs. H. C. Lewis, residing near Parker, Spottsylvania County, Virginia, the remaining proceeds of same bonds.”
    On July 5,1905, some months before Black’s death, there was paid to the Safe Deposit & Trust Company, his committee, 12,000, being the proceeds of these bonds or policies.
    A short time after its receipt, and in the lifetime of Black, the committee invested these cash proceeds in a mortgage, assigned on its books to Black’s credit; it remained so invested up to and after Black’s death, when the investment in the form of cash was paid to his administrator pendente lite, and afterwards as cash came back to the accountant’s hands, and is part of the balance in cash for distribution.

      James B. Sterrett, of Patterson, Sterrett & Acheson, with him Hugh S. Craig, for appellant.
    — If a legacy be given with reference to a particular fund, only as pointing out a convenient mode of payment, it is to be considered demonstrative, and the legatee will not be disappointed though the fund wholly fail. But where the gift is of the fund itself, in whole or in part, or so charged upon the object made subject to it, as to show an intent to burden that object alone with the payment, it is deemed specific, and consequently liable to be adeemed by the alienation or destruction of the object: Welch’s Est., 28 Pa. 363; Walls v. Stewart, 16 Pa. 275; Ludlam’s Estate, 13 Pa. 188; Blackstone v. Blackstone, 3 Watts, 335; Hoke v. Herman, 21 Pa. 301; Harshaw v. Harshaw, 184 Pa. 401; Smith’s Appeal, 103 Pa. 559; Crawford v. McCarthy, 159 N. Y. 514 (54 N. E. Repr. 277); Holt v. Lamb, 17 Ohio St. 374.

      D. C. Jennings, with him W. K. Jennings and Ceorge Henderson, for appellee.
    — As the proceeds of the sale of the property is given, it follows that if such a part thereof as is specified can be traced out and identified, at the time of the death of the testator, the legacy will take effect, and there will be no ademption, or, only a partial one: Nooe v. Vannoy, 6 Jones Eq. 185; Clark v. Browne, 2 Smale & Giffard, 524; Pulsford v. Hunter, 3 Brown Ch. 416.
    January 4, 1909:
   Opinion by

Mr. Justice Elicin,

The testator held two bonds in the National Life Insurance Company, maturing in twenty years, which were in the nature of insurance contracts. He bequeathed one-half of the proceeds of these bonds to David R. Kennedy and the remaining half to Mrs. H. C. Lewis. ■ These legatees in the distribution of the estate in the court below claimed what the will in express terms gave them, that is, the proceeds of these bonds. Their right to participate in the distribution is denied by the residuary legatee on the ground that these legacies were adeemed. The solution to the controversy depends upon the facts rather than upon the law. ■ Of course, if the testator had bequeathed a particular bond to a certain person, and in his lifetime had disposed of that bond so that it did not remain his property at the time of his death, that would be an end of the legacy, because the particular thing bequeathed was not the property of the testator when the will became operative. Under such circumstances there would be an ademption. But that is not this case. The testator bequeathed, not the bonds, but the proceeds, and the learned court below has found as a fact upon sufficient testimony that the proceeds of these bonds, identified and earmarked, are intact, ready for distribution to the parties entitled thereto. This finding of fact relieves the whole situation from difficulty. The very thing bequeathed by the testator, that is, the proceeds of two certain bonds, being in existence and belonging to him at the time of his decease, there is no rule of law which would deny the legatees the right to demand and receive what the will in terms gave them. The learned judge who delivered the opinion of the court in banc very properly and pertinently said: “Ademption of a specific legacy arises by the alienation or destruction of the object. It is now clear that the thing devised has neither.been alienated or destroyed; the proceeds being traced out and identified at the time of testator’s death, the legacy will take effect: Nooe v. Vannoy, 6 Jones Eq. 185. The proceeds of tliese bonds being the thing devised were in fact kept apart from the testator’s estate by the mortgage investment, therefore the argument in favor of extinction and ademption falls: Clark v. Browne, 2 Sm. & Gif. 524.”

Decree affirmed at the cost of the appellant.


text:
    Gearhart, Appellant, v. Standard Steel Car Company.

      Corporations — Issue of stock — Payment of stock — Payment for stock out of earnings — Act of April 29,1874, P. L. 73.
    A contract by which a person agrees to enter the employ of a corpo- » ration in consideration of a certain salary per year, and the setting aside to him of stock of the company of an amount stated to be paid for out of the earnings of the company, cannot be enforced so as to compel the company to issue or set aside the stock on the terms stated. Such a contract violates the Act of April 29, 1874, P. L. 73, which provides that “no such corporation shall issue their bonds or stock, except for money, labor done, or money or property actually received, and all fictitious increase of stock, or indebtedness in any form, shall be void.”
    Argued Nov. 4, 1908.
    Appeal, No. 3, Oct. T., 1908, by plaintiff, from decree of C. P. No. 3, Allegheny Co., May T., 1906, No. 98, dismissing bill in equity in case of Harry J. Gearhart v. Standard Steel Car Company.
    Before Fell, Brown, Mestrezat, Potter and Elkin, JJ.
    Affirmed.
    Bill in equity to compel the issuing of stock of a corporation.
    Evans, J., filed the following opinion:
    The plaintiff files his bill, alleging that the defendant is a corporation of the state of Pennsylvania, and that in the year 1901, while he was in the employ of the Pressed Steel Car Company, in the capacity of auditor and acting general manager, he was' approached by one A. R. Fraser, who stated that h.e and J. M. Hansen and others proposed organizing a corporation to be known as the Standard Steel Car Company, and requested him, the plaintiff, to enter the employ of that company as general manager, for which he would receive $7,500, a year, “and in addition thereto would have set apart for him twenty-five thousand dollars worth of the capital stock of the new company, at par, the same to be paid for out of the earnings of the company.” That the proposition was accepted, the company organized, and the plaintiff entered into the employ of the defendant corporation, and continued in its employ for more than one year, during which time he received the salary of $7,500 a year as general manager of the company; that the stock has never been transferred to him, and prays, first: “That the contract made between the complainant and respondent for the execution and delivery to the complainant of certificates of the capital stock of the respondent, for two hundred and fifty shares, which stock is to be issued to the complainant, when paid for out of the earnings of the respondent, be decreed to be a binding legal obligation on the parties affected.” And third: “That a decree be made ordering the respondent to issue to the complainant proper certificates of stock of the respondent in the total number of two hundred and fifty shares, the same being the stock which has been set aside for the complainant, upon the payment by him to the respondent of the difference in cash between the par value of the stock and the amount of earnings it should have credited to the complainant and applied to the payment and liquidation of the amount due on the aforesaid stock.”
    FINDINGS OF FACT.
    The. complainant, H. J. Gearhart, and J. M. Hansen and A. R. Fraser, in the summer of 1901, were all employees of the Pressed Steel Car Company. In the summer of that year J. M. Hansen and A. R. Fraser, with E. A. Shoen, C. T. Shoen and W. A. Shoen, associated themselves together with the object of organizing a corporation for the purpose of manufacturing steel cars. The complainant, H. J. Gearhart, was at that time auditor and acting general manager of the Pressed Steel Car Company, and A. R. Fraser, in October of 1901, went to the complainant and stated to him: “That there was a scheme on foot to organize a new steel car company in opposition to the Pressed Steel Car Company, that there had been several meetings of the promoters; that they wanted Gearhart to go along, and there was a question raised as to whether he would go with them or not. He stated to Gearhart that they would give him the same salary he was receiving, and set aside $25,000 worth of stock for him, to be paid for out of the earnings of the new company.” This proposition was accepted by Gearhart. The proposition of Fraser to Gearhart was discussed by the individual promoters, and acquiesced in by them, with the exception of J. M. Hansen. There was never any formal action taken by the promoters with reference to this proposition. The promoters, other than Fraser, however, understood that the proposition was that the stock should be paid for out of the dividends of the company to be organized. Gearhart and the other employees of the Pressed Steel Car Company resigned their positions with that company, and subsequently Gearhart attended the meetings of the promoters of the new company, was one of its incorporators, and a member of the board of directors for the first year. The proposition to transfer or set aside to Gearhart $25,000 of the stock of the Standard Steel Car Company was never submitted to the board of directors of that company, nor to its stockholders, and the stock was never so set aside to Gear-hart on the books of the corporation. Gearhart remained in the employ, as general manager of the Standard Steel Car Company, for a little more than a year, during which time he received $7,500 a year, and then he went into the employ of the Southern Car & Foundry Company, a corporation in which the Standard Steel Car Company was interested, and remained with that company for a few months, when it went into the hands of a receiver, and his connection with the Standard Steel Car Company and its allied interests ceased. His severing his connection with the Standard Steel Car Company, and going into the employ of the Southern Car & Foundry Company, at a salary of $4,000 a year, was acquiesced in voluntarily by him and the Standard Steel Car Company.
    CONCLUSIONS OF LAW.
    That the bill should be dismissed at the cost of the complainant.

      OPINION.
    The proposition made by Frasér to Gearhart is very vague. To quote the language of Gearhart, “He stated that'they would give me the same salary I was receiving, and set aside $25,000 worth of stock for me, to be paid for out of the earnings. Q. The earnings of the new company? A. Yes, sir.”
    It will be observed that there is no condition in this alleged contract as to the length of time that Gearhart was to be employed. He was to be the general manager of the company; he was to receive $7,500 a year, the same that he was temporarily receiving from the Pressed Steel Car Company, but, under the conditions of the contract, as he has stated them, he could have remained a year or he could have remained a month, and severed his connection with the Standard Steel Car Company without breach of his agreement. He testified that Fraser's proposition was that the stock should be paid for out of the earnings of the company. It will be observed that there is no specific condition of this contract as to what proportion of the earnings of the company should be applied to the payment of this stock. The testimony of Mr. Shoen is that the proposition, as talked of among the promoters, was that the stock was to be paid for out of the dividends, and presumably if that meant anything, it meant that it was to be paid for out of the dividends declared upon this stock. A pertinent inquiry arises here as to whom this stock belonged pending the fulfillment of the proposed contract made between Fraser and the complainant. The stock assuredly was not the property of the complainant. He does not allege that he had paid for the stock, or that he had • given any obligation on his part to pay for it. Under the law of Pennsylvania the stock could be issued to him only upon his paying for the same, either in cash, property or labor, and he does not claim that either cash, property or labor of his paid for this stock; therefore, the stock did not belong to him. And even now, in his prayer, he does not ask that the certificates of stock be issued to him, excepting on condition that it has been paid for out of the earnings of the company. If, then, the stock was not the property of the complainant, it must have been the property of the corporation; it must have been stock in the treasury of the corporation at that time. But stock in the treasury of the corporation is not capable of earning anything. Dividends may not be declared upon stock in the treasury of the corporation, and therefore while this stock remained the property of the corporation, it could never be paid for out of the earnings which it produced, or out of the dividends declared upon it. Unless, then; it be the contention of the complainant that the meaning of the proposition made to him by Fraser was that this stock should be set aside and issued to him when the entire earnings of the company had amounted to sufficient to pay for that stock, we see no possibility of the stock ever being paid for by the earnings of the company. This is pertinent when we take into consideration the provisions of the seventeenth section of the Act of April 29, 1874, P. L. 73: “No such corporation shall issue their bonds or stock except for money, labor done or money or property actually received, and all fictitious increase of stock, or indebtedness in any form shall be void.”
    It is argued by counsel for the complainant that if this corporation could have issued fully paid-up stock to this complainant for his labor, then it could enter into a contract to issue to him for his labor capital stock of the corporation, when it should be paid for out of the earnings of the company. But that is just what the act of assembly says a corporation may not do. It was not the purpose that this stock should be issued to the complainant, and paid for with his labor; the stock was to be paid for by the corporation itself, and was, therefore, a gratuity to the complainant. It was to prevent just such vague, uncertain, shifting agreements as this one purported to be that the legislature of the state enacted, in such clear and specific language, the consideration which a corporation is bound to receive for the issue of its stock. This is not a case where the corporation only is interested in declaring this supposed contract illegal; the fictitious issuing of corporate stock is a question of public policy; the legislature has made it so, and while corporations have been held many times to contracts that were ultra vires, when executed by the other party, that is only in case where the corporation alone is interested, and not the public.

      Error assigned was decree dismissing the bill. .

      Stephen Stone, with him Wm. A. Stone and Castle & Jarvis, for appellant.
    — Stock may be issued outright by a corporation for services to be rendered in future: Shannon v. Stevenson, 173 Pa. 419.
    Gearhart has not received his stock up to the present time, and under the contract was not to receive it until the earnings of the company would be equal to the amount of the capital stock. Of course “earnings” means “net earnings.” This was decided in the case of Commonwealth v. Penna. Gas Coal Company, 62 Pa. 241, as follows: “Net earnings or income are the product of the business, deducting the expenses only. . . .” See also Commonwealth v. Ocean Oil Co., 59 Pa. 61; Union Pacific Railroad Co. v. United States, 99 U. S. 402.

      George B. Gordon, with him Wm. Watson Smith, for appellee.
    January 4, 1909:
   Per Curiam,

The decree is affirmed at the cost of the appellant on the opinion of the learned judge of the common pleas.