text:
    Altoona Sanitary Milk Company v. Armstrong, Appellant.

      Corporations- — Foreign, corporations — Registration and appointment of agent — Contract—Subscription contract.

    1. Where a number of persons enter into a contract in writing with r, foreign corporation, not registered in Pennsylvania, by which they agree to organize a Pennsylvania corporation, to subscribe to the stock thereof, and to pay out of the money thus subscribed for a plant to be erected by the foreign corporation for the new company, and in pursuance of this agreement the Pennsylvania company is organized, a large portion of the subscriptions are paid, the plant is erected and the foreign corporation paid in full, certain subscribers who had not paid, cannot in an action against them by the Pennsylvania company set up that the whole of the contract is invalid because it was made with a foreign corporation which was not registered at the time in Pennsylvania.
    2. A subscription to a joint-stock company is not only an undertaking to the company, but with all other subscribers. Such contracts are trilateral, and even if fraudulent as between two of the parties, they are to be enforced for the benefit of the third.
    Argued Oct. 26, 1908.
    Appeal, No. 9, Oct. T., 1908, by defendant, from judgment of O. P. Blair Co., June T., 1905, No. 134, on verdict for plaintiff in case of Altoona Sanitary Milk Company v. T. J. Armstrong.
    Before Rice, P. J., Porter, Henderson, Morrison, Oriady, Head and Beaver, JJ.
    Affirmed.
    Assumpsit to recover a stock subscription.
    The facts are stated in the opinion of the Superior Court.
    Verdict and judgment for plaintiff for $603.83. Defendant appealed.

      Error assigned was in refusing binding instructions for defendant.

      Thomas C. Hare, with him Edwin M. Amies, for appellant.
    The contract was an undertaking on the part of the construction company for doing the unlawful things provided for in the contract. It is clear that an action against the subscribers to the contract cannot be sustained without disclosing the entire contract; for performance of its prohibited acts (the acts of the unregistered corporation), is the foundation of recovery against the defendant: Pittsburg Construction Co. v. West Side Belt Railroad Co., 151 Fed. Repr. 125; McMullen v. Hoffman, 174 U. S. 639 (19 Sup. Ct. Repr. 839); Diamond Glue Co. v. Glue Co., 187 U. S. 611 (23 Sup. Ct. Repr. 206); Mitchell v. Smith, 1 Binney, 110; Badgley v. Beale, 3 Watts, 263; Columbia Bank & Bridge Co. v. Haldeman, 7 W. & S. 233; Shuman v. Shuman, 27 Pa. 90; Kepner v. Keefer, 6 Watts, 231; Seidenbender v. Charles, 4 S. & R. 151; Eberman v. Reitzel, 1 W. & S. 181; Lloyd v. Leisenring, 7 Watts, 294; Chase v. Burkholder, 18 Pa. 48; Turnpike Co. v. Henderson, 8 S. & R. 219; Holt v. Green, 73 Pa. 198; Ice Mfg. Co. v. Armour, 12 Pa. Superior Ct. 443.
    As will appear from the following authority, precisely the same rule obtains in federal courts, as is found in the Pennsylvania courts: Connolly v. Pipe Co., 184 U. S. 540 (22 Sup. Ct. Repr. 431); Trist v. Child, 88 U. S. 441; Bank v. Owens, 27 U. S. 527; McMullen v. Hoffman, 174 U. S. 639 (19 Sup. Ct. Repr. 839); Gibbs v. Consolidated Gas Co., 130 U. S. 396 (9 Sup. Ct. Repr. 553); Harris v. Runnels, 53 U. S. 79.
    Cases expressly decided under the act of 1874 forbidding the right of recovery to foreign corporations not complying with its requirements are Ice Mfg. Company v. Armour, 12 Pa. Superior Ct. 443; Lasher v. Stimson, 145 Pa. 30; Silk Mfg. Company v. Reilly, 187 Pa. 526; Delaware River Quarry, etc., Co. v. Railway Co., 204 Pa. 22.

      H. A. Davis, for appellee.
    It is well settled that subscriptions to the stock of a corporation are trilateral contracts. They are undertakings not only with the company and the commonwealth, but with all the other subscribers to the stock: Braddock Elec. Railway Co. v. Bily, 11 Pa. Superior Ct. 144; Graff v. Railroad Co., 31 Pa. 489; Phila. & Del. County R. R. Co. v. Conway, 177 Pa. 364; Jeanette Bottle Works v. Schall, 13 Pa. Superior Ct. 96; Shober v. Lancaster County Park Assn., 68 Pa. 429.

      February 26, 1909:
   Opinion by

Porter, J.,

■ This action is brought to recover the amount of a subscription by the defendant to the capital stock of the plaintiff corporation. The only ground of defense, so far as the specifications of error are concerned, was that the defendant was relieved of liability because of the connection of the Industrial Construction Company, of Chicago, a corporation of the state of Illinois, with the contract which included the subscription of the defendant to the capital stock of the plaintiff corporation. The fact that the Illinois corporation, at the time of the execution of the contract, did hot have an authorized agent or an established office in Pennsylvania, and had not registered in the office of the secretary of the commonwealth, or in the office of the auditor general, and consequently had no right to make the contract, must, it is contended by the defendant, render the whole contract invalid, and strike down all rights arising thereunder. The contract was dated October 15, 1903, and the Illinois corporation, while not registered at that date, did appoint an agent, establish an office, execute the certificate required by the Act of April 22, 1874, P. L. 108, and duly file the same in the office of the secretary of the commonwealth, on November 11, 1903. i

The written agreement which contains the subscription of stock upon which this action is founded did name the Illinois corporation as “party of the first pari” and the subscribers, the defendant and eighty-two other residents., of Altoona, as “parties of the second part;” but all the provisions of this paper must be considered in determining its true meaning and ascertaining its effect and the rights and duties to which it gave rise. When thus considered it clearly appears that the principal purpose of the subscribers was to form a corporation to own and operate a sanitary milk plant, the stock of the corporation to be held by the subscribers in the proportion set down in their respective subscriptions. This clearly appears from the following paragraph of the subscription agreement. “For the purpose of forming a corporation to own and operate said sanitary milk plant and fully carry out the intention of the subscribers, it is agreed that when this contract is closed, second parties, shall come together at some convenient meeting place in compliance with five days’ notice .... and at the time and place specified in said notice, proceed to organize, elect the executive committee herein provided for, adopt a name, elect a board of directors and take such other action as may be necessary preparatory to incorporation. And it is agreed that at this meeting each subscriber may cast one vote either in person or by proxy for each one hundred dollars subscribed by him or her and that a majority of the votes then and there cast shall elect as the will of all and that after the incorporation each subscriber shall receive the number of shares of the stock of the corporation as shall represent his or her paid up subscription thereto.” The agreement contained a stipulation that the subscriptions were not to become binding unless the sum of $50,000 or more was subscribed. The agreement also contained a provision that the subscribers should select and at their own expense furnish suitable and reasonably level land for said plant, with good title, within twenty days from the completion of subscriptions. The agreement did embody a contract with the Illinois corporation under the provisions of which the latter was required to erect, upon the site selected and furnished by the subscribers, a building of a kind specified, and furnish the same with a large amount of specified machinery to be used in the process of treating the milk, for which it was to be paid the sum of $42,000. The agreement provided that all subscriptions were to be the property of the Illinois corporation until the full contract price had been paid, “but all such subscriptions, money or notes remaining after the first party (the Illinois corporation) has been fully paid are the property of the second parties (the subscribers).” Those who signed this paper subscribed for the purpose of forming a corporation, the stock in which was the only thing they were to receive as the consideration for the money they agreed to pay. The purpose for which the organization was to be formed was clearly stated and the manner in which it was to be organized was expressly provided for. The erection of the plant, which the corporation was to own and operate, was one incident involved in carrying into execution the general purpose. The subscribers selected the Illinois corporation as the contractor to erect the building and pledged, or attempted to pledge, the subscriptions to the stock of the proposed Pennsylvania corporation as security for the payment of the contract price of the building. If it be assumed that this pledge of the subscriptions was valid, then the incorporators simply burdened the Pennsylvania corporation, when formed, with responsibility for the payment of the price of the building. That is a matter, however, which it is not necessary to discuss for it is an admitted fact that the Illinois corporation has been paid in full.

The Illinois corporation was not a subscriber to the stock of the Pennsylvania corporation; its undertaking was simply to equip and furnish the building. The agreement was, in effect, quadrilateral, each subscriber contracted with the proposed Pennsylvania corporation, with all the other subscribers and with the Illinois corporation: Railway Company v. Bily, 11 Pa. Superior Ct. 144; Jeannette Bottle Works v. Schall, 13 Pa. Superior Ct. 96; Edinboro Academy v. Robinson, 37 Pa. 210; Shober’s Administrators v. Lancaster County Park Association, 68 Pa. 429.

There was no dispute, at the trial in the court below, as to the material facts in this case. Subscriptions to the capital stock of the proposed corporation to an amount in excess of 150,000, the aggregate being almost 175,000, were obtained prior to October 15, 1903. Notice was given to the subscribers as provided for in the agreement, and in pursuance thereof there was a meeting of the subscribers on October 19,1903, at which an organization was effected, there were elected a board of directors, a secretary, a treasurer and three auditors; the name of “Altoona Sanitary Milk Company” was adopted for the proposed corporation, the amount of the capital stock fixed at 175,000, the board of directors authorized to determine the manner of collecting the stock subscriptions and provision made for procuring a charter. An application for a charter in due form having been made, the same was approved by the governor of the commonwealth and the charter was-issued on December 8, 1903, to the plaintiff corporation. The charter was duly recorded in the office for the recording of deeds in Blair county, on January 22, 1904. The Pennsylvania corporation thus formed issued calls for payment of installments upon the subscriptions of stock from time to time, of which this defendant had notice. The Illinois corporation proceeded to do the work which it had covenanted to perform and the Pennsylvania corporation made payments upon the same from time to time. The Illinois corporation completely performed the work which it had undertaken to do and after having done so was, on August 12, 1904, paid the full balance for the completion of the work. The Ilfinois corporation thereupon ceased to have any interest in this agreement or in the Pennsylvania corporation. The Pennsylvania corporation, in addition to the $42,000 which it has paid to the Illinois corporation, paid $9,000 for the land on which the building was erected, $6,000 for horses, wagons and milk routes, $5,000 for the erection of a stable and over $4,000 for the purchase of a creamery. All these expenditures were made either in preparation for or in connection with the operation of the plant. Other parties who joined in the subscription agreement have paid in upon their subscriptions, to the Pennsylvania corporation, over $61,000, but the defendant and a few others decline to pay. After this action was brought, in August, 1905, the defendant for the first time raised the question that the whole subscription agreement was invalid, for the reason that the Illinois corporation which had contracted for the erection of the building had not registered in Pennsylvania in’ accordance with the provisions of the Act of April 22, 1874, P. L. 108. The defendant first raised this objection long after the Pennsylvania corporation had paid to the Illinois corporation the entire consideration for the erection of the building, and after the latter corporation had ceased to have any interest in the agreement.

After careful consideration of the subscription agreement and the evidence produced at the trial below we are led to the conclusion that the action of the learned judge of the court below in giving binding instructions for the plaintiff was free from error. The contract, so far as the Illinois corporation is concerned, has been fully executed, and that corporation has no further interest in the matter. The plaintiff does not recover under any right derived from the Illinois corporation, but upon the contract of this defendant with his associates. Even if the Illinois corporation could not have enforced this contract against the defendant and his associates, the defendant cannot allege that invalidity in this action to recover his subscription to the stock of the Pennsylvania corporation. “A subscription to a joint stock is not only an undertaking to the company, but with all other subscribers. Such contracts are trilateral, and even if fraudulent as between two of the parties, they are to be enforced for the benefit of the third:” Graff v. Railroad Company, 31 Pa. 489; Philadelphia & Delaware County Railroad Company v. Conway, 177 Pa. 364.

The judgment is affirmed


source: Caselaw Access Project

author: Beaver, J.,

license: Public Domain

text:
    Hoffa v. Hoffa, Appellant.

      Contract — Agreement with one person to pay money to another — Declarrations against interest.

    1. If one pay money to another for the use of a third person, or having money belonging to another, agree with the other to pay it, to a third, action lies by the person beneficially interested. But where the contract is for the benefit of the contracting party, and the third person is a stranger to the contract and consideration, the action must be by the promisee.
    2. One brother conveyed to another a farm for the consideration of $1.00 named in the deed. The farm was in fact worth $3,000. At the time of the acknowledgment before a justice of the peace, the grantee said, “That other paper we will make, too, before long.” Subsequently the grantee stated to four different persons on as many different occasions that he had agreed with his brother when he received the farm to pay to another brother and sister $1,000 each. Held, (1) that the brother and sister could maintain a suit against the grantee’s administrator for the money which the grantee had promised his brother to pay them; (2) that the declarations of the grantee were admissible to establish the grantee’s obligation to pay the money; and (3) that the case was for the jury, and that a verdict and judgment for plaintiff should be sustained.
    Argued Oct. 27, 1908.
    Appeal, No. 36, Oct. T., 1908, by defendant from judgment of C. P. Lebanon Co., June T., 1905, No. 173, on verdict for plaintiff in case of John Hoffa v. Morris Hoffa, Administrator of the Estate of William Hoffa, deceased.
    Before Rice, P. J., Portee, Henderson, Morrison, Orlady, Head and Beaver, JJ.
    Affirmed.
    Assumpsit on a promise made by the defendant’s intestate to another to pay money to the plaintiff. Before Ehrgood, P. J.
    The facts are stated in the opinion of the Superior Court.
    Verdict and judgment for plaintiff for $1,135. Defendant appealed.

      Error assigned, amongst others was in refusing binding instructions for defendant.

      E. W. Miller, with him Wm. E. Schaak and Chas. V. Henry, for appellant.
    It was incumbent on the plaintiff to prove, by direct testimony, either that the decedent, Wm. Hoffa, owed the amount claimed, or that it was a gift from Mark Hoffa to John Hoffa, the plaintiff: McKnow’s Estate, 198 Pa. 102; McGary v. McDermott, 207 Pa. 620; Rearick v. Rearick, 15 Pa. 66; Frey v. Heydt, 116 Pa. 601; Jack v. Dougherty, 3 Watts, 151.
    It is laid down as a rudimentary principle, that a party may sue on a promise made, on sufficient consideration, for his use and benefit, though it be made to another and not to himself, but the courts have confined the exceptions to the general rule, that no one can sue on a contract to which he is not a party, to “ cases in which the third person, although not a party to the contract, may be fairly said to bé a party to the consideration on which it rests;” as where the promise to pay the debt of a third person rests upon the fact that money or property is placed in the hands of the promisor for that particular purpose: Adams v. Kuehn, 119 Pa. 76; Delp v. Brewing Co., 123 Pa. 42; Hostetter v. Hollinger, 117 Pa. 606; Kountz v. Holthouse, 85 Pa. 235; Guthrie v. Kerr, 85 Pa. 303; Blymire v. Boistle, 6 Watts, 182; Torrens v. Campbell, 74 Pa. 470; Freeman v. Penna. R. R. Co., 173 Pa. 274; Mississippi Cent. R. R. Co. v. Southern R. R. Assn., 8 Phila. 107; Brown v. German-American Title & Trust Co., 174 Pa. 443.

      February 26, 1909:
    Claims against the estates of decedents, resting on mere oral testimony, of declarations and admissions of the deceased are very dangerous, and not- to be favored by the courts: Pollock v. Ray, 85 Pa. 428; Romig’s App., 84 Pa. 235; Seybert’s Est., 5 Pa. C. C. Rep. 35; Harbold v. Kuntz, 16 Pa. 210; McCarty v. Scanlon, 187 Pa. 495.

      B. Morris Strauss, with him A. Frank Seltzer, for appellee.
    The preponderance of American authority is to the effect that a third person may enforce a contract made by others for his benefit, if it is manifest, from the nature or terms of the contract, that the parties intended to treat him as the person primarily interested: Merriman v. Moore, 90 Pa. 78; Beers v. Robinson, 9 Pa. 229; Blymire v. Boistle, 6 Watts, 182; Moran v. Munhall, 204 Pa. 242; Wilson v. Pearl, 12 Pa. Superior Ct. 66.
    That the admissions of William Hoffa to William Strauss, Henry Miller, Jonathan Borry and Henry E. Stoudt were competent evidence, is borne out by the universal practice and the decisions of the courts: Shirley v. Shirley, 59 Pa. 267; Wolf v. Studebaker, 65 Pa. 459; Munger v. Silsbee, 64 Pa. 454; Porter v. Nelson, 121 Pa. 628; Johnston v. McCain, 145 Pa. 531; Gordner v. Heffiey, 49 Pa. 163; Cutbush v. Gilbert, 4 S. & R. 551; Nauman’s App., 116 Pa. 505; Eldred v. Hazlett, 33 Pa. 307; McGill v. Ash, 7 Pa. 397; Galbraith v. Green, 13 S. & R. 85.
   Opinion by

Beaver, J.,

Mark Hoffa conveyed to his brother William a farm containing over 100 acres, for the consideration therein named of $1.00. This farm was shown on the trial in the court below, in various ways, to have been worth $3,000 or over, and it appeared from the testimony that that amount, or a sum approximating it, was realized during the lifetime of the brother, to whom it was conveyed, and by his heirs since his death. At the time the deed was executed and delivered it was said in the presence of the justice of the peace who took the acknowledgment: “That other paper we will make, too, before long.” Subsequently the grantee in this deed, on several occasions, to different persons communicated the fact variously stated by the witnesses that, notwithstanding the fact that the consideration mentioned in the deed from his brother to him was $1.00, he was to pay to a brother and sister, the former of whom is the plaintiff in this case, the sum of $1,000 each.

The defendant asked for binding instructions and subsequently moved for judgment n. o. v., both of which were denied. The point and motion were based upon certain propositions which are raised by the plaintiff’s points which were affirmed, and those of the defendant which were denied, and exceptions to certain parts of the charge, the same being embraced in fifteen distinct assignments of error. These were, first, that the plaintiff, being a stranger to the alleged contract between his brothers, Mark Hoffa and William Hoffa, cannot recover in this suit; second, that the alleged contract between Mark Hoffa and William Hoffa not having been signed by William, there can be no recovery in this case; third, that: “There being no direct proof of a contract between John Hoffa, the plaintiff, and William Hoffa, and nothing more than alleged declarations made by William Hoffa to strangers, in the absence of the plaintiff, the plaintiff cannot recover,” and, fourth, that: “The declarations alleged to have been made by William Hoffa, as proved in this case, are too vague, indefinite and uncertain to sustain a recovery in this suit.”

As to the plaintiff’s right of recovery. In Blymire v. Boistle, 6 Watts, 182, regarded as a leading case upon this subject, it was said by Mr. Justice Sergeant: “Numerous cases are to be found in the books respecting the right of a third person to sue on a promise made to another, and they are not all reconcilable with each other. See 1 Vin. Abr. 333-337, and the note to Pigot v. Thompson, 3 B. & P. 147. They seem, however, to warrant this distinction, that, if one pay money to another for the use of a third person, or having money belonging to another, agree with that other to pay it to a third, action lies by the person beneficially interested. But where the contract is for the benefit of the contracting party, and the third person is a stranger to the contract and consideration, the action must be by the promisee.”

This distinction has been maintained in the later cases. In Adams v. Kuehn, 119 Pa. 76, Mr. Justice Williams, who delivered the opinion, referring to Blymire v. Boistle, supra, said: “Where one person enters into a contract with another to pay money to a third, or to deliver some valuable thing, and such third party is the only party interested in the payment or the delivery, he can release the promisor from performance or compel performance by suit. If, on the other hand, a debt already exists from one person to another, a promise by a third person to pay such debt is for the benefit of the original debtor to whom it is made, and can only be released or enforced by him. If it could also be enforced by the original creditor, the promisor would be liable to two actions for the same debt at the same time and upon the same contract. Among the exceptions, are cases where the promise to pay the debt of a third person rests upon the fact that money or property is placed in the hands of the promisor for that particular purpose. Also where one buys out the stock of a tradesman and undertakes to take the place, fill the contracts and pay the debts of his vendor. These cases as well as the case of one who receives money or property on the promise to pay or deliver to a third person (as is the case here) are cases in which the third person, although not a party to the contract, may be fairly said to be a party to the consideration on which it rests. In good conscience the title to the money or thing which is the consideration of the promise passes to the beneficiary, and the promisor is turned in effect into a trustee. But when the promise is made to, and in relief of one to whom the promise is made, upon a consideration moving from him, no particular fund or means of payment being placed in the hands of the promisor out of which the payment is to be made, there is no trust arising in the promisor and no title passing to the third person. The beneficiary is not the original creditor who is a stranger to the contract and the consideration, but the original debtor who is a party to both and the right of action is in him alone.”

In Freeman v. R. R. Co., 173 Pa. 274, a case tried by Judge Thayer, this distinction is clearly maintained and the Supreme Court, on appeal, affirmed the judgment of the court below in a per curiam opinion.

In this case the plaintiff, although not a party to the contract, is directly interested in the consideration and has, therefore, the right to maintain the suit, if the testimony shows a liability on the part of the defendant’s decedent.

In the late case of Moran v. Munhall, 204 Pa. 242, a case which was twice argued in the Supreme Court and seems to have been thoroughly considered, the facts, as stated by Mr. Justice Dean, taken from the opinion of the trial judge in the court below, are as follows: “Patrick Moran was the owner of a lot of ground in the city of Pittsburg, having thereon erected a brick dwelling house. This property he conveyed on September 21, 1896, to Michael Munhall for the consideration of $10,100. This consideration was made up as follows: mortgage to the Pennsylvania Company $8,000; note of Moran held by Munhall $1,500; note given same day by Munhall to Moran $600. The title taken by Munhall remained in him until August 1, 1899, when he sold and conveyed the property to Stolzenbach for the consideration of $16,000. Up until that date Moran remained in possession without paying rent, but paying the taxes and keeping up repairs, paid insurance and for improvements, the whole amounting to $1,252.97. At the time the deed was delivered, it was agreed orally between Moran and Munhall that the property should be sold as soon as possible; that both would use their best efforts to make a sale and any surplus remaining after Munhall was paid in full should be paid to Moran. After the sale was made to Stolzenbach, Mun-hall sent to Moran $500, but refused to make any further payment. Deducting this from the amount of Stolzenbach’s purchase money, left a balance of surplus in Munhall’s hands of $3,923.84. This amount Moran claims as still payable to him, under his oral agreement, and he brought this action of assumpsit.” He recovered in the court below the judgment, which was affirmed in the Supreme Court.

In that case as in this the agreement to pay more than the consideration named in the deed was in parol. There, it is true, the party to the contract was also the party beneficially interested and brought the suit. Here, however, the party interested in the consideration brings the suit and is entitled to recover, if the contract for the payment of a sum greater than the amount mentioned in the deed is established.

As to the point that there was no direct proof of the contract between the brothers who were parties to the deed and that the same depended entirely upon the declarations of William Hoffa, the defendant’s decedent, we are of opinion that the latter were not only competent evidence but that they sufficiently established the obligation of William Hoffa to pay to the plaintiff and to his sister the sum of $1,000 each. Such an admission was made to at least four different witnesses. They do not agree, it is true, as to the exact language used by William Hoffa, but as to the fact there can be no doubt, if the witnesses are believed. Indeed, the fact that the language used was different on the several' occasions, when William Hoffa communicated with the several witnesses, and that their testimony does not agree as to the particular language used is rather in favor of, than, against, the truthfulness of their testimony.

In Galbraith et al. v. Green et ux., 13 S. & R. 85, Mr. Chief Justice Tilghman says (p. 92): “What a man says against his own interest may be safely believed; but it is not safe to credit him, where he is advocating his interest. Upon this principle the rule of evidence is founded — a man’s confession against himself, is evidence — but his declarations, in favor of his own interest, are not evidence.”

In McGill v. Ash, 7 Pa. 397, Mr. Justice Coulter, who delivered the opinion, says: “I do not know any higher, or more reliable evidence of a fact, than the admissions or declarations of a party who is to be prejudiced, freely and voluntarily made. It is of no consequence whatever, that these admissions and declarations were made after the fact. That only gives them more point and potency.”

The value of such testimony has been so many times referred to and the rule is so firmly established that it is rather surprising that the question should be raised at this late day. The declarations of William Hoffa were undoubtedly competent evidence and were sufficient, if believed by the jury, to charge him, if living, and his estate, when dead, with the amounts admitted by him to be payable to the plaintiff and his sister, as a part of the consideration of the deed made by his brother, in which the expressed consideration was merely nominal. A careful examination of the testimony shows that William Hoffa, on at least four different occasions, to as many different witnesses, admitted his obligation to pay to the plaintiff and to his sister $1,000 each. To one he said: “I got the farm. Mark gave me the farm over at Jonestown, but I must give my sister $1,000 and brother John $1,000, but I can have the use of the farm as long as I want.” Another witness said: “He told me he got a farm from his brother Mark, and he could have the use of the farm, but he was to pay each to John Hoffa, his brother, and to Luzetta Miller, his sister, $1,000.” To another witness he said: “I got a farm, do you know it? I said‘Yes.’ Do you know how? I said, ‘No.’ I must pay $2,000 out — $1,000 to my brother John and $1,000 to my sister Miller in Pottsville.” To another witness, who went to William Hoffa for the purpose of purchasing the farm, the witness said: “Well, I went down to buy the farm and, when I got there, he told me he would not take less than so much. Q. How much? A. $3,000. That he got the farm conditionally; or bought it conditionally, rather; that he was to pay two-thirds of the proceeds of the farm out, and he had to give $1,000 to a brother or sister, I don’t know which, because I was a stranger to these people, but he said he had to give two-thirds of the proceeds of this farm to a brother or sister, or two brothers or two sisters.” It came out in cross-examination that the conversation was held in German and that the language was: “I promised to pay each of my kschwishter two-thirds of the proceeds.” The word “ kschwishter,” as interpreted,- being applicable to either brother or sister, or both.

The facts connected with the execution and delivery of the deed and of all that followed were carefully referred to in the charge of the court to the jury and, in submitting the case, the court said: “Consider the testimony in the case carefully, and I say again if you find that there was such a contract you may find in favor of the plaintiff. If you find that there was not such a contract, then you find in favor of the defendant.”

The question was undoubtedly for the jury. We see no error in the manner in which it was submitted.

We have not considered the assignments of error seriatim, but what has been said covers the points which have been raised and discussed by the appellant and meets the substance of alleged error, as contained in all of the assignments. We find no merit in any of them and they are, therefore, all overruled.

judgment affirmed.


text:
    Miller v. Hoffa, Appellant.
    February 26, 1909:
    Argued Oct. 27, 1908.
    Appeal, No. 000, Oct. T., 1908, by defendant, from judgment of C. P. Lebanon Co., June T., 1905, on verdict for plaintiff in case of Luzetta Miller v. Morris Hoffa, Administrator of the Estate of William Hoffa, deceased.
    Before Rige, P. J., Porter, Henderson, Morrison, Orlady, Head and Beaver, JJ.
    Affirmed.
   Opinion by

Beaver, J.,

This case was tried in the court below with Hoffa v. Hoffa's Admr., and was argued with that case here. A single paper-book was furnished and a stipulation made by the parties interested: “The questions involved in this case being the same as those involved in the case of John Hoffa, Appellee, v. Morris Hoffa, Administrator of the estate of William Hoffa, dec’d, Appellant, No. 36, October Term, 1908, in the Superior Court of Pennsylvania, the two cases arising out of the same transaction, were tried together by the same jury and based on the same facts, testified to by the same witnesses, it is understood and agreed by the parties to this action that the court shall enter a similar judgment in this case as it will enter in No. 36, October Term, 1908.”

An opinion in No. 36 of October Term, 1908, referred to in this stipulation, having been this day filed (see ante, p. 356), for the reasons therein stated a like judgment is entered in this case.

Judgment affirmed.


author: Porter, J.,

text:
    Bell v. Clark, Appellant.

      Payment — Misappropriation of payments — Debtor and creditor.

    1. Where no appropriation of a payment is made by either party to specific claims, the law will apply the payment in the way most beneficial to the creditor; and, therefore, to the debt which is least secured, unless to the prejudice of a surety.
    2. Where a payment is made less in amount than the aggregate of various claims due by the debtor to the creditor, and neither party makes an appropriation, the law will apply the payment to claims primarily due by the debtor to the creditor, and notes made by him as principal, in preference to his liability as indorser and surety on the note of a third person.
    3. The maker of a promissory note purchased with another person a judgment against the indorser on the note, which judgment was held by a bank as collateral security for a number of claims against the indorser. The amount paid for the judgment was less than the aggregate of the claims of the bank. The object of the assignment was to enable the assignees to clear title to certain lands in which they were tenants in common with the indorser. It was stipulated in the assignment that if anything was realized by the sale of the lands, over the amount paid, the bank should receive it towards the liquidation of the account against the indorser, but nothing further was in fact received by the bank. It was also stipulated that the bank should continue to hold and retain any notes or other securities for which the judgment had been collateral, unaffected by the assignment. An action was brought by the bank against the maker of the note indorsed by the defendant in the judgment assigned. Held, that the maker could not set up as a defense that the money paid for the assignment of the judgment involved payment of the note in suit.
    Argued Oct. 27, 1908.
    Appeal, No. 39, Oct. T., 1908, by-Mary E. Clark, from judgment of C. P. McKean Co., Oct. T., 1900, No. 359, on verdict for plaintiff in case of W. W. Bell v. Mary E. Clark.
    Before Rice, P. J., Porter, Henderson, Morrison, Orlady, Head and Beaver, JJ.
    Affirmed.
    Assumpsit on a promissory note. Before Bouton, P. J.
    The facts are stated in the opinion of the Superior Court.
    Defendant presented the following point:
    1. That it appearing that the payment made was not applied, either by the debtor or creditor, the law makes application thei’eof in the manner most favorable to the debtor, that is to say, in relief of the source from which the payment fund arose. Answer: This, gentlemen, is good law in a case to which it applies, but as we view the law, it has no application to this case. No payment in this case was made by the debtor, Junius R. Clark,- — the debtor in the judgment, — the payment made in this case was made by Mr. Richmond as attorney for Ellen C. Hanna and Mary E. Clark for the purpose of getting control of this judgment and having the judgment assigned to him as such attorney, hence the rule of application has no place in this case. At the time Junius R. Clark made no application of the money, — the bank simply applied to the collateral security held by them. Mary E. Clark made no application and had no right to make application to these various notes, for the very reason that her stipulation was that the notes and other securities for which the collateral judgment was given, should be held and retained by the bank unaffected by the assignment, and that assignment was delivered to her upon the payment of this $6,750, hence this point is refused. [1]
    2. If the jury believe from the evidence that the agreement between the bank and Richmond was intended to be a full settlement between the bank and Mary E. Clark, then the verdict should be for the defendant. Answer: This point is refused. We say to you that under the evidence there was no settlement of this note in full or any other note in full held by the bank on which J. R. Clark was maker or indorser, as we view the law,— hence this point is refused.
    3. That the judgment note of Junius R. Clark having been given as collateral security for the note in suit among other notes, and the bank having entered judgment upon it and made assignment thereof, if the jury believe that the credit entered upon the judgment was an application of the amount paid, then the application thus made was pro rata upon the debts secured and the verdict should be only for the balance, if any, without interest thereon. Answer: This point is refused. The bank, being the holder of all these notes, being the owner of the judgment given as collateral security, had the right to assign this judgment for the consideration of $6,750, which they did assign, — had the right to make the stipulation which they did make that the notes for which the judgment was given as collateral should be retained unaffected by the assignment, and had’the right to pursue any note they held until they received the full amount of the indebtedness of J. R. Clark to them. This $6,750, of course, must apply upon this collateral and was so applied upon the collateral, but it in nowise affects the right of the bank under this stipulation in the case to pursue, as we have already said, any note which they held for which the judgment was given as collateral, and could pursue them to the extent of recovering their face amount up to the time when the total amount recovered, together with the sum of $6,750 — including the $6,750 — was in full of J. R. Clark’s debt.
    If they collected more by virtue of the judgment than was actually due them, such collection would inure to the benefit of the holder of the collateral, until the holder of the collateral had been reimbursed for the amount due him. When they had fully collected all that was due them, then they could, of course, collect no more, and the holder of the collateral, if it was Mr. Richmond or anyone else, could compel the bank by a proceeding in equity,- to transfer to them all of those other notes so that they might be able to pursue and recover what was due on them. In the absence of any stipulation, an assignment of the collateral would carry with it an assignment of the original evidences of indebtedness, but this stipulation, you will readily see, prevents those notes from passing to the holder of the collateral; the bank holds the notes first, to reimburse itself for all that is due it, — -afterwards holds them merely in trust for the holder of the collateral: the holder of the collateral held the judgment of $10,000 first, to reimburse him to the extent of his interest and after that, in trust for the bank. When J. R. Clark, or anyone for him, has paid the full amount of his indebtedness to the bank or to the holder of the collateral, then nothing further could be recovered from him. Any equities between Mary E. Clark and J. R. Clark cannot be worked out in this case, but would be worked out in a separate and distinct suit. [3]
    Plaintiff presented this point:

      1. The court is respectfully asked to charge the jury that under all the evidence in this case its verdict must be for the plaintiff for the face of the note in suit, with interest from April 7, 1897.
    We affirm this point; we say to you under the evidence in this case, the evidence on the part of the plaintiff being purely documentary, their case depends in no particular upon parol proof, and the defense having failed to make a defense to this action, this point is affirmed and the verdict will be for the plaintiff for the amount of this note, with interest from the time it was due to this date.
    Now, gentlemen, as we have already said to you, at the time this assignment was made, under the evidence offered by the plaintiff, there was due to the bank $10,613.98. Under the evidence since that time, there has been paid some small amounts, $84.58, to the bank, perhaps some other small items, but in any event it leaves the amount due to the bank considerably more than the amount of this note and interest, so that your verdict will be for the plaintiff, for the amount of this note and interest to this date. [4]
    Verdict and judgment for plaintiff for $568.75. Defendant appealed.

      Errors assigned were (1-4) above instructions, quoting them.

      R. B. Stone, with him Thomas B. Wilson, for appellant.-
    It has been held that debtor and creditor alike must make application if at all at the time of payment: Simson v. Ingham, 2 Barn. & C. 65; Clayton’s Case, 1 Merivale, 572.
    One having the means of payment of a debt due himself in his hands must be considered as having made the appropriation at the first opportunity presented of making his election to do so: Ingram’s Estate, 32 P. L. J. 233; Ronig v. Erdman, 5 Whart. 112.
    Or at least within a reasonable time after payment: Harker v. Conrad, 12 S. & R. 301.
    It is too late for either party to claim a right to make an application after the controversy has arisen: United States v. Kirkpatrick, 22 U. S. 720,

      February 26, 1909:
    Where neither has exercised it the law nevertheless presumes, in ordinary cases, that the debtor intended to pay in a way which at the time was most to his advantage: Harker v. Conrad, 12 S. & R. 301; Pardee v. Markle, 111 Pa. 548; Moorehead v. West Branch Bank, 3 W. & S. 550.
    If there is a surety upon any debt the application will first be made upon that debt for the surety’s relief: Jones on Pledges and Collateral Securities, sec. 548.
    Where collateral security is given to secure a note and also future advances, payment is first to be applied to the note: Jones on Pledges and Collateral Securities, sec. 548; Goddard v. Hodges, 1 C. & M. 33.
    If a thing is pledged to a creditor for several debts, and the pledge when sold is not sufficient to pay all the debts, the money arising from the sale is to be applied proportionately to all the debts to extinguish the same pro tanto: Story on Bailments, sec. 312; Graeffs Appeal, 79 Pa. 146; Weisse’s Estate, 36 P. L. J. 274; Ege v. Watts, 55 Pa. 321; Donley v. Hays, 17 S. & R. 400; Fourth Nat. Bank’s App., 123 Pa. 473.

      W. E. Burdick, with him F. W. Hastings and D. H. Jack, for appellee.
   Opinion by

Porter, J.,

This action is brought upon a negotiable promissory note, dated January 7, 1897, made by the defendant payable to the order of Junius R. Clark, three months after date. The parties filed a stipulation in the court below agreeing that W. W. Bell, the nominal plaintiff, had taken and held the note as cashier of the First National Bank of Bradford; that the note was the property of said bank and that the case should be tried as if the action had been brought in the name of the bank “and further that upon the trial it shall be treated and considered as though the pleadings had been drawn in accordance with this stipulation.”

The uncontradicted evidence established that the note was the last of a series of renewals of an original note for $500, of which the bank was a holder for value before maturity; that at one of the renewals the defendant had paid $150 and given a new note for $350 for which amount the note was from time to time renewed. There was no evidence which tended to show that the defendant had given the note to J. R. Clark without a full consideration or that the consideration had failed. The defendant while making no attempt to deny that the note when given was a valid obligation founded upon a sufficient consideration and that the bank took the note before maturity and for full value, set up the defense that she had paid the note. The evidence produced by the defendant tended to establish a .rather complicated state of facts, from which the defendant contends an implication of law would arise that the note had been paid.

The facts upon which the defendant relied, if by the jury found from the evidence, must necessarily be stated at some ' length. The note in question was not paid at maturity and, on September 21, 1900, this action was brought. Junius R. Clark was, when this note was discounted by the bank, and subsequently continued to be indebted to the bank in a large amount, in addition to his liability as indorser upon this note; on December 14, 1907, he executed and delivered to the bank his judgment note in the sum of $10,000 to be held by the bank as a security collateral to all the obligations upon which he was liable; the bank entered judgment against Junius R. Clark, upon this warrant of attorney, on February 23, 1898, in the sum of $10,000 with attorney’s commissions. And this judgment was revived in February, 1903. After the defendant had made the note in suit litigation arose between Mary E. Clark, this defendant, Ellen C. Hanna, Junius R. Clark, E. K. Clark and Roger P. Clark, concerning certain lands situate in McKean county. Ellen C. Hanna, in February, 1898, in an equity proceeding obtained a decree against Junius R. Clark for a large amount of money and also for the partition of certain lands. There was also litigation pending in the United States courts between the same parties and E. K. Clark and after it had been pending for a number of years the parties decided to make a settlement. Ellen C. Hanna and this defendant desired to purchase the interest of E. K. Clark in certain properties and in order to enable them to do this arranged to effect a sale of a part of the property to R. J. Hoffman, who agreed to furnish the money to enable them to carry out the transaction. The judgment of the First National Bank against Junius R. Clark was thought to be a lien upon the land and Mrs. Hanna and Miss Clark, through their attorney, entered into negotiations with the bank to obtain control of that judgment. Mary E. Clark had prior to this filed a bill in equity against the First National Bank of Bradford, in which she had attacked the validity of the judgment as a lien upon the land, and that proceeding was then pending. The representatives of the bank finally entered into an agreement with Mrs. Hanna and Miss Clark under the terms of which the bank agreed, in consideration of the sum of $6,750 to assign the judgment against Junius R. Clark to Thomas F. Richmond, as attorney for Mrs. Hanna and Miss Clark, subject to certain stipulations and conditions. The bank did, on May 13, 1903, execute a paper assigning the judgment to “Thomas F. Richmond, attorney for Ellen C. Hanna and Mary E. Clark,” which paper set forth the terms and conditions upon which the assignment was made, and Mr. Richmond, as attorney for Ellen C. Hanna and Mary E. Clark, accepted the assignment in writing “upon the terms and conditions therein stated and all such terms and conditions are made a.part of the contract of assignment.” Among the terms and conditions upon which the judgment was assigned were the following: a certain designated tract of land was not to be sold under this judgment nor upon the decree in favor of Ellen C. Hanna, in the equity proceeding above referred to, nor upon the judgment of Mary E. Clark held by her against said Junius R. Clark. The parties also agreed that the equity proceeding of Mary E. Clark against the First National Bank should be discontinued. The following paragraph of the assignment seems, for the purposes of this case, to be most material: “It is also stipulated that any notes of other securities held by the First National Bank of Bradford to secure which the above stated judgment was given as collateral, shall be held and retained by the said bank unaffected by said assignment.” The whole purpose of the parties to the assignment and the effect which they intended it should have is made clear by the following paragraph: “ It is further stipulated and made a part of this assignment that after the assignee shall have used said judgment for the purpose of perfecting title to certain lands bound by the lien of said judgment he, his heirs or assigns, shall, if requested so to do, reassign said judgment to the First National Bank, its successors or assigns, after crediting upon said judgment any amount which it shall be entitled to be credited with as proceeds of sale of said property.” It is manifest that the only purpose and intention of the parties, in assigning the judgment, was to enable the assignees to perfect the title to certain lands; that they thought it might be necessary in order to accomplish their purpose to sell those lands upon this judgment and they agreed that in case such a sale was made the amount to which the judgment would become entitled as a lien upon the land should be credited upon the judgment. Had the lands been sold upon the judgment, the effect would have been to reduce the amount of the judgment which the bank would be entitled to have reassigned to it after the assignees had used it for the purpose of perfecting the title to the lands of which they wished to dispose. The net result of this arrangement was to give to the assignees, in consideration of the amount which they had paid to procure the assignment, the right to take as their own any amount which they'might succeed in making upon the judgment out of the lands, in case they proceeded to a sale. The fact that the assignees accomplished their purpose by releasing the land from the lien of the judgment, instead of selling it thereon, was only in line with the original intention. There is not in the agreement assigning the judgment one word from which it could be inferred as a fact or implied, as matter of law, that it was the intention of the parties that the $6,750 which the assignees paid for the assignment should, as between the assignees and Junius R. Clark, the defendant in the judgment, be treated as a credit upon the judgment. There is nothing in the evidence which could justify the suggestion that the parties had any such consequence in their minds. To have reduced the judgment by the amount which the assignees paid for the assignment would have defeated the very purpose of the parties, which was to use the judgment, in case it became necessary, to get rid of any interest which Junius R. Clark, the judgment defendant, might have in the land.

The uncontradicted evidence established that, on May 13, 1903, when Ellen C. Hanna and Mary E. Clark paid to the bank $6,750 and procured the assignment to Mr. Richmond, their attorney, of the judgment against Junius R. Clark, the indebtedness of the latter to the bank, for which he had given this judgment as a collateral security, amounted to $10,612.80. This aggregate of indebtedness was made up of the following items, notes upon which he was liable as maker, with interest thereon, $9,965.80; an overdraft made by him of $201; and the note upon which this suit is brought, upon which he was liable as indorser only, $350, with $96.00 interest thereon. The only amount received by the bank since that date was $84.58, with which payment this defendant had no connection. The amount which the bank received from Ellen C. Hanna and Mary E. Clark was nearly $4,000 less than sufficient to discharge the entire indebtedness of Junius R. Clark to the bank. There is not a scintilla of evidence from which a jury should have been permitted to find that the agreement under which the bank assigned the judgment against Clark to Richmond, as attorney for Ellen C. Hanna and Mary E. Clark, was intended to be a full settlement between the bank and Mary E. Clark and a payment of the note now in suit. The express terms of the written agreement negative any such intention, “any notes or other securities held by the First National Bank of Bradford to secure which the above stated judgment was given as collateral, shall he held and retained by the said bank unaffected by said assignment.” And upon this point the oral testimony was in entire accord with the written agreement. The court very properly refused to submit this question to the jury. There was no evidence which would warrant a finding that Ellen C. Hanna and Mary E. Clark, at the time they paid the money for the judgment which they bought, made any attempt to appropriate the money, which they thus paid, to this note or any other security for which the judgment against Junius R. Clark had been held by the bank as collateral.

The learned counsel representing the appellant contends that because the evidence does not disclose that the bank had made an application of the $6,750, for which they sold the judgment, the law will, under the circumstances of this case, make application thereof to the payment of this note of Mary E. Clark. The ground upon which he founds this position is that when neither of the parties has made application, the law makes application in the manner most favorable to the debtor. The answer to this would seem to be that Mary E. Clark was not the debtor, in the judgment which she bought. There is not, so far as the principle here involved is concerned, any distinction between a judgment and any other security. Had Junius R. Clark delivered to the bank United States bonds, or the bonds of a municipal or other corporation, as collateral security for his obligations to this bank, and had Ellen C. Hanna and Mary E. Clark bought those bonds from the bank, it will scarcely be contended that Mary E. Clark would have had anything to say, in the absence of an express agreement, as to how the purchase money for those bonds should be applied by the bank. The appropriation of the fund derived from the sale of the collateral was, in the absence of an express agreement, a matter wholly between the bank and Junius R. Clark, the judgment debtor.

Junius R. Clark was the debtor of the bank, he gave the note upon which the judgment was entered as a security collateral to the other securities held by the bank. The bank undoubtedly took a risk in assigning this judgment to Ellen C. Hanna and Mary E. Clark, for had the assignees proceeded on the judgment and realized from the property of Junius R. Clark an amount in excess of $6,750 the bank might have been required to credit the amount of such excess upon the claims which it continued to hold against Junius R. Clark. When the bank assigned the judgment the consideration for that sale must, as between the bank and Junius R. Clark, be considered as having been realized from the note which he had given as a collateral security for all the claims against him. The effect of the receipt of that money by the bank was, as between the bank and Junius R. Clark, precisely the same as if the fund had been realized from the sale of property of Clark upon the judgment: that is the same as if Clark had actually paid the money to the bank. Clark had given to the bank a collateral security and the bank had derived the fund from the sale of that security. Junius R. Clark was therefore entitled to credit for the $6,750, the moment that money was received by the bank, without regard to whether the assignees of the judgment ever realized a single dollar from the sale of his property. Had the assignees proceeded on the judgment and realized more than $6,750 another question would have arisen, as between Junius R. Clark and the bank, but this case does not present that question.

The bank was the creditor and Junius R. Clark was the debtor and the manner in which the $6,750 should be appropriated to the claims, which the former held against the latter, was a matter in which no other party had a right to interfere. They might have agreed to any application that they saw fit. Neither of them at the time, made any appropriation of the payment to particular claims. Mary E. Clark was not upon the note in suit a surety of Junius R. Clark; she was the maker of the note and the principal debtor. The law would certainly raise no implication that a payment upon the indebtedness of Junius R. Clark should be applied to the extinguishment of the independent indebtedness of Mary E. Clark, she being the principal debtor and not a surety. The only party here complaining is Mary E. Clark who contends that the money should have been applied to the payment of her note, upon which Junius R. Clark was liable only as indorser. Had Junius R. Clark paid to the bank the amount of this note, he as indorser would have been entitled to the paper and, so far as the evidence in this case discloses, he could have recovered from Mary E. Clark the amount thereof. The appropriation of this payment contended for by the appellant would have been adverse both to the right of the creditor, the bank, and Junius R. Clark, the debtor. No appropriation of the payment to specific claims having been made, the law would apply it in the way most beneficial to the creditor; and, therefore, to the debt which is least secured, unless to the prejudice of a surety: Pierce v. Sweet, 33 Pa. 151; Johnson’s Appeal, 37 Pa. 268; Smith v. Brooke, 49 Pa. 147; McKelvey v. Jarvis, 87 Pa. 414; Borland v. Murphy, 92 Pa. 91; Moore v. Kiff, 78 Pa. 96; Garrett’s Appeal, 100 Pa. 597. The effect of this rule would be to appropriate the payment to the claims of the bank against Junius R. Clark; to the notes in which he was liable as maker and for which the bank held the obligation of no other party as an additional security. This rule would exclude from participation in the appropriation the note in question, the independent obligation for which Mary E. Clark was primarily liable as maker, the liability of Junius R. Clark being that only of an indorser. These considerations, coupled with the facts that Mary E. Clark at the time she and Ellen C. Hanna paid the money for and accepted this assignment, took it subject to the express covenant that the bank should continue to hold and retain any notes or other securities for which the judgment had been collateral, unaffected by the assignment; that Mary E. Clark at that time knew that this very action on the note was pending against her; and that the assignment while expressly covenanting as to the disposition of other litigation between the parties made no mention of this, lead us to the conclusion that the action of the court below in giving binding instructions in favor of the plaintiff was free from error.

The judgment is affirmed.


author: Morrison, J.,

text:
    Williams Typewriter Company, Appellant, v. Cleaver.

      Contract- — -Alteration of written contract — Contract of sale — General and specific contract.

    1. Where a written contract for the purchase of typewriters is altered after the purchaser has signed it, by the insertion of serial numbers of the typewriters and by the addition of a schedule materially varying the terms of payment, the seller cannot enforce the agreement.
    2. In such a case the insertion of the serial numbers in the contract, without the knowledge or consent of the purchaser, changes it from a general to a specific contract, and the change is very material because it gives the seller the right to sue for and recover the contract price for the typewriters if the purchaser refuses to take them, but without such insertion the recovery is limited to the difference between the price agreed upon and the market value on the day fixed for delivery.

      Evidence — Assignments of error — Appeals—Harmless error.

    3. Where the trial judge gives binding instructions in favor of the defendant because of material alterations made by the plaintiff in the contract in suit after the defendant had signed it, errors in ruling on what was or was not proper cross-examination, are harmless.
    Argued Oct. 28, 1908.
    Appeal, No. 92, Oct. T., 1908, by plaintiff, from judgment of C. P. Northumberland Co., Dec. T., 1904, No. 220, on verdict for defendant in case of The Williams Typewriter Company v. C. L. Cleaver, publisher of the “ Daily News.”
    Before Rice, P. J., Porter, Henderson, Morrison, Orlady, Head and Beaver, JJ.
    Affirmed.
    Assumpsit on a contract of sale. Before Auten, J.
    The opinion of the Superior Court states the facts.
    Verdict and judgment for defendant. Plaintiff appealed.

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

      W. J. Sanders, with him P. A. Vought, for appellant.
    The insertion of the serial numbers did not add to or change the liability of the defendant, nor did it change the remedy, hence it was immaterial and did not avoid the contract laid down in Miller v. Reed, 27 Pa. 244; Express Pub. Co. v. Aldine Press, 126 Pa. 347.
    An alteration is immaterial which does not change the legal effects of the instrument: Gardinier v. Sisk, 3 Pa. 326; Robertson v. Hay, 91 Pa. 242; Com. v. Emigrant Industrial Savings Bank, 98 Mass. 12; Elizabeth v. Force, 29 N. J. Eq. 587.

      L. S. Walter, with him W. B. Faust and F. E. Bucher, for appellee.
    With the serial numbers inserted into the agreement it becomes a contract for the purchase of specific typewriters and the plaintiff in such case would be entitled to recover the full purchase price as set out in the agreement: Reynolds v. Callender, 19 Pa. Superior Ct. 610; Jones v. Jennings, 168 Pa. 493; Miller v. Reed, 27 Pa. 244; Fulmer v. Seitz, 68 Pa. 237; Citizens’ Nat. Bank of Baltimore v. Williams, 174 Pa. 66; Sunday v. Dietrich, 16 Pa. Superior Ct. 640; Alexander v. Buckwalter, 17 Pa. Superior Ct. 128; Colonial Trust Co. v. Getz, 28 Pa. Superior Ct. 619; Unexcelled Fire-Works Co. v. Polites, 130 Pa. 536; Blair v. Ford China Co., 26 Pa. Superior Ct. 374.
    February 26, 1909:
   Opinion by

Morrison, J.,

On December 16, 1903, the defendant entered into a written contract with the plaintiff for the purchase - of three Williams typewriters, one roll-top desk and two eight-drawer desks for the sum of $405, payable four months after date, with the privilege of paying the same prior to maturity on mutually satisfactory advertising mileage to be renewed until used. The undisputed evidence shows that the agreement was executed in the borough of Mt. Carmel, Pennsylvania, and that the printed contract was presented by plaintiff’s agent to the defendant for execution when the latter was about to take a train for Philadelphia, and he told plaintiff’s agent that he did not have time to read the contract but would sign the same if the conditions of the contract were as stated by the agent, namely, that the advertising on account of which the said railroad mileage was to be secured was to be furnished and the transportation secured, by the plaintiff company. The defendant was informed by the agent of the plaintiff that such was the case and he signed the contract and immediately took the train for Philadelphia. The following day the defendant returned and read the contract he had signed. He then discovered that in accordance with its terms, he, the defendant, was not only to furnish the advertising matter and print the same, but was also to furnish transportation over the various railroads to the plaintiff company, in payment of the said typewriters and desks. He also discovered that the contract had been 'materially altered and changed; that prices for transportation as per a certain schedule had been attached to the original contract after the defendant had signed the same, which schedule of prices stated that the defendant was to furnish the transportation and gave a list of the roads over which transportation would be accepted, and that serial numbers of typewriters had been inserted into the contract. Upon the defendant’s discovery of these material changes and alterations in the contract, he immediately wrote to the plaintiff company countermanding the order for the said typewriters and desks. This letter was received by the plaintiff company but, nevertheless, the typewriters and desks were shipped to the defendant. When the typewriters and desks reached Mt. Carmel the defendant refused to receive them and refused to pay for them, either in cash or railroad advertising mileage, and therefore this suit.

The plaintiff’s declaration claims damages for the breach of the contract for the full value of the articles mentioned in the contract.

The undisputed evidence- shows that after the contract was signed and delivered by the defendant to the plaintiff’s agent, there was attached to the contract, without the defendant’s knowledge or consent, an important schedule in reference to the prices for transportation and placing upon the defendant certain obligations not contained in the contract which he signed. The contract when signed did not contain the serial numbers of the typewriters and these numbers were also inserted by the plaintiff’s agent without the knowledge or consent of the defendant. The effect of the latter was to make the contract refer to specific typewriters, whereas without these numbers inserted, it only referred generally to three Williams typewriters. The learned court below was of the opinion, both at the trial and on the motion for a new trial, that the two alterations above referred to were material and in law relieved the defendant from the obligation of the contract. Upon this ground, at the trial, the court directed a verdict for the defendant and, on the same ground,. refused to set aside the verdict and grant a new trial. The numerous assignments of error complain of this action of the court. In our opinion, the learned court committed no error in withdrawing the case from the jury.

It were of an

cannot be doubted that the alterations in the contract material, as they imposed obligations on the defendant important character, not embraced in the original con-tract. The effect of inserting the numbers of the typewriters was to make the contract specific, and this would change the general rule as to the measure of damages arising out of a breach of the contract. The general rule that in executory contracts for the sale of goods not specific, the measure of damages for the refusal of the buyer to accept the same is the difference between the price agreed upon and the market value on the day appointed for delivery, does not apply to an agreement for the sale of certain specific shares of a corporation represented by a particular certificate. In such a case where the vendor has tendered the delivery of the particular shares of stock as required by the contract, he is entitled to the purchase price: Reynolds v. Callender, 19 Pa. Superior Ct. 610, and cases there cited.

In Jones et al. v. Jennings Bros. & Co., 168 Pa. 493, Mr. Justice McCollum, speaking for the Supreme Court, said: “In executory contracts for the sale of goods not specific, the measure of damages for the refusal of the buyer to accept the same is the difference between the price agreed upon and the market value on the day appointed for delivery.” This language plainly implies that if the goods were specific the rule would be different.

Under the law, as we understand it, the insertion of the serial numbers in the contract, without the knowledge or consent of the defendant, changed it from a general to a specific contract, and the change was very material, because it gave the plaintiff the right to sue for and recover the contract price for the typewriters, but without such insertion the recovery would have been limited to the difference between the price agreed upon and the market value on the day fixed for delivery.

The case of Miller v. Reed, 27 Pa. 244, cited by counsel for appellant, is not in point. The alteration of the note in that case was not material because it conferred no new benefit upon the payee, nor did it impose any new obligation upon the payors. Several other authorities cited by the appellant in his paper-book are not in point as they relate to cases where the facts were in dispute, an assertion on the part of one party and a denial on the part of another, in such case the question could not be ruled as a matter of law.

In the present case there is no dispute of fact as to the insertion of the serial numbers after the contract was signed. Nor is there any dispute of fact that the schedule of prices was attached to the contract, after the defendant executed it, without his knowledge or consent. The contract which the defendant signed gave him the privilege of paying for the typewriters and desks with “mutually satisfactory advertising mileage.” This was probably a valuable condition of the contract, but the schedule attached to the contract has the effect of nullifying the mutually satisfactory clause.

One who makes a voluntary, material and unauthorized alteration of a written contract cannot recover upon it: Fulmer v. Seitz, 68 Pa. 237; Hartley & Co. v. Corboy, 150 Pa. 23.

We held in Sunday v. Dietrich, 16 Pa. Superior Ct. 640, where the word “order” had been stricken out of a promissory note and the word “bearer” interlined, the note could not be admitted in evidence until evidence was introduced by the plaintiff explaining the alteration. See also Alexander v. Buckwalter, 17 Pa. Superior Ct. 128; Colonial Trust Co. v. Getz, 28 Pa. Superior Ct. 619.

In the present case there was no attempt to explain, by competent evidence, the material alterations of the contract above referred to. Therefore, the court committed no error in directing a verdict in favor of the defendant.

Several of the assignments of error complain that the. court permitted the defendant, when called for cross-examination, to be questioned on matters which were improper and which had not been touched upon by the witness in answer to questions put to him by plaintiff’s counsel. The case was not submitted to the jury and, therefore, no harm was done by such testimony, conceding it to be improper. The binding instruction was given because the contract upon which the plaintiff declared was not the contract executed by the defendant.

The assignments of error are all dismissed and the judgment is affirmed.


text:
    Philadelphia to use v. Hafer.

      Road law — Paving—Original pavement — Municipal action.

    1. A first pavement in the legal sense, which exempts the abutting property owner from liability for any subsequent improvement, may be defined generally as one that is put down originally or adopted or acquiesced in subsequently, by the municipal authority, for the purpose and with the intent of changing an ordinary road into a street. It may be of macadam or anything else. This is a matter of evidence only. If the purpose and intent be wanting, a mere surfacing of the road, however carefully or expensively done, will not be a paving, but if the intent and purpose are present, or to be fairly inferred, then there is a paving whatever the material may be.
    2. When a city acquires the property of a plank road or turnpike company the duty which it assumes is to keep the highway in repair. The character of the highway is not changed from a road into a city street merely because- the city has acquired the possession and assumed the duty of maintaining the highway. The city may keep the road in repair, as such, until the proper time has arrived for the change into a city street, and the city authorities are sole judges as to when that time has arrived. The city may adopt such road as a street sufficiently well paved for all the requirements of present or future use, as a city street. And if this course is adopted as to any road or portion thereof, no matter how or with what material it was paved, then it becomes a street as the result of such action. The entire absence of formal municipal action is strong presumptive evidence of lack of municipal intent to adopt the road as a street.
    3. The action of the city which will give rise to an -implication of the adoption of a road as a paved street, and exempt an owner from assessment for future improvement, must involve a recognition of it as a paved street; mere recognition of it as a highway is not sufficient. No such recognition can be inferred from laying water pipes in the street, or in lighting it, or in collecting garbage and ashes from houses on it, or in requiring persons to take out a permit for making openings in it, or in permitting the operation of an electric railway on it, or in the paving of the center of the street with vitrified brick, by the railway company.
    Argued Oct. 22, 1908.
    Appeal, No. 163, Oct. T., 1907, by Mary Hafer, executrix of Charles Hafer, deceased, from order of C. P. No. 3, Phila. Co., Dec. T., 1906, No. 2,054, making absolute rule for judgment for want of a sufficient affidavit of defense in case of city of Philadelphia to use of Barber Asphalt Paving Company v: Charles Hafer.
    Before Rice, P. J., Porter, Henderson, Morrison, Orlady, Head and Beaver, JJ.
    Affirmed.
    Scire facias sur municipal claim for paving. Before Ferguson, J.
    The facts appear by the opinion of the Superior Court.

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

      Bayard Henry, with him Thomas Stokes, for appellants.
    It is immaterial that the paving was not originally put down by the city as a street paving, if it is subsequently acquiesced in by the city: Philadelphia v. Eddleman, 169 Pa. 452.
    Subsequent municipal acquiescence in a paving may be shown by the introduction of improvements into a street by the authority of the city: Harrisburg v. Funk, 200 Pa. 348.
    Although any one act of the city may not in itself be sufficient to show municipal acquiescence, yet all the acts set forth in .the affidavits of defense, taken collectively, are sufficient to show that prior to the laying of asphalt thereon the city had recognized Tacony street as a paved city street: Leake v. Philadelphia, 171 Pa. 125.
    But in addition to this the city did exercise a statutory authority with respect to the paving of the street by the ordinance of December 15,1902.

      Walter Biddle Saul, with him E. O. Michener, for appellee.
    The act of municipal adoption or acquiescence must be an affirmative act in regard to the paving. Actions taken by the city with respect to a street which are commonly done by the city with relation to its unpaved streets is not adoption, nor can adoption be presumed from the failure of the city to dis-affirm an intent to adopt: Dick v. Philadelphia, 197 Pa. 467.
    The first defense alleged is that Tacony street was formerly known as State road and open and in existence in front of defendant’s property prior to 1854, and that a plank road company constructed a plank road and later substituted a stone road for the plank road. Philadelphia v. Baker, 140 Pa. 11; Philadelphia v. Eddleman, 169 Pa. 452, and Dick v. Philadelphia, 197 Pa. 467, effectually dispose of any contention that municipal adoption can be shown from these facts.
    February 26, 1909:
    Repairing a street does not mean an adoption: Philadelphia v. Dibeler, 147 Pa. 261; Evans’s App., 210 Pa. 539.
    If the purpose and intent be wanting, a mere surfacing of the road, however carefully or expensively done, will not be a paving: Philadelphia v. Baker, 140 Pa. 11.
    That the city had authorized a street railway company to lay its tracks along Tacony street proves nothing in regard to the intent to adopt the paving of the street: Reading v. United Traction Co., 215 Pa. 250.
   Opinion by

Porter, J.,

This is a scire facias upon a municipal lien for paving Tacony street, under the provisions of an ordinance approved June 30, 1904. An affidavit of defense was filed which the appellant contends averred facts which established that the work was the repaving of a city street and not an original paving for which the property owner was liable. The court below made absolute a rule for judgment for want of a sufficient affidavit of defense, and the defendant appeals.

The affidavit of defense contained the following material averments. Tacony street was formerly known as State road, and was open and in existence in front of defendant’s property prior to the year 1854, when the borough of Frankford was consolidated with the city of Philadelphia; that on March 3,1854, P. L. 143, an act of assembly was passed authorizing the construction of a plank road by a company to be known as the Tacony & Poquessin Plank Road Company; that said company was organized in July, 1854, and soon afterwards completed that part of their road on what is now Tacony street; that prior to 1860, gas pipes were laid in the road in front of the property now owned by the defendant; that on April 3, 1860, P. L. 625, an act of assembly was approved which authorized the plank road company to change that portion of their road already laid with plank to a stone or turnpike road and to complete the said road with stone; that in 1860 the plank road company surrendered its franchise to the city of Philadelphia; that water pipes were laid along said part of said street in June, 1882, and that in order to tear up said street to connect with the gas and water mains the property owners were obliged to obtain permits from the city of Philadelphia. The affidavit averred, further, that by ordinances of December 23,1892, and December 28,1894, the city authorized the Holmesburg, Tacony & Frankford Electric Railway to operate an electric railway on said Tacony street in front of defendant’s property, said railway company agreeing to keep and maintain said street in good order at all times; that in 1895, said railway company dug up the macadam of said street and laid a single track, with turnouts, repaving said street with vitrified brick between the tracks, and since laying their tracks said railway company had maintained said street in repair; that brick sidewalks and curbs had been laid on said Tacony street in front of defendant’s property for a period of over fifteen years, and that ashes and garbage had been collected and said street had been lighted with electric lights for the same length of time; that the street had been macadamized in front of defendant’s property since 1884 and there had been no change of grade or plans made in said street during that period; and'that the street had been cleaned at intervals and dirt carted away from the gutters. A supplemental affidavit of defense was filed, which set forth at length two ordinances of the city, the first of which was approved April 5, 1884, and the second October 21, 1884. By the provisions of the first ordinance the chief commissioner of highways was “ authorized and directed to repair State Road, from Bridge Street to Delaware Avenue, with broken stone and to make arrangements with the Board of Managers of the House of Correction to furnish materials and to have said work done by the inmates of said institution;” and the city controller was authorized to countersign warrants to an amount not exceeding $5,000 for the necessary expenditures relating to the work. The second ordinance transferred the sum of $5,000 from another appropriation, “to provide for the payment of the hauling and transportation of materials, and for necessary expenditures relating or incidental thereto, for finishing the work of repairing State Road, from Bridge Street to Delaware Avenue, with broken stone and gravel.” This affidavit stated that, under said ordinances, a durable macadam paving was constructed in the center of the street, leaving a strip about six feet wide next the curb on each side, and the owners of the abutting property, at the same time, entered into an arrangement with the authorities of the house of correction and procured the macadamizing of this strip of the street next the curb and paid for the same; that the city of Philadelphia maintained Tacony street in repair at public expense up to June, 1895. This affidavit also set forth at length the provisions of an ordinance, approved December 15,1902, authorizing the department of public works “to lay water mains for the distribution of filtered water” in a large number of streets, including the street in question, and “to remove street paving and relay the same,” and directing that the expense of said work be charged to the appropriation for main line pipe and lines for the distribution of filtered water; and averred that under the authority of this ordinance Tacony street in front of defendant’s property had been dug out from curb to curb and main pipes for filtered water laid therein, and that said street in front of defendant’s property had been left without paving for over a year, and at the expiration of that time the asphalt paving was laid, to pay for which this claim was filed. The learned counsel for the appellant argue that from all these facts the inference is to be drawn that the city adopted and acquiesced in the construction of the plank road, by the plank road company, or, if not that plank road, then the repair of the road by the city, with macadam, in 1884, as a paving of the road, for the purpose and with the intent of changing an ordinary road into a city street. It may here be observed that the affidavit of defense does not state that the plank road company had availed itself of the provisions of the act of assembly of April 3, 1860, by changing the road already laid with plank into a stone or turnpike road. What the condition of the road was at the time it passed into the charge of the city is not by the affidavit of defense made to appear.

“As the city has the exclusive right to determine in the public interest when, how and with what material such conversion into a street shall take place, it is essential to such a first pavement as shall exonerate the abutting owner from further charge for improvement, that it shall be laid or adopted by the municipal authority. Not necessarily by formal ordinance declaring the change, for it is not always convenient or even possible to make such documentary proof, but municipal recognition of the pavement of the street, as such, must appear, either by action in the first instance or by acquiescence and adoption subsequently. ... A first pavement, therefore, in the legal sense, which exempts the abutting property owner from liability for any subsequent improvement, may be defined generally as one that is put down originally or adopted or acquiesced in subsequently, by the municipal authority, for the purpose and with the intent of changing an ordinary road into a street. It may be of macadam or anything else. That is a matter of evidence only. If the purpose and intent be wanting, a mere surfacing of the road, however carefully or expensively done, will not be a paving, but if the intent and purpose are present, or to be fairly inferred, then there is a paving whatever the material may. be. It may perhaps be safely stated as a corollary, that prima facie, macadamizing is not a street paving in Philadelphia or probably in other large cities, .while on the other hand there may be a presumption the other way in smaller cities or towns:” Philadelphia v. Eddleman, 169 Pa. 452. When a city acquires the property of a plank road or turnpike company the duty which it assumes is to keep the highway in repair. The character of the highway is not changed from a road into a city street merely because the city has acquired the possession and assumed the duty of maintaining the highway. The city may keep the road in repair, as such, until the proper time has arrived for the change into a city street, and the city authorities are the sole judges as to when that time has arrived. The city may adopt such road as a street sufficiently well paved for all the requirements of present or future use, as a city street. And if this course is adopted as to any road or portion thereof, no matter howor with what material it was paved, then it becomes a street as the result of such action. The entire absence of formal municipal action is strong presumptive evidence of lack of municipal intent to adopt the road as a street; “municipal adoption or acquiescence cannot be assumed. It must be proven:” Harrisburg v. Funk, 200 Pa. 348. The action of the city which will give rise to an implication of the adoption of the road as a paved street, and exempt an owner from assessment for future improvement, must involve a recognition of it as a paved street; mere recognition of it as a highway is not sufficient. When the city acquired the property of the plank road company, in 1860, the road was either planked or macadamized, the affidavit does not clearly state which, and gas pipe had already been laid in the road. From the mere acquisition of the road in this condition no inference could be drawn that the city adopted it as a paved city street. The laying of water pipe in the street, in 1882, had no connection with the pavement, for water pipes may be laid in a street, whether paved or unpaved, and are often laid in streets but little used, in order to more directly reach local centers of population. The subsequent lighting of the street had no material bearing upon the question, for unpaved streets may properly be lighted, and in modern times the unpaved roads of country villages are frequently lighted. The fact that garbage and ashes have been collected along the highway for a number of years past has no more connection with the character of the street than has the fact that houses fronting upon the road are subject to the jurisdiction of the health department of the city. The fact that persons who opened the street to make connection with the water and gas mains of the city were required to take out a permit can have no weight in determining whether the street was paved or unpaved; the city may very properly make such a regulation with regard to its water and gas mains in any and all streets, whether paved or unpaved. The consent of the city to the construction and operation of an electric railway on the road did not involve the adoption of the road by the municipality as a paved city street; such railways may lawfully be operated upon suburban and country roads, as weil as city streets. None of these acts singly nor altogether following each other at varying periods, could be held to justify the inference that the municipality had adopted or acquiesced in the original surfacing of the road or any repair thereof as converting the road into a paved street: Philadelphia v. Eddleman, 169 Pa. 452; Dick v. Philadelphia, 197 Pa. 467; Philadelphia v. Gowen, 202 Pa. 453; East Street, 210 Pa. 539. The repair of the street by macadamizing, under the provisions of the ordinances of 1884, was not such an original paving as would exempt abutting property from assessment when, in the judgment of the municipal authorities, the time had come for changing the road into a city street and placing upon it a suitable pavement: Philadelphia v. Baker, 140 Pa. 11; Philadelphia v. Dibeler, 147 Pa. 261. Even if the action of the electric railway company, in paving between the rails of its'track with vitrified brick, could be held to be a paving of the road with the approval of the municipal authorities, that would be only applicable to the strip of the street so paved, and would leave the abutting owners liable to assessment for the paving of the other parts of the street: Alcorn v. Philadelphia, 112 Pa. 494. The affidavit of defense does not state what width of the street was so paved with vitrified brick by the electric railway company and does not aver that the defendant was charged with any amount of the pavement between such tracks, thus failing to show that the defendant is called upon to pay for any part of the pavement of the street for which he is not liable.

The ordinance of December 5, 1902, authorizing the laying of water mains for the distribution of filtered water in Tacony and other streets, did not specifically authorize the paving of any street, 'it simply authorized the proper officers to remove and relay such street paving as was necessary to permit the construction of the mains for the distribution of filtered water. The affidavit of defense specifically avers that the macadamizing was not replaced upon the part of Tacony street in question; there was, therefore, no paving of the street under the provisions of that ordinance. The affidavit does not deny that the paving for which this lien was filed was laid under the authority and in accordance with the provisions of the ordinance of June 30, 1904. The authorities hereinbefore cited dispose of all the questions raised by the affidavit of defense, adversely to the contention of the appellant.

The judgment is affirmed.

Rice, P. J., and Head, J., dissent.