text:
    Talley v. Chester Traction Company, Appellant.

      Negligence — Street railways — Crossing—“Stop, look and listen”

    1. There is no fixed duty to stop imposed upon a driver before crossing the tracks of a street railway, and, unless the necessity for additional precaution is obvious, the question whether under the circumstances it should have been taken is for the jury.
    2. Where a man driving along a highway parallel to a street railway line is struck by a car as he turns from the highway onto a public crossing at which his view is obstructed by trees and undergrowth between the road and the tracks, the question of his contributory negligence is for the jury, where the plaintiff testifies that when 100 feet from the crossing, from which point he had a view back for 500 feet along the tracks, he brought his horse to a walk and looked and listened for a car, and continued to look and listen as he drove on, and that as he turned from the highway to the crossing he leaned forward and looked but neither saw nor heard a oar coming.
    Submitted Feb. 8, 1910.
    Appeal, No. 5,
    Jan. T., 1910, by defendant, from judgment of O. P. Delaware Co., March T., 1908, No. 41, on verdict for plaintiff in case of Amor Talley v. Chester Traction Company.
    Before Fell, C. J., Brown, Potter, Elkin and Moschzisker, JJ.
    Affirmed.
    Trespass to recover damages for personal injuries. Before Johnson, P. J.

      The opinion of the Supreme Court states the facts.
    The court submitted the case to the jury.
    Verdict and judgment for plaintiff for $2,123.10. Defendant appealed.

      Error assigned was in refusing to enter judgment for defendant non obstante veredicto.

      John B. Hannum, for appellant.
    — There are occasions when it is the duty of a person about to cross the tracks of a street railway company to stop: Omslaer v. Pittsburg & Birmingham Traction Co., 168 Pa. 519; Smathers v. Pittsburg & Butler Street Railway Co., 226 Pa. 212; Mankewicz v. Lehigh Valley Railroad Co., 214 Pa. 386; Kinter v. Penna. R. R. Co., 204 Pa. 497; Trout v. Electric Railway Co., 13 Pa. Superior Ct. 17; McCartney v. Union Traction Co., 27 Pa. Superior Ct. 222.

      John M. Broomall, for appellee.
    — Whether or not the driver ought, under all the circumstances, to have come to a full stop is a question for the jury: Jones Bros. v. Railway Co., 9 Pa. Superior Ct. 65; Vincent v. Transit Co., 220 Pa. 350; Cohen v. Transit Co., 16 Pa. Dist. Rep. 491; Bard v. Railway Co., 199 Pa. 94; Bickel v. R. R. Co., 217 Pa. 456; Hamilton v. Traction Co., 201 Pa. 351.
   Per Curiam,

March 7,1910:

The accident happened in a rural district where the track of the defendant's road was laid on a narrow strip of ground that abutted on the highway on which the plaintiff was driving. Between the track and the highway there were at places trees and underbrush that obstructed his view of the track. He testified that when he was 100 feet from an avenue that crossed the highway at right angles, into which he intended to turn on the side next the car track, he brought his horse to a walk and looked, and listened for a car. From this point he could see back in the direction from which the ■car came 500 feet. He continued to look and listen as he drove on, but his view was cut off by trees and bushes at. the roadside. As he turned from the highway into the avenue, he leaned forward and looked, but neither saw nor heard a car until his horse was crossing the first rail. He stopped his horse before it had crossed the second rail and tried to back off. The car was running very rapidly on a down grade, and no signal of its approach was given. The only question raised by the appeal is whether the case should have been withdrawn from the jury on the ground of the plaintiff's contributory negligence.

It is the duty of a driver, before crossing the track of a street railway, to look and to continue to look until the track is reached and to listen, if his view is obstructed. It may be his duty to stop, as under the facts in Omslaer v. Traction Co., 168 Pa. 519, where an approaching car could not be seen because of obstructions nor heard because of other noises: Haas v. Railway Co., 202 Pa. 145; Smathers v. Railway Co., 226 Pa. 212. But there is no fixed duty to stop and, unless the necessity for the additional precaution is obvious, the question whether under the circumstances it should have been taken is for the jury. The plaintiff did not act recklessly. He looked and listened until the track was reached. While his view was in a measure obstructed, he could place some reliance upon his sense of hearing, especially in view of the duty of the motorman to give notice of the approach of a car to a public crossing.

The judgment is affirmed.


source: Caselaw Access Project

author: Per Curiam,

license: Public Domain

text:
    Bowers v. Bowers, Appellant.

      Will — Decedents' estates — Advancements.
    An item in a will, “If any of my children shall be indebted to me at the time of my decease, I order and direct the amount to form part of my estate and the same with interest at the rate of four per cent, per annum to be charged against such child, or his or her issue and be deducted from the share that would go to him; her or them of my estate upon the final distribution of the same,” is a direction that the indebtedness of the children shall be treated as assets of the estate, and their debts set off against their share upon final distribution, but in no wise attempts to control or direct the manner or process to be used by the executors in collection of said assets.
    Argued Feb. 9, 1910.
    Appeal, No. 16,
    Jan. T., 1910, by defendant, William T. Bowers, individually and as executor of the estate of Louisa Bowers, from judgment of C. P. Chester Co., Jan. T., 1909,' No. 40, on verdict for plaintiffs in case of John L. Bowers, Robert E. Bowers, Executors and Trustees of William Bowers’ Estate v. John- L. Bowers, William T. Bowers, Robert E. Bowers, Joseph W. Bowers, Mortgagors, and Louisa Bowers, Terre-Tenant.
    Before Fell,. C. J., Brown, Potter, Elkin and Moschzisker, JJ.
    Affirmed.
    Scire facias sur mortgage. Before Hemphill, P. J., who .filed the following opinion:
    Payment of the balance due upon the above mortgage is resisted upon two grounds:
    . 1. Because of the will of William Bowers, deceased, the mortgagee designates the way in which it is to be paid and must be followed.
    2. That under a family settlement or agreement the mortgage was to have been satisfied.
    Neither defense is, in our judgment, tenable.
    Immediately after the funeral of William Bowers, in December, 1877, when the widow and heirs were all present, the propriety or rather advisability of having his executor satisfy the mortgage with a view of strengthening the credit of the mortgagors, was discussed and assented to, provided it could be legally done, and the matter was left with his son, Jacob, a member of the Philadelphia bar, for determination.
    Jacob, it would seem, reached the conclusion that it could not or should not be done for a few weeks. Later when Joseph W. Bowers inquired why it had not been done his brother, John L. Bowers, answered, “That brother Jacob objected to it,” consequently the agreement was never consummated and the mortgage remains unsatisfied of record to this date.

      The clause of William Bowers’ will upon which the first ground of defense is based is as follows:
    “Item. If any of my children shall be indebted to me at the time of my decease, I order and direct the amount to form part of my estate and the same with interest at the rate of four per cent, per annum to be charged against such child, or his or her issue and be deducted from the share that would go to him, her or them of my estate, upon the final distribution of the same.”
    Thus the testator directs that the indebtedness of his children shall be treated as assets of his estate, and their debts set off against their share upon final distribution, but in no wise attempts to control or direct the manner or process to be used by his executors in collection of said assets.
    We think, therefore, that the binding instructions given in this case were correct and the rule must be dismissed, and counsel will prepare a proper decree or order for the entry of judgment for the balance due upon the mortgage.
    William T. Bowers, as mortgagor and as executor of Louisa Bowers, deceased, terre-tenant, appealed.

      Errors assigned were in directing verdict for plaintiffs and discharging defendants’ rule for judgment non obstante veredicto.

      George J. Edwards, Jr., with him I. Hazelton Mirkil and C. Wesley Talbot, for appellants.

      Walter S. Talbot, with him Joseph H. Baldwin, for appellees.
   Per Curiam,

March 7, 1910:

The judgment is affirmed on the opinion of Judge Hemp-hill.


author: Mr. Justice Elkin,

text:
    Boyer, Appellant, v. Nesbitt.

      Corporations — Stock—Voting trust — Powers—Trusts and trustees— Options — Proxies.
    1. An- agreement made between a majority of the stockholders of a corporation and its three directors, whereby the stockholders transfer the legal title and voting rights of their stock to the directors as trustees, for the term of five years, the design being to secure a continuation of the business policy of the corporation inaugurated by the officers then in'control of its affairs, is not invalid, as. againsk.public policy, nor does such, an agreement offend in terms or by necessary implication against any.positive legislative enactment or any declared statutory policy of this state.
    2. The general policy of the law prohibits the separation of the voting power from the beneficial interest in the stock of a corporation and to justify such a separation by a voting trust agreement there must be a proper interest to conserve, some definite policy in the interest of the- corporation to be carried out, some beneficial interest of the stockholders to be served or some purpose not unlawful of an advantageous character to the stockholders to be effectuated.
    3. A provision in such agreement giving the trustees the first right to purchase the stock of any contracting party who should not desire to continue the trust relation at the expiration of the period named, for double the par value of the same for the use and benefit of the remaining parties renders^ the power bestowed a power coupled with an interest and therefore irrevocable in accordance with the agreement, ■and this is especially so where the trustees, during the period in which the right to purchase runs, have active and important duties to perform in the interest of all the contracting parties.
    4. Irrevocable trusts, if not coupled with an interest, are regarded as in the nature of a revocable power, but if coupled with an interest, such agreements are generally sustained, and this interest may be either an interest in the subject upon which the power is to be exercised, or an interest in that which is produced by the exercise of the power.
    5. An option is not invalid because contingent for, in a sense, all options are contingent, since they may or may not be exercised within the time or upon the conditions stipulated.
    6. An option is a unilateral agreement binding upon the party who executes it from the date of its execution and becomes a contract inter partes when exercised according to its terms.
    7. In the above case no question as to the right to vote by proxy arose nor as to the sixty-day limitation provided by the Act of March 5, 1903, P. L. 14, as the parties in whose names the stock stood on the books of the company voted the same and no proxy was required or used.
    Argued Jan. 3, 1910.
    Appeal, No. 205,
    Jan. T., 1909, by plaintiff, from decree of C. P. Luzerne Co., Dec. T., 1908, No. 2, dismissing bill in equity in case of Joseph Boyer v. A.' G. Nesbitt, J. C. Wiegand, A. L. Williams, W. J. Richards, George T. Coddington, Benjamin Dorrance, Charles Gardner, Minnie S. Galland, Lea Hunt, Henry Kunkle, O. W. Lance, E. W. Marple, S. R. Miner, John Mainwaring, C. R. McAlamey, Abram Nesbitt, P. J. Stegmaier, Charles Stegmaier, Stegmaier Brewing Co., Ambrose West, Harry B. Schooley, and the Adder Machine Company.
    Before Fell, C. J., Brown, Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Affirmed.
    Bill in equity to revoke a voting trust of corporate stock. Before Halsey, J.
    The voting trust was to continue for a period of five years with .a provision for further continuance at the desire of a majority.
    The facts appear in the opinion of the Supreme Court.

      Error assigned was decree dismissing bill.

      Frank P. Prichard, with him E. F. Heller, for appellant.—
    The agreement in the present case is clearly invalid or at all events revocable and the clause in the agreement giving the option of purchase unless the agreement is renewed does not make the trust valid or the delegation of voting power irrevocable: Shelmerdine v. Welsh, 8 Pa. C. C. Rep. 330; Rigg v. Railway Co., 191 Pa. 298; Vanderbilt v. Bennett, 6 Pa. C. C. Rep. 193; Morgan v. Hartley, 30 Pa. C. C. Rep. 22; Shepaug Voting Trust Cases, 60 Conn. 553 (24 Atl. Repr. 32); Railway Co. v. State, 49 Ohio, 668 (32 N. E. Repr. 933); Kriessl v. Distilling Co., 61 N. J. Eq. 5 (47 Atl. Repr. 471); Warren v. Pim, 66 N. J. Eq. 353 (59 Atl. Repr. 773); Harvey v. Imp. Co., 118 N. C. 693 (24 S. E. Repr. 489); Moses v. Scott, 84 Ala. 608 (4 So. Repr, 742).

      William S. McLean, with him F. W. Wheaton and A. L. Williams, for appellees.
    — The agreement contains a power coupled with a beneficial interest and is therefore irrevocable: Hunt v. Rousmanier, 21 W. & S. 174; Smyth v. Craig, 3 W. & S. 14; Blackstone v. Buttermore, 53 Pa. 266; Wood v. Kerkeslager, 225 Pa. 296; Garrett v. Phila. Lawn Mower Co., 39 Pa. Superior Ct. 78.
    The interest coupled with the power is a property interest: Fitzsimmons v. Lindsay, 205 Pa. 79.
    The .option is not invalid because contingent: Corson v. Mulvany, 49 Pa. 88.
    The agreement creates a valid, active and irrevocable trust: Eshbach’s Est., 197 Pa. 153; Briggs v. Davis, 81 Pa. 470.
   Opinion by

Mr. Justice Elkin,

March 14, 1910:

It is apparent from this record that many citizens of the city of Wilkes-Barre desirous of building up a local enterprise procured the incorporation of the Adder Machine Company and became subscribers to its capital stock. It is in' the nature of a private trading corporation and questions of public policy relating to public and quasi-public corporations do not arise. After the business of the corporation had been successfully started under competent and satisfactory management, a large number of the shareholders representing a majority of the stock, concluded that the' mutual interests of the stockholders as well as the interest of the corporation itself would- be best served by a continuation of the business policy of the company inaugurated by the officers,then in control of its affairs. To effectuate this purpose an agreement in writing was entered into between all of the stockholders who chose to become parties to it and the three stockholders who at the time of its execution had formulated the policy of the company and were directing its business affairs. This agreement named the three persons then constituting the board of directors and in charge of the business management of the company as trustees. It defined the rights of the shareholders on one side and the powers and duties of the trustees on the other. The duty of management was imposed upon the trustees who accepted the responsibilities and have continued to perform the duties of their trust. Under the agreement each of the contracting shareholders transferred his stock to what is called voting trustees who surrendered the same to the corporation and received new certificates in the individual names of the trustees in lieu thereof. The trustees then issued trust certificates to the shareholders who had thus contracted defining the rights and interests of the contracting parties. The trustees therefore hold the legal title to the stock, have imposed upon them the duties of management and are clothed with power to continue through their stock control a business policy helpful to the corporation and beneficial to the shareholders. The important question raised by this appeal is whether this agreement is invalid because against sound public policy. It may be conceded that the question is not free from difficulty and in our own state there is no decided case squarely ruling it. In other jurisdictions courts have differed as to the rule properly applicable to such a state of facts and creditable authority may be cited in support of either side of the present controversy. Courts as a rule have predicated their decisions upon the character of the trust agreement and the statutory requirements as to the control and management of corporations in the particular state where the question arose. In Shepaug Voting Trust Cases, 60 Conn. 553, and Warren v. Pim, 66 N. J. Eq. 353, the leading cases cited by counsel for appellant, the courts treat the question of public policy indicated by the statutes of the respective states as the basis of their reasoning and the foundation upon which their conclusions rest. This seems to be the sounder rule because the public policy which should prevail in the management and control of corporations is primarily a legislative rather than a judicial question. In this connection it is very ably argued that the agreement in question is in contravention of our Pennsylvania statutes. If this were true in fact it would necessarily follow that the agreement must fall because void as against a declared statutory policy of the state, but no such statute has been called to our attention, nor does the agreement offend in terms or by necessary implication against any positive legislative enactment. It'fis argued that the corporation acts of 1874 and 1891 provide for annual elections by the stockholders and so they do, but annual elections are held by the appellee corporation and directors are annually chosen by the stockholders. The agreement in question in no way disregards the duty to hold annual elections but on the other hand contemplates the holding of such elections. It is further contended that the act of 1903 confirming the right to vote by proxy and providing that proxies dated more than two months prior to a meeting or an election shall not confer the right to vote, is in effect contravened by the agreement relied on by the appellees in the present case. In answer it may be said that no question of the right to vote by proxy arises in this case. It seems perfectly clear that the proviso referred to has reference to formal proxies given by a stockholder authorizing the person designated therein to vote his stock at a meeting or at an election. No proxy of any kind was given in the case at bar and therefore the sixty-day limitation has no application. In the present case the persons in whose names the stock stands on the books of the company vote the same as they have the prima facie right to do under the express provisions of our statutes. The act of 1893 recognizes the right of a trustee to vote stock so hekl by him at elections of the company, and provides that if the ' character of his trusteeship be not disclosed on the face of the certificate, how the question of his right to vote shall be determined. This act clearly contemplates not only the right of a trustee to hold stock, but the power to vote it, and this is what was done in the present case.

But it is argued with great force by the learned counsel for appellant that even if the agreement in question is not invalid as against public policy it is at all events Revocable. We concede the weight of authority to be that the generar policy of the law prohibits the separation of the voting power from the beneficial interest, and to justify such a separation, there must be a property interest to conserve, some definite policy in the interest of the corporation to be carried out, some beneficial interest of the stockholders to be served or some purpose not unlawful of an advantageous character to the stockholders to be effectuated. As we read this record and view the facts found by the learned court below there was a property interest to conserve, a definite policy of the corporation in the interest of the stockholders to be carried out and a lawful purpose beneficial to all concerned to be effectuated. This was the very purpose of the agreement and the results seem to be a confirmation of the wisdom of the plan adopted. All of the cases turn upon the question whether the irrevocable trust is or is not coupled with an interest. If coupled with an interest such agreements have been generally sustained but if not coupled with an interest they are regarded as in the nature of a revocable power. We think this is the turning point of the present case and after consideration have concluded the learned court below properly held that the power being coupled with an interest the agreement is valid and binding upon the parties who entered into it. The beneficial interest is set forth in the eighth paragraph of the agreement which gives the trustees the first right to purchase the stock of any contracting party who does not desire to continue the trust relation at double the par value of the same for the úse and benefit of the remaining parties. We think this comes within the definition of a power coupled with an interest which has been held to be an interest in the subject upon which the power. |s to be .exercised, or an interest in that which is produced by the exercise of the power. It cannot be doubted under the rule of all our cases that if the parties to' the present agreement had entered into a similar contractual relation as partners for the purpose of accomplishing the same results and with the view of continuing a business policy the contracting parties would be bound by their covenants and the contract would be enforced according to its terms. There does not seem to be any sufficient reason for the application of a different rule because instead of binding themselves together as partners the parties chose to adopt the more modern method of incorporation for the transaction of their business in an enterprise in the nature of a. private trading corporation. This view of the law was tersely expressed by Chief Justice Mitchell in Fitzsimmons' v. Lindsay, 205 Pa. 79, where in discussing the question of restraint of alienation arising under a somewhat similar agreement it was’said, “Such agreements are quite common among partners as to their shares, in the firm assets and are enforced by courts without hesitation. No reason of overruling public policy is apparent why they should not also be sustained in relation to shares of stock in what is really only a private trading corporation.” Agreements between the stockholders of a private trading corporation relating to the alienation, purchase and sale of the shares of stock of contracting shareholders have been sustained by this court in two recent cases: Boswell v. Buhl, 213 Pa. 450; Boggs v. Boggs & Buhl, 217 Pa. 10. Our cases-hold that a beneficial interest coupled with a power is a property interest and as such is irrevocable: Smyth v. Craig, 3 W. & S. 14; Blackstone v. Buttermore, 53 Pa. 266; Fitzsimmons v. Lindsay, 205 Pa. 79; Wood v. Kerkeslager, 225 Pa. 296; Garrett v. Lawn Mower Company, 39 Pa. Superior Ct. 78.

In addition it may be said that under the present agreement there is something more to be considered than the mere abstract legal question of power to vote stock coupled with a' beneficial interest. The agreement contains all the essential elements of .an active trust and the trustees have not only been charged with active duties but they have performed and are performing these duties in the interest of the corporation' and for the benefit of the stockholders. They give their services without compensation in the interest of all concerned and it seems to be conceded that the management is competent and the business policy intended to be continued under the agreement highly satisfactory. No question of fraud, mistake or misapprehension has been raised nor has even a suggestion been made reflecting upon the management. No stockholder is complaining about the management and no: question has. been raised respecting the rights of minority, stockholders. The appellant purchased his stock with full* knowledge of the agreement and took it impressed with the trust. He is not a purchaser without notice and if the agree-' ment is valid he is bound by its terms. We do not agree with the contention of appellant that the option to purchase is not such a substantial interest as will support the trust, especially in view of the fact that the trustees during the period in which the right to purchase runs have active and important duties to perform in the interest of all the contracting parties. Nor is the argument sound that the option is invalid because contingent. In a sense all options are contingent because they may or may not be exercised within the time or upon the conditions stipulated. An option is a unilateral agreement binding upon the party who executes it from the date of its execution and becomes a contract inter partes when exercised according to its terms. Optional agreements have been before this court for construction in several recent cases and the right of parties to make them and the power of courts to enforce them if exercised according to their terms have always been sustained: Barnes v. Rea, 219 Pa. 279; McHenry v. Mitchell, 219 Pa. 297. There is no substantial merit in the contention that the contract lacks mutuality of parties and is without consideration.

Decree affirmed at the cost of appellant.


author: Mr. Justice Potter,

text:
    Kimberly’s Estate.

      Wills — Decedents’ estates — Trusts and trustees — Corporations—Holding corporations.

    A provision in a will authorizing the executors and trustees, in the exercise of their discretion, to cause to be incorporated one or more companies, for the purpose of carrying on any business whatever, by the use of any property that might bo in their hands, and authorizing them to transfer to such company or companies, any property in their care, and to receive for it the capital stock of such company or companies for such amounts as seem to them just and proper, is intended to apply only to the organization of such corporations as may become necessary or useful in the management and proper development of such of the properties owned by testator, or in which he was interested, as are unproductive and undeveloped; and further provisions to the effect that “the stocks of any such corporation, taken as aforesaid by, my said trustees and executors, shall be taken and held by them for the purpose of distribution to and among the several legatees of my estate, the same as if the said stocks were converted into money” and “ if there shall come into the hands of my said trustees and executors, as part of the trust property, any stocks of a corporation or corporations which my said trustees and executors may consider that it is for the benefit of my estate to hold, and not sell, they may retain the same and distribute them to my legatees specifically, as if they were money” do not authorize the creation of a corporation to be used merely as a holding company for such portions of the stock as remain in the hands of the executors, including shares of capital stock of other corporations which in their judgment it is more advantageous to keep than to sell; and this construction is strengthened by the fact that the testator provided for a period of five years from the date of his death for the settlement of his estate, and directed his executors and trustees “to make distribution of any stocks or funds” either during or at the end of such period of five years.
    Argued Jan. 17, 1910.
    Appeal, No. 1,
    Oct. T., 1910, by George A. Baird, Ira B. Bassett and John C. Owsley, Executors and Trustees of Peter L. Kimberly, deceased, from decree of O. C. Mercer Co., June T., 1909, No. 37, granting petition of Emma K. Cotton and C. W. Fenton, Administrator of the estate of Jane P. Williamson, deceased, in Estate of Peter L. Kimberly, deceased.
    Before Fell, C. J., Brown, Mestrezat, Potter, Elkin and Moschzisker, JJ.
    Affirmed.
    Petition of beneficiaries finder a will for an injunction and reconveyance. Before Williams, P. J. .
    The facts appear in. the opinion of the Supreme Court.

      Error assigned was the decree of the court granting the petition.

      Harry Rubens, of Rubens, Fischer, Mosser and Rigby, with him James P.. Whitla, for appellants.
    — The question always before the mind of the court is not what should the testator have meant to do or what words did he mean to use, but what he meant by words which he actually used: Hancock’s App., 112 Pa. 532; Bruckman’s Est., 195 Pa. 363; Woelpper’s App., 126 Pa. 562; Horwitz v. Norris, 60 Pa. 261.

      The words “for the purpose of carrying on any business whatever” are broad enough to include any object consistent with the interests of society that may engage the attention of men and invite their co-operation: Maxwell v. Akin, 89 Fed. Repr. 178; Vokes v. Eaton, 119 Ky. 913 (85 S. W. Repr. 174); Brown v. Corbin, 40 Minn. 508 (42 N. W. Repr. 481); Cahill v. Citizens Mutual Building Association, 61 Ala. 232; State v. Corkins, 123 Mo. 56 (27 S. W. Repr. 363); Market St. Ry. Co. v. Hellman, 109 Cal. 571 (42 Pac. Repr. 225).
    A power clearly given is not limited except by clear language: Pope v. Sullivan, 156 Mass. 585 (31 N. E. Repr. 684); Cochran v. Elwell, 46 N. J. Eq. 333 (19 Atl. Repr. 672); Ford v. Ford, 80 Mich. 42 (44 N. W. Repr. 1057).

      William D. Wallace, with him William McElwee, Jr., and C. W. Fenton, for appellees.
    — The intention of the testator as it existed at the time the will was written and which the testator expressed by the language he used therein, must control: Thran v. Herzog, 12 Pa. Superior Ct. 551; Campbell’s Est., 202 Pa. 459; Bender’s App., 3 Grant, 210; Hancock’s App., 112 Pa. 532; Bruckman’s Est., 195 Pa. 363; Woelpper’s App., 126 Pa. 562; Bank v. Hartman, 8 Pa. Superior Ct. 170.
   Opinion by

Mr. Justice Potter,

March 14, 1910:

Peter L. Kimberly held a large number of shares of the capital stock of investment companies, and in mining, irrigation and electric railway companies, incorporated and doing business outside the state of Pennsylvania. He died unmarried and without issue, and by his will divided his estate among various relatives, personal friends, and charities to be selected by his executors. In order to prevent any undue sacrifice of values through hurried sales, the testator provided for a period of five years from the date of his death for the settlement of his estate. He authorized his executors and trustees, in the exercise of their discretion, to cause to be incorporated one or more companies, for the purpose of carrying on any business whatever, by the use of any property that might be in their hands, and authorized them to transfer to such company or companies, any property in their care, and to receive for it the capital stock of such company or companies for such amounts as seemed to them just and proper.

The judge of the orphans’ court, very properly we think, construed the language of the testator, as used in this connection, as intended to apply only to the organization of such corporations as might become necessary or useful, in the management and proper development of such of the properties owned by testator, or in which he was interested, as were unproductive and undeveloped. It appears that the testator was largely interested in undeveloped mining properties, ■which being 'more or less hazardous as investments, and uncertain as to their outcome, and involving management from a distance, the dictates of common prudence would suggest the advantage of procuring as to them the protection and limitation of corporate organization rather than to assume the unlimited liability of personal or partnership management. In this connection the testator provided that “the stocks of any such corporation, taken as aforesaid, by my said trustees and executors, shall be taken and held by them for the purpose of distribution to and among the several legatees of my estate, the same as if the said stocks were converted into money.” And further, “If there shall come into the hands of my said trustees and executors, as part of the trust property, any stocks of a corporation or corporations, which my said trustees and executors may consider that it is for the benefit of my estate to hold, and not sell, they may retain the same ■and distribute them to my legatees specifically, as if they were money.” The- five years, period allowed for settlement and distribution will expire June 6, 1910. The trustees and executors in pursuance of what they regarded as the power conferred upon them in the will, caused to be incorporated, under thé laws of the state of Maine, a corporation under the name of the Kimberly corporation, not for the purpose of carrying ■on any business in connection with any of the properties of the estate, such as mining, or .transportation, or irrigating lands, but merely for the purpose of using it as a holding company •for such portions of the estate as remain in their hands, in-eluding shares of capital stock of other corporations which in their judgment it will be more advantageous to keep than to sell. And they proposed to transfer to said company such assets of the estate. The court below was of the opinion that a holding corporation formed as the one in question by the trustees, was not within the fair meaning of the language used by the testator in his will. The plan of the trustees, as noted above, contemplated the conveyance of the remaining assets of the estate to this holding company, the Kimberly corporation, and then the distribution of the stock of that corporation in kind among the legatees. While, under this scheme, the stock of the new corporation would be distributed, the assets of the estate which were left by the testator would remain in the hands of the corporation. This disposition can hardly be reconciled with the direction of the will “to make distribution of any stocks or funds” either during or at the end of a period of five years from the testator’s death. If the testator had intended that his whole estate should be incorporated, and that only the stock of the company so formed should be distributed, he probably would have made his intention very clear. The plainest authority ought to be. shown for such an unusual step.

In proposing this plan the executors and trustees seem to be actuated by a desire to protect the interests of the beneficiaries, many of whom are women, and unused to the management of business affairs. The object may be commendable, but we do not see that it is justified by any provision in the will. Ample time was allowed the executors and trustees in which to convert the trust property into money or stocks for the purposes of distribution. They had no power to carry on the business of the decedent, except to the extent of the express authority given to them in the will. The testator clearly intended that the process of settlement of his estate should not extend over more time than the period of five years provided by him. It may be suggested that the assets of the estate may be distributed by means of the division of the stock in the holding corporation. But such action is unnecessary, and it is beyond any authority bestowed upon the executors and trustees in the will. Our examination of this record leads us to the same conclusion as that reached by the court below; that the Kimberly corporation, acting as a holding company, is not such a corporation as was contemplated by the testator, .and provided for in sec. 2 of the first paragraph of the will; and further, that the organization of a corporation for the purpose of transferring to it the assets of the estate, and the transfer of said assets, even with the view of distributing its stock in kind among the legatees, is in excess of the power and authority conferred upon the executors and trustees in the will of Peter L. Kimberly.

The assignments of error are overruled, and the decree of the court below is affirmed.


author: Mr. Justice Moschzisker,

text:
    Commonwealth Title Insurance & Trust Company v. Seltzer.
    ■ Corporation — Stock—Officers—Sales—Collusive sale — Illegal profits— Costs. ‘

      1. An officer is but the agent of his corporation, and in all transactions in which its interests are involved, he must act for it with unselfish singleness of purpose, and if in any such transaction it appears that he has acted against the interest of his corporation, the mere fact that the means used to accomplish the unlawful end would if standing alone be lawful in themselves will not save such officer from responsibility to account for profits thus made by him which otherwise might have gone into the coffers of his corporation.
    2. Where the president of a corporation, practically the whole of whose capital is invested in a valuable piece of real estate, is approached by the agent of another corporation which desires to buy the real estate and, although he knows that his company is willing to sell its property, leads the agent to believe that the real estate cannot be purchased, and afterwards negotiations are carried on between the two which are consummated in a.written contract whereby the agent contracts to buy from the president a majority of the stock of the company owning the real estate, and thereupon the president and a director of his corporation, acting collusively, buy in enough stock to gain control of the corporation, which they turn over to the agent of the other corporation in pursuance of the contract, whereby the agent secures control of the corporation owning the real estate, and the real estate is thereupon regularly sold and deeded over to the agent’s corporation for a not inadequate price, such president and director, in a bill fded by certain of the stockholders, will be compelled to refund to such claimants their proportionate share of the profits made on the sale of the stock to the agent, where the facts conclusively show that all of the negotiations, arrangements and contracts in the stock deal, and the sale and transfer of the real estate, were really parts of one and the same transaction.
    3. In such a case all that the claimants are entitled to recover is the same share of the profits that they would have received had such profits gone into the treasury of the corporation instead of into the pockets of the president and director; but the costs will be imposed on the defendants.

      Equity — Class bill — Stockholders—Practice, equity.

    4. The rule is that a bill which asserts the right of a corporation must ordinarily be brought by the corporation itself, and that the right of an individual stockholder to act for the corporation is exceptional, but where the corporation has practically gone into liquidation and its trustees have no active duties to perform, and where those trustees are found to bo the nominees of the defendants who committed the wrong complained of, the stockholders have reason to believe that a suit instituted in the name of the corporation would not be prosecuted with effect, and the trial judge has the right to allow them to bring and maintain their own bill.

      Practice — Equity practice — Finding of fact — Deduction from other facts — Reviev).

      5. When the judgment of the trial court is based upon a deduction from other facts, the conclusion, being the result of reasoning, is subject to revision and to correction if erroneous.

      Corporations — Receivers—Stockholders’ bill — Equity.
    6. On a stockholder’s bill against the president and a director of a corporation in which the corporation itself is a party defendant, to recover illegal profits made on the sale of the company’s real estate, a receiver will not be appointed, where a receivership will entail heavy expenses on all concerned without bringing any corresponding benefit.
    Argued Jan. 18, 1910.
    Appeal, No. 150,
    Jan. T., 1909, by í Earles M. Seltzer and J. Haseltine Carstairs, defendants, and íipueal, No. 183, Jan. T., 1909, by tbe Commonwealth Title insurance & Trust Company, and Frank L. Lyle, Executors of Charles E. Ellis, deceased, plaintiffs, from decree of C. P. No. 4, Phila. Co., Dec. T., 1905, No. 4,952, in case of the Commonwealth Title Insurance & Trust Company and Frank L. Lyle, Executors of Charles E. Ellis, deceased, the Fidelity . Trust Company, Trustee for Charles N. Davis, Kate C. White and Mary W. White, Executrices of William J. P. White, deceased, and Benson W. Conrad, stockholders of the Continental Hotel Company on behalf of themselves and all other stockholders of said company v. the Continental Hotel Company and Charles M. Seltzer, J. Haseltine Carstairs, Frank .Haseltine, William Dulles and Eli K. Price, officers and managers of said company.
    Before Brown, Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Affirmed.
    . Bill in equity filed by certain stockholders of a corporation against the corporation and certain of its officers, alleging that in a sale of the corporate property the defendant officers had fraudulently received a special profit and praying that these officers be required to account to them directly for their pro..portion of the profits, or that a receiver should be appointed ' for the corporation and that an accounting for the profits be ' required to be made to such receiver. Before Audenried, J.
    The court held that two of the defendants, Charles M. Selt- ' zer and J. Haseltine Carstairs, had made an illegal profit and that the plaintiffs were entitled to their proportionate share of these profits, and denied the prayer for the appointment of a receiver.
    The facts appear in the opinion of the Supreme Court.
    The court entered the following decree:
    And now, March 30, 1909, this cause came on to be further heard at this time and was argued by counsel, and upon consideration thereof, it is ordered, adjudged and decreed as follows:
    1. So far as it involves the claims of the plaintiffs for an accounting by the defendants Frank Haseltine and Eli K. Price and by the representatives of the defendant William Dulles, deceased, and so far as it relates to the defendant the Continental Hotel Company, the bill is dismissed. The costs of the said four defendants shall be paid by the plaintiffs who shall contribute thereto in the following proportions, viz: Charles E. Ellis, one-fourth; Kate C. White and Mary W. White, executrices of William J. P. White, deceased, one-fourth; Benson W. Conrad, one-fourth; and the Fidelity Trust Company, trustee for Charles N. Davis under the will of Charles W. Poultney, deceased, one-fourth.
    2. The defendants Charles M. Seltzer and J. Haseltine Car-stairs shall pay to the plaintiff Charles E. Ellis, the sum of $1,540.78; to the plaintiffs Kate C. White and Mary W. White, executrices of William J. P. White, deceased, the sum of $357.19; to the plaintiff Benson W. Conrad, the sum of $286.64; and to the Fidelity Trust Company, trustee for Charles N. Davis under the will of Charles AV. Poultney, deceased, the sum of $286.64 and the said Charles M. Seltzer and. the said J. Haseltine Carstairs shall pay the costs of each of the said plaintiffs.
    The defendants, Charles M. Seltzer and J. Haseltine Car-stairs, appealed, assigning as error the decree of the court.
    The Commonwealth Title Insurance & Trust Company and Frank L. Lyle, executors of Charles E. Ellis, deceased, plaintiffs, appealed assigning as error the refusal to appoint a receiver.

      John G. Johnson, for Charles M. Seltzer and J. Haseltine Carstairs, appellants.

      M. Hampton Todd, with him G. Heide Norris and John H. Shan, for plaintiffs as appellees and for the executors of Charles E. Ellis, deceased, appellants.
    — Directors and officers of a corporation will not be permitted to make any profit for themselves out of a transaction in which their corporation is interested: Simons v. Vulcan Oil & Mining Co., 61 Pa. 202; Rice’s App., 79 Pa. 168; Bird Coal & Iron Co. v. Humes, 157 Pa. 278.
    No demand by the stockholder for action by the corporation was necessary in this case, the officers of the corporation being themselves guilty of the wrong complained of: Warner v. Hopkins, 111 Pa. 328; Wolf v. R. R. Co., 195 Pa. 91; McCloskey v. Snowden, 212 Pa. 249.

      James F. Hagen and John Marshall Gest, for the estate of William Dulles, appellees.
   Opinion by

Mr. Justice Moschzisker,

March 14, 1910:

Two of the defendants have appealed from a decree ordering them to pay to the plaintiffs certain sums representing illegal profits found to have been made by these defendants as officers of a corporation in which the plaintiffs were stockholders. One of the two defendants was the president and the other was a director of this corporation. The corporation had practically its whole capital invested in a valuable piece of real estate. The first of the defendants came in contact with the agent of another corporation which desired to buy this real estate. The defendant was informed of this fact, and although he knew that his company was willing to sell its property, instead of treating with the agent on that basis, he led him to believe that the real estate could not be purchased. After . this, negotiations were carried on between the two which resulted in a written contract whereby the agent'was granted; an option to purchase from the defendant a sufficient number of the shares of‘stock of the corporation to control it. This contract on its face bears evidence of its real purpose, which was to place the agent or his constituent in a position to secure the desired real estate. The defendant conceived the scheme of buying in enough stock to gain control of his corporation immediately after his first meeting with the agent of the other corporation. Not having sufficient funds to properly finance the matter, he took in the other defendant, and thereafter they were associates in common in the enterprise, each bound by the knowledge and actions of the other. Together they accumulated the stock covered by the written contract. The deal went through exactly as desired: the agent secured enough stock to control the corporation which owned the real estate, and its property was duly deeded to the corporation represented by him; the purchase price, which was not found to be inadequate, being subsequently divided among the stockholders of the former corporation. Certain of the stockholders, believing that the officers had so manipulated the sale of the property as to make a secret and illegal profit for themselves at the expense of their corporation, filed a bill against the defendants in question and several of the other officers of the company. The corporation was also included as one of the defendants for the purpose of securing the appointment of a receiver. The bill came on for hearing with answers filed by the several defendants denying all of its serious allegations.

The trial judge filed an adjudication with full and elaborate findings of fact, which we do not deem it necessary to further outline here at any great length. The important findings upon which the decree against the two defendants must either stand or fall are to the effect that from the inception of the negotiations between the defendant, who was the president of the real estate owning corporation, and the agent of the company which desired to purchase the real estate, it was understood that the effort to get control of the stock of the former was solely for the purpose of forcing the sale of its property to the latter, and the accumulation and transfer of the large block of such stock was made in order to facilitate and effectuate that purpose. Further, that the sale and transfer of the property was carried out by means of a meeting of the stockholders of the real estate owning corporation, at which meeting the directors and officers were given authority (“but not the binding direction”) to accept the offer made by the company represented by the agent with whom the stock deal had been made; and that this meeting was immediately followed by a meeting of the directors, participated in by the two defendants, and by resolution of that body the transfer of the property was duly authorized. The trial judge finds that this meeting and all that took place there “was part of the same transaction of which the making of the profitable contract for the sale of their (the defendants ’) 2,250 shares of stock formed another and inseparable part, and it was understood and intended by them so to be. The profit realized by (the two defendants) on their sale of stock was an incident to. the sale of the property.” On the facts as'found, the court below reached the conclusion that the two defendants, having, as managers of the real estate owning corporation participated, in making the sale of its property, were bound to account for the profits made by them in the stock deal with the agent of-the purchasing company, the contract for that purpose “being,, in fact, an integral part of the same transaction and related to the sale of the property.”

The defendants contend that the trial judge fell into error in drawing the deduction that the stock deal and the sale of the real estate were parts of one and the same transaction; and we are asked to reverse the findings based on- this deduction and to set aside the decree. “When the judgment of. the court below is based upon a deduction from other facts, the conclusion, being the result of reasoning, is subject to revision and to correction, if erroneous:” Woodward v. Carson, 208 Pa. 144. With this rule in mind we have gone over the record and the notes of testimony with exceeding care,, but we are unable to say that we find any error in the fundamental facts as stated by the trial judge or in his deductions therefrom. It is not only perfectly conceivable that an urn prejudiced mind might reasonably reach the conclusion that all. of the negotiations, arrangements, and contracts in the stock deal,- and the sale and the transfer of the real estate, were really parts of one and the same transaction, but anyone reading the testimony and looking at the documentary evidence would find his mind irresistibly travelling to the conclusion that, although the parties endeavored to give to them the appearance of separate transactions and even on occasions talked to one another as if they were such, nevertheless they all the time knew that everything they were doing was intended to bring about the sale and transfer of the real estate from the corporation represented by the defendants to the corporation represented by the agent. These defendants as managing officers were under an inherent obligation not to. in any manner use their ■ positions to advance their indi- , vidual interests as distinguished from the interests of their corporation. When the presment of this corporation was approached by a likely buyer, instead of persistently maintaining the attitude that there was no possibility of the property being acquired by purchase, and then proceeding to use this information for liis own personal benefit, and incidentally to the detriment of his corporation, he should have overlooked his own welfare and acted entirely for the benefit of Ms corporation. An officer is but the agent of his corporation, and in all transactions in which its interests are involved he must act for it with unselfish singleness of purpose. If in any such transaction it appears that he has acted against the interest of Ms corporation, the mere fact that the means used to accomplish the unlawful end would if standing alone be lawful in themselves will not save such officer from responsibility to account for profits thus made by Mm which otherwise might have gone into the coffers of his corporation. “The director of a corporation is a trustee for the entire body of stockholders, and by assuming the office, he undertakes to give Ms best judgment in the interests of the corporation in all matters in which he acts for it, untrammelled by any hostile interest in himself or others; and all secret profits derived by Mm in any dealings in regard to the corporate enterprise must be accounted for to the corporation:” Bird Coal & Iron Co. v. Humes, 157 Pa. 278. In scrutinizing the acts of such officers, the court will not heed mere forms when the substance which lurks behind them shows profits from a dealing in the corporation property. It is quite true that the profits in the present case were made to appear on the surface as not coming from the sale of the property of the corporation; but as all the facts show that the purchaser only wanted the real estate, and not the control of the franchise of the corporation, there is little or no doubt that the profits paid to the two defendants were considered by the purchaser as part of the cost of the real estate. The purchaser wanted the property and was willing to pay a price for it. The defendants knew this, and the facts justify the inference that the stock dealing was for the very purpose of diverting a part of that price from the corporation into their own pockets; and this, in a nut-shell, is the theory upon- which the case was decided. The conclusions of the court below were reached, and are here sustained, on the peculiar facts in this case, with a full and express recognition of. the general rule that a stockholder, even though he be one of the managing officers of a corporation, has the right to buy and sell its stock and to keep any profits which he may thus acquire. But corporation officers cannot under cover of this rule carry through a transaction such as appears in this case without accounting for profits thereby diverted from their corporation.

- The • defendants further contend that the plaintiffs should not have been allowed to maintain the action in their own names. The court below in overruling this contention based its conclusion upon the peculiar relation in which the plaintiffs as stockholders stood with respect to the managers of the corporation, holding that, as these managers were the nominees of the defendants, equity would regard a demand upon them for the prosecution by the corporation of a claim against these ■ particular defendants as “idle, and, therefore, unnecessary.” While recognizing the rule that a bill which asserts the right of a corporation must ordinarily be brought by the corporation itself, and that the right of an individual stockholder to act for the corporation is exceptional, we are convinced that there was no error in treating this case as one of the exceptions. In this connection, we must look at the rule and the theory upon which it rests: “The rule that a shareholder cannot sue if the corporation is able to protect itself is a general one, founded on convenience and the implied agreement of the parties, that where a trustee is invested with active duties and represents numerous beneficiaries, no portion of these beneficiaries are entitled to bring a suit for the protection of the trust, unless the trustee has refused, or is unable,, to take the necessary steps to protect it on their behalf:” Morawetz on Private Corporations (2d ed.), vol. 1, sec. 239. In a case like the present, where the corporation has practically gone into liquidation and its trustees have no active duties to perform, and where these trustees are found to be the nominees of the defendants who committed the wrong complained of, the stockholders had reason to believe that a suit instituted in the name of the corporation would not be prosecuted with effect, and the trial judge had the right to allow them to bring and maintain their own bill: Wildee v. McKee, 111 Pa. 335.

In addition to the appeal of the two defendants, one of the plaintiffs has appealed, complaining of the amount of the award, of the dismissal of the bill as to the other defendants, of the refusal to appoint a receiver, and of the order as to costs.

It is contended that the defendants were not charged with all of the profits realized by them; and further that the distributive proportions were fixed too low; while on the other side the contention is that they were too high. Without going into any lengthy discussion on these points, it is sufficient to say that although the defendants received a greater sum than that with which they are charged as'profits, yet they paid to some stockholders a larger price than the value named in the written contract concerning the sale of the stock, so their actual profits were as found by the trial judge. The mere fact that some of the persons to whom they paid this higher price were closely connected with the defendants by relationship or otherwise cannot alter the situation. The trial judge found “The share of each (plaintiff) is found in the proportion which the number of his shares (of stock) bears to the total number of shares outstanding.” All that the plaintiffs are entitled to recover is the same share of the ascertained profits that they -would have received had these profits gone into the treasury of the company instead of into the pockets of the two defendants; and this -was the proportion awarded to each of them by the court below. No fault can justifiably be found by any of the parties to this cause with the method pursued by the trial judge in arriving at the amount of the profits as stated in the adjudication, or with his distribution thereof.

The court below held that no case had been made out against the other defendants; and decided that it was not necessary to appoint a receiver for the corporation in order to give the necessary relief, “since a receivership would entail heavy expenses on all concerned without bringing any corresponding benefit.” Accordingly the bill was dismissed as to' these defendants. In this we find no error.

The order made as to the costs seems to be just and reasonable and will not be disturbed.

■All the assignments of error in both of the appeals are overruled, and the decree of the court below is affirmed. The appellants in each instance to pay the costs of their respective appeals.


author: Mr. Justice Stewart,

text:
    Baugh, Appellant, v. Bergdoll.

      Trespass — Real estate — Party walls■ — Building operations — Encroachment of wall foundations — Equity•—Injunction.
    1. Where one intrudes upon the land of another, the latter has choice of remedies; he may compel a withdrawal of the intruder, or he may regard the intrusion as a permanent trespass and recover compensatory damages therefor. Except he has forfeited his right to the former remedy by conduct which would make its enforcement inequitable, he cannot be denied his privilege to pursue it.
    2. Where an owner in erecting a wall to be built entirely on his own ground encroaches with his foundations on adjoining land to the extent of six inches beyond the line to which under the law he could go with a party wall, at a point five or seven feet below the foundations of an existing party wall, a bill in equity to enjoin the construction of these foundations so far as they encroach, and compel their removal, should not be dismissed where neither laches, inducement nor acquiescence on part of the plaintiffs is alleged, nor that the trespass was an act of inadvertence or mistake on the part of defendants, but the gist of the defense is that the encroachment upon plaintiffs’ land was necessary in order to support the superstructure the defendants intended to build; that it was in accordance with the custom of the building trade, and that it did not interfere with plaintiffs’ present enjoyment of their property. Pile v. Pedrick, 167 Pa. 296, followed.
    Argued Jan. 18, 1910.
    Appeal, No. 286,
    Jan. T., 1910, by plaintiffs, from decree of C. P. No. 2, Phila., Co., Sept. T., 1907, No. 1,085, dismissing bill in equity in case of Helene A. Baugh and Laura P. Baugh v. Emma C. Bergdoll, Louis J. Bergdoll, The Belmont Iron Company, and Joseph G. Lynch, and Jacob A. Lynch, and Calvin Z. Lynch, trading as Lynch Bros.
    Before Brown, Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Reversed.
    Bill in equity to enjoin the construction of foundations of a building and to compel their removal. Before Barratt, J.
    The facts appear in the opinion of the Supreme Court.

      Error assigned was decree dismissing bill.

      E. Clinton Rhoads, with him Henry Wiener, Jr., for apellants.
    — The wrongful erection of any structure upon the land of another constitutes a permanent trespass which equity will enjoin: Bright v. Allen, 203 Pa. 394; Western National Bank’s App., 102 Pa. 171; Vollmer’s App., 61 Pa. 118; Masson v. Besanson’s App., 70 Pa. 26; Pile v. Pedrick, 167 Pa. 296; McConahy v. Western Allegheny R. R. Co., 31 Pa. Superior Ct. 215; Wesley v. Sulzer, 224 Pa. 311.

      Joseph Gilfdlan, with him George S. Graham, for appellees. — ■
    The court will not compel the removal of construction work: Orne v. Fridenberg, 143 Pa. 487; Sharpless v. Boldt, 218 Pa. 372; Mercantile Library Co. v. University of Penna., 220 Pa. 328; Overholzer v. Daily Times, 2 Montg. 169.
   Opinion by

Mr. Justice Stewart,

March 14, 1910:

It is a fact established by the finding of the court, and conceded, that in constructing the footings of the piers intended for the support of their building, the defendants in several places have encroached upon plaintiffs to the extent of six inches beyond the line to which under the law they could go with a party wall. The wall they have erected upon this foundation is not a party wall, and was not so intended. It is wholly upon defendants’ land. The plaintiffs’ adjoining wall is a party wall, supported by a foundation which extends eight feet below the surface of the ground. The foundation for defendants’ wall begins from five to seven feet lower than plaintiffs’ foundation, and it is ■ at this point that the encroachment occurs. Plaintiffs filed their bill to enjoin the construction of these footings, so far as they encroach, and compel their removal. Defendants’ answer, while containing a general denial that they had encroached or were encroaching upon plaintiffs’ property, contained this admission, “ It is true that defendants have undermined the complainants’ wall by foundations for iron columns and encroached upon complainants’ property about' four inches, and not upwards of a foot, as alleged in said bill.” The claim is made in the answer that the encroachment was absolutely necessary; that it accords with the custom of the building trade, to so encroach upon an adjoinder’s property, and that in doing so, in the present instance, complainants’ walls were strengthened and in no way injured. Upon final hearing the bill was dismissed on the ground that plaintiffs had an adequate remedy at law. From that decree plaintiffs have taken this appeal.

There are cases where courts of equity have refused to compel removal of erections placéd by defendant upon land of his adjoinder, but in every one it will be found that equitable considerations prevailed to stay the hand of the court, and remit the party injured to his remedy at law. If there are any such considerations here which should prevail to leave the defendants undisturbed in the possession of the plaintiffs’ property, which they have wrongfully appropriated, they have not been brought to our notice. Neither laches, inducement, nor acquiescence on part of the plaintiffs is alleged; nor was the trespass even an act of inadvertence or mistake on part of defendants. The gist of the defense is that the encroachment upon plaintiffs’ land was necessary in order to support the superstructure the defendants intended to build; that it was in accordance with the custom of the building trade, and that it does not interfere with plaintiffs’ present enjoyment of their property. It ought to be vain to urge such considerations as a defense in a proceeding such as this; and yet, unsupported by any other suggesting a possible equity in the defendants, they were allowed to prevail. The obvious effect of the decree entered, if permitted to stand, would be to compel the appellants to submit to a divestiture of title simply for the accommodation of the appellees, and accept in return whatever amount a jury might determine to be compensatory damages. Where one intrudes upon the land of another, the latter has choice of remedies; he may compel a withdrawal of the intruder, or he may regard the intrusion as a permanent trespass and recover compensatory damages therefor. Except he has forfeited his right to the former remedy by conduct which would make its enforcement inequitable, he cannot be denied his privilege to pursue it. There is not a single finding in the case that imputes to the appellants anything by way of commission or admission suggesting an equity in the appellees. The case so clearly resembles Pile et al. v. Pedrick et al., 167 Pa. 296, where the law applicable is fully discussed by Williams, J., that further comment is unnecessary.

The decree is reversed at the cost of the appellees; the bill reinstated, and the court below is directed to issue the injunction -in accordance with the prayer of the bill so far as it relates to the encroachment referred to in this opinion.


author: Mr. Justice Mestrezat,

text:
    Smith v. City of Philadelphia, Appellant.

      Municipal laxo — Municipal contracts — Supplemental contracts — Contracts — B ids — A dvertisements — Ratification.
    1. A contract between the city of Philadelphia and a contractor whereby the latter undertakes “to furnish and deliver all the materials, and to do and perform all the work and labor” required for a certain improvement “in its entirety.” at unit prices but with an express provision that the work to be done “shall in no event exceed the sum of $500,000,” which contract, by mutual agreement, is construed to mean, not that the whole improvement must be done for the sum named, but that the contractor is only to perform such work and to furnish such materials as would at the unit prices named in the contract not exceed $500,000, neither stipulates for nor contemplates the performance of any other work or compensation than the work and compensation therein expressly provided for, and to permit the city officials to enlarge it, under the guise of supplemental contracts, so as to include the performance of the additional work necessary to complete the improvement and the further expenditure of $550,000 without advertising and letting to the lowest bidder would be in direct antagonism to the statutes and ordinances regulating the subject.
    2. Where neither a city nor its officers are legally authorized to enter into a contract, any attempted ratification of their action in making such a contract is of no validity.
    Argued Jan. 19, 1910.
    Appeal, No. 273,
    Jan. T., 1909, by defendants, from decree of C. P. No. 4, Phila. Co., Dec. T., ’’ 1908, No. 1,058, awarding permanent injunction in case of Samuel Smith v. The City of Philadelphia, John E. Reyburn, '"’’¡feyyr,' George R. Stearns, Director of the Department of /’ippohii Works, John M. Walton, Controller, and Edwin H. váre.'
    /Before Fell, C. J., Brown, Mestrezat, Potter, Elkin,' Stewart and Moschzisker, JJ.
    Affirmed.
    Bill in equity by a taxpayer to restrain the city of Philadelphia and "a contractor from entering into a contract supplemental to á prior contract for a municipal improvement. Before Willson, P. J.
    The facts appear in the opinion of the Supreme Court.

      Error assigned was decree awarding the injunction.

      Ira J. Williams and John G. Johnson, with them Simpson & Brown, for Edwin H. Vare, and J. Howard Gendell, city solicitor, with him Andrew W. Crawford, assistant city solicitor, for the city of Philadelphia, et ah, appellants.
    — The ratifying ordinances eliminate any question of antecedent authority on the part of the officials of the city to advertise for and receive bids upon the entire project: City v. Hays, 93 Pa. 72; Shiloh Street, 165 Pa. 386; Fell v. Phila., 81 Pa. 58; Brighton Road, 213 Pa. 521; Fitzgerald v. Phila., 3 Walker, 17; McKnight v. Pittsburg, 91 Pa. 273; Harrisburg v. Shepler, 190 Pa. 374; Amberson Ave., 179 Pa. 634; Chester v. Eyre, 181 Pa. 642.
    The city can lawfully ask and receive bids for work to be done in'opening or widening a highway before such highway is actually opened or widened or condemned, and can lawfully contract for the doing of such work before condemnation proceedings are had.
    The clause limiting the amount to be expended under “ this ” contract to $500,000 did not set the final limitation of expenditure; the actual intent of the parties, to be gathered from the four comers of the contract and specifications, being that all the work was to be done by that contractor as appropriations were from time to time made.
    The original advertisement and bidding having covered the entire project, the city could thereafter base thereon one or more contracts, even if the original contract be regarded as limited to $500,000: City v. Hood, 211 Pa. 189; Clark v. Pittsburg, 217 Pa. 46; McManus v. City, 211 Pa. 394; Silsby v. Allentown, 153 Pa. 319; Parker v. Phila., 220 Pa. 208; Louchheim v. Phila., 218 Pa. 100.
    Councils have power to authorize the proposed contract, irrespective of any prior advertising or bidding: Tatham’s App., 80 Pa. 465; Ogden v. City of Phila., 17 Phila. 200; Ross v. Phila., 115 Pa. 222; Filbert v. Phila., 181 Pa. 530.

      E. O. Michener, with him Owen J. Roberts, for appellee.—
    All contracts for city work must be let upon a competitive basis after advertising and bidding: Lehigh County v. Kleckner, 5 W. & S. 181; Addis v. Pittsburg, 85 Pa. 379.
    If the contract was void for noncompliance with the statutory provisions, or if the statutes forbid the making of a supplemental contract, then no ordinance ratifying the making of such supplemental contracts can cure the defect and render them valid: Parker v. Phila., 92 Pa. 401; Mathews v. Phila., 93 Pa. 147; Bladen v. Phila., 60 Pa. 464; Phila. v. Flanigen, 47 Pa. 21.
    Neither the city nor the contractor is bound to enter into such supplemental contracts, and hence they constitute new contracts, which must be let in the usual way.
    The system of supplemental contracts, as here attempted, is unfair, is contrary to public policy, and should not be sustained.
   Opinion by

Mr. Justice Mestrezat,

March 14, 1910:

In the elaborate opinion filed by the learned president of the court below he has found the facts and amply vindicated the correctness of the decree which was entered. Two other opinions were filed by the same learned judge in a case arising between the same parties and involving the same question in which he reached a like conclusion. Every contention of the learned counsel of the appellants in this case has been met and answered by the court below and the decree may well be affirmed on its opinion.

By a contract dated September 29,1904, between the city of Philadelphia and one Edwin H. Yare the latter undertook, in consideration of the payments specified in the contract, “to furnish and deliver all the materials, and to do and perform all the work and labor required to be furnished and delivered, done and performed in grading, regrading, paving, repaving .... and other contingent work required for the improvement of Broad street from Moyamensing avenue southward in its entirety as projected for the Bureau of Highways and the Department of Public Works, in strict and exact accordance with the proposals and specifications” attached to the contract. The contractor was to be paid by warrants drawn on the city treasury “for the said work the sums or prices as set forth in the proposal attached hereto and made a part hereof.” The contract also contained the following provision: “It is further distinctly understood and agreed that the total amount to be expended for the materials to be furnished and the work to be done under this contract shall in no event exceed the sum of five hundred thousand dollars ($500,000).”

The contract is explicit in its terms and sets out clearly the covenants to be performed by both parties. Vare undertook to furnish the materials and to perform the work required for the improvement of Broad street from Moyamensing avenue southward in its entirety as projected. The contract in terms, it will be observed, requires the contractor to do all the work and furnish all the materials for the consideration stipulated. The obligation is not to do any particular or specified part of the work, but to complete the improvement “in its entirety.” There is a limitation, not upon the amount of materials to be furnished and work to be done on the improvement, but upon the amount to be expended for such materials and work. The contract is based upon unit prices with, however, the limitation suggested. In no event could the city under this contract expend or the contractor receive more than the aggregate amount of $500,000 for the improvement. This is the usual contract where the contractor undertakes to perform certain work at unit prices with the stipulation that the entire cost of the completed work shall not exceed a fixed sum. As said by the learned trial judge, it is not apparent why the language of the contract made by Vare with the city does not cover the entire work for the improvement of Broad street from Moyamensing avenue southward, for the consideration stipulated in the agreement which was not to exceed $500,000. It does so in terms, and although more than five years have elapsed since the parties executed the contract, the contractor has not asked a chancellor to reform the agreement or to construe it differently from the plain import of its language. The city, however, has not thus construed the contract but agrees with the contractor that he is not required to complete the improvement for the sum named in the agreement. Under this interpretation of the contract of 1904 the city, by means of supplemental agreements, has attempted to obligate itself to pay Vare $550,000 for work on the improvement in addition to the half million dollars already paid him and for which he covenanted to furnish the material and do the work “required for the improvement of Broad street from Moyamensing avenue southward in its entirety.”

Vare entered upon the performance of his work under the contract of 1904 and continued the prosecution of it until he had received according to the itemized terms of his bid the sum of $500,000. The improvement not having been completed, the councils authorized the proper city officers to enter into supplemental contracts with Vare to do additional ' work at the unit prices named in the original contract of 1904. Pursuant to an ordinance of May 10, 1907, the mayor, without advertising for bids as required by the statute and ordinance, executed a supplemental agreement with Vare by which the latter was authorized to perform additional work on the improvement to an amount not to exceed $150,000. By an ordinance approved December 10, 1908, the proper city officers were authorized to execute a similar contract with Vare for further work on the improvement, without advertising for bids, to an amount not to exceed $400,000. The bill in this case was filed to restrain the execution of this contract.

The contract of September 29, 1904, was complete in itself. By that agreement, Vare undertook to do all the work on the improvement at specific unit prices, the aggregate not to exceed a certain sum for the entire work. Neither he nor the city was obligated beyond what was stipulated in the contract. The work he was to do and the amount of money the city was to pay were fixed by the agreement. While he agreed to do all the work and furnish all the materials for the improvement, yet the city construed the contract to mean that he was only to perform such work and to furnish such materials as would at the unit prices named in the contract not exceed the sum of $500,000. Under that construction of the agreement, he could not be required to perform any work .other than that for which the sum named would compensate him.. On the other hand, the city did not agree that he should furnish materials or perform work beyond the limit named in the contract. In other words, after Vare had received $500,000 for the' work which he had done under the contract of 1904, he could not compel the city to enter into another agreement at the prices named in the original contract for the work yet to be done on the improvement; nor could the city require him to furnish the materials‘and perform the work necessary to complete the improvement at the unit prices named in the contract. Under this interpretation of the agreement, its terms had been fulfilled and complied with by both parties when Vare on February 6, 1908, received the last instalment of the $500,000.

As said by the learned trial judge, whatever Vare agreed toG do was to be covered by the payment of the sum named. If, therefore, any other materials were to be furnished or work was to be done, the statutes and ordinances required that it should be done by contract which must be preceded by advertising for bids and by an appropriation of money to cover the cost of the work and materials. The same formalities were required to give validity to the contract to complete the improvement as preceded the contract of 1904, by which Vare agreed to perform the work. The learned court below so held and we think it was entirely right. The attempted ratification of the supplemental contract was of no validity. Neither the city nor its officers were legally authorized to enter into such a contract and hence their action in doing so could not be ratified. Ratification is only effective where there is authority to do the act which is subsequently ratified. The supplemental contract was in direct violation of the requirements of the law, and hence neither the city nor its officials could legally execute it.

Whether the width of the street as projected was to be 160 feet or 300 feet does not affect the original contract, or the question of the authority of the city, without advertising for bids, to enter into a supplemental contract with Vare for the performance of other work than that stipulated in the original agreement. The parties could not amend or enlarge the contract so as to make it include work beyond its original scope and hence the width of the improvement becomes immaterial. We may say, however, that we entirely concur with the conclusion of the learned trial court that the width of ¡.he street as contemplated in the original contract was J()0 feet. That it was so understood by the officers of the city Wits expressly declared by them. In his message to councils on April 3, 1905, the mayor stated that “this boulevard is being built of a width of 160 feet.” The director of public works indorsed upon one of the plans showing the contemplated width of 300 feet a statement that “only 160 feet is to be done under the present contract, approved September 29, 1904. ” 11 is true the councils had directed the board of surveyor? to prepare the plan for a street 300 feet wide, but on September 29, 1904, the date of the contract with Yare, the board had neither confirmed nor rejected the plan which it was within its power to do. It seems that prior to the contract with Vare, some of the officials of the city had anticipated the street being opened to the width of 300 feet, but at the date of the contract, as suggested by the learned court below, “the project was all in the air.” If it had been intended to let a contract for the improvement of the street to the width of 300 feet it should have been so stated in the advertisements so that parties could bid intelligently. .Vare may have known of the purpose of the city officials to increase the width of the street ultimately to 300 feet but, so far as the evidence discloses, it does not appear that other parties interested in bidding did know. It was the duty of the city officials to see that all the facts necessary to intelligent bidding were given the public, and it was their imperative duty, for the protection of the city, to see that the contract with the successful bidder was expressed in clear and explicit language. In view of this and other litigation growing out of the original agreement, it seems that the parties failed to make themselves understood by.the language employed therein, and to leave the door of the city treasury sufficiently ajar to justify the contractor in entering and demanding more than double the compensation stipulated in the original contract for future work to be done on the improvement.

In awarding contracts, the officers of the city must comply strictly with the requirements of the statutes and ordinances. We have said this time and again for reasons whiclsr are apparent and which have been fully and frequently stated:. Section 6 of the Act of May 23, 1874, P. L. 230, provides th^,t all work and materials required by the city, shall be furnished under contract with the lowest responsible bidder. The /ordinance of December 26, 1882, enacted to carry the statute, into effect, authorizes and directs the departments to advertise for all work and materials required and provides that the contract shall be awarded to. the lowest responsible bidder. The Bullitt bill requires all contracts relating to city affairs to be in writing and executed by the proper officer. It further provides that every contract for public improvements shall be based upon an estimate of the whole cost, that no bid in excess of such estimate shall be accepted, and “the liability of the city thereon shall be limited by the amounts which shall have been or may be, from time to time appropriated for the same.” These statutory provisions, as held in Hinkle v. Phila., 214 Pa. 126, are mandatory and must be strictly complied with. They cannot be evaded or disregarded by the city or by its officials. The protection of the public as well as the rights of the contractor require their rigid enforcement. It is manifest that the contract of 1904, neither stipulated for nor contemplated the performance of any other work or compensation than the work and compensation therein expressly provided, and to permit the city officials to amend or enlarge it, under the guise of supplemental contracts, so as to include the performance of the additional work necessary to complete the improvement and the further expenditure of 5?o50,000 without advertising and letting to the lowest bidder would be in direct antagonism to the statutes and ordinances regulating the subject and afford an opportunity for favoritism and abuses of the grossest kind. The necessity for a strict observance of the statutory duty imposed upon city officials in awarding contracts is well stated by the learned president of the court below. He says: “The infirmities of human nature, the natural disposition to favor friends, personal and political, and the various motives which influence public officers to depart from a strict and rigid adherence to the obligations that rest upon them as representing the public, make-it important that they should be held strictly within the limits of the powers conferred upon them.”

The decree of the court below is affirmed.


text:
    Yoder, Appellant, v. Strong.

      Contracts — Vendor and, vendee — Exchange—Liquidated damages— Penalty.

    Where a contract for an exchange of properties contains a provision reading “the penalty is 100 dollars that spoils this sale,” and contemporaneously with the agreement each party executes a note to the other in the sum of $100, which notes are delivered over to the scrivener of the agreement and remain in his hands, the transactions admit of no other conclusion than that the notes stand for liquidated damages and measure the loss that either party may sustain in case of a default by the other, and, in no event, can there be recovery beyond the amount so fixed, whether that sum be a penalty or liquidated damages.
    Argued Jan. 31, 1910.
    Appeal, No. 266,
    Jan. T., 1909, by plaintiff, from judgment of C. P. Montgomery Co., Oct. T., 1908, No. 94, on verdict for defendant in case of Levi D. Yoder v. George W. Strong.
    Before Brown, Mestrezat, Potter, Elkin and Stewart, JJ.
    Affirmed.
    Assumpsit for damages arising from breach of contract. Before Weand, J.
    The opinion of the Supreme Court states the case.

      Error assigned among others was in giving binding instructions for defendant.

      N: H. Larzelere, with him Franklin L. Wright, for appellant.

      John Faber Miller, with him Samuel H. High, for appellee.
   Opinion by

Mr. Justice Stewart,

March 14, 1910:

The contract was for an exchange.of properties — a farm for a stock of merchandise in a country store. The farm was to be accepted at a valuation of $4,000; the stock of merchandise at its market value as determined by appraisers mutually chosen. The contract was executed January 21, 1908. The appraisement was completed March 4 following, and showed a stock valuation of $6,136.05. On March 10 the parties met for settlement. The defendant, the owner of the farm, demanded a deduction from the appraisement of $500, and declined to convey his farm except as the deduction was allowed. The plaintiff refused to comply with this demand, and the parties separated. No other negotiation followed, and on July 30 plaintiff brought his action to recover damages for defendant’s breach of his contract. In the statement of claim filed demand is made for $3,416.95 damages, the principal item in the demand being loss sustained on a resale of the stock of merchandise, expense incurred in connection with the resale, and cost of appraisement and counsel fees. On the trial it was shown on part of the plaintiff that following defendant’s refusal to carry out his contract the plaintiff, nearly two months thereafter, proceeded to sell the stock of merchandise at public auction. Various offers were made to show the difference between the total amount thus realized and the market value of the goods as ascertained by the appraisers. It was also offered to be shown that the auction was conducted with entire fairness and after wide public notice given. These offers were rejected, on the ground that if the contract was to be regarded as executed the goods were not the plaintiff’s, and he had no right to sell them; that if executory, the sale was made too long after the breach to fix the difference in value. This ruling of the court is made the subject of various assignments of error. The jury was instructed that plaintiff having failed to prove any damage, the verdict should be for the defendant. This ruling is also assigned. In view of a certain provision in the contract, from which there can be no escape, it is wholly unnecessary to consider any of the several assignments except the one last mentioned. It is as follows: “The penalty is 100 Dollars that spoils this sale.” Whatever obscurity there is in this provision as written, it entirely disappears in the light of what the parties did pursuant to it. Contemporaneously with the agreement each executed a note to the other in the sum of $100, payable March 21 following. Both notes were delivered over to the scrivener who wrote the agreement, and they remained in his hands until the trial of the case. The transaction admits of no other conclusion than that the notes stood for liquidated damages; they measured the loss that either would sustain in case of default by the other. Whether penalty or liquidated damages, there could be no recovery in any event beyond the amount so fixed. The learned trial judge correctly held that if there was a breach of the contract for which defendant would be liable, such breach occurred March 10 when defendant refused to convey his farm. Had plaintiff then claimed and received his $100, so far as appears from the evidence in the case, he would have been clear of all loss. There is not a word of evidence as to the value of the bargain to the plaintiff. Manifestly it was considered by the parties that $100 would compensate either for the loss of his bargain, and they so provided. Whatever loss the plaintiff suffered beyond this was the result of the mistaken course he afterwards pursued with respect to his property. The present action was not upon the note, and no claim was made thereunder. It was for the recovery of damages not covered by note or contract.

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