text:
    Bank of Morehead v. Hernig, Appellant.

      Promissory note — Action by indorsee against maker — Deject of title— Notice — Statement of claim — Affidavit of defense.

    Where in an action on a promissory note by an indorsee against the maker, the statement of claim does not aver that the plaintiff is a bona fide holder for value, and the affidavit of defense avers that the note was taken by the holder after notice of the payee’s defective title, and that no consideration passed, or if any consideration did pass, it was very small, the affidavit of defense is sufficient, and the plaintiff is put to the proof of the bona fides of the transaction, and to show his title.
    Argued Jan. 13, 1908.
    Appeal, No. 219, Jan. T., 1907, by defendants, from order of O. P. No. 1, Phila. Co., Dec. T., 1906, No. 5,188, making absolute rule for judgment for want of a sufficient affidavit of defense in case of Bank of Morehead v. Peter Hernig and Ely K. Richard.
    Before Mitchell, C. J., Fell, Brown, Mestbezat, Potter, Elkin and Stewart, JJ.
    Reversed.
    Assumpsit on a promissory note.
    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 making absolute rule for judgment for want of a sufficient affidavit of defense.

      J. S. Freemann, for appellants.
    In view of the fact that the statement of claim did not aver that the plaintiff was a holder of the promissory note for value before maturity and without notice, the affidavit was sufficient: Hutchinson v. Boggs, 28 Pa. 294 ; Hoffman v. Foster & Co., 43 Pa. 137 ; Royer v. Keystone Nat. Bank, 83 Pa. 248 ; Sloan v. Union Banking Co., 67 Pa. 470 ; Carpenter v. Bank, 106 Pa. 170 ; Maynard v. Bank, 98 Pa. 250 ; Lerch Hardware Co. v. Bank, 109 Pa. 240 ; Phelan v. Moss, 67 Pa. 59 ; Hart v. United States Trust Co., 118 Pa. 565 ; Camden Nat. Bank v. Fries-Breslin Co., 214 Pa. 395 ; Todd v. Shelbourne, 8 Hun, 510 ; Harger v. Wilson, 63 Barb. 237 ; Dresser v. Missouri, etc., R. R. Construction Co., 93 U. S. 92.

      W. IT. G. Gould, for appellee.
    The affidavit of defense in this case is fatally defective because of its vague and indefinite statements upon several material points : Markley v. Stevens, 89 Pa. 279 ; Camden Nat. Bank v. Fries-Breslin Co., 214 Pa. 395.
    Before the holder of negotiable paper can be required to prove his bona fides it must appear that the instrument was obtained originally or was put into circulation subsequently by fraud or undue means : Sloan v. Union Banking Co., 67 Pa. 470 ; Phelan v. Moss, 67 Pa. 59 ; Bardsley v. Delp, 88 Pa. 420.
    The makers of a note are held as the primary obligors and, in the absence of fraud, felony or force, are liable to the holders who took the note, even with the knowledge that it is accommodation paper at the time they took it: Walker v. Bank, 12 S. & R. 382 ; Penn. Safe Deposit & Trust Co. v. Stetson, 175 Pa. 160 ; Smith v. Hine, 179 Pa. 260 ; Delaware County Trust, etc., Co. v. Haser, 199 Pa. 17 ; Lord v. Ocean Bank, 20 Pa. 384 ; Chambers v. McLean, 24 Pa. Superior Ct. 567.
    It is not necessary in order to become a holder for value to pay the full face value of the note: Gaul v. Willis, 26 Pa. 259 ; Moore v. Baird, 30 Pa. 138 ; Morris v. Creswell, 2 Pears. 197 ; Forepaugh v. Baker, 21 W. N. C. 299 ; First Nat. Bank of Mahanoy City v. Dick, 22 Pa. Superior Ct. 445.
    March 2, 1908:
   Opinion by

Mr. Justice Mestrezat,

This is an appeal from a judgment entered by the court below for want of a sufficient affidavit of defense. The criticism of the affidavit by the learned counsel for the appellee has at least some ground to support it, but it may be suggested that a like criticism might have been made by the appellants’ counsel against the statement. We must, however, dispose of the case as we find it, and if . either party suffers by disregarding the well-settled rules of pleading he has no just ground to complain.

This action was brought by the plaintiff against the defendants to recover on a promissory note for $2,500, dated May 16, 1906, and payable four months after date to the order of E. Y. Carr who indorsed and delivered it to the plaintiff. The statement avers that the defendants executed the note and delivered it to Carr who prior to the maturity of the said note indorsed and delivered the said note to the said bank of More-head, aforesaid plaintiff.”

The affidavit of defense avers that the defendants executed and delivered two notes, one dated May 11 and the other May 16, to Carr for his accommodation; that Carr agreed that if he succeeded in having one discounted, the other would be returned to the makers ; that the two notes were given to take up a note previously given by the makers for the same amount which represented an indebtedness due by Carr to a third party; that Carr had one of the notes discounted at the National Deposit Bank of Philadelphia and received the proceeds and that note has since been paid by the defendant, Hernig ; that when Carr was requested by the defendants to return the note in suit he advised them that he had left it in Kentucky, but would get it and return it; and that shortly thereafter Hernig received an inquiry as to this note from the plaintiff bank, whereupon this deponent notified the bank that they should not advance any money to Carr upon this note, that the deponents were not indebted to said Carr.”

The affidavit further avers that no money, or, if any, then but a very small amount had been advanced by the plaintiff bank prior to the receipt of the notice given by Hernig, notifying the bank not to advance any money on the note to Carr. The affidavit then directs attention to the fact that there is no averment as to when or how the plaintiff advanced any part of the money to Carr, and that the statement does not set forth that the plaintiff was a holder for value of the note without notice prior to its maturity.

We think the affidavit is sufficient to send the case to a jury. The defendants are not seeking to prevent a recovery on the note because of their being accommodation makers. They claim that Carr made a fraudulent use of the note and that the bank had notice that his title was defective before it discounted it. The affidavit clearly shows that the defendants Avere accommodation makers and that Carr negotiated the note in violation of his agreement to return it to the makers. The other note had been negotiated and Carr had received the money. He then had no right to use the other note, and in doing so he was committing a fraud on the accommodation makers. If the plaintiff bank had knowledge of this defect in the title, it is not a bona fide holder for value without notice, and cannot enforce payment from the defendants.

The statement does not aver that the plaintiff is a bona fide holder for value, which is the usual form of averment in suits on promissory notes by an indorsee against the maker. It is true that every holder is deemed, prima facie, to be a holder in due course, but the uniform practice is to aver in the statement that the plaintiff took the note before maturity, and is a bona fide holder without notice. At all events when, as here, the affidavit of defense avers that the note was taken by the holder after notice of its defect and that no consideration passed, or, if any consideration did pass it was very small, the plaintiff is put to the proof of the bona fides of the transaction and to show his title.

In Hoffman v. Foster & Company, 43 Pa. 137, the affidavit of defense averred that the note was for the accommodation of the payee, and was sent in a letter to him ; tbat he denied receiving it and asked for a duplicate, promising to return the original, if found. A second note was given and paid by the defendant, who was then sued upon the original note, which the payee had fraudulently negotiated. It was held that the plaintiff was required to prove that he took the note for a valuable consideration and before maturity. In the opinion it is said (p. 138): “ As against McGinnis (the payee), he (the defendant), always had an ample defense to both notes, and it is clear that the first note has thrown around it a cloud of suspicion and fraud which calls upon the plaintiff to show that he obtained it upon a valuable consideration in the usual course of business before it was due.”

In Real Estate Investment Company v. Russel, 148 Pa. 496, it appeared that the note in suit was put in circulation by fraud. In reversing the court below and holding that there was sufficient in the affidavit to call upon the plaintiff to show that he was a bona fide holder, Chief Justice Paxsou said (p. 499): It (the averment of fraud) is sufficient to require the plaintiff to show that he took the note before maturity, and paid value for it. Were this not the rule, it would be impossible for the maker of a note, fraudulently issued, to setup any defense whatever. As a general rule, in such oases, the maker has no knowledge as to whether the plaintiff paid value or not; hence he cannot conscientiously swear that he is not a bona fide holder. It is no hardship to the plaintiff to require proof of consideration.”

The same rule obtains under the negotiable instruments law passed in 1901, which is simply declaratory of the law as it existed at the time of the passage of the act. By its provisions, if the title of the person who negotiated the instrument is defective, the burden is on the holder to prove that he or some person under whom he claims acquired a title in due course. The title of a person who negotiates an instrument is defective within the meaning of the act if he obtains the note or any signature by fraud, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud. If the transferee receives notice of any defect in the title of the person negotiating it before he has paid the full amount, he will be deemed a holder in due course only to the extent of the amount theretofore paid by him.

Under the circumstances set forth in the affidavit of defense we think the defendants have disclosed as much knowledge of the consideration paid by the holder for the note in suit as could be expected. They aver that they expect to be able to proye that a very small amount of money, if any, was paid prior to the receipt of the notice given to the plaintiff. In the absence of any averment in the statement that the transfer was made for value and without notice, we do not think the defendants are required, or can be expected, to make a more definite averment in regard to the consideration paid by the plaintiff to the payee for the transfer of the note. The plaintiff has knowledge of what was paid as a consideration, while the defendants do not have such knowledge, and have no means of knowing whether anything was paid or not, and hence they cannot conscientiously aver in their affidavit what consideration, if any, the payee received for the transfer of the note.

The judgment is reversed with a procedendo.


source: Caselaw Access Project

author: Mr. Justice Stewart,

license: Public Domain

text:
    Gerding v. Standard Pressed Steel Company, Appellant.

      Negligence — Master and servant — Infant—Contributory negligence— Conflicting testimony — Province of court and fury.

    In an action by a boy fifteen years old against his employer to recover damages for personal injuries sustained by a fall of a part of a dangerous machine, at which he was working, the case is for the jury where the plaintiff’s own testimony, although uncorroborated, and contradicted by the defendant’s witnesses, tends to show that the part which fell had fallen in the same way two days before, that he then told the foreman about it, and some repairs were made in consequence, that it had fallen three times before his accident, and that he had made complaint each time to the foreman, who replied that the machine was all right, and that he should get to work.
    Argued Jan. 8, 1908.
    Appeal, No. 266, Jan. T., 1907, by defendant, from judgment of O. P. No. é, Phila. Co., March T., 1906, No. 3,729, on verdict for plaintiff in case of Joseph Bernhardt Gerding by his next friend and father, Bernhardt O. Gerding in the right of the said Joseph Bernhardt Gerding, and Bernhardt C. Gerding in his own right v. The Standard Pressed Steel Oompanju
    Before Mitchell, C. J., Fell, Bbown, Mestkezat, Potteb, Elkin and Stewabt, JJ.
    Affirmed.
    Trespass to recover damages for personal injuries.
    Before Willson, P. J.
    The facts are stated in the opinion of the Supreme Oourt.
    Yerdict and judgment for plaintiff, Joseph Bernhardt Gerding for $1,500, and for plaintiff, Bernhardt O. Gerding for $1,200. Defendant appealed.

      Error assigned was in refusing binding instructions for defendant.

      George L. Qrawford, of Crawford c& Zougklin, for appellant.
    The dangers of which it is the duty of an employer to give warning to an employee, are not those which are subjects of common knowledge or apparent to ordinary observation: Eisenberg v. Fraim, 215 Pa. 570 ; Betz v. Winter, 195 Pa. 346 ; Danisch v. Amer, 214 Pa. 105 ; Simmons v. Traction Co., 207 Pa. 589 ; Masterson v. Eldridge, 208 Pa. 242 ; Bornscheuer v. Traction Co., 198 Pa. 332.
    Where the evidence is of such conclusive character that the court, in the exercise of a sound judicial discretion, ought to set aside a verdict returned in opposition to it, there being no reasonable doubt as to the facts or inferences of fact, binding instructions should be given: Patton v. Texas Ry. Co., 179 U. S. 658 (21 Sup. Ct. Repr. 275); Gates v. Penna. R. R. Co., 154 Pa. 566 ; Dunlop v. Patterson, 5 Cowen’s Rep. 243 ; Newell v. Wright, 8 Conn. 319 ; Lynch v. Erie City, 151 Pa. 380 ; Custer v. R. R. Co., 206 Pa. 529 ; Barry v. N. Y. Biscuit Co., 59 N. E. Repr. 75 ; Fick v. Jackson, 3 Pa. Superior Ct. 378 ; Zurn v. Tetlow, 134 Pa. 213 ; Ford v. Anderson, 139 Pa. 261 ; Welsh v. Butz, 202 Pa. 59 ; Baldwin v. Urner, 206 Pa. 459 ; Swanson v. Crandall, 2 Pa. Superior Ct. 85.

      Howard A.. Dcivis, with him II. B. MoLcrnghlin, for appellee.
    The case was for the jury: Creachen v. Bromley Bros. Carpet Co., 209 Pa. 6 ; Ely v. Ry. Co., 158 Pa. 233 ; Iseminger v. New Haven Water, etc., Co., 206 Pa. 591 ; Schiglizzo v. Dunn, 211 Pa. 253 ; Rummel v. Dilworth, 131 Pa. 509 ; Raymer v. Standard Steel Works, 216 Pa. 101 ; Lillie v. American Car & Foundry Co., 209 Pa. 161 ; Lewis v. Seifert, 116 Pa. 628 ; Ross v. Walker, 139 Pa. 42 ; Noden v. Verlenden Bros., 211 Pa. 135 ; Patterson v. Harrisburg Trust Co., 211 Pa. 173 ; Finnerty v. Burnham, 205 Pa. 305 ; Dougherty v. Dobson, 214 Pa. 252 ; Kehler v. Schwenk, 151 Pa. 505 ; Beil v. Bonneville Portland Cement Co., 218 Pa. 472.
    March 2, 1908:
   Opinion by

Mr. Justice Stewart,

The refusal of the court to give binding instructions for the defendant is the subject of the only assignment before us. The action was for negligence. The plaintiff, a boy of fifteen years, was an employee of the defendant company, and was engaged in working about and operating a machine for cutting dies out of metal sheets. He had been so employed for only three or four days before the accident. His employment required him to place the metal sheets upon the stationary lower die, and by the nse of a treadle bring the upper die to bear upon the sheets and thus stamp them into what is called hangers. To pull out these hangers from between the dies, he had been furnished with an iron hook such as was ordinarily used for this purpose. On this particular occasion, however, he was using his hand to pull out the hangers, when the upper die suddenly, and without his foot having touched the treadle, by which it was operated, fell and caused his injury. The reason he gave for using his hand to pull out the hangers was that the hook furnished him had broken ; that he had applied to the foreman for another, who told him that he had no other, and that he should do the work with his hands. If the danger of using the hand for the work the hook was intended for, had been so imminent and inevitable that the plaintiff must have known that injury would result to him, such fact would have been fatal to his case, since an implication of contributory negligence would at once have risen; the fact that he was acting under the direction of a superior would not have avoided it. But such was not the case. The question of danger was present of course, but not to that degree that it required the plaintiff to assert himself against his employer; the upper die could only fall at the direction of the workman in charge, or from outside interference, or defect of the machine. The rule, as we have stated, is that except as the work is inevitably or imminently perilous, the servant may recover if injured while working under the direction of his employer. "Whether there was contributory negligence here was a question for the jury.. The real ground of complaint was, that the machine which plaintiff was assigned to operate was defective; that the upper die, which did the stamping, was not held securely in place; that because of some defect it was liable to fall at other times than when so directed from the treadle; and that it was in consequence of such defect that plaintiff without his fault received his injuries. The plaintiff testified that his foot was not on the treadle when the die fell; that he wms entirely clear of it; that it had fallen in the same way two days before; that he had then told the foreman about it, and some repairs were made in consequence; that it had fallen three times before his accident, and that he had made complaint each time to the foreman, who replied that the machine was all right, and that he should get to work. Assuming this to be a true narrative of the facts, the defendant’s negligence in failing to provide and maintain suitable instruments for the work of the plaintiff is beyond question. Whether it was true was a question wholly for the jury. It rested wholly upon the unsupported testimony of the plaintiff, which was challenged in many most important and material points, by the conflicting testimony of witnesses called by the defendant. Notwithstanding, the jury gave their credence to plaintiff’s statements, and their finding must be conclusive of the case.

Judgment affirmed.


text:
    Brennan’s Estate.

      Orphans’ court sales — Sales—Real estate — Personalty—Conversion.
    Orphans’ court sales are not absolute and unconditional. They depend for their validity upon the approval and confirmation of the court. They are liable to be vacated by a power superior to the purchaser and against his will. The sale, even after confirmation, does not divest the title of the heirs of the decedent, for it remains in the power of the court until a deed has been executed and delivered. Until then, no conversion takes place.
    Real estate was sold at an orphans’ court sale for a large sum of money, and the purchaser paid a small sum at the sale. After the sale had been confirmed, but before a deed had been made, the purchaser died leaving an estate consisting wholly of personalty, and barely sufficient to complete the purchase of the real estate. To relieve his estate of the embarrassment, his executors secured another to stand in his stead as purchaser, and with the consent of the parties interested in the real estate, obtained from the court an order amending the return by substituting the new party as purchaser in place of decedent. In the distribution of the latter’s estate, which followed, the estate was treated as personalty, and the widow who had elected to take against the will, was awarded her share absolutely. Held, that the distribution was proper, inasmuch as the orphans’ court sale did not work a conversion of the personal estate into real estate.
    Argued Jan. 13, 1908.
    Appeal, No. 168, Jan. T., 1907, by James A. Brennan, from decree of O. C. Phila. Co., Oct. T., 1904, No. 629, dismissing exceptions to adjudication in Estate of James A. Brennan, deceased.
    Before Mitchell, O. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
    Affirmed.
    Exceptions to the adjudication of Penrose, J.
    The facts are stated in the opinion of the Supreme Court.
    Exceptions to the adjudication were dismissed in an opinion by Ashman, J.

      Error assigned was decree dismissing the exceptions.

      Fred J. Enaus, with him Henry II. Farley and Edwa/rd P. Gallagher, for appellant.
    The appellant contends that the effect of the purchase was to make the vendors trustees for the decedent as to the realty, and the decedent trustee for the vendors for the purchase money : Kerr v. Day, 14 Pa. 112 ; In re Drenkle’s Estate, Rangler’s Appeal, 3 Pa. 377 ; Longwell v. Bently, 23 Pa. 99 ; McClure v. Fairfield, 153 Pa. 411 ; Green v. Smith, 1 Atkyns, 572 ; Longwell v. Bently, 23 Pa. 99 ; Hudson v. Cook, Law. Rep. 13 Eq. Cases, 417.
    No printed brief filed nor oral argument offered for appellee.
    March 2, 1908:
   Opinion by

Mr. Justice Stewart,

James P. Brennan, whose estate was distributed in this proceeding, shortly before his death purchased at an orphans’ court sale certain real estate in Philadelphia at the price of $55,000. He paid on the purchase $500, and on return béing made to the order, the sale was duly confirmed by the court. Within three weeks thereafter, and before anything further had been paid, Brennan died, leaving an estate consisting wholly of personalty and barely sufficient to complete his purchase had the whole of it been so applied. To relieve his estate of an embarrassment sure to result were it attempted to complete the purchase of the real estate, his executors secured another to stand in his stead as purchaser, and with the assent and approval of the executors through whom the sale had been made, obtained from the court an order amending the return by substituting this new party as purchaser in place of Brennan. In the distribution of Brennan’s estate which followed, the estate was treated as personalty, and the widow, who had elected to take against the will, was awarded her share absolutely. This is complained of as error on the ground that the purchase by Brennan at the orphans’ court sale worked a conversion, and that so much of his estate as was required to complete the purchase descended as realty. The argument wholly overlooks the clear distinction between private executory contracts of sale and orphans’ court sales. The cases cited by appellant in support of his contention are simply so many authorities for the application of the rule of equitable conversion to private contracts, about which there can be no dispute; not one of them affords a suggestion that the rule is ever applicable to orphans’ court sales. The question here sought to be raised is no longer an open or disputable one. It was considered in Erb v. Erb, 9 W. & S. 147, and it is there said: “ Notwithstanding the sale had been confirmed by the orphans’ court, still it was liable to be defeated from more causes than one. Had the purchaser proved wholly unable to pay the purchase money, it will not be pretended, I apprehend, that all that was done towards effecting a sale of the "estate could have had the least influence whatever in converting it into personalty. It is material to observe that the contract for the sale was made under the authority and operation of law; and, therefore, without being consummated and carried into full execution, ought not to be considered as changing the primitive character of the estate. Nothing will be considered as if done, in such case, until it is actually accomplished ; for, if it were to be so considered, it might, in some instances at least, operate to the prejudice of those interested in the estate. The law, therefore, when it directs the sale of an estate, will take all possible care that the rights of those concerned in it shall not be prejudiced thereby more than can be avoided. It bears no resemblance to the case where by deed or devise it has been agreed or ordered that land shall be converted into money, or money invested in land. There the governing principle is, that what ought to have been done, or is even ordered to be done, shall be considered as if done; because it was the will of the owner of the estate that it shall be so.” Again, in Biggert’s Estate, 20 Pa. 17, it is said : “A conversion of real into personal estate, by act of the law, differs from a conversion by act of the party. In the latter case, where conversion is the object of the owner, the result is produced as soon as a contract of sale is made. In the former, where payment of debts, or partition, and not conversion, is the object, the transmutation is but an unavoidable result of the proceeding, and takes place only when the estate is completely vested in the vendee and the purchase money paid or secured.” In Demmy’s Appeal, 43 Pa. 155, the question was very fully considered, and Mr. Justice Strong in the opinion delivered points out very clearly the distinction between private executory sales and orphans’ court sales in this connection, and vindicates the earlier rulings of the court. We quote but a single passage from the opinion: Such sales (the reference being to orphans’ court sales) are not absolute and unconditional. They depend for their validity upon the approval and confirmation of the court. They are liable to be vacated by a power superior to the purchaser and against his will. The sale, even after confirmation, does not divest the title of the heirs of the decedent, for it remains in the power of the court until a deed has been executed and delivered. . . . Until then, no conversion takes place, and if the heir to the decedent die, even subsequently to the confirmation of the report of sale, but before the deed, his interest descends as land, and not as money.” The above authorities are conclusive. Further comment is unnecessary.

The decree is affirmed, and the appeal is dismissed at the costs of appellant.


author: Mr. Justice Mestrezat,

text:
    Rambo, Appellant, v. Pile.

      Trust and trustees — Banks and banking — Bank deposit in trust for another named — Intention—Evidence.
    Where a real estate dealer makes a deposit in a bank in his own name as a trustee for another person named, and he does this for his own convenience or advantage, intending to retain title to and power of disposing of the funds, and he carries out this intention by depositing in the account large sums of money belonging to himself and his customers, and withdrawing the same, and he continues to do this until after the person named as cestui que trust dies and until his own death, the representatives of such person have no title to the fund.
    Argued Jan. 13, 1908.
    Appeal, No. 262, Jan. T., 1907, by plaintiff, from order of O. P. Ho. 3, Phila. Co., June T., 1905, Ho. 737, entering judgment for defendant on referee’s report in case of Ritter L. C. Rambo, Executor, etc., of Elizabeth S. Burton, deceased, v. Charles II. Pile and William T. Clark, administrators pendente lite of the Estate of Amos Burton, deceased.
    Before Mitchell, C. J., Fell, Beown, Mesteezat, Potter, Elkin and Stewart, JJ.
    Affirmed.
    Exceptions to report of Ira J. Williams, Esq., referee.
    The opinion of the Supreme Court states the case..

      Error assigned was in entering judgment for defendant.

      Charles Enittel, for appellant, cited :
    Smith’s Estate, 144 Pa. 428 ; Dickerson’s Appeal, 115 Pa. 198.

      Arthur S. Arnold, with him Maurice C. BeUcnap, for appellees, cited :
    Haux v. Savings Institution, 37 N. Y. Supp. 917 ; Flanagan v. Hash, 185 Pa. 41 ; Crawford’s Appeal, 61 Pa. 52 ; Bartlett v. Remington, 59 N. H. 364 ; In re United States Trust Co., 102 N. Y. Supp. 271 ; In re Totten, 179 N. Y. 112 (71 N. E. Repr. 748); Moore v. Moore, Law Reports, 18 Eq. 474 ; Jones v. Lock, Law Reports, 1 Chancery Appeal Cases, 25 ; Gaskell v. Gaskell, 2 Young & Jervis, 502.
    March 2, 1908:
   Opinion by

Mr. Justice Mestrezat,

This is a feigned issue to determine the ownership of $8,314.71 which stood to the credit of “ Amos Burton, trasteé for E. S. Githens,” on the books of the banking department of the Integrity Title Insurance, Trust and Safe Deposit Company, at the time of the death of Amos Burton, January 26,1905. The plaintiff is the executor of Elizabeth S. Burton, the cestui que trust named on the books of the bank, and the defendants are the administrators of Amos Burton, the trustee. The contest, therefore, in the court below and here is between the representatives of the trustee and the cestui que trust, both claiming to be entitled to the fund in controversy. The case was tried before a referee, appointed under the Act of May 14, 1874, P. L. 166, 2 Purd. (12th ed.) 1845. He found that the money in dispute is the property of the estate of Amos Burton, deceased, and should be paid to the defendants, his representatives. The referee found and stated the facts in his report and they need not be repeated here in detail. The court below entered judgment on the referee’s report in favor of the defendants. The appellant has not excepted to the findings of fact, and there is no assignment of error raising the question of their correctness. The only error assigned is that the court erred in entering judgment in favor of the defendants and in not entering judgment for the plaintiff.

The single question, therefore, on this appeal is, whether the referee was justified in finding that the money deposited in the trust company belonged to Amos Burton at the time of his death. This was a question of fact, and under the evidence we think the referee committed no error in finding that the fund was the property of Amos Burton when he died' in January, 1905.

The intention of Amos Burton in making the deposit must be ascertained and be permitted to determine the ownership' of the fund in dispute. If he intended to constitute himself a trustee for Githens, and as such held the fund for her, the plaintiff, as her legal representative, would be entitled to have the fund awarded to him; if, on the other hand, Burton made the deposits in his name as a trustee for his own convenience or advantage intending to retain title to and the power of disposing of them, and carried out the intention and disposed of them as his own funds until his death, then the plaintiff can have no claim upon them, and the learned referee was right in awarding the fund in court to the defendants.

In Gaffney’s Estate, 146 Pa. 49, the decedent in his lifetime made a bank deposit to the credit of himself in trust for one Polly McKim. He also had another account in the same bank in his own name. In the distribution of his estate, the orphans’ court refused to award the fund, held in trust, to the cestui que trust. In reversing. the orphans’ court Chief Justice Paxson said (p. 53): “ It was contended that Mr. Gaffney (trustee) never intended the money should go to Mrs. McKim ; that his only object in depositing the money in her name, or in trust for her, was to increase his deposit in bank over the limit of $2,000. But of this there was not a word of reliable testimony. . . . Upon the face of the bank book, the money belonged to Polly McKim, and there is not sufficient upon the record to rebut this presumption.” In the recent case of Merigan v. McGonigle, 205 Pa. 321, a depositor who had one account in her own name, opened another in the same bank in her name as trustee of her foster daughter. At intervals for nearly nine years deposits were made in each account to the limit of the amount permitted by the rules of the Saving Fund Society. There were no withdrawals. The depositor declared that the money -was the beneficiary’s and,was deposited for her. The depositor died without withdrawing any of the money, leaving it all deposited in her name as trustee. This court held that the evidence was sufficient to warrant the court below in submitting the case to the jury on the question whether the depositor intended to create a trust for the person named as beneficiary. In the opinion it is said (p. 326): “ It is clear that the question of the intention of the donor in making the deposit was, under the evidence, for the jury, and was not submitted in a manner prejudicial to the appellant. . . . There is not a particle of evidence to show that Mrs. Fitzgerald (the depositor and trustee) had made the deposit for any other purpose than that disclosed by the books of the bank. She lived ten years after she opened the account and expressed no desire to withdraw the money and apply it to her own use, and made no attempt to revoke the trust she had created for the appellee.”

It will be observed that both of these decisions are based on the depositor’s intention and its subsequent consummation to constitute himself a trustee for the benefit of the person named. In ascertaining such intention, recourse may be had to parol testimony disclosing all the facts and circumstances connected with the deposit made by the trustee. While standing alone the entry in the bank books may show prima facie the intention to make a deposit in trust for the beneficiary, as suggested in Gaffney’s Estate, but the intention of the depositor in directing such entries to be made on the books of the bank may be shown to have been for a different purpose than creating a trust for the party named as the beneficiary. In each case, therefore, it becomes a question of fact to be determined upon all the evidence submitted.

On June 18,1891, Burton opened an account with the banking department of the Integrity Title Insurance, Trust and Safe Deposit Company, and deposited as his first credit the sum of - $398. The account was opened and appeared on the company’s books in the following form: Amos Burton, Trust.” His pass book read : “ Amos Burton, Trustee.” Within six or eight months thereafter, by his direction, the words, for E. S. Githens ” were added on the bank’s ledger, which then read: Amos Burton, Trustee for E. S. Githens.” Ho change was made in the signature book nor in the pass book. At this time his only relation to E. S. Githens was that of a tenant of a building owned by her. A year or two after-wards Mrs. Burton died, and in 1896 or 1897 Burton married E. S. Githens. She died in April, 1900. Ho change was made in the name in which the account stood, and it remained the same on the books of the bank at Burton’s death in 1905. Save for the form of the deposit, every fact in the case points to the intention of Burton to retain control of the fund and dispose of it at his pleasure. When he opened the account and added the word “ Trust.” to his name on the books of the bank, no beneficiary was named, and there is no reason suggested why he deposited the fund to himself as trustee. He was a real estate agent, and, as his bank account shows, he handled large sums of money from the time he opened the account until his death. He had no other account in the bank, and made all his deposits in and drew all his checks on this account. Ho one has appeared to claim any interest in the moneys deposited by him in this account prior to the change made to E. S. Githens. The account was an active one from the beginning, and, as found by the referee, “ through it passed a multitude of financial transactions.” Very large sums in the aggregate were deposited by Burton in this account and were checked out in small amounts. This was the only bank account he had, and through it he transacted all his business. From the time her name was added as a beneficiary to the Burton account until her death, Githens had an account in her own name in the same trust company.

There was no change made in the account after Githens died. Burton continued to make deposits in his account as trustee for her, and he drew checks on the account as he had done prior to her death. When he died in 1905 the balance of the account stood in his name as trustee for E. S. Githens. Eor thirteen years, therefore, he did all his banking through this account. Whatever funds he received, and from whatever source they came, they went into this account. Likewise, whatever debts were paid by him were paid by checks upon this account. There is no evidence whatever to show that Githens ever made any suggestion in regard to the account or attempted to exercise any authority over it. Burton dealt with it as his own fund from the first deposit he made until the last check he drew before bis death. It was absolutely in his dominion and under his control, and, so far as the evidence discloses, no other person had aught to do with it. Even after her death when he received checks from her estate he deposited them to his credit in this account.

There has been no reason assigned, aside from the form of the deposit, why Burton intended to hold this money in trust for Githens. When her name was added as a beneficiary his first wife was living, and he certainly could not then have anticipated both the death of his wife and his subsequent marriage to Githens. It is true, Githens was the owner of the building in which he had his office, but that does not account for an intention to make her the beneficiary of a bank account which would contain thousands of dollars and thereby the owner, so far as appears, of all the money Burton had. He was a real estate agent, and carried on the business himself. It does not appear that Githens had anj^ interest in it, and there is no reason disclosed why. the entire proceeds from that business should have been handed over to her by Burton depositing them to her credit in the bank. Such would be the result of holding that Burton’s intention was to constitute himself a trustee for Githens for the money deposited in the Integrity Trust Company.

The fact that the bank account was continued in the same form after her death as it was prior to her death tends strongly to show that the form adopted by Burton was for his own convenience or advantage and not with an intention to hold the funds deposited as trustee for Githens. After the date of her death, there was no beneficiary named on the books of the bank and there could be no claim by her legal representatives for the deposits made after that date.

In the cases of this court, cited above, where a trust was sustained, it will be observed that the beneficiary was living at the death of the trustee, and that the account was not an active one but the deposits remained until the death of the trustee, except as they were augmented by interest. bTo checks were drawn in payment of the individual indebtedness of the trustee, bio dominion or control was exercised by the depositor over the fund after it had reached the bank, but it remained there until his death. There were no contemporaneous facts or circumstances which disclosed a purpose on the part of the depositor other than that shown by the form of the deposit. In the present case, however, exactly the opposite appears. There is nothing in it to show an intention on the part of the depositor to hold the fund in trust, except the form of the deposit. All the circumstances surrounding the deposit tend to establish the fact that the deposit was made with the intention, on the part of the depositor, of retaining the control and ownership of the fund in himself and that he did exercise absolute control over the fund from its inception until the date of his death.

The uncontroverted facts found by the learned referee fully warrant his conclusion that the fund in dispute belonged to Burton, and, therefore, the judgment is affirmed.


author: Mr. Justice Brown,

text:
    Thayer v. Thompson, Appellant.

      Beneficial associations — Corporations—Right to appoint beneficiary— Constitution — By-laws—Act of April 6, 1893, P. L. 7.
    A beneficial association whose membership is limited to employees of one of three departments of the municipal government of a city, is within the exemption contained in sec. 4 of the Act of April 6, 1893, P. L. 7, and a member of such an association may name as the beneficiary a person other than a member of his family, his heir, blood relative, affianced husband or affianced wife, or a person dependent upon him.
    Where the charter of a beneficial association provides that upon the death of a member, the death benefits shall be payable “to his widow or orphans, and such or either of them, or such other person or persons as the member may have designated,” the member may designate as beneficiary a friend, although the by-laws of the association provide that “when a member has no living relative, a friend may be named.” In such a case the by-law is not prohibitive but permissive; but even if it should be construed to be prohibitive, it is void as contravening the charter.
    All the by-laws of a corporation to be of legal validity must be made in conformity with the charter, inasmuch as they are the working machinery of the charter.
    Argued Jan. 13, 1908.
    Appeal, No. 277, Jan. T., 1907, by-defendants, from order of O. P. Ho. 4, Phila. Co., Sept. T., 1906, Ho. 2,406, making absolute rule to pay over money paid into court in case of Susie B. Thayer v. Mary E. Thompson et al.
    Before Mitchell, C. J., Fell, Bbown, Mestbezat, Pottee, Elkin and Stewabt, JJ.
    Affirmed.
    Rule to pay over money paid into court.
    Before Audenbied, J.
    The facts appear by the opinion of the Supreme Court.

      Error assigned was order making absolute rule to pay over money paid into court. r

      Francis 8. Laws, with him John F. Lewis, for appellant.
    Susie B. Thayer, not falling within any class designated by the Act of April 6, 1893, P. L. 7, could not legally be made the beneficiary of the fund : Wolpert v. Grand Lodge Knights of Birmington, 2 Pa. Superior Ct. 564 ; Thomenf v. Knights of Birmingham, 12 Pa. Superior Ct. 195; Menovsky v. Menovsky, 19 Pa. Superior Ct. 427.
    Under the charter of the Police Beneficial Association, Susie B. Thayer, “ a friend,” could not be made the beneficiary so long as there were “ living relatives of the decedent.”

      Wm. B. 8. Ferguson, with him John A. Ward, for appellee.
    The Act of April 6, 1893, P. L. 7, has no application to this case: Compton’s Est. 25 Pa. Superior Ct. 28 ; Schoales v. Order of Sparta, 206 Pa. 11.

      The Act of April 6, 1893, P. L. 7, being eliminated under the law as laid down in Pennsylvania, and the charter and bylaws of the Police Beneficiary Association, the decree entered by the court below must be affirmed : McCullen v. Insurance Company, 2 Pa. Dist. Rep. 361; Appeal of Jordan et al., 10 W. N. C. 37 ; Philadelphia Savings Fund Society v. Clark, 11 W. N. C. 118 ; Folmer’s App., 87 Pa. 133 ; Death Benefit Fund of the K. G. E. No. 39, 5 Pa. 385.
    A member of a beneficial association, subject to the laws of the association, is entitled to name his beneficiary. Ah association has no discretion in the matter, but must issue the certificate to the person named: Scholl v. Sadoury, 42 Pitts. L. J. 43 ; Knights of Honor v. Martin, 13 W. N. C. 160; Fisk v. Equitable Aid Union, 20 W. N. C. 290; Beatty’s Appeal, 122 Pa. 428 ; Vollman’s Appeal, 92 Pa. 50 ; Jones’s Appeal, 154 Pa. 107 ; Burst v. Weissenborn, 1 Pa. Superior Ct. 276 ; Hale v. Equitable Aid Union, 168 Pa. 377 ; Mulderick v. Grand Lodge, A. O. U. W. 155 Pa. 505 ; Jinks v. Banner Lodge, No. 484, 139 Pa. 414 ; Vollman’s Appeal, 92 Pa. 50 ; Beatty’s Appeal, 122 Pa. 428.
    March 2, 1908 :
   Opinion bt

Mr. Justice Brown,

The Police B eneficiary Association was incorporated July 13, 1888, under the corporation Act of April 29, 1874, P. L. 73. Its purpose is “ to maintain a society and to adopt and maintain such by-laws and rules as Till be for the mutual benefit and protection of its members and to provide from moneys collected therein a fund to be paid over upon the death of any member to his widow or orphans and such or either of them, or such other person or persons as the member may have designated and in the manner of such designation, and, in default of such designation, to such person or persons as the bylaws of the association may direct.” Membership in the association is limited to male persons “ officially connected with the Bureau of Police, the Electrical Bureau and the clerical force of the Mayor’s office of the city of Philadelphia.” A member resigning, suspended or discharged from either of these departments does not lose his membership in the association so long as he complies with its rules.

Edward J. Millet became a member of the association on March 9, 1896, and in the following May applied for and received from it a certificate, in which his mother, Bridget Millet, was designated as the beneficiary entitled to receive the money to become payable on his death. She died February 23, 1904, and in lieu of the certificate in which she was named as beneficiary, Millet took out another, naming his friend, Susie B. Thayer, the appellee, as the beneficiary. She was neither a blood relative nor his affianced wife and was not dependent upon him. Fie died unmarried, leaving no children. Ilis heirs at law and next of kin are the appellants, who were all living at the time the certificate was taken out in favor of the appellee. He died September 1, 1906, and the money payable by the Police Beneficiary Association under his contract of membership was claimed by the appellee, on the one hand, and by his brothers and sisters on the other. She and they brought suits against the association. Admitting its liability to pay the sum of $1/109 to one or the other of these claimants, it was granted leave to pay the fund into court, and the claimants were ordered to interplead, that it might be determined to whom the money belonged. After the money was paid into court a rule was granted at the instance of the appellee requiring the appellants to show cause why it should not be paid to her, and there being no material fact to be passed upon by a jury, the rule was made absolute. The only error assigned is that the court erred in making absolute the rule to show cause why the fund should not be ordered to be paid to Susie B. Thayer.

The claim of the appellee is resisted by the appellants on the ground that the designation of her as a beneficiary in the certificate issued upon the application of Millet is void for two reasons : “ (1) Because Susie B. Thayer, not falling within any class designated by the Act of April 6, 1893, P. L. F, could not legally be made the beneficiary of the fund; (2) because, aside from the act, Susie B. Thayer could not under the provisions of the charter of the Police Beneficial Association be named his beneficiary so long as there were living relatives of the decedent.’ ” Under their contention that the appellee could not be named as the beneficiary, that the designation of her is void, and that the certificate must be regarded as having in it the name of a deceased beneficiary, Bridget Millet, the appellants claim the fund under art. IX, sec. 2 of the bylaws of the association, which provides that “ If at the death of a member it shall be found that the beneficiary oh beneficiaries named in said member’s certificate are also deceased, payment of the amount of money derived from the assessment levied by reason of the said member’s death shall be made to said member’s heirs-at-law as if they had been specifically named.”

By sec. 1 of the act of April 6, 1893, a society or voluntary association formed or organized and carried on for the sole benefit of its members and their beneficiaries, and not for profit, shall pay death benefits to families, heirs, blood relatives, affianced husband or affianced wife of or to persons dependent upon the member.” The appellee belongs to none of these classes ; hut by sec. 4 of the act it is further provided “ that all beneficial and relief associations formed by churches, societies, classes, firms or corporations with or without ritualistic form of work, the privileges and membership in which are confined to the members of such churches, societies or classes and to the members and employees of such firms or corporations, shall be exempt from the provisions of this act.” As membership in the Police Beneficiary Association is confined to a certain class, to male persons “ officially connected with the Bureau of Police, the Electrical Bureau and the clerical force of the Mayor’s office of the city of Philadelphia,” it is clear that the association comes within the exception of sec. 4, exempting it from the provisions of the act. That one may continue a member of it after he resigns, is suspended or discharged from the police force, the electrical bureau or the clerical force of the mayor’s office, does not affect the exemption of the association from the provisions of the act. It continues to be an association of a certain class — those who were, at the time they became members of it, employees in one of three departments of the municipal government of a certain city.

The provision in art. IX, sec. 4 of the by-laws that, When a member has no living relative, a friend may he named,” is not prohibitive, hut permissive. But, even if it should be read, as appellants contend, as impliedly prohibitive of the designation of a friend when the member has a living relative, it is void because it is in contravention of the association’s charter, which is its supreme law in making its by-laws. “ All bylaws of a corporation must be made in conformity with the charter, inasmuch as they are the working machinery of the charter: ” Weimer’s Pennsylvania Corporation Law, 91. “ All by-laws to be of legal validity, must be made in conformity with the charter. They are but the working machinery of the charter, and are required to be framed in harmony with it. They are like the acts of the Legislature which must be consistent with the constitution under which the Legislature assumed to act, or they are void : ” Langolf v. Seiberlitch, 2 Parsons, 64. “No corporation can make valid any by-law in conflict with its charter. That would be to enable the corporation to make a new constitution for itself, and thereby wholly defeat the object of the law which gave it birth: ” Diligent Fire Co. v. Commonwealth, 75 Pa. 291. The charter provision of this association is, that out of the moneys collected by it there is payable, upon the death of a member, a fund “ to his widow or orphans and such or either of them, or such other person or persons as the member may have designated.” The charter right of designating a beneficiary is unlimited, and, under it, the deceased named the appellee, from whom the court below could not, therefore, have withheld what was awarded to her. Appeal dismissed and order affirmed at costs of appellants.


text:
    Warren-Ehret Company v. Byrd, Appellant.

      Contract — Building contract — Subcontractor—Architect—Arbitration.
    Where an arbitration clause in a building contract is limited by its express terms to disputes between the owner and the contractor, or between the contractor and a subcontractor, such clause cannot be extended to a dispute between a subcontractor and a person furnishing the latter labor and materials.
    In an action by a person furnishing material and labor to a subcontractor under a building contract, the defendant cannot complain of a substitution of one method of doing the work for another, if it appears that the plaintiff made the substitution in accordance with the directions of the architect and the other parties in interest and that such substitution imposed no additional burden upon the defendant; and this is the case although the defendant was not present when the substitution was directed by the architect.
    A provision for a guaranty from a subcontractor in a building contract cannot be extended by the subcontractor to a contract between himself and a person furnishing him labor and material unless he expressly stipulates for such guaranty.
    Argued Jan. 14, 1908.
    Appeal, No. 267, Jan. T., 1907, by defendant, from judgment of C. P. No. 2, Phila. Co., Sept. T., 1903, No. 2,782, on verdict for plaintiff in case.of Warren-Ehret Company v. John Byrd.
    Before Mitchell, C. J., Fell, Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
    Affirmed.
    Assumpsit to recover under a contract for roofing.
    Before Barratt, J.
    The court charged in part as follows ;
    It appears that an athletic association connected with the University of Pennsylvania entered into a contract with Wells Brothers Company (whom I will hereafter call Wells for brevity whenever I allude to this firm) for the performance of some work at Franklin Field, which embraced the erection of a grand stand, and it further appears that Wells entered into a contract with the defendant, Byrd, for a part of the work which included at least the placing of what has been called a slag roof upon or in connection with this grand stand. Wells was the direct contractor with the athletic association, and the defendant, Byrd, was a subcontractor of Wells. It further appears that the subcontractor, Byrd, entered into a contract with the plaintiff, the Warren-Ehret Company, for the erection of this slag roof, the contract consisting of two letters, which are as follows:
    “ Philadelphia, 3/20, 1903.
    “ Warren-Ehret Co.,
    “ Land Title Building.

      “ Gentlemen:—
    “ Please furnish and put on ... . the Four-ply Slag Grit Roofing on Grand Stand at Franklin Field, in accordance with plans and specifications.

      “ All the above work to be done at four (4) cents per square foot, less one-half cent (|) per square foot and same to be applied promptly and without delay when ready.
    “ Yours truly,
    “ John Byrd.”
    “March 23, 1903.
    “ Mr. John Btrd,
    “ 1426 Catherine St.,
    “ Philadelphia, Pa.
    “ Dear Sir :—
    “Ye have booked your order for covering the roof of the Grand Stand, Franklin Field, for the University of Pennsylvania, as per your order of March 20, 1903, with a Four-ply Slag Grit roof, guaranteed against natural wear and tear for ten years, as per plans and specifications at the rate of four cents (.04) per square foot, less a rebate of one-half cent (.00^) per square foot. The work to be done promptly and without delay. You will kindly notify us about three or four days before the roof is ready for us.
    “ Thanking you for the order, we remain,
    “ Yours very truly, -
    “Warren-Ehret Company,
    “Alonzo Gibbons, Secretary.”
    By this contract the defendant, Byrd, ordered a four-ply slag grit roofing to be put on the grand stand at Franklin Field in accordance with plans and specifications. The plans and specifications you will have out with you. The price for the work is stipulated, and the work is ordered to be done promptly and without delay. The plaintiff company accepts this order, accepts the price stipulated, agrees to do the work promptly and without delay, guarantees the roof against natural wear and tear for ten years as per plans and specifications.
    This is the contract between the parties to the case which you are now trying. You have heard a great deal of discussion about the terms of the contract between the defendant Byrd, and the direct contractor, Wells, and while I instruct you at this point that the covenants of that contract are not binding upon the plaintiff in this case, I desire to say but a word upon the subject so as to rid your mind of any ambiguity or uncertainty that may have arisen concerning the matter. [Before the Warren-Ehret Company could be held to be bound by the contract between Wells and Byrd, it would have to be shown that the Warren-Ehret Company had agreed, in its contract with Byrd, to accept as applying to itself the terms and covenants of Byrd’s contract with Wells.] [14] While some of the letters written by Mr. Byrd to the plaintiff which are in evidence (and you will have them out with you), state that the plaintiff would be held to the performance of its work under Byrd’s contract with Wells, because the plaintiff had agreed to the terms of that contract, Byrd’s testimony upon the stand, when he was relating a discussion which took place between him, Mr. Duross, of the plaintiff company, and Mr. Gilbert, of Wells, was (although this is entirely for you to recall) that Mr. Duross of the plaintiff company refused to accept the terms of that contract and thereby release him from their operation as against him. This is Byrd’s sworn testimony, and if it is true, notwithstanding that he says that Duross prior to that interview had agreed to accept the terms of his (Byrd’s) contract with Wells, that acceptance never became an accomplished fact, nor is there any where in the evidence anything shown of a legal consideration passing between Byrd and the plaintiff for the alleged superseding contract. I say superseding, because [according to the contract between Byrd and the plaintiff, as constituted by the letters of March 20 and 23, the plaintiff did not either directly or by implication agree therein to be bound by the terms of any contract except that of the two letters, and therefore, if the plaintiff at any time assumed Byrd’s contract with Wells, it must have been subsequently to March 23, 1903, and, therefore, a superseding contract.] [15]
    [And even if, as contended by the defendant, the acceptance of the contract by the plaintiff in the letter of March 23, to do the work according to the plans and specifications, which plans and specifications were contained in the contract between Byrd and Wells, brought to the notice and knowledge of the plaintiff the covenants contained in that contract, the plaintiff could not be bound by those covenants, at least in so far as doing the work to the entire satisfaction of the architects was concerned, and in so far as making the final acceptance of the work and payment therefor dependent upon the acceptanee by the architects of the work to their entire satisfaction, and in so far as making the architects the final arbiters of any and all disputes or differences of opinion that might arise between any contractors or subcontractors, because in defining what is meant by contractors and subcontractors this contract between Wells and Byrd says that “ whenever the word contractor is used in this specification it refers to those having a direct contract with the owner” — Wells, “and to subcontractors to such direct contractors” — Byrd to Wells, “and to no other persons whatsoever.” As the plaintiff is a subcontractor of a subcontractor, he comes under the phrase “ no other persons whatsoever,” and, therefore, the plaintiff is expressly excluded in respect at least of the matters to which I have just referred in which the architects’ powers, control and supervision over the work are defined.] [16]
    You therefore have the issue very plainly marked out, although you will probably be met with some difficulty in solving the questions because of the conflict of the evidence that has been presented before you.
    [Now, the issue plainly stated is : The plaintiff having entered into a contract to do this work according to certain plans and specifications, has it done the work in a workmanlike manner in substantial compliance with the terms of the contract as constituted by the two letters referred to ? [17] Well, the plaintiff says yes; the defendant says no. You must ascertain the fact.
    I do not propose to go into the details of the testimony with you, but will leave all of the evidence, where it properly belongs, with you.
    [According to the plaintiff’s evidence the exact requirements of the specifications were not complied with. They tell you in substance and effect that very shortly, I think within a day or two, after they began work, a question arose as to whether they were putting down four-ply felt and pitch in the manner as required by the specifications. They say that they then laid a sample portion of the roof in the presence of the architects, and T think a representative of Wells (if I am in error you will correct me), and that it was satisfactory to them, and that they were directed to proceed in that way, and they tell you that they did so proceed with the work. My instruction to you upon this branch of compliance with the specifications is that if you believe that, although the specifications directed a certain method, all the parties in interest agreed that another method should be substituted, then so far as the substituted method was carried out, if you believe that it was carried out, there was substantial compliance in respect of that part of the specification.] [18] If you do not believe such to have been the case, then there was a direct violation of the contract, and so far as that violation would, in your judgment, affect in dollars and cents the claim of the plaintiff here, the amount of the verdict, if you should reach the question of amount, would be affected.
    I think that it is safe to say that it is a conceded fact that this roof leaked. The plaintiff contends that the leaks were caused, not by improper material or defective workmanship, but by the fact, as it alleges, that certain lag screws were falsely placed, as the architect described it, through this roof. It appears that upon the roof there were a large number of iron benches screwed fast with 22,000 lag screws, and the plaintiff contends that a great number of them, instead of going through the roof and into the rafters underneath, as they should have done, missed the rafters in a very great many places (you will remember all this evidence), and thus afforded a means by which water could percolate through the roof. The plaintiff further contends that the water did percolate through these falsely placed lag screw holes, and that to these falsely placed screws alone is attributable the fact of the leaking of the water through the roof. On the other hand, the defendant contends, and has produced a number of witnesses to prove, that there were comparatively few falsely placed lag screws, and that this leakage was not at all attributable to the lag screws that had failed to penetrate the rafters, as you have heard described ; but that it was due to defective workmanship by the plaintiff, in that the places upon which the sleepers were to rest were not properly covered with pitch in accordance with the plans and specifications, and that there were spaces between the stringers of from one-eighth to one-quarter of an inch, left by the plaintiff’s workmen, through which the water found an outlet.
    The defendant resists the claim of the plaintiff upon the further ground, as he alleges, that the felting was not four-ply over the whole roof, as required by the specifications, but was a three-ply solid roof with a dry sheet underneath it. Some of the witnesses have testified to this effect, although I think, and you will correct me' if I am wrong, that the defendant on the stand said that the under sheet of felt was not improperly laid without pitch under it, because if pitch had been put under the lower sheet of felt, the shrinkage of the boards would have had a tendency to have torn the felt which would have adhered to the boards because of the pitch if so applied. That is the way I understood the defendant to have testified upon this subject. As I have said, you will substitute your own recollection for mine, if I am in error. The plaintiff contends that it is a four-ply felt covering.
    The defendant also sets up as a defense a further violation by the plaintiff of the specifications in that the pitch was not properly applied for the carpenters in placing the stringers or other woodwork, you will remember what it was, in adjusting the seats upon this roof; and also that the slag or slag grit was not of the sizes specified, and that because of this there was a great deal of washing of sand into the gutters, damaging the gutters and necessitating the hauling away of this sand at some considerable expense. The plaintiff meets this by telling you that the slag grit placed upon this roof was the commercial article which fully met the specifications, and that the quantity of it that he saw in the gutters was no more than must reasonably be expected in the case of a new roof of this kind. The architect told you that there was too much of this slag grit used, which would affect the question of performance in a workmanlike manner ónly, because the specifications, as I have read them, do not state the amount or quantity of slag grit to be put on. The defendant further tells you that at an expense of something over $750 he had had the leakage of the roof stopped, and that the bill for hauling away the loose sand was $150, but as to these amounts it is proper to say that there has been no itemization given you in the evidence.
    I think that I have thus substantially stated to you the contentions of the plaintiff and the defendant. You will remember everything in the case, and give to all of it very careful consideration. If I have misstated anything, you will correct me by your recollection, and the same applies to any omissions that I may have made. In other words, the whole case is in your hands.
    If you find, after a very careful consideration of the whole matter, that the plaintiff committed such breach or breaches of the contract as not to have performed his work in substantial compliance therewith and in a workmanlike manner, then 3ou will have to find a verdict for the defendant. [If, howevér, you should finally determine that the plaintiff has performed the work embraced in the contract in substantial compliance with it, and in a workmanlike manner, then you may find a verdict for the plaintiff.] [19]
    [As to guarantee of this work, the contract "between the plaintiff and the defendant provided that the plaintiff’s guarantee was to be against natural wear and tear for ten 3ears, as per plans and specifications, and I instruct you that there is nothing in the evidence upon which you could base a finding that the plaintiff’s guarantee should take a wider scope. It is not a valid defense that the plaintiff has not given a separate and formal guarantee, because the guarantee contained in his letter of acceptance of the order to do the work is just as binding upon him as a separate written guarantee would be. [20]
    [So far as concerns leaks caused by work done or material furnished by anybody other than the plaintiff, if you find that leaks were so caused, the plaintiff is not responsible for them.] [21] So far as leaking of this roof due to defective workmanship or material, either or both, on the part of the plaintiff, is concerned, if you find that the leakage came about in this way, as alleged by the defendant, the plaintiff is responsible, and, if you find that such was the case, you will take it into consideration along the lines of my previous instructions to you upon the law.
    [The plaintiff claims for the entire work at the contract price for something over 76,000 square feet of roofing, which it alleges amounts to $2,682.68, upon which it asks for and is entitled to, if you find for the plaintiff, interest from September 21,1903, at which time it alleges, and it is not denied, that it tendered to the defendant a written guarantee in addition to and following the terms of the guarantee contained in its letter of acceptance of the order to do this work.] [22] The plaintiff claims that the work was at this date fully completed, and that it was done, and the materials furnished, in substantial compliance with the terms of the contract.
    Yerdict and judgment for plaintiff for $3,233.61. Defendant appealed.

      Errors assigned among others were (14-22) above instructions, quoting them.

      F. S. Brown, of Simpson & Brown, with him Q. W. Van Artsdalen, for appellant.
    The law is well settled that the reference in a contract to another writing or document reads the writing or document so referred to into the contract, and the parties thereto are bound by the writing referred to just as much as if the paper referred to had been set forth at length in the contract.
    In the case of Philadelphia v. Jewell, 135 Pa. 329, plaintiff is a subcontractor within the meaning of the specifications : Thorington v. Smith, 75 U. S. 1 ; Young v. Gas Co., 5 Pa. Superior Ct. 232 ; Smith v. Hickman, 14 Pa. Superior Ct. 46 ; Morrison v. Wilson, 30 Cal. 344.
    Plaintiff, having changed the manner of erecting the roof without the consent or knowledge of the defendant, is not entitled to recover, and the burden was upon the plaintiff to prove affirmatively that it erected the roof in accordance with the specifications : Hartupee v. Pittsburg, 97 Pa. 107 ; Hand v. Baynes, 4 Wharton, 204 ; Rogers v. Davidson, 142 Pa. 436.

      M. Hampton Todd, for appellees.
    March 2, 1908:
   Opinion by

Mr. Justice Stewart,

The defendant, John Byrd, here the appellant, engaged as subcontractor to construct the roof of a gymnasium according to certain plans and specifications. Byrd in turn sublet his contract, engaging one party to do the carpentry in connection with the roof, and the plaintiff company to cover the roof as constructed by the carpenters Avith what is called four-ply slag grit roofing. When completed the roof was found defective in that it leaked. The present action was brought by plaintiff company to recover the contract price for the slag grit roofing. On the trial the plaintiff’s right of action was denied, on the ground that the contract between the parties provided for a reference of all disputes that might arise to the architects, whose decision should be final; and that the particular dispute here, namely, whether the slag grit roofing provided by the plaintiff company corresponded to the specifications, had been determined by the architects adversely to the plaintiff. The reference to the architects had been made at the instance of the defendant, and not until after the present action had been brought. It was not attempted to be shown that the plaintiff company appeared by anyone before the architects in the investigation made, or consented to the reference, or recognized in any way the right of the architects to pass upon any dispute between it and the defendant. This left the question to be determined under the terms of the contract. The plaintiff’s contract is expressed in its letter accepting the defendant’s order. It reads as follows: “ We have booked your order for covering roof of the grand stand, Franklin Field, for the University of Pennsylvania, as per your order of March 20, 1903, with a four-ply slag grit roof, guaranteed against natural wear and tear for ten years, as per plans and specifications at the rate of four cents (.04) per square foot, less a rebate of one-half cent (.00J) per square foot.” The plans and specifications here referred to are those which accompanied the contract with the general contractor, and with which the plaintiff company was entirely familiar. So far as these related to the particular work which plaintiff had engaged to do, they became part of its contract with the defendant, and plaintiff would be entitled to recover only as compliance was shown. But beyond this plaintiff was not bound by any of the provisions or stipulations in the general contract. It was not a party to it, and was not made subject to it by its terms ; on the contrary, that contract, providing among other things for a reference to the architects of all disputes which might arise between any two or more contractors or subcontractors, or between any of the contractors and subcontractors, or between the owner and any contractor or subcontractor, in express terms excludes the plaintiff, and those like it, doing work or furnishing materials to a subcontractor, from its operation. It provides that: “Wherever the word contractor is used in this specification it refers to those having a direct contract with the owner, and to subcontractors to such direct contractors, and to no other persons whatsoever.” In this contention, therefore, a finding by the architects with respect to a controversy between these parties, was not only immaterial but wholly incompetent as evidence. The defendant was a subcontractor to the direct contractor; but the plaintiff stood in no such relation, his relation being with a subcontractor. The offer to show such finding by the architects was properly refused by the court.

The plaintiff offered evidence to show a substantial, if not strict, compliance on its part with the plans and specifications; that it had done its work in a workmanlike manner, and that the leakage was due to the defective manner in which the carpentry work, for which it was not responsible, was done. The defendant, on the other hand, offered evidence in support of his contention that the fault was with the slag roofing, and that it was defective because of failure to conform to the specifications; that the felt used was not lapped as required; that hot pitch had not been used in laying the sleepers, and that the slag grit used was of smaller size than the specifications called for. These were the questions of fact submitted to the jury in a charge which, with entire fairness, so far as we can see, summarized and presented the evidence. The finding of the jury in favor of the plaintiff for the full amount of its claim is a virtual affirmance of each of the plaintiff’s contentions in this regard. Whether it was a four-ply felt that plaintiff was using, and whether the pitch was being used in the way required, were subjects of dispute very early in the course of the work. The plaintiff’s evidence was to the effect that as soon as it knew of any dissatisfaction, it asked the architects to inspect a sample of work laid, and upon inspection, after explanations given, the architects expressed their approval, and directed the company to proceed and finish the work according to sample. The defendant was not present. The instruction of the court with respect to this feature of the case was as follows : “ My instruction to you upon this branch of compliance with the specifications is. that if you believe that although the specifications directed a certain method, all the parties in interest agreed that another method should be substituted, then so far as the substituted method was carried out, if you believe it was carried out, there was substantial compliance in respect of that part of the specifications. If you do not believe such to have been the case, then there was a direct violation of the contract.” The plaintiff’s contention was: (1) that there was no departure from the specifications in any material effect; (2) that even though a variation were shown, the work done corresponded exactly to the sample exhibited to the architects and which met their approval. Because it was not shown that the defendant was present when the examination was made by the architects, and the plaintiff was directed to proceed according to the sample, it is argued that submission to the jury to find whether all the parties in interest agreed that another method should be substituted, assumed a fact for which there was no support in the evidence. In a certain sense the defendant was a party in interest, and we must assume that he was not present at the inspection. But his interest was not such as made him a necessary party to an agreement of substitution or change made between the contractor under him and the architects. His only interest was to have the work done in a way which would meet the approval of the architects, who, under the terms of his contract, were to be the final judges in any dispute between him and the contractor over him with respect to the work. Of course, it would have been otherwise had the change, if any were made, imposed any additional burden upon him, but nothing of the kind could have resulted. The plaintiffs, in submitting to the architects a sample of their work, did nothing beyond what the defendant would have been obliged under his contract to do, had he undertaken the work himself. In proceeding with the work in the manner directed by the architects, they were meeting the requirements of defendant’s contract much more certainly than by any other course, since the architects were the final arbitrators. If the agreement contemplated a substitution of one kind of work for another, and such substitution was in fact observed by the plaintiff, it was binding on owner and contractor alike under the contract, Robinson & Kennedy v. Baird, 165 Pa. 505, and was without prejudice to the defendant. The fact that the latter was not present or consulted with regard to it, is an immaterial circumstance. If, in consequence of such circumstance, the roof proved defective, the responsibility would not rest with the defendant. Such fact could not prevent his recovery of the contract price.

With quite as little reason can default on part of the plaintiff be claimed because of failure to give defendant a written guarantee corresponding in form to that expressed in the original plans and specifications. The entire contract between plaintiff and defendant is to be found in defendant’s written order and plaintiff’s written acceptance. The latter expressed a guaranty, and it is by no means certain that any other was in contemplation of either party. Be that as it may, the form of guaranty expressed in the plans and specifications was not for plaintiff’s but defendant’s observance as part of the latter’s contract. If defendant proposed to exact from plaintiff such a guaranty, he should have stipulated for it. The plain reading of the plaintiff’s letter of acceptance makes it clear that the word's, “ as per plans and specifications,” referred to the work to be done and nothing else. The guaranty which plaintiff subsequently tendered, while, as we think, unnecessary, covered fully plaintiff’s entire engagement in this regard. In point of. fact the difference between it and the guaranty provided for in the plans and specifications is unsubstantial. It would be a narrow construction that would give one a larger effect than the other.

The case was fairly submitted to the jury, and we see no merit in any of the assignments of error.

Judgment affirmed.