author: ME. COMMISSIONER CLAYBEEG Pee, C'ueiam. Me. Justice Holloway;

text:
    PORTER et al., Appellants, v. PLYMOUTH GOLD MINING CO., Respondent.
    (No. 1,747.)
    (Submitted December 11, 1903.
    Decided January 11, 1904.)

      Corporations — Ultra Vires Contracts — Purchase of Stock— Contracts with Shareholder — Validity — Estoppel — Reduction of Capital Stock — Agreements with Subscriber — Contracts — Concurrent Conditions — Offer of Performance — Premature Offers — Appeal—Record—Sufficiency—Bills of Exception — Recitals — Effect — Affirmance of Judgment— Gh'ounds — A tta chment.

    1. Where the bill of exceptions recites service of notice of appeal upon counsel for respondent, and shows such counsel’s acknowledgment of the same, a contention that service of such notice does not appear from the record is without merit.
    2. A contention that the record does not contain the notice of appeal and judgment roll properly certified cannot be sustained where appellant procured a new certificate of the clerk of the lower court, which appears attached to the transcript, and by which the clerk certifies that the record contains “full, true and correct” copies of the judgment roll and notice of appeal, to which no objection was made.

      3. Where a corporation contracted to sell stock, agreeing that if, at the expiration of six months from the date of sale, the purchaser should become dissatisfied with the stock or with its earning powers as an investment, he should be entitled to return the same, it could not be heard to say that the sale was valid, and the contract to repurchase was void, without rescinding the sale and returning the purchase money, thus placing the purchaser in statu quo.

    4. A private corporation may purchase its stock if the transaction is fair and in good faith, if it is free from fraud, actual or constructive, if the corporation' is not insolvent or in process of dissolution, and if the rights of its creditors are in no way affected thereby.
    5. The mere repurchase of capital stock by a corporation does not tend to decrease the same unless the directors should absolutely merge or extinguish the stock after its purchase, within the meaning of Civil Code, Section 438, providing that directors of corporations must not reduce or increase the capital stock except as thereinafter specially provided.
    6. It is presumed that directors do not violate the law and decrease the capital stock of the corporation on repurchasing the same, and some positive showing must be made to the contrary to overturn that presumption.
    7. A contract for the sale of stock by a corporation, whereby the corporation agreed to take back the stock if the purchaser should become dissatisfied therewith, is not objectionable a’s a secret contract between a corporation and a subscriber, by which the subscriber is at liberty to withdraw his subscription, but is valid and enforceable.
    8. Civil Code, Section 1950, defines a conditional obligation as one in which the rights of the parties depend upon the occurrence of an uncertain event. Section 1953 defines concurrent conditions as mutually dependent, and to be performed at the same time. Section 1955 provides that, before a party to an obligation can require another party to perform any act under it, he must fulfill all conditions precedent imposed upon himself, and must be able to offer to fulfill all conditions concurrent imposed upon him on like fulfillment by the other party. Held, that a purchaser of corporate stock, who, under his contract of purchase, was entitled to reconvey the same to the corporation, and receive the price paid, could not compel the corporation to repurchase the stock, without himself performing the concurrent condition of redelivery to the corporation.
    0. Where the option of resale of corporate stock was to be exercised “at the expiration of six months from this date,” the seller was not bound to repurchase until the expiration of the six months, and an offer to deliver the stock before the expiration of that time- was premature, and of no avail.
    10. An allegation that plaintiffs were “ready and willing” to return certain stock in accordance with a contract providing for its return and a repayment of the consideration given, cannót be construed as an allegation of an “offer” to return the stock.
    11. Where a demurrer to a complaint has been sustained for failure to state a cause of action, the judgment entered thereon will be affirmed on appeal if the supreme court concludes that the demurrer should have been sustained upon some other ground, although such ground was not suggested or argued to the supreme court, and although the lower court may have sustained the demurrer for a wrong reason.
    12. A recital in a bill of exceptions that the court below, in deciding a demurrer, only passed on the question that the complaint did not state facts sufficient to constitute a cause of action because the contract sued on was ultra vires, does not affect the rule that the supreme court will sustain the judgment on the demurrer, if the whole complaint fails to state a cause of action for some other reason than that recited.
    13. An attachment cannot be maintained on a complaint which does not state facts sufficient to constitute a cause of action.

      Appeal from District Court, Letuis and Clarice County; J. ill. Clements, Judge.

    ActioN by James Porter and others against the Plymouth Gold Mining Company. Prom a judgment entered on demurrer, and from an order’ dissolving an attachment, plaintiffs appeal.
    Affirmed.

      Mr. S. A. Balliet, for Appellant.
    The contract sued upon is not ultra vires; the corporation can mortgage or pledge its stock for the purpose of raising money to conduct its business, and if it may enter into a contract pledging its stock for the purpose of raising money needed for the management of its business, it may also’ make a conditional sale of said stock for the same purpose, or it may sell it unconditionally for such purpose. ( Chicago, Pelcin & Southern R. R. Co. v. President and Trustees of Town of Marseilles, 84 Ill. 145, 643; Taylor v. Miami Exportation Co., 6 Ohio, 83; City Bank. of Columbus v. Bruce, 17 N. Y. 507; Williams v. Savage Mfg. Co., 3 Md. Oh. 452; Ex parte Holmes, 5 Cow. 426; State v. Smith, 48 Vt. 266, 285, 290; Angelí & Ames on Corp. Sec. 280; Melvin v. Lamar Ins. Co., 80 Ill. 446 ; Beford R. R. Co. v. Bower, 48 Pa. St. 29; Cooke on Stock and Stockholders, Yol. 2, Sec. 681, p. 971; Leslie v. Lorillard et al., 110 N. Y. 531, 532; Logan County Bank v. Townsend, 139 U. S. 67, 71; Hitchcock v. Galveston, 96 IT. S. 341, 351; State Board of Agriculture v. C. S. Railway Co., 47 Ind. 407; Allegheny City v. McClurkin, 14 Pa. St. 81; Maher v. Chicago, 38 Ill. 266; Oneida Bank v. Ontario Bank, 21 N. Y. 490'; Argenti v. City of San Francisco, 16 CaL 256; Silver Lake Bank v. North, 4 John. (N. Y.) Ch. 370; Vent v. Duluth Coffee & Spice Co., 64 Minn. 307; Brown v. St. Paul Plow Works, 62 Minn. 90; Thorndike v. Locke, 98 Mass. 340'; Fremont Carriage Mfg. Co. v. Thomsen, 91 N. W. 376; Civil Code of Montana, Seo. 520, Subd. 7.)
    The defendant having accepted plaintiffs’ money under said contract, and said corporation and its stockholders, having re-eeived tbe benefits of plaintiffs’ money paid upon said contract, are now estopped from denying tbe validity of said contract and from availing, themselves of tbe plea tbat it is ultra vires. (Eeese on Ultra Vires, Sec. 120'; Cooke, Stockholders, Secs. 311, 312; Blalock v. Kernsville Mfg. Co., 1101 N. G. 99; First Nat’l Bank v. Sáleme Mills, 39 Ped. Rep-. 89; Bank, etc. v. Bruce, 17 N. T. 510; Taylor v. Export Co., 6 Ohio, 176; In re Ins. Co., 3 Biss. (IT. S.) 452; Bank Business Transportar tion Co., 18 Vt. 138; Clapp v. Peterson, 104 Ill. 26; Dupee v. 1Water Power Co., 114 Mass. 37; Republic Ins. Co. v. Swigert, 135 Ill. 150; Chicago, etc. R. Co. v. Marseilles, 85 Ill. 145; Chatlain v. Ins. Co., 86 Ill. 220 ; Fraser v. Ritchie, 8 Ill. App. 554; Eggeman v. Blanks, 46 Mo-. App-. 318; Leland v. Hayden, 102 Mass. 542; E'by v. Guest, 94 Pa. St. 160; Early’s Appeal, 89 P. St. 160; Coleman v. Columbus Oil Co., 51 Pa. St. 74; Iowa Lumber Co. v. Foster, 49 Ohio, 25; State Bank v. Fox, 3 Blatch. (IT. S-.) 431; Hao'tridge v. Rockwell R. M. Charlt (Ga.), 260; Robinson v. Beale, 26 Ga. 17; Hagie v. People’s Ass’n, 107 N. C. 581; De Groff v. Am. Linen Thread Co., 24 Barb. 379; Steam Nav. Co. v. Weed, 17 Barb. 378; Silver Lake Bank v. North, 4 Johns. Cb. 370; Chester Glass Co. v. Dewey, 16 Mass. 102; McCutcheon v. Steamboat Co., 13 Pa. St. 13 ; Palmer v. Lowell, 3 Sandf. 170; Manchester, etc. R. Go. v. Concord R. Co., 9 L. R. A. 693; Millard v. S. F. X. Academy, 8 Ill. App-. 350; Memphis L. R. R. Co. v. Bell, 19 Fed. 393; Hitchcock v. Galveston, 96 IT. S. 351; Denver Fire Ins. Co. v. McClelland, 9 Colo. 11; Camden, etc. R. R. Co\ v. May’s Landing, etc. R. Co., 48 N. J. L. 530; Parrish v. Wheeler, 22 N. Y. 49; Bissell v. Railt'oad Co., 22 N. Y. 258; Kent v. Quicksilver Co., 78 N. Y. 159; Whitney Arms Co. v. Barlow, 63 N. Y. 62; Woodruff v. Erie Ry. Co., 93 N. Y. 669; Bradley v. Ballard, 55 Ill. 413; Terry v. Eagle Rock Co., Ml Conn. 141; Qarst v. Gale, 83 Ill. 137-; Wan'd v. Johnson, 95 Ill. 215; Peoria R. Co. v. Thompson, 103 Ill. 186.)
    Tbe order sustaining defendant’s demurrer and dissolving tbe attachment, and tbe judgment entered herein, is not authorized by tbe pleadings and is against tbe law, for tbe reason that tbe question as to whether or not tbe contract sued upon is ultra vires cannot be raised upon demurrer. Tbe plea must be made by answer setting up tbe facts, showing wherein tbe contract is beyond tbe power of tbe company to enter into-; to which plea tbe plaintiff may then reply, setting up> acquiescence, ratification or any matter in estoppel. (Manchester, etc. B. Go. v. Ooncord B. Go., 9. 1. R. A. 693; Denver Fire Ins. Go. v. Mc-Clelland, 9 Colo. 11; Chicago, etc. B. B. Go. v. Town of Marseilles, 84 Ill. 145 ; Estee’s Pleadings & Forms, Vol. 2, p. 740; Maxwell on Code Pleadings, p. 800; Camden, etc. B. B. Go. v. Bailroad Go., 48 N. J. E. 563; Newell y. Whitwell, 16 Mont. 243'; Vent v. Duluth G. & 8. Go., 64 Minn. 307; Brown v. St. Paul Plow Works', 62 Minn. 90; Fremont Carriage Go. y. Thomsen, 91 N. W. 378; Bank v. Pence, 59 Neb. 579.)

      Messrs. Walsh & Newman, for [Respondent.
    Tbe contract set forth in tbe complaint is ultra vires. (Constitution, ¶Art. XV, Sec. 10; Civil Code, Secs. 393, 438; Bank y. Wickersham, 34 Pac. 444; Thompson on Corporations, Secs. 1511, 1513, 1514, 1516, 1517, 1612; J swell v. Bock Biver Paper Go., 101 Ill. 57; White Mt. By. Co. v. Eastman, 34 N. BE. 124; Minneapolis T. M. Go. v. Davis, 40 Minn. 110; Gill y. Bates, 72 Md. 424; Bedford B. Go. v. Bowser Co., 48 Pa. St. 29 ; Blodgett v. Merrill, 20 Vt. 509; Melvin v. Lamar Ins. Go., 80 Ill. 446; Miller v. Hanover, etc. By. Go., 87 Pa. St. 95; Sturgis v. Stetson, Fed. Cases, No. 13,568; Bobinson v. P. O. By. Go., 32 Pa. St. 334; Graff v. P. & S. By. Go., 31: Pa. St. 489; Homey v. V. & A. By. Go., 17 Ohio, 187; Chandler y. Brown, 77 Ill. 335; La Grange v. Plank Boad Go., 29 Mo. 464; Myer y. Blair, 109 N. Y. 600; Earnest v. Elmira M. I. Go., 54 N. Y. St. 116; Thompson v. Beno Savings Bank, 3 Am. St. Rep'. 797; Upton v. Tribilcock, 93 IT. S. 45; Sawyer y. Iloag, 17 Wal. 620; Burke v. Smith, 16 Wal. 390; Bider v. Morrison, 54 Md. 429; Hughes v. Antietam Co., 34 Md. 316; Pacific Fruit Go. v. Goon, 107 Cal. 447; Chicago Bldg. & Mfg.

      Co. v. Lyon, 64 Pae. 6; Topeka- Mfg. Co. y. Hale, 17 Pac. 601; Farnsworth v. Bobbins, 31 N. W. 349; Beach on Private Corporations, Sec. 538; Cools on Corporations, Sec. 168; Constitution, Art. VIII, Sec. 28; Code of Civil Procedure, Sec. 460.)
    Any person purchasing stock of a corporation is charged with a knowledge of the laws of the state or country under which it is created, the provisions of its charter and its by-laws. His rights must be determined by these laws. (Thompson on Corporations, Secs. 3046, 1137, 1400, 1401, 1393; Morawétz on Corporations, Sec. 101; Upton v. Tribilcock, 93 U. S. 45; Morgan v. Struthers, 131 U. S'. 31; Ciesen v. London & A. M. Co., 102 Fed. 584; Silver Mines v. Brown, 58 Fed. 644; Railway Co. v. Gebhard, 109 IJ. S'. 527; Hawkins v. Glenn, 131 U. S. 533; First Nat’l Bank v. Gustin, etc. Min. Co-., 42' Minn. 327; Peters v. Lincoln, 14 Fed. 319 ; Kelley v. Clark, 21 Mont. 340; Farnsworth v. Bobbins, 31 N. W. 349; Minneapolis T. M. Co. v. Davis, 10 Minn. 110.)
    A corporation cannot purchase its own stock. (Dartmouth College v. Woodward, 4 Wheat. 636; Civil Cbde, Secs. 393, 438, 413, 4654; German Savings Bank v. Wulfkluhler, 19 Kan. 60; Barton v. Port Jackson, etc. B. Co., 17 Barb. 397; Adams v. Westlake Co. (S. Dak.), 65 Pac. 471; Thompson on Corporations, Secs. 548, 1107, 1548, 2054, 3276, 3277, 8351; Zutullas Claim, 5 Chancery Appeals, 444; Coppin v. Green-less Co., 38 Ohio St. 275; Morgan v. Lewis, 45 Ohio St. 702; Price v. Pine I. C. Co., 32 S. W. 267; St. Louis Rawhide Co. v. Hill, Moi App. 142; St. Louis Mfg. Co-, v. Hilbert, 24 Mo. Appi 338; Crandall v. Lincoln, 52 Conn. 73; Abolles v. Cochran, 22 Kan. 441; First Nat’l Bank v. Ex. N. B., 92 U. S. 122; Bank of S. L. O. v. Wickersham, 34 Pac. 444; Heggie Bldg. & L. Ass’n, 12 Si Si 275; Hemng v. Buskin C. A., 52 S. W. 327; B'each, Private Corporations, Sec. 242; Currier v. Plate Co., 56 N. H. 262; Cooley on Const. Dim. 394; Green’s Brice’s Ultra Vires, 81; Cook on Stockholders, See. 309 ; Mora-wetz on Corporations, Secs. 112, 434; Political Code, Sec. 5152; Code of Civil Procedure, Sec. 3452.)

      The defendant is not estopped from claiming that the alleged contract is ultra vires. (Penn. B. B. Go. v. St. L. B. B. Go., 118 U. S'. 290'; Panic of Augusta v. Earle, 13 Pteters, 519; Pittsburg, G. & St. L. B. Go. v. Keokuk' c& PL. B. Go., 131 TJ. S. 371; Parkersburg v. Brown, 106 IT. S. 487; Beach, Private Corp. Sec. 421; Central T. Go. v. Pullman P. 0. Co., 139 IT. S. 24; Ghewalker Lime Works y. Dismukes (Ala.), 6 So. 122; Jemison v. Citizens’ Savings Bank, 25 N. El 264.)
   ME. COMMISSIONER CLAYBEEG

prepared the opinion for the court.

Appeal from final judgment and from an order dissolving attachment.

The material allegations of the complaint are, briefly, as follows: That on the 23d day of May, 1900, appellants and respondent entered- into a contract whereby respondent agreed to sell appellants 4,000 shares of the capital stock of the respondent company at the price of $2,000; that appellants purchased the same, and paid the consideration therefor to respondent; that at the same time this purchase was made the respondent agreed in writing with the appellants that if, at the expiration of six months from the date of the sale, appellants should become dissatisfied with the stock, or with its earning power as an investment, they should be entitled to return the said stock to said respondent upon notifying respondent of their intention so to do, and that the respondent should relieve themi of all liability thereon, and repay to them, the said $2,000, with interest at 8 per cent, from date of payment; that on or about September 13, 1900, appellants became dissatisfied with the stock' and its earning power as an-investment, and notified respondent of their conclusions, and of their intention to return the stock to respondent and demand the payment of the sum of $2,000 and interest. The complaint continues: “And at said date the said James Porter and George Swan did demand of said Plymouth Gold Mining Company, of Gould, Montana, the payment of the said $2,000, with interest, as aforesaid, and did offer to return the stock of said Plymouth Gold Mining Company in accordance with the terms- of said agreement. Plaintiffs further state that ever since said date they have been ready and willing to receive payment of said two thousand dollars ($2,000) and interest aforesaid upon the same from the 23d day of May, 1900', and ¿ver since said 13th day of September, 1900, have been ready and willing to deliver said stock to said company in accordance with said agreement.”

Despondent demurred on the ground that the complaint did not -state facts sufficient to constitute a cause of action. The court below sustained this demurrer. Appellants standing on their complaint, judgment was entered in favor of defendant.

Upon the filing of the complaint and issuance of summons in this case appellants caused an attachment to iss-ue against the property of respondent. Despondent made a motion to dissolve the attachment, which motion was heard at the same time as the hearing of the demurrer. The court dissolved the - attachment, and appellants also- appeal from said order of dissolution.

On the day of the hearing of these appeals counsel for respondent presented a motion for their dismissal, based on the three following grounds, viz.: (1) Because the record does not disclose that the notice of appeal was- served upon respondent. (2) Because the record does not contain the notice of appeal properly certified. (3) Because it does not appear from the certificate of the clerk of the court below that the record contains the judgment roll. On the hearing, permission was given appellants to- correct the record so as to- avoid the motion to dismiss^ if the facts warranted it. Counsel for the appellants procured a new certificate of the clerk of the court below, which now appears, attached to the transcript, and by which the clerk certifies that the record contains “full, true and correct” copies of the judgment roll and notice of appeal.

There is no- merit in the first ground of the motion. The respondent does not object because there was no service of this notice, but because it does not appear from the record that a notice of appeal was served upon respondent. The bill of exceptions, wbicb is properly a part of tbe record, recites service upon counsel for respondent, and shows their acknowledgment of the same.

The second and third grounds of the motion, viz., that .the record does not contain the notice of appeal and judgment roll properly certified, have been removed by the new certificate of the clerk of the court below, to which no- objection has been made.

We advise that the motion to dismiss the appeal be overruled.

We shall therefore consider the appeal upon its merits. The first matter for consideration is the appeal from, the judgment, and the first question to be decided is, does, the complaint state facts sufficient to constitute a cause of action ?

Counsel for respondent, in support of the judgment, insists that the contract sued upon is ultra, vires on three grounds: (a) That a. private corporation cannot purchase its own stock; (b) that by such purchase its capital stock is decreased, in violation of Section 438 of the Civil Code; (c) that by such purchase a subscriber is secretly allowed to withdraw his subscription. We shall discuss these reasons seriatim.

(a) May a private corporation purchase its own stock? Generally speaking, a corporation, when acting within the scope of the purposes of its organization, has the same power to contract with reference to such purposes as an individual. True, this power must be exercised in the proper corporate manner, and by the proper corporate officers. In this case, however, no question is raised concerning the form or manner of the execution of the contract sued upon. So we must assume that it was made in the proper corporate manner, and by the proper corporate officers. In the absence of a showing ,to the contrary, we must also, assume that the corporation held the stock in question for sale just as it holds any other asset, and possessed the power of disposition. We are therefore not concerned as to the manner in which the corporation acquired the stock, or the character of the stock itself. It is sufficient to know that it had the stock. tbe right to sell it, sold it, and received the purchase price upon such sale.

Despondent complains that the corporation did not stop' at the sale of the stock and the receipt of the purchase money, but contracted to take the stock'back and return the purchase price, with interest, upon the happening of certain events. This agreement by the corporation is based upon the consideration of the purchase of and payment for the stock by appellants, by the express terms of the contract sued upon. Two objects were evidently in the minds of the contracting parties at the time this contract was entered into, which were sought to be accomplished by the contract, viz., the sale of the stock and a contract for its repurchase. The company desired to' sell the stock; appellants desired to purchase the same, but were unwilling to do so without having the company bound by contract to repurchase it upon the happening of certain events. The purchase and payment of the purchase price was a consideration to the company for its promise to repurchase the stock. There was but one contract, viz., for the sale and repurchase of the stock, each object being a consideration for the other. This contract was entire and indivisible. The sale could not be sustained unless the contract of repurchase could be enforced. Therefore, if a portion of the contract is ultra vires, the whole contract must fall. The corporation cannot be heard to say that the sale was valid and the contract to repurchase was void without rescinding the sale and returning the purchase money, thus placing the other party in statu quo ante. The appellants have executed the contract of purchase on their part by the payment of the purchase price. The corporation therefore has received from them something of value, which it would not have received except for its contract of repurchase. ,It cannot be heard to say: “True, I have received your two thousand dollars, which I promised to return to' you upon the happening of certain events, but my promise in that regard was and is beyond my power to enter into, and, although the contemplated events have occurred, I will keep your money, and will not perform my contract.” Sucb action, if allowed, would be reproach upon the law. It is not honest or right, and right is the basic principle of all law.

The following language of Judge Parker in Steam Navigation, Co. v. Weed, 17 Barb. 378, is very pertinent in this connection: “I am happy to come to the conclusion that the law will not sustain this most unconscionable defense. It ill becomes the defendants to borrow from the plaintiff one thousand dollars for a single day, to- relieve their immediate necessities, and then to turn around and say, ‘I will not return you this money, because you had no power, by your charter, to lend it.’ Let them first restore the money, and then it will be time enough for them to discuss with the sovereign power of the state of Connecticut the extent of the plaintiff’s chartered privileges. ' We shall lose our respect for the law when it so far loses its character for justice as to sanction the defense here attempted.”

But this is somewhat of a digression, and is only stated as illustrating the character of the defense sought to be interposed by the corporation. We shall now return to the question under consideration.

We believe the rule to be well settled in the United States by the overwhelming weight of authority and reason that a private corporation may purchase its own stock if the transaction is fair and in good faith; if it is free from fraud, actual or constructive; if the corporation is not insolvent, or in process of dissolution; and if the rights of its creditors are in no way affected thereby. (Clapp v. Peterson, 104 Ill. 26; City Bank of Columbus v. Bruce, 17 N. Y. 507; State ex rel. Page v. Smith, 48 Vt. 266; Williams v. Savage Mfg. Co., 3 Md. Oh. 418; Taylor v. Miami Exp. Co., 6 Ohio, 177; Crandall v. Lincoln, 52 Conn. 73, 52 Am. Rep. 560; Chicago, Pekin, etc. R. R. Co. v. Marseilles, 84 Ill. 145; Dupee v. Boston Water Power Co., 114 Mass. 37; St. Louis Rawhide Co. v. Hill, 72 Mo. App. 142; Morgan v. Lewis, 46 Ohio St. 1, 17 N. E 558; Yeaton v. Eagle Oil & Refining Co., 4 Wash. 183, 29 Pac. 1051; Chapman v. Ironclad, etc. Co., 62 N. J. Law, 497, 41 Atl. 690; Blalock v. Kernersville Mfg. Co., 110 N. C. 99, 14 S. E 501; Howe Grain, etc. Co. v. Jones, 21 Tex. Civ. App. 198, 51 S. W. 24; Chalteaux v. Mueller, 102 Wis. 525, 78 N. W. 1082; Rollins v. Shaver Wagon, etc. Co., 80 Iowa, 380, 45 N. W. 1037, 20 Am. St. Rep. 427; Oliver v. Rahway Ice Co., 64 N. J. Ch. 596, 54 Atl. 460; Republic Life Ins. Co. v. Swigert, 135 Ill. 150, 25 N. E. 680, 12 L. R. A. 328; First Nat'l Bank of Peoria v. Peoria Watch Co., 191 Ill. 128, 60 N. E. 859; New England Trust Co. v. Abbott, 162 Mass. 148, 38 N. E. 432, 27 L. R. A. 271; West v. Averill Grocery Co., 109 Iowa, 488, 80 N. W. 555; Dock v. Schlichter Jute Co., 167 Pa. 370, 31 Atl. 656; Marvin v. Anderson, 111 Wis. 387, 87 N. W. 226; 1 Cook on Corporations, Sec. 311.)

No bad faitb, unfairness or fraud is charged against this transaction. There is nothing tending to show that the corporation is insolvent, or in process of dissolution, or that any cred-. itors exist whose rights could be affected.

(b) Would the capital stock of the company have been reduced in violation of Section 438, Civil Code, by the purchase of this stock?

Section 438, Civil Code, provides as follows: “Directors of corporations must not * * * reduce or increase the capital stock except as hereinafter specially provided.” The mere repurchase of this stock would not tend to decrease the capital stock of the company, unless .the directors should absolutely merge or extinguish the stock after its repurchase. The company could own and deal with it just the same as it had done before the sale. It could be sold and issued again. The company would be in no different position as to- this stock than it would have been had the transaction with appellants in regard to it never occurred. When it is transferred to the company, it becomes a part of its property. It is there for the creditors and stockholders. The capital stock is not decreased. A portion of the capital of the company may be unavailable until the stock is again sold and issued, but nothing is destroyed. Whether the stock is merged or extinguished or held as an asset for sale is much a matter of intention on the part of the corporation. If it is unlawful to decrease the capital stock, presumptively the directors did not violate the law. It would require some positive showing to the contrary to overturn this presumption. The following authorities lend sufficient support to this position: 1 Cook on Corp. Sec. 313; Taylor v. Miami Exp. Co., 6 Ohio, 177; City Bank of Columbus v. Bruce, 17 N. Y. 507; Williams v. Savage Mfg. Co., 3 Md. Ch. 418; Ex parte Holmes, 5 Cow. 426; State ex rel. Page v. Smith, 48 Vt. 266; Morgan v. Lewis, 46 Ohio St. 1, 17 N. E. 558; Bank of San Luis Obispo v. Wickersham, 99 Cal. 655, 34 Pac. 444.

(c) Did such purchase secretly allow a subscriber to withdraw his subscription ?

It must be remembered that appellants did not become subscribers for any stock of the respondent company, and therefore there could have been nothing’ due to the company from them as subscribers. By the transaction they became the bona fide owners of the stock as full paid, and could never be called on, at least by the company, to pay any further sum on the stock. Therefore the numerous eases relied on by the counsel for the respondent of secret contracts between a corporation and a subscriber for stock, by which the subscriber’s liability for further payment on their subscription is released, while excellent law, have absolutely no bearing upon this case. The Supreme Court of Illinois well says with, reference to these cases: “So the question is not whether appellant may release the village from paying for and receiving the -shares subscribed for, but whether appellant has power to purchase shares of its own stock, paid for, issued to and held by the village.” (Chicago, Pekin, etc. Ry. v. Marseilles, 84 Ill. 643.) In the following cases, among others, contracts similar to the one in question were held not to be ultra vires, and were enforced against the corporations: ■ Browne v. St. Paul Plow Works, 62 Minn. 90, 64 N. W. 66; Vent v. Duluth C. & S. Co., 64 Minn. 307, 67 N. W. 70 ; Freer mont Carriage Co. v. Thomsen (Neb.), 91 N. W. 376; Chicago P. & S. W. R. R. v. Marseilles, 84 Ill. 145; Howe Grain, etc. Co. v. Jones, 21 Tex. Civ. App. 198, 51 S. W. 24; New Eng land Tr. Co. v. Abbott, 162 Mass. 148, 38 N. E. 432, 27 L. R. A. 271; West v. Averill Co., 109 Iowa, 488, 80 N. W. 555.

We are satisfied from tifie foregoing authorities that the contract was a valid and enforceable one, and that the court erred in holding that it was ultra vires. Speaking generally, there is nothing inherently wrong about such contracts, and they have been frequently enforced as between individuals. (Schultz v. O’Rourke, 18 Mont. 418, 45 Pac. 634; Maurer v. King, 127 Cal. 114, 59 Pac. 290.)

But the complaint is fatally defective in another substantial regard. Section 1950 of the Civil Code provides: “An obligation is conditional, when the rights or duties of any party thereto' depend upon the occurrence of an uncertain event.” Section 1953 provides: “Cbnditions concurrent are those which are mutually dependent, and are to be performed at the same time.” Section 1955 provides: “Before any party to an obligation can require another party to perform any act under it, he must fulfill all conditions precedent thereto' imposed upon himself; and must be able and offer to fulfill all conditions concurrent so imposed upon him on the like fulfillment by the other party, except as provided by the next section.” The contract sued upon comes clearly within the provisions of these sections. The duty of redelivery of the stock to the respondent, and the payment for the same by the respondent, became concurrent, mutually dependent, and to be performed simultaneously. (Schultz v. O’Rourke, 18 Mont. 418, 45 Pac. 634.) This being true, appellants, before they can require the performance of the duty devolving upon respondent to repurchase the stock, “must be able and offer to fulfill all conditions con current so imposed upon bim on the like fulfillment by the other party.” (Section 1955, Civil Code.) The complaint is wanting-in any sufficient allegation of this character. The latter part of paragraphs 2 and 3 of the complaint, above quoted, contain the only allegations which could tend in any way to this end. The latter part of paragraph 2 alleges an offer made on or about September 13, 1900, to return the stock “in accordance with the terms of said agreement.” Tbe contract was entered into on May 23, 1900. Tbe option of resale by tbe appellants was to be exercised “at tbe expiration of six months from tbis date.” Respondent therefore, under tbe contract, was not bound to repurchase tbe stock until tbe expiration of six months from May 23, 1900, and an offer to deliver the stock to tbe corporation before tbe expiration of that time was premature, and of no avail. (Schultz v. O’Rourke, 18 Mont. 418, 45 Pac. 634.) The only other allegations in the complaint upon tbis matter are those found in paragraph 3. They are utterly insufficient. They do not show that tbe appellants were able or offered to return tbe stock, but only that “they are ready and willing” to do so. Being ready and willing to perform an act cannot be tortured by construction into an allegation of an offer to perform such act. One might be ready and willing to do an act without knowledge thereof on tbe part of tbe other party. Tbe other party could only legally acquire such knowledge by an offer of performance, made to him. It is thus apparent that the complaint is deficient for want of proper allegations in tbis regard.

Tbis specific defect in tbe complaint was not raised or argued in tbis court. Counsel for respondent insists only that tbe complaint is deficient, because it does not allege that tbe stock was offered to- be returned, properly indorsed, so as to pass title to tbe company upon its surrender; and not that there was no offer to deliver tbe stock. Tbis position must have been taken by counsel under tbe erroneous assumption that the allegations of offer to return tbe stock on September 13th were sufficient. We have seen that they did not have that effect. Tbis court has established tbe rule that, where a demurrer has been filed to a complaint on tbe ground that it does not state facts sufficient to constitute a cause of action, and tbe court below sustains such demurrer, and plaintiff elects to stand on bis complaint, and judgment is entered against him, upon an appeal from tbe judgment it will be affirmed if tbis court, upon an inspection of tbe complaint, concludes that tbe demurrer should have been sustained upon some other ground, although such ground was not suggested or argued to- this court by counsel, and although the court below may have sustained the demurrer for a wrong reason. The court says: “This case is before this court on appeal from the judgment, which judgment was on demurrer sustained to the amended complaint for want of substance; plaintiff abiding its complaint. The court was right in its decision on the demurrer. The judgment is right, and must be sustained. The court may .have, in sustaining, the demurrer, done so for a wrong reason, but we have nothing to do1 with its reasons. Our duty is to pass upon the correctness of its action. If the act of the court in sustaining the demurrer was right, the court must be sustained. Hayne on New Trial & App. p'. 839. The silence of counsel as to1 the. defects found by this court in the said complaint cannot in such a case as this be regarded as a restriction upon the legal scope of the general objection raised by the demurrer.” (Butte Hardware Co. v. Frank, 25 Mont. 344, 65 Pac. 1.)

Counsel for appellants may say that the bill of exceptions in the record discloses the fact that the court below, in deciding the demurrer, only passed upon the question that the complaint did not state facts sufficient to constitute a cause of action, because the contract sued upon was ultra vires. There is nothing, however, in the bill of exceptions, which in any manner discloses that the point last above referred to in this opinion was not argued to or considered by the court. It may have been. The presumption that it was is just as consistent with the recital in the bill of exceptions as that it was not. We cannot, therefore, permit this recital in the bill of exceptions to' prevail over the law as laid down by this court in its decisions.

The question as to the action of the court in.. dissolving the attachment which was issued at the time the suit was commenced becomes immaterial under the conclusions that we have reached upon the appeal from' the judgment. If the complaint did not state facts sufficient to constitute a cause of action, no attachment could be maintained.

Upon tbe decision of tbis court above cited we advise that tbe motion to dismiss tbe appeal be overruled, and that tbe judgment and order appealed from be affirmed.

Pee, C'ueiam.

Por tbe reasons stated in tbe foregoing opinion, tbe motion to dismiss is denied, and tbe judgment and order affirmed.

Me. Justice Holloway;

I agree with tbe conclusion reached in paragraph 2 of the opinion. Tbe only question before tbe court for determination is, does tbe complaint state a cause of action ? That question is answered in tbe negative in paragraph 2 above, and tbe judgment of tbe trial court is affirmed. In my judgment, tbe decision reached in paragraph 1 of tbe opinion is simply a dictum, and should not be announced as a determination of tbis court.

Rehearing denied February 10,'1904.


source: Caselaw Access Project

author: MR JUSTICE HOLLOWAY

license: Public Domain

text:
    STATE ex rel. MENDENHALL, Relator v. DISTRICT COURT OF THE SECOND JUDICIAL DISTRICT et al., Respondents.
    (No. 2,012.)
    (Submitted January 11, 1904.
    Decided January 18, 1904.)

      Discovery■ — Inspection of Boohs and Papers — Order—Affidavits — Sufficiency—Constitution.
    1. The constitutional guaranty contained in Article III, Section 7, that the people shall be secure in their persons, papers, homes and effects from unreasonable searches and seizures, cannot be disregarded under Section 1810, Code of Civil Procedure, unless such necessity for inspection exists as is contemplated by said section.
    2. under Code of Civil Procedure, Section 1810, the court, before making an order of inspection, must determine from the moving papers that an action is pending, and that the writings subject to be inspected contain competent evidence, material to the issues, or necessary to enable the moving party to prepare for trial; and hence tlie moving papers must affirmatively show that such action is in fact pending.
    3. under Code of Civil Procedure, Section 1810, the court must determine from the facts set forth in the moving papers whether any necessity exists for the order; and affidavits which do not set forth any facts, but merely affiant’s conclusion that such inspection is necessary, are insufficient.
    ApplicatioN for a writ of review, to annul an order, by tbe state, on tbe relation of E'. B. Mendenhall, against tbe district court of tbe Second judicial district; Hon. EL W. Harney, judge.
    Order annulled.

      Mr. James Donovan, and Mr. F. W. Mettler, for Delator.

      Messrs. McBride & McBride, for Kespondents.
   MR JUSTICE HOLLOWAY

delivered tbe opinion of tbe court.

On July 25, 1903, an action was commenced in tbe district court of Silver Bow county, Montana, by one E. B. Mendenhall, plaintiff, against T. M. Hodgens and T. D’enoon, copartners doing business under tbe name of tbe Copper State Fruit Company. To tbe original complaint filed, tbe defendant Hodgens interposed a demurrer, which was by tbe plaintiff confessed, and thereafter, on November 2, 1903, an amended complaint was filed. Tbe purpose of tbe action is to recover damages alleged to have been sustained by tbe plaintiff, Mendenhall, by reason of tbe alleged breach of a contract on tbe part of tbe defendants. Tbe complaint sets forth in detail tbe terms and conditions of tbe contract, and tbe particulars in which tbe plaintiff was damaged by tbe alleged breach.

On November 3, 1903, and without further appearing in the matter, tbe defendant Hodgens filed in tbe district court an application for an order requiring tbe plaintiff to permit tbe defendant Hodgens to examine and take copies of certain documents and writings designated in tbe application as documents and writings used in evidence upon tbe trial of tbe case of tbe state of Washington against EL B. Mendenhall, and designated therein as Defendant's Eixhibits 3, 4 and 5, and Plaintiff's'Ex-bibits 1 and 2. In support of tbis motion, defendant Hodgens filed bis own affidavit and tbe affidavit of Bobert McBride, one of bis attorneys. These affidavits set forth tbe efforts of tbe defendant Hodgens to secure from tbe attorneys of tbe plaintiff, in whose possession tbe writings are alleged to be, an inspection and copies of tbe same, and bis failure in that behalf. Tbe affidavit of tbe defendant Hodgens then continues: “That affiant understood from tbe said Donovan that said letters were letters affecting tbe merits of tbe claim which tbe said'Donovan made on behalf of tbe said Mendenhall, and were letters upon which be relied to establish the validity of tbe said Menden-hall’s claim, and that tbe said letters were letters used by tbe said Mendenhall in tbe trial of tbe case of tbe state of Washington against Mendenhall, mentioned in plaintiff’s complaint on file herein; that prior to tbe commencement of tbis action tbe said Donovan wrote to affiant relative to- tbe Mendenhall claim, and referred in said letter to an alleged contract which tbis affiant bad with tbe said' Mendenhall, a copy of which said letter is hereto' annexed, marked ‘Eixbibit A,’ and made a part of tbis affidavit; and affiant believes, and so. alleges, that tbe letters which tbe said Donovan has in bis possession are material in tbis action for tbe purpose of establishing the defense to tbe pretended and alleged claim made by said Mendenhall against affiant.” Tbe affidavit of McBride contains these averments: “And affiant believes, and so alleges, that tbe said letters are material in tbe action, and an inspection of tbe same is necessary to a proper defense of tbe said action, and that tbe said plaintiff will rely upon tbe said letters, if tbe above action shall ever be tried, as a basis of bis claim against tbe said Hodgens; that tbe letters referred to as being in tbe possession of tbe said Donovan are letters which were used in tbe trial of tbe case of tbe state of Washington against El B. Mendenhall, mentioned in plaintiff’s complaint as being an action upon which tbe said Mendenhall relies for tbe purpose of establishing a claim for damages against tbe said Hodgens. * * * And affiant believes, and so alleges, that tbe said identical letters are now in tbe possession of tbe said D'onovan, and are material in tbe above-entitled action, as a part of tbe defense to tbe same.”

Tbe plaintiff filed written objections to tbe application for tbe order of inspection, for tbe following reasons:

“(1) Because tbe affidávits in support of said application are insufficient, in tbat they do' not contain any statement that an action is pending- in tbe court in favor of tbe plaintiff and against tbe defendant, and for tbe further reason tbat said affidavits do not apprise the court of tbe nature of tbe action and tbe relief sought, in order tbat it may determine wbetbe'r tbe evidence sought to be obtained by tbe inspection could, in any view of tbe case, be material or relevant to tbe issues.
“(2) Because tbe affidavits in support of said application fail to state any facts or circumstances showing tbat tbe letters or documents sought to be inspected by tbe defendant concern tbe defense of tbe defendant, but, on tbe contrary, said affidavits affirmatively show tbat such letters or documents, if pertinent at all,, have reference solely to tbe plaintiff’s case.
“(3) Because it is not shown tbat said letters or documents, or any of them, sought to be inspected, are material to any' issue which has been or may be raised by any pleading in any case, or tbat the same, or any of them, are necessary to enable tbe defendant to make a defense, or to' aid him in framing bis answer or other pleading.
“(4) Because no particular description of tbe letters or documents or their contents are set out in tbe application, or tbe .affidavits in support thereof.
“(5) Because it is not shown in tbe said application what particular information or evidence defendant desires to obtain, nor is it shown tbat any of said letters or documents contain any such information, if produced.
“(6) Because it is not shown tbat the documents are or would be admissible in evidence on behalf of tbe defendant upon tbe trial of any issue in any cause, and it is not shown tbat tbe same would be admissible as evidence under any circumstances.
“(7) Because there are no facts or circumstances stated showing the necessity for the production of said documents at this time.
“(8) Because it is not shown that the defendant has made or intends to make any defense to said action, for the reason that it does not appear that any answer has ever been filed in the case., or ever will be filed by the defendant herein; and for the further reason that it does not appear that the defendant has a good and meritorious defense, or any defense, to- said action.”

• Thereafter, on November 21, 1903, the application was heard by the court; and, in addition to the moving papers, the defendant Hodgens introduced in evidence the complaint and amended complaint in the action of Mendenhall v. Hodgens, and rested. The court thereupon made an order overruling the plaintiff’s objections, sustaining the application of defendant Hodgens, and directing that plaintiff permit an examination and inspection of the writings, and the making of copies thereof, on or before November 28, 1903, at 12 o’clock m. Plaintiff thereupon made application to this court for a writ of review to annul such order of inspection.

The same question presented here came before this court in State ex rel. Boston & Montana C. C. & S. M. Co. v. District Court, 27 Mont. 441, 71 Pac. 602, 94 Am. St. Rep. 831; and it was there held that the moving papers in the application for the order — in this instance, the motion and affidavits — must show affirmatively that an action is then pending in the district court. It was also-said: “We are further of the opinion that the application should, by express statement, or by apt reference to the pleadings on file, apprise the court of the nature of the action and the relief sought, in order that it may determine whether or not the evidence sought to be obtained by the inspection could, in any view of the case, be material or relevant to the issues. For its failure to show these facts, we consider the application insufficient to- vest in the lower court authority to make any order of inspection.” The reason for the rule there announced is made even more apparent in this instance. The constitutional guaranty contained in Article III, Section 7, of the Constitution, that the people shall be secure in their persons, papers, homes and effects from unreasonable search and seizure, cannot be disregarded, to- satisfy the idle curiosity of litigants.

Section 1810 of the Code of Civil Procedure, under which this application is made to the court below, provides: “Any court in which an action is pending, or a judge thereof, may, upon notice, order either party to give to the other, within a specified time, an inspection and copy, or permission to take a copy, of entries of accounts in any book, or of any documenc or paper in his possession or,under his control, containing evidence relating to the merits of the action, or the defense therein.” The provisions of this section are obviously intended to enable a party to an action then pending to obtain an inspection of writings in the possession or under the control of his adversary, provided the party applying for the inspection in good faith believes he has a meritorious cause of action or defense, and provided further that those writings, contain evidence relating to the merits of the action, or to the defense therein; and the district court, before making an order of inspection, must determine from the' showing made that an action is pending ; that the writings sought to be inspected do in fact contain evidence competent to be introduced upon the trial, and material and relevant to the issues in controversy, or necessary to enable the moving party to frame his pleading or prepare his cause for trial. In this instance it was impossible for the lower court to have reached any conclusion with reference to these matters. There is no allegation that an action is pending, and, taking the view most favorable to defendant Hudgens, and in conformity with the contention of the respondent here — that the original and amended complaints were before the court as evidence of the pendency of an action — it must be apparent at a glance that such a showing is wholly insufficient. The mere fact that a complaint -is on file in court is hardly sufficient proof of the pendency of an action. The complaint might be on file, and the action have been dismissed, or a final judgment have been entered, and affirmed on appeal. However, we reassert the doctrine announced in State ex rel. Boston & Montana C. C. & S. Mining Co. v. District Court, supra, that it must appear affirmatively from the moving papers that such action is in fact pending. The defendant Hodgens had made no appearance in the ease, except to- file a demurrer, which had been confessed, and, in his application and affidavits in support thereof, he wholly fails to- state that he intends to plead further, that he has any defense to the plaintiff’s cause of action, or, if he has, the nature thereof, or that he will interpose it. The court could not be apprised of the issues which would he involved; neither could it determine whether, in fact, the inspection was necessary in order to enable defendant Hodgens to frame an answer, to prepare for trial, to make his defense, nor whether, in fact, the writings contain anything which, in any view of the case, could be relevant to, or material or competent in, the cause.

There is an entire absence from the application and affidavits of any allegations showing the - necessity for the inspection. The portions of the affidavits quoted above contain the only allusions to- the subject, and no facts whatever are there stated, but only the bald legal conclusions of the affiants that such inspection is necessary. This is wholly insufficient. It is a matter for the court to determine from the facts set forth whether such necessity exists as is contemplated by the statute, for it is only under such conditions that the right of privacy must give way to- the dictates of public policy. The applications, including all the moving papers, must be sufficient to invoke or set in motion the jurisdiction of the court to which the application is made; otherwise the court is without power to make the order petitioned for. In this instance it is wholly insufficient in the particulars herein designated, and the order of inspection made on November 21, 1903, is annulled and set aside.

Order annulled.


author: ME. JUSTICE! HOLLOWAY

text:
    In re HARNEY.
    (No. 2,012.)
    (Submitted January 11, 1904.
    Decided January 23, 1904.)

      Certiorari — Stay of Proceedings — Service of Writ — Alteration of Record — Contempt.
    1. under Code oí Civil Procedure, Sections 1944, 1945, a judge of a district court is not guilty of contempt in altering an order after lie has been served with a writ of review from the supreme court directing that “all proceedings under said order be stayed,” the stay being by its'terms limited to the enforcement of the order.
    2. It is the duty of a court, upon whom a writ of certiorari has been dnly served, to certify up the record without alteration as it is at the time that the writ was served, otherwise, without reference to any express stay, ■ there may be contempt in not obeying the writ.
    PROCEEDINGS in the matter of the alleged contempt of E. W. Harney.
    Dismissed.

      Mr. James Donovan, and Mr. P. W. Mettler, for Petitioner.

      Messrs. McBride <& McBride, for Despondent.
   ME. JUSTICE! HOLLOWAY

delivered the opinion of the court.

On November 21, 1903, an action was pending in Department No. 1 of tbe district court of Silver Bow county, presided over by E. W. Harney, judge, wherein E!. B. Mendenhall was plaintiff and T. M. Hodgens et al. were defendants, in which action the defendant Hodgens had theretofore appeared and filed an application for an order requiring the plaintiff, Men-denhall, and his attorneys to1 permit him (Hodgens) to inspect and make copies of certain papers alleged to be at that time in the possession of plaintiff’s attorneys. Such application was heard by the court, which thereupon made the following order: “This day this cause coming regularly on to be heard upon defendant’s application for order of inspection of writings and plaintiffs objection thereto; plaintiff being represented by Messrs. Donovan and Mettler, and defendant being represented by Messrs. McBride & McBride. After bearing argument of counsel, the motion is by the court sustained and objection overruled, to which ruling, the plaintiff by counsel duly excepts, and orders that plaintiff have until November 28,1903, between the hours of 10 and 12 a. m. to submit writings herein is by the court made and entered herein.”

On November 27, 1903, plaintiff applied to this court for a writ of review to annul the order so made, and this court on November 28, 1903, ordered the writ to issue, and directed that “all proceedings under said order of inspection and copy be stayed until the further order of this court.”

On December 9, 1903, the writ of review was duly served, and on the 12th day of December, 1903, the district court caused to be certified to this court what purported to be the record in the case of Mendenhall v. Hodgens. On January 4, 1904, the attorneys for plaintiff, Mendenhall, called the attention of this court, by an affidavit, to the fact that after service of the writ of review upon the lower court, and before the record had been certified to this court, the trial court had ma'de a material alteration in the record in the cause by changing the order of inspection made on November 21, 1903, in a material respect. This court thereupon issued an order to show cause why the judge of said court should not be punished for contempt. The return of the judge to this last order sets forth a copy of the order of November 21st, as shown above, and proceeds: That on December 11, 1903, upon motion of counsel for defendant Hodgens, the lower court amended said order to show that, upon the hearing for'the order for inspection, counsel for the applicant for that order introduced in evidence, in addition to the moving papers, the original and amended complaints in the case of Mendenhall v. Hodgens et al. The return attempts to justify this change in the order by asserting that it was done in order to make the record speak the truth. Upon the affidavit and this return the matter was heard by this court, it being conceded that no issue of fact was presented.

Sections 1944 and 1945 of tbe Code of Civil Procedure read as follows:

“Sec. 1944. Tbe writ of review must command tbe party to whom it is directed to certify fully to tbe court issuing tbe writ, at a specified time and place, a transcript of tbe record and proceedings (describing or referring to tbem witb convenient certainty), that tbe same may be reviewed by tbe court, and requiring tbe party in tbe meantime to desist from further proceedings in tbe matter to be reviewed.
“Sec. 1945. If a stay of proceedings be not intended, the words requiring the stay must be omitted from tbe writ; these words may be inserted or omitted, in tbe sound discretion of tbe court or judge, but, if omitted, tbe power of tbe inferior court or officer is riot suspended or tbe proceedings stayed.”

Whatever may have been the rule, prior to tbe adoption of tbe Code of 1895, as to tbe efieet of tbe service of tbe writ of certiorari to stay proceedings, tbe Code itself now furnishes tbe only rule for our guidance. Under tbe provisions of Section 1945, above, tbe court issuing tbe writ of certiorari may include in tbe writ, or omit therefrom, a provision requiring a stay of proceedings, and, if omitted, there is no* stay, and, if included, tbe extent of tbe stay is to* be determined from tbe words used. In this instance this court specifically limited tbe stay of proceedings, to prevent tbe enforcement of tbe inspection order, and it is not contended that any attempt was made to enforce that order. Tbe alteration in tbe minutes* made by tbe lower court was entirely futile. So far as tbe certiorari proceedings were concerned, tbe record was in no* sense different in legal effect after tbe alteration was made.

Tbe duty of tbe court is to certify up tbe record as it is at tbe time that tbe writ of review was served. It may not alter or add to tbe record and certify tbe altered record as tbe required record. We do* not mean that unimportant changes, such as corrections of spelling, punctuation, and tbe like, may not be made; but tbe safer way is to do* as directed, and send up tbe record as it is; otherwise, without reference to any express stay, there may be contempt in not obeying tbe writ.

For tire reasons herein stated, no contempt was committed, and tbe proceedings in contempt are dismissed.

Dismissed.


author: ME, COMMISSIONER. POORMAN Pee Cueiam:.

text:
    MACDONALD, Respondent, v. GERRICK et al., Appellants.
    (No. 1,972.)
    (Submitted January 8, 1904.
    Decided January 23, 1904.)

      Corporations — Injunction Pendente Lite Against Disposal of Stock — Evidence-^-Sufficiency-—Appeal.
    An injunction pendente lite against a corporation and a trustee of its stock to prevent disposing of a certain portion thereof will not be interfered with on appeal, where the evidence at the preliminary hearing tends to prove the allegations of the complaint.

      Appeal from District Court, Silver Bow County; E. TF. Har-ney, Judge.

    Action by W. E, R. Macdonald against John Gerrick and another. From an order granting an injunction pendente lite, defendants appeal.
    Affirmed.

      Mr. John A. Shelton, for Appellants.

      Messrs. Kirk & Clinton, for Respondent.
   ME, COMMISSIONER. POORMAN

prepared the opinion Lfor the court.

The complaint in this action was filed March 9, 1903. The plaintiff therein alleges, among other things, the incorporation of defendant company on May 8, 1902, and that prior thereto it was mutually understood and agreed between the plaintiff and “the incorporators” that the plaintiff should perform certain work on tbe mining claims of the company to the amount of $750, and should receive as compensation therefor one-sixteenth of all the capital stock of the corporation. If is also alleged that all the stock of the company had been issued, and that the stock claimed by plaintiff was issued to defendant Gerrick to be held in trust by him for the plaintiff; that Ger-rick is insolvent, and will dispose of the stock unless restrained by order of the court; and that both Gerrick and the company had refused to turn the stock over to plaintiff. An injunction pendente lite was asked for. Ou the filing of the complaint an order to show; cause was issued, and the hearing thereon set for March 23, 1903. At the healing defendants presented a joint answer to the order to show cause, admitting the incorporation of the company and the issuance of the stock, but denied the insolvency of Gerrick, that any stock had been issued to Ger-rick in trust for the plaintiff, and that plaintiff was entitled to any stock at all. A contract is then set up; which it is alleged was entered into between Gerrick and the plaintiff prior to the incorporation of the company, and, while Gerrick held an option to buy the mining property, by the terms of which plaintiff was to perform work and labor upon the property continuously until the purchase price thereof of $50,000, together with all expenses of operation, were paid from the product of the mines; that plaintiff was to 'receive therefor a one-sixteenth interest in the property. It is also alleged that the plaintiff had failed to cbmply with the terms of this contract, and that after performing a part of the work he had abandoned the same. At the hearing an injunction pendente lite was issued restraining the defendants from, disposing of this stock claimed by the plain tiff until further order of the court. From the order granting this injunction the defendants appeal. *

The main action to which this proceeding is ancillary has nox yet been tried. We therefore do not discuss the evidence introduced at the hearing, nor consider its sufficiency to sustain a final judgment. It is sufficient to say that the entire record has been examined, and that the evidence introduced by and on bebalf of tbe plaintiff tends 'to1 prove the allegations of the complaint, and to sustain the further contention off respondent that the consideration for the stock in question has been fully paid by the plaintiff and accepted by the defendants. The statute of frauds can, therefore, have no application to this proceeding. This evidence tends further to show that the plaintiff has some right in or to- the stock in question, and we find nothing inequitable or erroneous in the order of the court restraining the defendants from disposing of this stock until the action has been determined on its merits.

We therefore recommend that the order appealed from be affirmed. .

Pee Cueiam:.

For the reasons stated in the foregoing opinion, the order is affirmed.

Rehearing denied February 13, 1904.


author: ME. COMMISSIONER CLAYBEEG Pee Cueiam.

text:
    STATE, Respondent, v. McKINNEY, Appellant.
    (No. 2,004.)
    (Submitted January 6, 1904.
    Decided January 23, 1904.)

      Meat and Milk — Inspection—License—Gonstituiional Law — ■ Statute — Title. — Classification — Police Powers — Taxation.
    1. Tbe purpose of Section 23, Article V, of tbe Constitution is to guard against fraud in legislation, and against false and deceptive titles to proposed Acts.
    2. while all tbe provisions of tbe Constitution are “mandatory and prohibitory” (Article III, Section 29), yet the courts will give this section a liberal construction, so as to not interfere with or impede proper legislative functions.
    3. Tbe legislature is the judge, to a great extent, of the title which it will prefix to a Bill.
    4. under Constitution, Section 23, Article V, the title is generally sufficient if the body of the Act treats only, directly or indirectly, of the subjects mentioned in tbe title, and of other subjects germane thereto, or of matters in furtherance of or necessary to accomplish the general objects of the Bill, as mentioned in the title. Details need not be mentioned. The title need not contain a complete list of all matters covered by the Act.
    5. If the court is in doubt as to the constitutionality of a Bill, it should sustain,the Act.
    6. Laws of 1903, p. 232, c. 120, Section 15, entitled "An Act to create the office of meat and milk inspector for the state of Montana, and prescribing his powers and duties and compensation therefor,” imposing a license fee on persons selling milk, and authorizing the collection thereof by the inspector, does not violate Constitution, Article V, Section 23, providing that no Bill shall be passed containing more than one subject, which shall be clearly expressed in its title.
    7. ' The license fee provided for in Laws of 1903, p. 232, c. 120, Section 15, imposed on persons selling milk, and authorizing the collection thereof by the meat and milk inspector, which office is created by the Act, is not a tax, though required to be paid into the state treasury.
    8. The license fee provided for by Chapter 120, Section 15, Laws of 1903, not being a "tax,” the legislature had power to determine by what agency the collection thereof should be made.
    9. Laws of 1903, p. 22G, c. 120, creating the office of meat and milk inspector, imposing a license fee on the right to do business with a vehicle by an owner thereof who milks over five cows, and exempting others, is not objectionable as an unreasonable classification of dairies.

      Appeal from District Court, Lewis and Clarice County; J. M. Clements, Judge.

    L. MoKiNNey was convicted of conveying and selling milk and cream without a license, and appeals.
    Affirmed.

      Messrs. Nolan <& Loeb, for. Appellant.
    A license charge or fee is a tax within the meaning of the term “tax” as employed in all sections of the Constitution of Montana, other than the “uniformity clause.” (State ex rel. Sam Toi v. French, 17 Mont. 54.)
    The exaction of one dollar per month license fee under Section 15 was made by the legislature with a view to revenue. Where the fee required for a license is intended for revenue, its exaction is the exercise of the power of taxation. (Home Ins. Co. v. City of Augusta, 50 Ga. 530; Cooley, Const. Lim. 201.)
    The legislature has no power to pass a law directing the payment of a license tax to a meat and milk inspector, and the Act, in so- far as the law attempts to- confer any power upon the meat and milk inspector to collect this license, is void as being unconstitutional. (Mutual Life Ins. Co. v. Martien, 27 Mont. 437.)

      A dairy may have one hundred (100) cows (no vehicle being used in the delivery and sale of the milk) and the entire product may be offered for sale and sold in a store, booth, stand, market place, depot or any place whatsoever, and no license tax is required or imposed, the only requirement being that the vender shall register in the book of the inspector (Subd. 5, page 233, Laws 1903). The tax imposed then, by Section 15, is a vehicle tax, to be paid by the owner of the vehicle. The owner of a five (5) cow dairy may employ two (2) vehicles in the sale and delivery of milk, and the owners of the vehicles are not subjected to the license. The owner of a six (6) cow dairy may employ one (1) vehicle in the sale and delivery of milk and is subjected to the license tax; and the owner of a one hundred (100) cow dairy may sell his entire product at a depot or market stand or booth, and he is not required to pay any license at all under Section 15. The classification of those who are subjected to' this vehicle tax is neither based on nor measured by the number of vehicles or on the kind of vehicles, hut is based on the number of cows in the dairy from which the milk produced is delivered in vehicles, exempting large dairies not using vehicles, but delivering their entire product at a. depot. This law, therefore, acts unequally and the classifications are unjust and unreasonable. It is also void because of the exemption of part of a class. (State v. Hammer, 42 N. J. Law, 440; Ex parte Frank, 52 Cal. 606; Parish v. Cochren, 20 La. Ann. 373 ; Button v. State (T’enn.), 36 S. W. 697; State v. Loomis, 115 Mo. 307, 22 S, W. Eep>. 350, 21 L. El A. 789; State v. Earn, 61 Nan. 146, 59 Pac. 431, (approved 183 U. S. 112) ; State v. Goodwill 33 W. Va. 179, 10 S. E. 286, 6 L, E. A. 621; Ex parte Jeutzsch, 112 Cal. 468, 44 Pac. 803, 32 L. Ev A. 665; Gity of Evansville v. State, 18 Ind. Sup. 420, 21 N. El 267; City of Evansville v. State, 4 L. E. A. 93; Magoun v. Bank, 170 TJ. Si 283; State v. Garbraski, 111 Iowa, 496; State v. Ashbrook, 154 Mo. 375; Constitution, Art. V, Sec. 26; Lossen Comity v. Cone, 72 Cal. 387; Pacific Junction v. Dyer, 64 Iowa, 38; Gone v. Clerk, 21 Pac. Co. Eep-. 495; Hotchkiss v. Marion, 12 Mont. 218; State v. 0onion, 55- Conn. 478, 48 Am. S't. Eep'. 22.)
    Section 15 of the' Act- under consideration is void, for tbe reason that tbe title of the Act is defective tinder tbe provisions of Section 23, Art. V, of tbe Constitution. (State v. Anaconda O. M. Go., 23 Mont. 498; Messenger v. State, 2-5 Neb. 674; State v. Clinton, 27 La. Ann. 40; People v. Gong don> 77 Micb. 351; People v. Phippin, 70 Micb. 6; Newherter v. Price, 11 Ind. 199; State v. Bankers, etc. M.- B. A., 23 Kan. 499; Oarr v. Thomas, 18 Fla. 736; Ives v. Norris, 13 Neb. 252; Johnson v. Spicer, 107 N. T. 185; Williams v. Payson, 14 La. Ann. 7 ; Savannah v. State, 4 Gra. 26; State v. Courtney'. (Mont.), 71 Pac. 308.)

      Mr. James Donovan., Attorney General, and .Mr. F. W. Mcl-tler, First Assistant Attorney General, for tbe State. ■
   ME. COMMISSIONER CLAYBEEG

prepared tbe opinion for tbe court.

Appeal from final judgment.- A complaint was filed against defendant in a justice court, alleging that be “willfully and unlawfully conveyed milk and cream in a vehicle for tbe purpose of selling tbe same, and did sell tbe same, in tbe county of Lewis and Clarke without first procuring a license as provided by law.” Upon this complaint a warrant was issued. Tbe defendant was arrested, and demurred to tbe complaint. Tbe demurrer was overruled, and defendant entered a plea of not guilty. Tbe case was tried, and resulted in a judgment against defendant-. On appeal to tbe district court tbe case was again tried, by tbe court sitting without a jury — 'jury trial having been expressly waived — and judgment passed against tbe defendant, from which this appeal is taken.

The prosecution was conducted under Chapter 120, page 226, of the Laws of 1903, entitled “An Act to- create tbe office of meat and milk inspector for tbe state of Montana, and prescribing their powers and duties and compensation therefor.” The-only part of this Act which is brought into controversy by this appeal is Section 15 thereof, which the attorneys for the appellant urge is unconstitutional, on the four following grounds: (1) Because the license provided in Section 15 is a tax, which can only be collected by the county treasurer, and not by the inspector; (2) because the law acts unequally, and the classifications are unjust and unreasonable; (3) because the law allows exemptions of a part of a class from1 payment of any fees; (4) because the title of the bill is defective.

Section 15 of this Act, which is attacked, is in the following language:

“Any person, persons, or corporation, in counties in which a meat and milk inspector is appointed, who conveys milk or cream in vehicles of any character whatsoever, for the purpose of selling it in such counties, shall annually, before the 1st day of June, be licensed by the meat and milk inspector of said county to sell milk and cream, within the limits thereof, and shall pay to' such inspector for each and every vehicle of whatsoever character used in the sale or delivery of such milk or cream or dairy product, the sum of twelve dollars ($12.00) per annum, payable quarterly in advance, which sum shall be paid into the state treasury by such inspector, quarterly, as received, to be turned into the general fund, and receipted therefor by said treasurer to said inspector.
“Subd. 1. Licenses shall be issued only in the name of the owner of the vehicles, carriages or other conveyances.
“Subd. 2. Such license shall, for the purposes of this Act, be conclusive evidence of ownership, and shall not be assigned or transferred.
“Subd. 3. Each license shall contain the number thereof, the name, the residence, the place of business, the number of vehicle used by the person, persons, or corporation, and the name of every driver or other person employed by the owner or owners in carrying, conveying or selling milk or cream.
“Subd. 4. Each person, persons, or corporations shall, before engaging in the sale of milk or cream, or dairy products of any character whatsoever, cause his name and number of his license to be placed legibly on each outer side of all carriages or vehicles or conveyance of whatsoever character used by him in the conveyance for sale of milk or cream.
“Subd. 5. Every person or persons, company or corporation, before selling milk or cream, or offering the same for sale in a store, booth, stand, market place, depot, or any place whatsoever, in a county in which a meat and milk inspector is ap^ pointed, shall register in the books of such inspector his or her name, or the name of the company or corporation, and proposed place of sale.
“Subd. 6. Nothing in Section 15, with the exception of subdivision five, shall be construed to apply to dairies milking five cows, or less.”

In considering the questions raised on this appeal, we shall not follow the order in which they are treated in the briefs, but shall first take up' the last one argmed, viz., is the Act in contravention of Section 23, Article V, of the Constitution ? This section is as follows: “No bill, except general appropriation bills, and bills for the codification and general revision of the laws, shall be passed containing more than one subject which shall be clearly expressed in its title; but if any subject shall be embraced in any Act which shall not be expressed in the title, such Act shall be void only as to so much thereof as shall not be so expressed.” It is insisted that the imposition of a license fee upon persons selling milk, or the collection thereof, is not “clearly (or at all) expressed” in the title of the Act, and therefore the Act, to this extent, is unconstitutional and void.

For a clear understanding of the question under consideration, it seems important to announce a few general legal principles viz.:

First. The purposes of this constitutional provision are to prevent the legislature from the enactment of laws surreptitiously ; to prevent “logrolling” legislation; to' give to the people general notice of the character of proposed legislation, so they may not be misled; to give all interested an opportunity to appear before committees of tbe legislature and be beard upon tbe advisability of tbe proposed legislation; to advise members of tbe legislature of tbe character of the proposed legislation, and give each an opportunity to intelligently watch the course of the proposed Bill; to guard against fraud in legislation, and against false and deceptive titles. These purposes have been so plainly announced by this court in numerous opinions that a statement of tbe rule and a citation of oases would seem sufficient. (State v. Brown, 29 Mont. 179, 74 Pac. 366; Western Ranches v. Custer County, 28 Mont. 278, 72 Pac. 659; State v. Courtney, 27 Mont. 378, 71 Pac. 308; State v. Anaconda C. M. Co., 23 Mont. 498, 59 Pac. 854; Jobb v. Meagher County, 20 Mont. 424, 51 Pac. 1034; State v. Mitchell, 17 Mont. 67, 42 Pac. 100.)

Second. While all tbe provisions of tbe constitution are “mandatory and prohibitory” (Art. Ill, Sec. 29), yet tbe courts, bearing in mind that tbe legislature is a co-ordinate branch of' tbe government, and that its action, if fair, should be sustained, have given this section of tbe constitution a liberal construction, so as to not interfere with or impede proper legislative functions. (Western Ranches v. Custer County, 28 Mont. 278, 72 Pac. 659; State v. Courtney, 27 Mont. 378, 71 Pac. 308; State ex rel. Olsen v. Board of Control, 85 Minn. 165, 88 N. W. 533; State ex rel. Green v. Power, 63 Neb. 496, 88 N. W. 769; Ballentyne v. Wickersham, 75 Ala. 533; Van Horn v. State, 46 Neb. 62, 64 N. W. 365; Lien v. Board of County Com'rs, 80 Minn. 58, 82 N. W. 1094.)

Third. Tbe legislature is tbe judge, to a great extent, at least, of tbe title which it will prefix to a Pill; and tbe court has no right to bold a title void because, in its opinion, a better one might have been used. (State ex rel. Olsen v. Board of Control, 85 Minn. 165, 88 N. W. 533; State ex rel. Green v. Power, 63 Neb. 496, 88 N. W. 769; State ex rel. Churchill v. Bemis, 45 Neb. 724, 64 N. W. 348.)

Fourth. Tbe title is generally sufficient if tbe body of tbe Act treats only, directly or indirectly, of tbe subjects mentioned in the title, and of other subjects germane thereto, or of matters in furtherance of or necessary to accomplish the general objects of the Bill, as mentioned in the title. Details need not be mentioned. The title need not contain a complete list of all matters covered by the Act. (Park v. Modern Woodmen, 181 Ill. 214, 54 N. E. 932; State ex rel. Graham v. Tibbetts, 52 Neb. 228, 71 N. W. 990, 66 Am. St. Rep. 492; City of Newark v. Mt. Pleasant Cemetery Co., 58 N. J. Law, 168, 33 Atl. 396; Barksdale v. City of Laurens, 58 S. C. 413, 36 S. E. 893; Prison Association v. Ashby, 93 Va. 667, 26 S. E. 893; Weber v. Commonwealth (Ky.), 72 S. W. 30.)

Fifth. If the court, after an application of all these principles, is’still in doubt as to the constitutionality of the Bill, it should sustain the Act. (State v. Camp Sing, 18 Mont. 128, 44 Pac. 516, 32 L. R. A. 635, 56 Am. St. Rep. 551; Cooley’s Const. Lim. 182; State v. Clancy, 20 Mont. 498, 52 Pac. 267.)

The purpose of the Act was the very laudable on© of providing for the inspection of meat and dairy products sold by the producers to the consumers within the. state, and h> prevent a sale of any of the same, except such as might, after inspection, be found to' be entirely healthful. The Act provides for the inspection of fresh meats, fish and poultry; and, after providing the necessary means for that purpose, it takes up the inspection of dairies and dairy products.

Section 9 makes it the duty of the inspector to inspect each dairy supplying milk to the public in his county for human’ consumption not less than once in every month during the calendar year, and provides that he shall, every ninety days, issue to each person or persons or corporation supplying milk a certificate of health, which shall include a certificate of the sanitary condition of the dairy every ninety days.

Section 10 provides that “it shall be unlawful * * * to feed unwholesome food of whatsoever character to his dairy cows, and that each dairyman supplying milk to the public must have for each cow, his certificate of health, including the tuberculum test made by said inspector, stating that each cow is free from tuberculosis or consumption, or any other infectious disease whatsoever.”

Section 11 provides that it is the duty of the inspector to prohibit any one from selling milt whenever, in his observation, proper cleanliness of utensils used in the accumulation, handling, or marketing of the milk is not up to the proper standard, “until such time as proper methods of cleanliness and precautions are used in the handling of said milk.”

Section 12 provides that all persons supplying milk “shall keep their barns or stables free from filth or manure or other substances likely to harbor or favor the growth of disease-producing germs therein, or about their stables or barns likely to be carried in, or to contaminate such milk or dairy product.”

Section 13 provides that any resident of the state, to whose knowledge or observation comes the fact that any dairyman is failing to observe the provisions of this section, shall notify the inspector, who shall at once visit the premises indicated; and, if he finds the complaint true, he shall prohibit the selling. of the product of the dairy, “and file an information against the dairyman.”

Section 14 requires that such inspector shall keepi in his book of records the names and places of business of all persons engaged in the sale of milk and cream within the bounty, and gives the inspector power to enter all places in which cream or dairy products are stored or offered for sale, and all vehicles used for the conveyance of milk or cream, and take samples therefrom for analysis.

Then comes the disputed Section 15, which we have already quoted at length in the opinion.

Section 16 provides the conditions under which one dealing in milk or cream shall be deemed guilty of misdemeanor.

Sections 1Y to 20 refer to the standard of the different classes of milk and cream. The rest of the Act is unimportant in the consideration of the questions involved in this case.

In our judgment, the decisions of this court in the cases of State v. Bernheim, 19 Mont. 512, 49 Pac. 441, and Snook v. Clark, 20 Mont. 230, 50 Pac. 718, are conclusive against tbe contention of counsel for appellant. In tbe Bernheim Case, tbe title of tbe Act- was “An Act to regulate tbe sale and redemption of transportation tickets of common carriers.” Tbe Act, in its body, made it unlawful for any person not in possession of a certificate or license provided for in another part of tbe Act to> sell tickets. It also provided a penalty for tbe violation of tbat portion of tbe Act. It was contended tbat tbe penalty part of tbe statute was not within the title. Yet tbis court said: • “Experience amply demonstrates tbat to regulate a particular business by law, and put a statute regulating it into practical and effective operation, there must be punishments prescribed and imposed upon those who violate its commands. But such penalties need not be included in tbe title, for they are but ‘ends and means necessary or convenient for tbe accomplishment of tbe general object.’ ”

In tbe case of Snook v. Clark tbe title of tbe Act was “An Act requiring railroad companies to, pay for damages to> stock.” In tbe body of tbe Act it was provided tbat railroad companies should fence their tracks. Counsel for tbe railroad company contended tbat, tbe title of tbe Act being silent as to fences, tbe law was inoperative, but tbe supreme court says: “Tbis question was passed upon by this court in State v. Bernheim, 19 Mont. 512, 49 Pac. 441.”

Now, tbe appointment of inspectors, and tbe placing upon such inspectors certain duties and labors, in order to make tbe Act practical and effective in its operation, requires tbat compensation be provided for tbe performance of these duties; and we must conclude, under tbe above authorities, tbat, even if tbe title of tbe Act was silent as to tbe intention of tbe legislature to provide such compensation, tbe body of tbe Act might have contained provisions for tbat purpose, as such provisions are but “ends and means necessary or convenient for tbe accomplishment of tbe general object.” Tbe purpose of tbe Act is clearly apparent, viz., to regulate tbe inspection and sales of meat and dairy products, and to, provide a fund to reimburse tlie state for its expenditures in and about tbe carrying of tbe regulations into effect. Tbe title of tbe Act is general. Its body may contain any provisions necessary to carry the purpose of tbe Act into effect. Of what use would be an inspector, unless be might inspect something ? Tbe Act, therefore, properly determines and specifically provides for tbe inspection of certain articles intended to be covered by the Act. The inspector could not be required to perform tbe labors of inspection unless compensated. Tbe legislature, in exercising tbe police power vested in it, bad tlie right to impose tbe cost of inspection, and all the necessary expenses of carrying tbe regulations into effect, upon tbe persons controlling the products to be inspected. It might provide that tbe state should become primarily liable for tbe payment of this cost, and in tlie same Act further provide for reimbursement to tbe state, in whole or in part, from tbe same source upon which it could have imposed tbe cost in tbe first instance. Can it be said that tbe title does not notify every person that the legislature intends to enact a law covering all these items ? Tbe title announces that tbe legislature intends to enact a law “creating tbe office of meat and milk inspector, and prescribing bis duties, powers and compensation.” This, in our opinion, gives notice to every one of what tbe legislature intended to accomplish. If tbe legislature bad power to accomplish this end by different methods, all persons were charged with knowledge that it might, for that purpose, exercise any method within its power. If tbe law allows tbe legislature to exercise tbe power above mentioned, every person within tbe state is charged with tbe knowledge of that law, and therefore with notice that tbe legislature might exercise tbe power by any authorized method. Every provision of the Act is germane to tbe announcement made in tbe title, and is unquestionably for tbe purpose of enabling tbe regulations prescribed in tbe Act to be carried into effect. All tbe general objects of tbe Act are expressed in tbe title.

True, tbe provisions of tbe Act relative to' tbe license inr-posed upon meats and upon dairy products are different, but tbe duties of tbe inspector as to each of these classes are different. Much more extensive duties are imposed upon tbe inspector as to' dairy products than as to meat. Tbe legislature might well have concluded that tbe provisions for tbe imposition of a license fee on meat were not applicable to tbe imposition of license fees upon dairy products. Tbe license fee imposed upon persons selling meats is provided by Section 4 of tbe Act, and is designated “an inspection license,” wbile tbe license imposed upon dealers in dairy products is provided by Section 15, and is designated as “license to sell milk and cream.” Notwithstanding this difference, it is plainly apparent that tbe license fees imposed upon both classes were, for tbe'purpose of reimbursing, tbe state for its outlay in carrying tbe Act into effect. Tbe license fee in such case simply ¿mounts to an inspection fee.

The Supreme Court of Minnesota (State ex rel. Olsen v. Board of Control, 85 Minn. 165,) has so thoroughly discussed tbe principles which must control a court in passing upon tbe constitutionality of a statute where objections are made to its title that we feel constrained to quote at length from its decision: “Every reasonable presumption should be in favor of tbe title, which should be more liberally construed than tbe body of tbe law, giving to tbe general words in such title paramount weight. It is not essential that tbe best or even an accurate title be employed, if it be suggestive in any sense of tbe legislative purpose. Tbe remedy to be secured, and mischief avoided, is tbe best test of a sufficient title, which is to prevent it from being made a cloak or artifice to> distract attention from tbe substance of tbe act itself. Tbe title, if objected to, should be aided, if possible, by resort to tbe body of tbe act, to show that it was not intended by such title to mislead tbe legislature or tbe people, nor distract their attention from its distinctive measures. Throughout all tbe decisions it will be found that it is a regard for tbe law itself, rather than anjy puerile consideration'for tbe title, which is made tbe essential object of judicial anxiety. A review of the cases where this court has set aside statutes because in violation of Section 27, Article 4 [Constitution of Minnesota], will sbow tbat tbe act was in every respect, to adopt tbe language of Justice Elandrau in Board of Supervisors v. Heenan, supra [2 Minn. 330; Gil. 281], entirely foreign to tbe object ‘expressed in tbe title;’ thus furnishing tbe evidence of sucb a fraud in securing its enactment tbat tbe law ‘would never bave received tbe sanction of tbe legislature, bad tbe members known tbe contents of tbe act.’ No better test, consistent with every subsequent decision on tbis subject, can be made than by a correct answer to tbe question: Is this title in every respect ‘so foreign to the purpose of the act, or some integral part of it, tbat it gives no intimation thereof V It may seem, from a cursory glance at these liberal views which bave been adopted to save statutes when attacked upon tbe ground of defective titles tbat little is left of inherent vitality in tbe constitutional limitation involved; but tbat this is only a cursory view must be apparent upon tbe reflection that the constitutional limitation was solely to prevent fraud and deception, when determinable from tbe evidence found in tbe act and its title read together, for obviously no other evidence is open to' tbe courts. Tbe constitutional provision sounded a note of warning tbat has generally protected the people from legislative juggles, while tbe liberal interpretation since given by tbis court has- saved many wholesome laws tbat otherwise would bave been defeated by a narrow view of its purpose. Legislators may not bave become absolutely perfect, and it may be tbat fraud will hereafter finesse into an act a ‘woodchuck’ which will be so apparent on judicial review as to require tbe court to nullify a result which never expressed tbe real legislative purpose. When sucb occasion does arise, tbis provision of our constitution will, we believe, be found to retain its pristine vigor, with plenary power to prevent tbe consummation of the infamy. In the meantime it stands forth in tbe organic law a danger signal to protect tbe people from tbe mischief tbat called it into being.” We also' refer to the very extensive and elaborate monographic notes found in 64 Am. St. Rep. 79 et seq., and 79 Am. St. Rep. 456 et seq.

Tested by tbe application of tbe above rules, we cannot say that the Act is unconstitutional because of the • alleged defect in the title.

2. Is the'license fee, provided for, a-tax? We are clearly of the opinion that it is not. Counsel for the appellant rely upon State ex rel. Sam Toi v. French, 17 Mont. 54, 41 Pac. 1078, 30 L. R. A. 415, as conclusive that it is a tas. A careful examination of that case discloses that the court only decided that a license fee imposed upon laundries was not a tax, as falling within the equality and irniformity provisions of the constitution. The court says: “The particular distinctions as to when a license fee is a tax, and when it is not, we shall not discuss, further than to give the reasons for our opinion that this license fee under consideration is not a tax, as falling within the equality and uniformity provisions of the Constitution.” (See, generally, State v. Camp Sing, 18 Mont. 128, 44 Pac. 516, 32 L. R. A. 635, 56 Am. St. Rep. 551; Littlefield v. State, 42 Neb. 223, 60 N. W. 724, 28 L. R. A. 588, 47 Am. St. Rep. 697; State v. Bixman, 162 M0. 1, 62 S. W. 828; Patapsco Guano Co. v. North Carolina Board of Agr., 171 U. S. 345, 18 Sup. Ct. 862, 43 L. Ed. 191; City of Jacksonville v. Ledwith, 26 Fla. 163, 7 South. 885, 9 L. R. A. 69, 23 Am. St. Rep. 558; Willis v. Standard Oil Co., 50 Minn. 290, 52 N. W. 652.)

In Littlefield v. State, supra, the court says: “But by Taxation,’ as the term is here employed, is meant the providing of revenue for the ordinary expenses of state or municipal government. It does not follow, therefore, that an ordinance will be held void simply because it provides for a fund to■ be derived from license fees. Such a measure will be upheld by the courts whenever it appears to have been designed to promote the welfare of the public, and the revenue derived therefrom is not disproportionate to the cost of its enforcement and the. regulation of the business to which it applies.”

In Willis v. Standard Oil Co., supra, the court says: “That the state may make any business requiring police regulation pay the expense of regulating and controlling it, and that this may be done by exacting fees, license fees, ot inspection fees from those engaged in the business, no one disputes. On its face, this law is a bona fide police regulation — a proper inspection law' — and the fees oare in good faith exacted to reimburse the state in the expense of inspection and enforcing observance of the law.”

It will be noticed that, by Section 2 of the Act, the annual salary of the meat and milk inspector is to be paid out of the general state fund monthly, and that the license authorized to be collected by the inspector under Section 15 shall be paid into the state treasury quarterly, to be turned into the general fund. It makes no difference that the license fees, when collected, are required to be paid into the state treasury. (State v. Bixman, 162 Mo. 1, 62 S. W. 828; Willis v. Standard Oil Co., 50 Minn. 290, 52 N. W. 652.) Their collection and deposit is clearly for the purpose of the reimbursement of the state for moneys expended in carrying the Act into effect, and not to obtain revenue for general governmental purposes.

It being a license, and not a tax, the legislature might determine by what agency the collection should be made; and the case of Mutual Life Ins. Co. v. Martien 27 Mont. 437, 71 Pac. 470, has no application.

Is the classification for the purpose of license unreasonable ? We think not. Counsel for appellant seem to have fallen into error as to the basis of this classification. They say that it is based upon the number of vehicles employed, and each vehicle is taxed. The number of vehicles employed has nothing to do with the classification. It is based solely upon the number of cows milked. The license fee is not imposed upon the vehicle, but upon the right to do- business with a vehicle by an owner thereof, who milks over five cows. The number of vehicles is only important in determining the amount of the license fee imposed.' Counsel frankly stated in his oral argument that he would not contend that a classification based upon the number of cows milked would be unauthorized. The question of classification of objects upon which a license fee is imposed is purely legislative, and, in absence of abuse, will not be interfered with by the co-urt. (See, generally, St. Louis v. Weber, 44 Mo. 547; State v. Broadbelt, 89 Md. 565, 43 Atl. 771, 45 L. R. A. 437, 73 Am. St. Rep. 201; Singer Mfg. Co. v. Wright, 97 Ga. 114, 25 S. E. 497, 35 L. R. A. 497.)

The consideration of the question of exemptions, as raised by the brief, has been fully covered in the. treatment of classification of subjects by the Act. It is a self-evident proposition that, whe.h the legislature designates certain subjects upon which license fees are imposed, all subjects not named are excluded fromi the operation of the Act. The exercise of the power of designation rests in the legislature, and will not be interfered with by the court unless clearly beyond constitutional limits of the power given to the legislature.

This disposes of all the questions raised or argued upon this appeal. The sufficiency of the complaint upon which the prosecution is based was not even referred to, and therefore was not considered or determined by the court.

We recommend that the judgment be affirmed.

Pee Cueiam.

For the reasons stated in the foregoing opinion, the judgment is affirmed.