author: ME, COMMISSIONER OLAYBERG

text:
    KING, Respondent, v. PONY GOLD MINING COMPANY et al., Defendants; MORRIS et al., Appellants.
    (No. 1,514.)
    (Submitted April 6, 1903.
    Decided April 27, 1903.)

      Appeal — Record on Appeal — Notice of Intention, to Move for New Trial — Practice—Stare Decisis — New Trial — Striking Attorneys' Names from, Answer — Discretion — Affidavits— Insufficiency of Evidence — Record — Revieru — Pleading— General Denial — Waiver—Suits in Equity — Instructions— Evidence — Harmless Error — Corporations — Liability' of Stockholders — Actions—Statute of Limitations — Briefs.
    1. The notice of intention to.move for a, new trial is not a necessary part of the record on appeal from an order denying a new trial unless some objection is presented to the notice in the trial court which the party making desires to have the supreme court pass upon.
    2. Where the court has fallen Into error upon a question of practice, and the correction of that error can in no way or manner injure any litigant in pending cases, the decision making the mistake should be overruled and the true and correct practice stated.
    3. under Code of Civil Procedure, Section 1172, providing that, when a motion for a new trial is based on error in the exercise of the trial court’s discretion, the motion must be made on affidavits, alleged error in striking ■ certain attorneys’ names from the answer cannot be considered on appeal where the record contains no affidavits.
    4. Sufficiency of the evidence to support the decree cannot be considered where it does not appear from the certificate of the trial judge settling the statement, or from the statement or bill of exceptions, that the record contains all the evidence or its substance.
    5. where the statement on motion for a new trial stated that plaintiff called certain witnesses, who testified as therein set forth and “plaintiff rested,” and that defendant 'called certain witnesses, whose testimony was also given, “whereupon defendants rested,” it was not made to appear that all the evidence given was contained in the record.
    6. Alleged insufficiency of a general denial cannot be first raisd on appeal.

      7. On appeal in a snit in equity, alleged error in instructions cannot be considered ; the verdict being merely advisory.
    8. where, in appellant’s original brief and in the oral argument, do reference was made to error in refusing to grant a moti'on for a nonsuit, an assignment based on such refusal will be considered waived.
    9. Admission of incompetent evidence in an equity case is not reversible error, it being presumed that the court considered competent evidence only, except where it clearly appears from the record that the court actually considered the incompetent evidence in making up its findings, or where the record — containing all the evidence — does not disclose sufficient competent evidence to warrant the findings.
    10. where the record does not purport to contain all the evidence, it will be presumed that there was sufficient competent evidence to support the decree.
    11. In a suit against stockholders of a corporation, defendants could not allege error in the admission in evidence of the report of a stockholders’ meeting, when by subsequent amendment of their pleadings they admitted the existence of the evidence objected to.
    12. Assignments of error in sustaining objections to certain questions cannot be considered where there is no showing as to what the answers would have been, and the .questions give no indication of the specific evidence sought to be adduced.
    13. under Compiled Statutes of 1887, Division Y, Section 457, providing that the stockholders of every company incorporated under the act shall be liable to the creditors of the company to the amount oí unpaid stock held by them, etc., the liability of the stockholders arises only after execution on a judgment against the corporation has been returned unsatisfied, and limitations do not begin to run against an action against the stockholders until such time.

      Appeal from District Court, Leivis and Ciarle/' County; H. C. Smith., Judge.

    Suit by Rockwell King against the Pony Gold Mining Company, Samuel T. Hauser, William W. Morris, and Henry El-ling. Judgment against Morris and Effing, and from the judgment and an order denying a new trial they appeal. After-wards Effing died, and Thomas Duncan and others were substituted, as executors', in his place and stead.
    Affirmed.
    STATEMENT OP TIIE CASE BY THE COMMISSIONER PREPARING the Opinion.
    This is an appeal from the final judgment, and from an order overruling a motion for a, new trial, in' a suit brought by a. judgment creditor of the Pony Gold Mining Company against Henry Effing, William W. Morris* and Samuel T. Hauser, as stockholders of said company, to recover an amount alleged to be due and unpaid upon the capital stock of the company held or owned by said defendants, to bo applied in the liquidation of said judgment. Tlia Pony Gold Mining Company is also made a party defendant to the suit. The theory upon which plaintiff claims that there is an amount unpaid upon said defendants’ stock is that practically the entire capital stock of the company was issued and delivered to said defendants Elling and Morris, as full-piaid stock, for the purchase of certain property by the company, the value of which is alleged to have been far beloiw the par value of said capital stock. It is alleged that the company issued and delivered to said defendants 499,991 out of 500,000 shares of the capital stock of said company (the par value being $10 per sharei) in payment for certain property which plaintiff claims was not worth over $Q50,000. It is also alleged that, in addition to the issuance and delivery of said stock, the company paid the defendants Elling and Morris $50,000 in cash, and executed and 'delivered a mortgage to them upon the property thus purchased for the sum of $150,-000. The record discloses that at the conclusion of plaintiff’s case a motion for nonsuit made by the defendants was submitted to- the court, which was sustained as to- defendant Hauser, but denied as to defendants Elling and Morris-. By this action of the court, defendant Hauser was- eliminated from the case, and it proceeded to a final judgment against defendants Elling and Morris. The action was one in equity, and upon the trial certain special issues were submitted to the jury. The jury returned findings upon these issues in favor of plaintiff, which were adopted by the court. The court then made additional findings in plaintiff’s favor, entered judgment against defendants Elling and Morris, and denied their motion for a new trial. From this action of the court, defendants Elling and Morris appealed to this court.
    After the appeals were perfected, appellant Henry Elling died, and, by order duly entered, Thomas Duncan, Mary B. Elling, Mabel M. Hutt, and the Union Bank & Trust Company were substituted herein, as executors, in his place and -stead. For brevity, we will refer to tlie appellants as Piling and Morris in tba following opinion.

      Mr. Robert B. Smith, Mr. W. A. Clark, and Messrs. Cullen. Day & Cullen, for Appellants.
    The court erred in striking' out the new matter in tire answer of the defendants Piling and Morris, relating to the statutes of limitations. (Wood on Statute of Limitations, See. 149; 1 Cook on Corporations, See. 225; Thompson on Liability of Stockholders, Sees. 292, 293; Compiled Statutes, 1887, First Hiv. Sec. 20; Longley v. Little, 26 Me. 162; Hunt v. Ward, 99 Cal. 612, 34 Pac. 335; Kelly v. Clark, 21 Mont. 291-342; Powell v. Oregonian Ry. Co., 36 Fed. 726; Stilphon v. Ware, 45 Cal. 110; Herman v. Coleman, 23 Pac. Pep. 62; Redding-ton v. Cornwall, 90 Cal. 49, 27 Pac. 44; Bank v. Pacific Coast Steamship Co., 103 Cal. 574, 37 Pac. 499; daggers Iron Co. v. Walker, 76 N. Y. 521; Hardman v. Sage, 124 N. Y. 25, 26 N. P. 354; Close v. Potter, 49 N. P. 686; Patterson v. Thompson, 86 Fed. 85; Blake v. Clausen, 38 N. Y. Snpp-. 514; Bassett v. Hotel Co., 47 Yt. 314; Sullivan v. Manufacturing Co., 20 S. O: 79; Loseev. Bullard, 79 N. Y. 404; Rector of Trinity Church v. Vanderbilt, 98 N. Y. 170; State Savings Bank v. Johnson, 18 Mont. 440.)
    There was no statute of the territory of Montana in force at the time when these transactions took place; which would require the plaintiff to recover judgment against the corporation before suing the stockholders, and we think this court will not now establish such a doctrine. There are numerous authorities to the effect that suit may be brought against a stockholder witk-'out bringing suit against the corporation. (Terry- v. Tubman, 92 U. S. 156; Camden v. Doremos, 3 How. 516-533; Stutts v. •Handley, 41 Fed. 531; First National Bank v. Creen, 64 Iowa, 445; Cleveland r. Marine Bank, 17 Wis. 545; Samain-ego v. Stiles, 20 Pac. 607; Barrack v. Clifford, 24 N. P. 259.)

      Mr. T. J. Walsh, and Mr. F. P. Sterling, for Kespondent.

      The statute of limitations begins to run when the plaintiff’s causa of action, accrues or ripens. The appellants contend that the plaintiff’s causa of action against them as stockholders in the Pony Gold Mining Company came into1 existence and w.as perfect immediately upon the accruing of the original indebtedness against the corporation in 1889. We say that it did not come intoi existence until the plaintiff had reduced his claim to judgment and had exhausted his remedies for the collection of the same from the corporation. (Kelly v. Ciarle, 21 Mont. 291; Thompson on Liability of Stockholders, Soos. 32, 36, 37; Cuylcendall v. Corning, 88 N. Y. 129 ; Handy v. Draper, 89 N. Y. 334-; Rocky Mountain Barde v. Bliss, 89 N. Y. 338; Hard-man v. Sage, 124 N. Y. 25; Christenson v. Quintard, 36 Hun. 334; Bams v. Babcock, 27 Pac. 674; Walter v. Merced, 59 Pac. 136; Vermont Marble Co. y. Declez Granite Co., 67 Pac. 1057; 2 Spelling1 on Corpora,tions, 823; Cillin v. Sawyer, 44 Atl. 677; Powell v. Ry. Co., 38 Ped. 187; Wehn v. Fall, 76 N. W. 138; Hawkins y. Glenn, 131 IT. S. 319; Hatch v. Dana, 101 IT. S. 205-214; Thompson’s Commentaries, 3770; 2 Beach on Private Corporations, 569; 1 Cook on Corporations, 195-225Í; Clark on Corporations, 239; Crofoot v. Thatcher, 57 Pac. 171; Jones v. Whitworth, 94 Tenn. 602; Merritt v. Reid, 10 Daly, 310; Trustee v. Semple, 80 Ala. 159; Allibone v. Hager, 46 Pa. St. 48; Scoville v. Thayer, 105 IT. S, 143; Thompson on Liability of Stockholders, 291; Younglove v. Lime Co., 33 N. E. 234; Bronson v. Schneider, 33 N. E. 233; Hardman v. Sage, 124 N. Y. 25.)
   ME, COMMISSIONER OLAYBERG

prepared the opinion for the court.

Before entering upon a consideration of the questions involved in this appeal, it is important to consider some of the preliminary objections presented by respondent’s counsel to the record of the case, and to "certain points relied upon by appellants in their brief. A great many questions are sought to be raised in appellants’ brief, many of which, ara objected to, and it seems to be the duty of the court to sift these objections-, and determine what questions are properly before the court for consideration. These preliminary objections are as follows: (1) That this court cannot consider any alleged errors involved in overruling the motion for a new trial, as there is no- notice of intention to move for a new trial in the record. (2) That this court cannot consider the alleged -error involving the striking of Cullen, Day & Cullen from the separate answer of defendant Hauser, because such error is an irregularity of the court below, which can only be presented to this! court by affidavits filed with 'the court below on the motion for a new trial, and no- such affidavits appear in the record. (3) That this court cannot consider the alleged errors assigned upon the insufficiency of the- evidence, because the record does not disclose that it contains all of the evidence introduced at the trial, or the substance thereof. (4) That this court cann'ot consider whether the property conveyed by defendants to the company is of any other value than that alleged in the complaint, because defendants’ denial of such allegations was general. (5) That this- court cannot consider the -errors assigned upon the instructions of the court to the jury, given or refused, because the case is one in equity, and in equitable cases this court cannot review the. instructions given or refused. We shall consider tírese objections- seriatim.

1. As to the absence of notice of intention to move for a new trial:

In this case the record on appeal contains nothing aside, from a statement of the case, p-ro-perly settled and signed, and the judgment roll. The notice of intention to move for a new trial is entirely omitted, and the question is- whether this omission is proper. The consideration of this question is necessarily limited to the conditions presented by the record in this case, and to none other, and this court desires to- be understood that this opinion shall be construed as applicable only to similar conditions and cases. For a full elucidation of the question, a reference to the statute -seems necessary.

Under Section 1171, Code of Civil Procedure, a motion for a new trial may be based upon one or more of seven grounds therein stated. Section 1172 provides that when the application is made for a cause mentioned in the first, second, third and fourth grounds, stated in Section 1171, it must be upon affidavits, and if upon other grounds, either upon a bill of exceptions or statement of the case, at the option of the moving Piarty. Section 1173 provides that within ten days after the verdict of the jury, or notice of the decision of court or referee, the party intending to move for a new trial must file with the clerk and serve upon the adverse party a notice of his intention, “designating the grounds upon which thei motion will be made.” Subdivision 3 of Section 1173 further provides: “When the notice of the motion designates as; the ground of the motion the insufficiency of the evidence to1 justify the verdict, or other decision, the statement shall specify the particulars in which such evidence is alleged to be insufficient. • When the notice designates as the ground of the motion errors in law, occurring at the trial and excepted to by the moving party, the. statement, shall specify the particular errors upon which the party will rely. If no. such specifications be made thei statement shall be disregarded on the hearing of the motion.”

It is apparent from the foregoing provisions of the Code that the only purposes of the notice of intention to move for a new trial are (1) to. notify the adverse party of the grounds, upon which the motion will be based; and (2) to guide the judge or referee in thei settlement of the statement when proposed, in only allowing such grounds, of motion to be. stated or claimed therein as ara set forth and relied upon in the notice of intention. When the statement is prepared in puriisance of tfie notice, it must specify particularly thei insufficiency of the evidence, and the particular errors) of law relied upon in the notice of intention. It is. then made the duty of the judge or referee to “malee the statement truly represent the case,” and to settle and sign the same. In order that the statement “truly represent tbe case,” tbe 'judge on: referee must not allow to* be included therein any grounds of motion not stated in tbe notice of intention and relied upon by tbe moving party. Tbei notice of intention must therefore be referred, to. and considered in settling tbe statement;, and if there is any objection to its form or substance, or if it has not been filed or served in time, such objections should be then presented, and the proper reference thereto should be inserted in the statement, so that the higher court, upon appeal, may consider and pass thereon. "When the statement is settled, all the functions and offices of the notice of intention have been, performed, and it need only be incorpo^ rated in the statement in cases where some point involving its consideration is desired to be presented to the supreme court. In all other instances there is no occasion to present it. to the higher court. There having -been no question raised in this record concerning the notice of intention, there was no; occasion for it to be brought to this court.

We find the former decisions of this court in great confusion, as to whether the record on appeal from an order granting or refusing a'motion for a new trial should contain the notice of intention. The first case where the question wasi considered is that of First National Bank v. McAndrews, 5 Mont. 251, 5 Pac. 879, where, a motion was made to strike the statement on motion out of 'the transcript “for the reason that there is, nothing in the record to show that there was either a motion for a, new trial filed, or a notice thereof served upon; the adverse party, as required by Section 287' of the Cod© of Civil Procedure.” This court sustained the motion, and held that a decision upon motion for a new trial may not be reviewed on the record when the record does not show that any motion for a new trial was filed in tire lower court, nor that any notice of motion, designating the errors complained of, was filed or served upon the adverse party. This decision was adopted and indorsed in the case of Gum v. Murray, 6 Mont. 10, 9 Pac. 447. It was next cited with approval in Arnold v. Sinclair, 12 Mont. 248, 29 Pac. 1124.

Tbesa decisions were all made while there was a statute in force requiring the appellant to furnish toi this court, on orders appealed from in new trial proceedings', among other things, “a copy of the papers used on the hearing in the court below.” (Section 425, Code of Civil Procedure, Revised Statutes of 1879; Section 438, Code of Civil Procedure, Compiled Statutes of 1887.)

In 1895 the legislative assembly enacted the present Codei of Civil Procedure, and by Sections 1176 and 1738 made a new requirement as to the papers necessary to be sent to this court on appeals from orders granting or refusing new trials. Section 1176 provides: “The judgment roll, and the affidavits, or bill of exceptions or statement, as the case may be, used on the hearing, with a copy of the order* made, shall constitute the record to be used on appeal from the order granting or refusing a new trial” Section 1738 provides: “On an appeal from an order granting or refusing a new trial, the appellant must furnish the court with a copy of the notice of appeal, of the order appealed from, and of the papera designated iin Section 1176 of this Code.” TJnder these sections, it is* very apparent that the only papers properly constituting the record on appeal in the present case are the judgment roll, the statement, the order appealed from, and the notice of appeal.

Recalling the fact that under Section 425, Code of Civil Procedure, Revised Statutes of 1879, and Section 438, Code of Civil Procedure, Compiled Statutes of 1887, the papers constituting the record were a copy of the notice of appeal, the undertaking on appeal, the order appealed from, and “a copy of the papers used on the hearing in the court below, ‘certified’ by the attorneys, of the parties to the appeal or by the clerk, to be correct,” we must conclude that, under the old practice, if the notice of intention was used in the court below on the bearing, a copy was required to be included in the record, certified to he correct, as provided by the statute. (Arnold v. Sinclair, 12 Mont. 248, 29 Pac. 1124.)

Under the present statutes, the only way in which the notice of intention can be brought before this court is by insertion in the statement or in the bill of exceptions. It has a proper place in the statement or bill, as we bare above seen, only, when some objection is made to its sufficiency at the time of the settlement of the statement or bill, and therefore, unless some such objection is presented to the notice of intention at that time, so that it becomes necessary to incorporate it in the statement or bill, it has no place in the record on appeal.

In determining this question, it is very important to' refer to the statutes and decisions of the supreme court of the state of California, because we find that in that state the same statutes were enacted, and the same questions arose as arise here, and had been definitely settled by the court of last resort of that state long prior to the adoption of our present Code of Civil Procedure, as hereinafter stated. Section 346, c. 5, p. 106, of the Laws of California of 1851, and Section 32, e 54, p. 64, of the Laws of 1854, were practically identical with our Section 425, Code of Civil Procedure, Revised Statutes of 1819, and Section 438, Code of Civil Procedure; Compiled Statutes of 1881. Under the Laws of 1851 and 1854, supra, the supreme court of California held (as this court held under Section 425, Code of Civil Procedure, Revised Statutes of 1819, and Section 438, Coda of Civil Procedure, Compiled Statutes of 1881), that the notice of intention was a necessary part of the record on appeal from an order granting or refusing a motion for a new trial. (Calderwood v. Brooks, 28 Cal. 151; Wright v. Snowball, 45 Cal. 654.) The legislature of California in the year 1814 adopted a new Code of Civil Procedure, changing the provisions of the old Code concerning the record on appeal from orders granting or refusing new trials, and substituting the present Sections. 661 and 952 for Section 346. These last sections did away with the requirement of certifying to the supreme court the papers used on the hearing of motion for a new trial in the court below, and only required the papers mentioned in those sections to- become parts of the record. The supreme court of California, in Dominguez v. Mascotti, 74 Cal. 269, 15 Pac. 773, uses the following language: “Formerly the notice was part of the record on appeal. But by careless legislation it is no longer so.” The same court also said in Pico v. Cohn, 78 Cal. 384, 20 Pac. 706: “Formerly the notice was made a paid of the record on appeal b'y express statutory provisions. But it is not so under the present Code. (Code of Civil Procedure, Sec. 670; Girdner v. Beswick, 69 Cal. 112, 10 Pac. 278; Dominguez v. Mascotti, 74 Cal. 269, 15 Pac. 773.) Nor is there any provision of the Code requiring that such notice shall be brought to this court by including it in the statement, or in any other manner. The papers necessary to be brought up are set out in Sections 661 and 952 of the Code of Civil Procedure, and the notice of intention is not one of them. The former statute having made the notice of intention a part of the record, we must assume that it was omitted from the present Code with a purpose. Being, omitted from the section providing what papers shall constitute the record on appeal, and no provision being made for bringing it up in any other way, it is fair to presume that it was not intended to require it to- be brought to this court at all. This leads usi to the conclusion that it was the legislative intention that the notice should be the basis of the motion to be made in the court below, and that, upon the proper statement being filed, and the necessary motion made and passed upon by the court below, the notice has performed its functions, and is not a necessary part of the record on appeal, or ton be presented here in any form. When! the: case comes to us, we must look to the statement, or bill of exceptions, and the specifications in which the decision of the court below is mot sustained by the evidence, and the: specifications of errors of law, as our guide in reviewing the case, and to these alone. If a question is presented by such specifications, and is properly saved in the statement or bill of exceptions, this court will look no further, but must presume that the question was properly presented to the court below, and! passed upon in its ruling upon the motion for a new tidal. We do not put this upon the ground of waiver by the opposite party, as is1 done in some of the earlier cases, but upon the sole ground that we must look aloue to the statement or bill of exceptions for the questions to be determined, in the absence of any showing by the respondent that no notice, or an insufficient one, was given. Undoubtedly the notice of intention is necessary, but if it hasi not been given, or has been given too late, that must be shown by the respondent, as against the settlement of the statement or bill of excepions, or at the time of and in opposition toi the motion for a new trial; and, if the court below rules against him, hu must cause the facts necessary to present the question to' be then included in the statement or a proper bill of exceptions, so that this court can determine whether a proper notice has been given or not. The specifications in the statement or bill sbonld conform toi the notice of intention to move for a newl trial. If they do not, the opposite party should move such amendments thereto as will remove therefrom all matter foreign- to the grounds stated in the notice, and in settling the same the court below should see that the statement does not go beyond the notice, either in the body of it ¡or in the specifications. If this is done, and the statement or bill is properly made np, no> injury can result to any one from the failure to bring up1 the notice.”

In 1895, as above stated, our legislature also enacted new ¡provisions in regard toi the papers which shall constitute the record on appeals from orders granting or refusing new trials. (See Sections 1176, 1738, Code of Civil Procedure.) By the adoption of. these two sections the legislative assembly enacted practically the identical provisions of Sections 661 and 952 of the Code of Civil Procedure of California. The supreme court of that state has, since the adoption of their Coda in 1874, freu quently decided that the notice of intention need not be a part of the record on appeal. (Ferrer v. Home Mutual Ins. Co., 47 Cal. 427; Hook v. Hall, 68 Cal. 22, 8 Pac. 596; Dominguez v. Mascotti, 74 Cal. 269, 15 Pac. 773; Pico v. Cohn, 78 Cal. 384, 20 Pac. 706.)

All these decisions were made subsequent to' the, adoption of the Code of California of 1874, and prior to the change in our Code of Civil Procedure. We having adopted Sections 1176 and 1738 from the Code of California, under the decisions of this court we must be held to have adopted such sections' with the construction theretofore placed upon them by the highest court of the state of California. (Davenport v. Kleinschmidt, 6 Mont. 502-538, 13 Pac. 249; First Nat’l Bank v. Bell S. & C. M. Co., 8 Mont. 32, 19 Pac. 403; Stackpole v. Hallahan, 16 Mont 40, 40 Pac. 80; Murray v. Heinze, 17 Mont. 353, 42 Pac. 1057, 43 Pac. 714; Largey v. Chapman, 18 Mont. 563, 46 Pac. 808; Sharman v. Huot, 20 Mont. 555, 52 Pac. 558, 63 Am. St. Rep. 645 ; Stadler v. First Nat’l Bank, 22 Mont. 190, 56 Pac. 111, 74 Am St. Rep. 582; Butte & Boston Consol. Mining Co. v. M. O. P. Co., 25 Mont. 41, 63 Pac. 825.)

Unfortunately, however, the California decisions above referred to were not called to the attention of this court when the question was first presented to it for consideration under the provisions of the Code of 1895, and by various decisions rendered since that time it has been held that the notice of intention is a necessary part of the record on appeal, and must come u'p in the statement. (Grinnell v. Davis, 20 Mont. 222, 50 Pac. 556; Harrigan v. Lynch, 21 Mont. 36, 52 Pac. 642; Carr, Ryder & Adams Co. v. Closser, 25 Mont. 149, 63 Pac. 1043; In re Reilly’s Estate, 26 Mont. 358, 67 Pac. 1121; Madigan v. Harrington, 26 Mont. 358, 67 Pac. 1121; Carr, Ryder & Adams Co. v. Closser, 27 Mont. 94, 69 Pac. 560.)

This court has also' held that the filing and service of this notice, and the omission thereof from the statement, if filed and served, is waived if the adverse party appears at the settlement of the proposed statement and offers amendments, thereto.. (Harrigan v. Lynch, 21 Mont. 36, 52 Pac. 642; In re Reilly’s Estate, 26 Mont. 358, 67 Pac. 1121.) By such decisions this court tacitly admits that the omission of the notice from the record is not jurisdictional. Is not such holding tantamount to saying that the insertion.' of tira notice in the statement is only, jurisdie-tional in oases where this court is requested to pass upon some question as to the validity or sufficiency of the notice itself, or as to its effect ? We Lave seen that in such instance's the party raising such question must cause the notice and his objections thereto to1 be incorporated in the statement or bill of exceptions.

We are of the opinion, after a careful and conscientious investigation and consideration of the statute!, and cases upon similar statutes in other jurisdictions, that the functions of the notice of intention to move for, a new! trial are fully exhausted when the statement of the case or bill on such motion is settled, and that it has no further force or effect, except in cases where an objection is made to it upon the settlement of the statement which the party making, desires to have this court pass upon. This court, in Carr, Ryder & Adams Co. v. Closser, 27 Mont. 94, 69 Pac. 560, recognizes the correctness ¡of the California decisions^, as shown by the following language: “Sections 1176 and 1738, supra, were adopted from the statutes1 of California after the supreme court of that state had interpreted them in Pico v. Cohn, 78 Cal. 384, 20 Pac. 706. While Harrigan v. Lynch and In re Reilly’s Estate, supra, were under advisement, the members of this court examined the transcript in Grinnell v. Davis, supra, and found that the new! trial proceedings were instituted after these sections had become law. It is probably true that in Gmnnell v. Davis this court should have followed the interpretation which, had been placed upon, similar sections by Pico v. Cohn, and 'that an injustice was worked by. nlot following it. Doubtless the court would havei conformed to the practice established by Pico v. Cohn, had it been advised of that decision.”

This leaves a single question for determination upon this branch of the case, and that is whether, under all the circumstances, the court will now correct the doctrine as laid down in Carr, Ryder & Adams Co. v. Closser, supra. This court, in the case of Wetzstein v. Boston & Montana Consol. C. & S. Mining Co., 25 Mont. 135, 63 Pac. 1043, in treating of a question of practice, uses the following language: “The rule of stare de~ cisis does not bere control, as it is not unusual, but proper, in matters of practice, to establish a correct and legal practice, if an error has been committed ill-advisedly in a former opinion of this court, provided that it is apparent that no substantial injury will be suffered by litigants by reason of reliance upon the precedent.” In this opinion the court does not refer to' the case of Ramsey v. Burns, 24 Mont. 234, 61 Pac. 129, in which this court uses the following language: “Decisions upon mere matters of practice, or interpretations of what may perhaps not improperly be called ‘adjective law,’ should never be disturbed unless it be apparent that injustice would result from adherence thereto.” But it is well to note that the rule of practice affirmed in that case was one which, if changed by the court, would entail hardship upon litigants whose appeals had been taken to, and were pending in, tliis court. The principle of practice reaffirmed was in relation, to the validity of bonds on appeal, and clearly, if the court overruled a former decision holding bonds on appeal of a particular form to' be valid, all appeals in. which a similar bond was filed would have to' be dismissed, and thus very serious hardship, would be indicted upon appellants who had taken their appeals in reliance upon the good faith of a decision of the supreme court of the state. This court again said, in the case of Cerr, Ryder & Adams Co. v. Closser, 27 Mont. 94, 69 Pac. 560 : “That decisions upon mere matters of practice be not disturbed, even if erroneous, is of prime importance-. It is most desirable that the practice be settled and known. Unless it be apparent that injustice will likely result from adherence to such decisions (Ramsey v. Burns, 24 Mont. 234, 61 Pac. 129), or that a, change will not work a wrong, they should not be disturbed. Only the most cogent reasons can justify a court in overturning them.” It will be noticed that Wetzstein v. Boston & Montana, Consol. C. & C. Mining Co., supra., is not referred toi in this decision. We thus see that this court has fallen into an inconsistency in the de1-cisioms of the three cases last cited, but we believe the true rule to ha that if the court has fallen into error upon a question of practice, and the correction of that error can in no way or manner injure any litigant in pending cases, th-ei decision making tbe mistake should ba overruled, and the true and correct prac-tica stated.

Chief Justice Johnson, of the court of appeals of New York, in a dissenting opinion in the case of Leavitt v. Blatchford, 17 N. Y. 521-544, seems, to state the rule correctly in the use of the following language: “To depart from, a decision is undoubtedly an act by which a court incurs a high degree of responsibility, and it should certainly be satisfied that its course is such that the future judgment of the enlightened profession of the law will approve its determination. But when it is satisfied that an erroneous determination has been m-ade, and that, too, with a full consideration of the merits of the question decided; when it sees that to correct it will render void no. one’s honest acts, nor disappoint any just expectation; when, in short,, it is fully persuaded that there is no one reason why such a decision should again be made, except that it was once made before — ■ then I think the court would be sacrificing substance to shadow if it refused to correct its error. Nor do' I believe that by so doing a court would disturb the public confidence in, the stability of its judgments. Courts are not inclined, any more than men out of courts, to admit that they have erred; and where the administration of justice is public, and must proceed upon reasons assigned for every judgment, there is little danger from the exercise, under the responsibilities: necessarily attending its exercise, of the power which a court possesses to, retrace its steps when it is satisfied that an error1 has been committed.”

2. As to striking the names of Cullen, Day & Cullen, as attorneys, from the answer of defendant Hauser:

We are of the opinion that this alleged! error is: not properly presented upon this appeal, for the following reasons, viz.: The statutes pcrovida that, when the motion for a new trial is based upon tins ground, it must be made upon affidavits,. (Section 1172, Code of Civil Procedure.) No affidavits of this character appear in the record. This court has said, in Cole man v. Perry, 28 Mont. 1, 72 Pac. 42: “If 'error was eommitr ted, it was because of tbe irregularity or abuse of discretion1 on tbe part of tbe trial court in thus freely expressing before tbe jury an opinion upon tbe probable effect of evidence. If tbe language of tbe court so used constituted error, it is one of tbe designated causes for wbicb a new trial may be granted. (Section 1171, Subd. 1, Code of Civil Procedure.) However, sucb error can only be shown by affidavit; otherwise it is not properly in the record or before this court (Section 1172, Code of Civil Procedure) ; and, asi the alleged error was not so saved, consideration of tbe matter isi not properly before this court upon this bearing.”

3. As to the alleged insufficiency of tbe evidence:

We are of tbe opinion tbat nona of these errors are properly before the court for consideration. The record does not positively or even inferentially disclose1 that it contains1 all tbe evidence introduced at the trial below, or tbe: substance thereof, bearing upon tbe errors assigned. This court, in the case of State v. Shepphard, 23 Mont. 323, 58 Pac. 868, bad occasion to state very fully and clearly the law relative to tbe requirement that tbe record disclose all the' evidence introduced at tbe trial below, or its substance, applicable to tbe errors asr-signed, in order to present the question of tbe insufficiency of the evidence to this court. A reference, to that case: upon this point would seem sufficient for the purposes of this opinion, without making extensive quotations therefrom.

A brief restatement, of tbe law is as follows, viz.: This court cannot consider errors assigned upon insufficiency of the evidence to sustain tbe findings or judgment in eases where the record does not disclose tbat all the evidence introduced before the trial court, or its substance, bearing upon the errors assigned, is contained therein. (State v. Shepphard, 23 Mont. 323, 58 Pac. 868; Currie v. Mont. Cent. Ry. Co., 24 Mont. 123, 60 Pac. 989; T. C. Power & Bro. v. Stocking, 26 Mont. 478, 68 Pac. 857.)

Under the authorities above cited there seem to' be two, ways by which the record]’ can. explicitly disclose that it contains all the evidence, or the substance thereof, bearing upon the errors assigned, which was introduced in the court below, viz.: (1) The certificate of the trial judge, settling the statement on motion for a neiwi trial or bill of exceptions; and (2) from the .statement or bill of exceptions itself.

The certificate of the trial judge to the statement on motion for a new trial in this case is as follows.: “I, Hénry C. Smith, judge of said district court, do hereby certify that the defendants having proposed a statement, and the plaintiff having offered certain amendments thereto, the same were settled by me, and engrossed in the foregoing statement, consisting of 117 typewritten pages, and the same is hereby allowed by me, and is correct. Done this 22d day of September, A. .D. 1899. ITenry O. Smith, Judge,”

If will be perceived that this certificate is entirely silent as to the contents of the statement, save as to the number of pages it Contains, No reference is made to the evidence; or the substance thereof. We find no declaration, or even inference, in the1 body of the statement on motion for a new] trial, tending to show that all the evidence, or its substance, bearing upon the errors assigned, is contained therein. It commences asi follows: “Be it remembered that on the 16th day of June, A. D. 1899, that being one of the days of the conrt, the plaintiff, to maintain the issues on his part, called and had sworn one Samuel T. Hauser, who testified as1 follows,” Following this appears the testimony of witness Hauser. ’ When his testimony was concluded, other witnesses were sworn, and at the completion of plaintiff’s testimony the recital appears: “Plaintiff rested.” Then it appears that certain motions for nonsuit were submitted to, and disposed of by, the court, which is followed by the recital: “And the said defendants; to maintain the issues on their part, called A. J. Seligman, who testified as follows.” Other witnesses were called for the defendants; and at the conclusion of their examination we find the recital, “Whereupon defendants rested.”

This court, in the case of State v. Sheppliard, supra, after a careful review of tibei authorities on the statement ox motion fox a new trial in that particular case, uses the following language, which- we adopt as conclusive in this case: “But it is not at all dear by this record that there was no other evidence before the jury than that included) in the record, and, in the absence of an affirmative showing of a connected narrativa or a positive statement that the entire evidence is therein, defendant has failed to avail himself of the point‘ha would rely on.”

4. As to the sufficiency of the general denial of allegations of value:

We are of the opinion that this court cannot consider this suggestion. Both parties to the suit tried the case upon the theory that this denial was sufficient. Testimony was introduced pro and con. This court said in the case of Hamilton v. Huson, 21 Mont. 9, 53 Pac. 101, “in- the court below the parties treated the denial (a general one) as good and! sufficient, and the ease was tided on that understanding. This question cannot be raised now, the parties having treated the pleading as sufficient in the court below.” See, also, Sweeney v. Great Falls & Canada Ry. Co., Mont. 523, 29 Pac. 19, and eases cited.

5. As to the errors assigned upon the instructions to the jury;

We are of the opinion that none of these; errors can be considered on this hearing. This is an equity ease, and the law is well settled, by various decisions of this court, that the verdict of the jury is merely adlvisory to the court, and that this court will not review -errors assigned upon' the instructions of the court to the jury. It is therefore noi longer an open question in this state. (Lawlor v. Kemper, 20 Mont. 13, 49 Pac. 398, and cases cited; Sanford v. Gates, Townsend & Co., 21 Mont. 217, 53 Pac. 749, and cases cited.)

Counsel assign as error the ruling of the court below in refusing to grant their motion for a nonsuit. In the argument in the original brief filed by them, we find -no reference to, or reliance upon, this alleged error. No reference was made to it in the oral argument. Under these circumstances, this error is presumed' to have been waived, and will not be considered by the court. (Murray v. Mont. L. & M. Co., 25 Mont. 14, 63 Pac. 719; Maloney v. King, 25 Mont. 138, 64 Pac. 351; Anderson v. Cook, 25 Mont. 330, 64 Pac. 873; Matusevitz v. Hughes, 26 Mont. 212, 66 Pac. 939, 68 Pac. 467; Hayes v. Union Merc. Co., 27 Mont. 264, 70 Pac. 975.)

Wé therefore conclude — distinguishing' the substantial from the unsubstantial, the substance from the shadow, in the record presented — that there are only two questions' properly presented to this court for consideration, viz.: (1) Was error committed in the admission or rejection of evidence!? (2) Was error committed in the rulings of the court below upon the question of statute of limitations, as pleaded by defendants?

As to the evidence:

Numerous errors are assigned as to the admission of what is claimed to have been incompetent evidence, but, under the view of the case which we have taken, all of these assignments can be considered and disposed of together. Befare entering upon such consideration, for a better understanding of the principles of law! involved, we deem it important to' refer again briefly to the nature of the suit, and the condition of the record upon which these appeals are presented: The suit, as shown hy the statement of the case preceding this opinion, was one in equity, brought by a judgment creditor of the Pony Gold Mining Company to recover from the defendants amounts unpaid upon the capital stock of that company, which are alleged to have been unpaid because of conveyances of property by the defendants to the company in consideration of the issue of a certain amount of fully paid capital stock, which property was of a value much less than the par value of such stock.

We have decided that the record does not disclose positively, or even inferentially, that it contains all of the evidence introduced at the hearing, and that therefore the appellants'cannot attack the finding of the court otn the ground of the insufficiency of the evidence. These findings are therefore conclusive upon appellants. They are full and complete. Presumably, they were based upon, competent evidence; and, the record not being shown to contain all the evidence, the further presumption is to ba indulged that there was sufficient competent evidence given at the trial to support the findings.

It is the well-settled law that in an equity case the mere admission of incompetent evidence will not be sufficient to warrant a reversal, because of the presumption that the court below only considered competent evidence in making up its findings. (Merchants’ Nat’l Bank v. Greenhood, 16 Mont. 395, 41 Pac. 250; Forrest v. Forrest, 25 N. Y. 501-510; Sawyer v. Campbell, 130 Ill. 186, 22 N. E. 458; Gardner v. Gardner, 23 Nev. 207, 45 Pac. 139; McDonald v. Jacobs, 85 Ala. 64, 4 South. 605; Salt Lake F. & M. Co. v. Mammoth Min. Co., 6 Utah, 351, 23 Pac. 160; Monroe v. Reid, 46 Neb. 316, 64 N. W. 983; King v. Murphy, 49 Neb. 610, 68 N. W. 1029.) There is: the following exception to this rule: Where it! clearly appears from the record that the court actually considered the incompetent evidence in making u,p its findings, or where the record, containing all the evidence, does not disclose sufficient competent evidence to warrant the findings. It is not clearly apparent, however, in this case, that the court considered incompetent evidence; and, as we have already held the record not purporting toi contain all the evidence, we cannot presume that there was not competent evidence before the court sufficient to sustain the findings.. So that it appears that the exception above stated does not apply in this’ case.

Again, one of the most important allegations of the complaint was to the effect that the board of trustees of the Pony Gold Mining Company, of which the appellants were members, by resolution duly adapted, purchased certain property of appellants and one Samuel T. Hauser, and agreed, in consideration therefor, to issue to appellants, and Hauser 499,991 shares of the full-paid capital stock of the company, and! to give to said defendants the company’» three notes; of $50,000 each; secured by mortgage from the company, on all the property so' pur-cbased and conveyed. After tibe plaintiff bad introduced tbe record of this meeting over defendants’ objections, appellants amended tbeir answer, alleging “that, while tbe books of bylaws and tbe minutes of tbe Pony Cold Mining Company sbow tbe issuance of 499,991 shares of stock of tbe Pony Cold Mining Ctompany for tbe consideration of certain property mentioned in the complaint, the fact is as follows: That the said defendants Elling and Morris were-the owners of all tbe property mentioned in tbe complaint; that, by a contract with their ood'efendant S. T. Hauser and tbe Pony Cold Mining Company, the said Hauser and tbe said Pony Cold Mining Company agreed to pay to these defendants for their property tbe following, to-wit: Tbey were to cause tbe construction of a railroad from Sappiington, in the counly of Callatin, to- the mines and property of these defendants, above tbe town of Pony, and tbe said Pony Cold Mining Company was to erect, equip> and furnish, complete, a four hundred ton concentrator for tbe treatment of ores of tbe mines conveyed by these defendants to said company. That these defendants were to be paid two hundred thousand dollars — fifty thousand dollars in cash, and one hundred and fifty thousand dollars in deferred payments, by the note of tbe said Pony Cold Mining Company, secured by a mortgage on all the property of said company. In addition thereto these defendants were to receive 138,333 shares of the capital tstock of said company. That the above and foregoing was the consideration, and tbe only.consideration, received by these defendants, or either of them, for or on account of tbe property conveyed to S-. T. Hauser and to the Pony Cold Mining Company by these defendants.” By this proceeding of appellants, tbey asserted tbe existence of tbe very proof which tbey bad objected to, and therefore clearly waived tbeir objection to its introduction. Having relied upon tbe records of the company themselves in one regard, they could not be beard tot say that tbe very same records’ were not properly identified and • admissible. Hnder the principles above announced, this court will not enter into the consideration of the question of the admissibility of the evidence complained of.

There were also various errors assigned to the rulings of the court upon tho cross-examination of witnesses, but we doi not perceive how any injury to appellants could have been occasioned by any of such rulingsi Besides', there is no showing in the record wha,t the answers would have been to¡ the questions which were excluded. Neither 'do the questions give any indication of the specific evidence sought to be adduced. This court will not reverse a easel upon such uncertain ground.

As to the statute of limitations:

We shall consider’ all the errors assigned upon this question together, because all are directed to the same end, and therer fore will be disposed of by the same decision.

In order to decide this question, we must fully understand the nature oif the liability sought to' be avoided. One of the fundamental questions applicable to the consideration of all statutes of limitation is, when did the cause of action arise, and, therefore, when did the statute begin to> run ? If, under the statute imposing the liability, a suit might have been instituted against the stockholders immediately and directly, then such statute would at once have commenced to run. If, however, under the statute, it was necessary that suit be instituted and concluded against the corporation, and execution returned unsatisfied, before there could be said to be a liability against the stockholder, then the cause of action against the stockholder would not arise until that time, and the" statute would only them begin to run. In other words, was the liability of the stockholder direct and primary, or secondary ?

This court, in Kelly v. Clark, 21 Mont. 291, 53 Pac. 959, 42 L. R. A. 621, 69 Am. St. Rep. 668, says^ “Tho shareholders are only secondarily liable,” etc.

The liability of the stockholder’ in this case is' based upon the provisions of Section 457 of the Pifth Division of the Compiled Statutes of 1887, which is as followis: “The stockholders of every company incorporated under the provisions of this article [chapter] shall be severally and individually liable to the creditors of the company in which they are stockholders, to the amount of unpaid stock held by them respectively, for all acts of and contracts made by such company, until the: whole amount of capital stock subscribed for shall have been paid in.” Section 458, Fifth Division, Ooippjiled Statutes, provides: “The trustees of such company may purchase mines, manufac-tories and other property necessary for their business:, and issue stock to the amount of the value thereof in payment thereof, and the stock so issued shall be declared and taken to be full stock, and not liable to any further call; neither shall the holders thereof be liable for any further payments under the provisions of Section 457 of this chapter; but in all statements and reports of the company to be published, this stock shall not be stated or reported as being issued for cash paid into: the company, but shall be reported, in this respect, according to' the facts.”

Plaintiffs claim that the trustees issued stock as full paid to the appellants: on the purchase of property from them, very much in excess of “the amount of the value: thereof,” and that under the decision of this court in Kelly v. Clark, 21 Mont. 291, 53 Pac. 959, 42 L. R. A. 621, 69 Am. St. Rep. 668, there was unpaid upon said stock the difference between the actual value of the property and the par value of the stock. The theory of the enforcement of this statutory liability is that this unpaid balance on the stock is an asset of the corporation, and a trust fund for the benefit of its: creditor*®. The bill filed is, in the nature of a creditors’ bill to reach and apply a portion of this equitable trust fund to the indebtedness. The indebtedness was against the corporation, and not against the stockholders. By this statute they are “liable to the creditors of the company in which they are stockholders to: the amount of unpaid stock held by them respectively, for all acts: of and contracts made by such company.” Under the: statute the enforcement of this rinpaid balance is to: be aecompjlished by the same means as would be .used in case the1 stockholders] had subscribed for the capital stock of the company, and a portion of stick subscription! yet remained unpaid.

In tke fourth edition of bis excellent work on Corporations, at Section 200, Mr. Cook discusses this question as follows: “Although it may be considered settled law, at least in the United States, that unpaid subscriptions to' the capital stock of corporations constitute a trust fund for the benefit of corporate creditors, yet such unpaid balances of subscription are not the primary or regular fund for the payment of corporate debts. Persons transacting business with a corporation look to the corporation itself for the payment of their debts. Credit is given to the corporation, not to the stockholders; and' it is the natural order of business that the creditors of the corporation are to’ he paid by the corporation from funds in the corporate treasury. Ordinarily corporate creditors have no knowledge or concern about the subscription list, and unpaid or partially paid subscriptions ara a matter .entirely between the corporation and the subscribers. So long as the corporation meets its obligations in the ordinary course of business, corporate creditors have no need to concern themselves about unpaid subscriptions of stock. But when the corporation is in default and embarrassed, oa< for any reason fails to pay its debts, then its creditors have rights with reference toi such unpaid subscriptions’. They then have the right to know whether all the subscriptions for stock have been fully paid in, and, if not, they have the right to compel such payment. It accordingly becomes important to know at what point, in their efforts to collect what is due them’, corporate creditors may cease to pursue the corporation, and proceed directly against its delinquent members. The well-established rule upon this point is that a corporate creditor’s suit to enforce payment of unpaid subscriptions can be properly brought only after a judgment at law has been obtained against "the corporation, and an execution returned unsatisfied. * * * By this is meant that judgment shall have been duly recovered against the corporation, and execution issued and regularly returned unsatisfied. Nothing short of that exhausts the remedy against the corporation.”

Of course, if the corporation has been declared a bankrupt, or is utterly insolvent, or has been dissolved, no proceedings need be taken against such company, because -the law does not contemplate useless acts.

It is apparent, therefore, that the cause of action against appellants did not arise until after the execution against the company was returned unsatisfied, and that the rulings of the court upon the question of the statute of limitations were correct.

We are therefore of the opinion that the judgment and order appealed from should be affirmed.

Píse Cueiam. — Nor. the reasons stated in the foregoing opinion, the judgment and order denying motion for new trial, appealed from, are affirmed.


source: Caselaw Access Project

author: MR. COMMISSIONER CALLOWAY

license: Public Domain

text:
    MACK, Appellant, v. HILL, Respondent.
    (No. 1,529.)
    (Submitted April 9, 1903.
    Decided April 27, 1903.)

      Warranty Deed — Equitable Mortgage — Equitable Relief.

    1. A grantor cannot maintain a suit in equity for the sole purpose of haying a deed absolute on its face declared a mortgage, but must alsc offer to redeem the property, and place himself wholly within the jurisdiction of the court to settle the whole controversy between him and his grantee.
    2. He who seelis equity must do equity.

      Appeal from District Gowrt, Cascade County j J. B. Leslie, Judge.

    Action by Wilhelm D. Mack against Kred L. Hill to have a warranty deed declared to bel amortgage. A demurrer to' the complaint was sustained, and plaintiff appeals.
    .Affirmed.

      Mr. Howard 8. Greene, and Mr. James Donovan, for Appellant.
    Tbie demurrer is on two grounds, the first .only of any materiality, as the second is the conjunctive and must be overruled. {White v. Allait, 87 Cal. 245; Greenbaum v. Taylor, 102 Oal. 624.)
    The right of redemption can only be lost by foreclosure and sale. The court ought to have overruled the demurrer and decreed a foreclosure and sale to satisfy the debt, or held that the deed was only a security. (Watts v. Keller, 56 Ned. 1; Boole v. Beasley, 40' S'. W. 101; Buckman v. Alwood, 71 Ill. 155; Biglow v. Ayranct, 46 Barb. (N. Y), 143; May, Fraudulent Con., Sec. 51.)
    Defeasance may be parol. (Jackson v. Lodge. 36 Cal. 28.)
    To sustain the demurrer allows a fraud. A court of equity will interfere to prevent such acts'. (Story, E'q- Juris., Sec. 439; Parmlee v. Lawrence, 44 Ill. 405, 410.)
    The deed as a conveyance is void. (Peugh v. Davis, 96 IJ. S. 332; Kerr’s Sup. Wilt. Mtg. Eorcl., Secs-. 889, 896, 897.)

      Mr. Thomas K. Brady, for Respondent.
   MR. COMMISSIONER CALLOWAY

prepared the opinion for the court.

In his complaint, plaintiff, appellant here, alleges that “at all times hereinafter mentioned the plaintiff was, ever since has been., and now is” the owner of certain land in Cascade county, Montana, describing it. That on June 13, 1897, he executed and delivered to the defendant his certain promissory note in the sum of $1,000, due in one year, and a,t the same time executed and delivered to defendant a mortgage deed on said land to secure the payment of the note. ' That on August 25, 1899, ha executed and delivered to the defendant “his certain warranty deed, covering the said described land, upon the following contemporaneous agreement, to>-wit: That said deed was not to convey the title to said grantee, but that any time within one year thereafter the said grantor, the plaintiff herein, had the right to pay the sum due on the aforesaid mentioned note, together with interest thereon, and that the defendant, upon the payment to him of said sum, would- cancel said deed and deliver as paid to the said plaintiff the said note; that the said plaintiff herein had full authority to sell and dispose of said lands, using the money derived therefrom to take up and payotha said note, which the said defendant herein retained and held, and now does retain and hold; that the said conveyance, although absolute on its face, was intended, executed, 'and received under said agreement as a mortgage or security for the payment of said debt.” That on August 26, 1899, the defendant placed the deed of record. “That the said defendant, at the time of making the agreement above mentioned, .promised the said plaintiff that he would in no manner undertake to- disr pose of said properly without the consent of said plaintiff, but, notwithstanding said- agreement, the said defendant is now threatening and has threatened plaintiff on the 20th day of October, 1899, that, unless said sum of money mentioned in said note is paid within forty-eight hours thereafter, that the said defendant would sell and dispose of said land, which threat plaintiff believes defendant intends to; carry out. Wherefore plaintiff prays a decree of this court adjudging and declaring the said deed above mentioned to be a mortgage, and further decreeing that the title to said land, although standing’ in the name of defendant, is in the plaintiff herein.”

To this complaint the defendant, respondent herein, demurred, alleging that it does hot state facts sufficient to constitute a cause of action.

Other grounds of demurrer are assigned, but as they are not properly alleged, and are not necessary to this decision, We shall not pass upon them.

The court below sustained the demurrer-, and, the plaintiff refusing, to pleiad further, judgment was¡ entered for the defendant for costs, from which the plaintiff appeals.

The question them, is, does the complaint state f acts sufficient to constitute a cause of action ?

It will be observed' that this is not an, action to have a deed absolute on its face declared to be a mortgage, and to bava the equitable mortgagor’s right of redemption enforced, including the reconveyance of the property by the equitable mortgagee. Under the facts stated in the complaint, the court is unable to enforce the contract alleged to exist between the parties. Nor does the appellant ask it On the contrary, it appears that the appellant., having entered into an unwise contract, asks the court to interpret it in hisi favor only. He does not allega that he will in any wise be injured' if respondent carries out his threat to- sell the property in question; for anght that appears in the complaint, appellant’s indebtedness t'oi ra spondent may he greatly in excess of the value of the property. And it may be inquired, .in passing, how the defendant is to “cancel” the deed, which is of record. Probably the plaintiff may desire a reconveyance of the property, hut he does not say so. Nor does the appellant even, intimate that ha ever -expects to pay the indebtedness which the deed was. given to¡ secura H'e does not allege a tender of the stun due respondent, nor does he assert his willingness toi pay if when the year mentioned shall expire. He also fails to state any facts which show that ha has not a full and complete remedy at law for the respondent’s anticipated maleonduct, for, so far as the court is advised, ra spondent is solvent, and fully able to respond in dam-ages for the breach of his contract with the appellant.

Appellant commences hi-si brief with the statement that “this action is brought to declare a deed, absolute ou its face, a mortgage.” In Cowing v. Rogers, 34 Cal. 648, the court said: “No precedent is cited of an action instituted for the sole purpose of having an absolute deed declared a mortgage.” This language is quoted with approval ini Cline v. Robbins, 112 Cal. 581, 44 Pac. 1023. We have seai-ched the hooks diligently, hut in vain, for such a case, and quite agree with the suggestion of the supreme court of California.

Tbe fact of declaring this deed a mortgage, and stopping there, might compel the respondent to bring an action to’ foreclose it. Coiurts will not try lawsuits by piecemeal. They incline to the maxim, “It is for the public good that there! be an end to litigation.”

In Cowng v. Rogers, supra, it is said: “If the position of the plaintiff is correct that, notwithstanding this action and a judgment in his favor declaring the deed to have been intended as a mortgage it is necessary’ for the grantee to foreclose the mortgage in order to realize the money) intended to be secured, then the present suit was essentially idle and useless.” And again: “It is very clear that when he does sue, offering to redeem and praying that the premises may be reconveved to him, the court is authorized, if the facts warrant it, to declare that the deed, absolute in its terms, was intended as a mortgage, and to prescribe the terms of redemption and reconveyance. Such judgment is as1 binding upon the grantor in respect to the redemption as upon the grantee in respect to the character of the instrument and the reconveyance. It isi one of the incidents of a mortgage that, where the mortgagor seeks the aid of a court of equity in effecting a redemption, the court may prescribe the terms of the redemption.”

If the appellant desires the court to declare that, in equity, the transaction between himself and respondent constitutes a mortgage, he must offer to redeem. He cannot fail to perform his part of the contract and demand that equity be done. He must place himself wholly within the jurisdiction of the court to settle the entire: controversy. See Hughes v. Davis, 40 Cal. 117.

In commenting on the maxim, “He who seeks equity must do equity,” Mr. Pomeroy observes: “It says, in effect, that the court will give: the plaintiff the relief to' which he is entitled, only upon condition that he hasi given, or consents tot give, the defendant such corresponding rights as he also' may be entitled to in respect of the subject-matter of the suit.” (1 Pom-eroy’s Equity Jurisprudence, See. 385.) Tbis tbe plaintiff bas not done or offered to do.

In .our opinion, tbe judgment should be affirmed.

Pee Gubiam. — Eor tbe reasons stated in tbe foregoing opinion the judgment appealed from is affirmed.


author: MR. COMMISSIONER POORMAN

text:
    STATE ex rel. HICKLIN, Relator, v. WEBSTER, Respondent.
    (No. 1,859.)
    (Submitted April 2, 1903.
    Decided April 27, 1903.)

      'Public Lands — Unsurveyed Portion of Townsite — Conveyance —Judges—Jurisdiction.

    under Act of Congress, March 2, 1867, as amended by Act, July 1, 1870, and Compiled Statutes of Montana, 1871-2, page 546, et seg., a district judge has no jurisdiction to issue a deed for an unsurveyed portion of a town-site to a person not claiming to be an occupant of the- land at the time the townsite was entered, before such portion had been surveyed, platted, and necessary streets, etc., laid out as required by Section 5117 of the Political Code.

      Mandamus by the state, on relation of EL B. Hicklin, against F. 0. Webster, judge of tbe Fourth judicial district, and ex officio probate judge of Missoula county, and trustee of Mis-, soula townsite.
    Peremptory writ denied.

      Messrs. Duncan & Draffenj and Messrs. Nolan & Loeb, for Eelator.

      Messrs. Marshall & Stiff; and Mr. Prank Woody, for Ee-spondent.
   MR. COMMISSIONER POORMAN

prepared tbe opinion for tbe court.

This is am application for a writ of mandate toi tbe judge of tbe Fourth judicial district of Montana, ex officio probate judge of Missoula county, and trustee of tbe townsite of Missoula, commanding him to execute and deliver to relator a deed to a certain piece of land, 50; by 105 feet in dimensions, situate within tbe limits of such toiwnsite as originally entered. An alternative writ was issued, and the respondent, the judge of said district court, has shown cause by answer. Tbe relator bad previously made application to respondent for a deed to said piece of land, which application bad been denied. At tbe bearing in the district court the First National Bant of Missoula filed a protest against tbe issuance of a deed to relator, controverting the material allegations of relator’s application, and claiming tbe land as its own, but made no demand for a deed. School District No. 1 of Missoula county also filed with respondent a petition requesting that tbe piece of land in question be surveyed, platted, and offered for sale at public auction for tbe benefit of such school district.

It appears from, tbe record that the townsite was entered under tbe Act of Congress approved March 2, 1861 (14 Stat. 541), as amended by Act approved July 1, 1810' (16 Stat. 183), providing, in substance, “that when., any portion of the public domain was .settled upon and occupied as a townsite it might be lawful * * * for tbe judge of tbe county couxfi for tbe county in which such townsite was situated, to enter tbe land * * * in trust for the several use and benefit of tbe occupants thereof * * ■ * the execution of which trust as to tbe disposal of the lots in such town, and tbe proceeds of tbe sale thereof to be conducted under such regulations as may be prescribed by the legislative authority of the state or territory in which the same might be situated.”

This townsite was surveyed and tbe official plat thereof was filed in tbe office of tbe county clerk of Missoula county on tbe 5th day of April, 18Y1. It further appears tbat the particular piece of land for which, conveyance is sought is a portion of a a.larger piece or strip of land included within this townsite, which strip has never been surveyed, numbered, or platted, except as it is included within the exterior boundaries of said townsite, and has never been laid off intoi lots and blocks; that the necessary roads, streets', lanes, and alleys^ if any are necessary through the same, have not been laid out or dedicated to the public use; and that the only description of the land for which a conveyance is sought, which respondent had or was able to obtain, was that furnished hy relator from a private survey which relator had caused to hel made of that particular part of said strip of land for which hei demanded a deed. A jurisdictional question is thus presented, as to whether the respondent, as such trustee, at the hearing before him, had jurisdiction in the premises further than to ascertain whether antecedent acts had been complied with.

The Acts of Congress, leave it entirely to thei state and territorial legislatures where the land is, situate to prescribe the mode of procedure toi he observed in dealing with- land within townsite entries., and, if the laws, of thei state of Montana in force with respect thereto' at the time t-hei application was made for this deed required this land to he “surveyed into suitable blocks and lots,” the respondent, as such trustee, upon ascertaining that this had not been done, could goi no further. (Section 2391 Rev. St. U. S. (U. S. Comp. St. 1901, p. 1459) ; Edwards v. Tracy, 2 Mont. 49; Hershfield v. Rocky Mt. B. T. Co., 12 Mont. 102, 29 Pac. 883; Ming v. Foote, 9 Mont. 221, 23 Pac. 515; County of Amador v. Gilbert, 133 Cal. 53, 65 Pac. 130.)

The territorial law in force at the time this townsite was entered made specific provision that a survey and plat should he made, and that the townsite should he surveyed “into blocks, lots«, streets and alleys,” and that no. lot should exceed in area 4,200 square feet. Further specific provisions were made as to the manner of disposing of lots, both claimed and unclaimed; but no provision whatever was made, prescribing a method of dealing’ with any part of a towtosite not “surveyed intoi blocks and lots.” (Comp. St. 1871-72, p. 546 et seq.) It was evidently the intent of the territorial law that all the land included withini a townsite entry should be “surveyed into blocks, lots, streets and alleys” in the first instance, and no¡ further survey was provided for. The law- so far gives the trustee authority to dispose of only that part of a townsite which had been surveyed into blocks and lots. What, then, shall be done with the un-surveyed portion ?

In this connection we find an able opinion cited in respondent’s brief, written by Mr. Justice Belford, of the supreme court of Colorado, and cited in the case of Martin v. Hoff (Ariz.), 64 Pac. 448, where the court uses this language: “Some land would be found in each subdivision not actually built upon or otherwise occupied for town purposes. What, then, is to be done with this land not occupied or improved? To whom is it toi go ? Clearly, not to the general government, for its title has ceased by the issuing of the patent; not to the territory, for it never had any interest; not to; the trustee, for he is a mera conduit or channel through which, the title passed from the government to the cestui que. trust; not to the individual citizen, for the Act of Congress defines the extent of his individual interest. The trust is manifestly a double one— the first a trust for the occupants of the town as individuals; the other a trust for them collectively as a community * * * This whole matter is left to the local legislature. To it belongs the creation of the tribunal before whom individual rights shall be adjudicated. It prescribes the kind of evidence necessary to make good a claim of title. It prescribes what kind of disposition shall be made of the money arising from the sale of lots, and in fact has full and plenary power over the whole subject-matter of the trust. And to> strengthen this power conferred by congress, the law declares that any act done by the trustee, inconsistent with or in violation of the rules and regulations prescribed by the legisuature for the execution of the trust, shall be void and1 of none effect. Congress seems to have contented itself with declaring, simply who might enter the land, and! denominating the cestui que trust; all else it hands over to -the territorial legislature, which isi better fitted, on account of its proximity to the sribjecit-miatter of the trusit, to supervise and direct its details1. * * *. By an oversight the legislature made no provision for the disposition of portions of this land to which no individual claim1 existed, and there is nothing in either Act of Congress from which a power of sale in the trustee can be inferred, and much to repel such an inference. The Acts of Congress leave it altogether to the territorial legislature to determine what disposition shall be made within the objects of the trust of town, lots belonging to the community at large, and of the proceeds of such of them as may be sold. This part of the trust most clearly cannot be-executed without the intervention of local legislation. The trustee cannot sell nnder the Acts of Congress, because they do not authorize him to sell any portion of the trust 'property, or to make any disposition whatever of moneys' that might come into his possession on such sale. It being evident that it was the intention of congress that the lands: included' within the townsite, and to which no rightful claim exists on the part of any individual, should be sold, and the proceeds disposed of under the directions prescribed by the legislature, who are to establish rules and regulations for the whole execution of the trust; and, it being further evident that the legislature failed to provide for the disposition of the same; it is clear to us that any sale of such land made by the probate judge or trustee, in the absence of these rules and! regulations, Was wholly unwarranted and absolutely void * * *. It was entirely competent for him to make conveyances to those having a valid and rightful claim to land at the data of the entry, provided they furnished the proper and requisite proof, — beyond this his acts were ultra vires, and could in no manner affect the rights of the community.” (City of Denver v. Kent, 1 Colo. 336.)

In 1895 the legislature of the state of Montana enacted Seetion. 5117 .of the present Political Code. Prior to. that time there was no authority given the trustee by legislative, enactment for disposing of unsurveyed portions of a townsite, and he can only dispose of such land now in the manner authorized by this section. The land must first be surveyed into, lots and blocks. All necessary roads., streets, and alleys must be laid through the same, and dedicated to the public use. The relator does not claim to have been an occupant of this land at the time of the entry of this townsite, and does not claim to have occupied the same prior to the 21st day of April, 1902. He isi not, therefore, a prior claimant under the law in force at the time of the entry of this townsite, or at the present time, as that law and the rights of occupant® thereunder is. considered and interpreted in the case of City of Helena v. Albertose, 8 Mont. 499, 20 Pac. 817, and the land which the relator claims, if required therefor, may be taken for a street or alley; andi there is nothing in this record to show that the land claimed by relatar, or at least a portion of it, will not be within a necessary street or alley when the survey is finally made. The trustee of a .town-site has no authority to issue a deed conveying any part of a street. (Hershfield v. Rocky Mt. B. T. Co., 12 Mont. 102, 29 Pac. 883; Parchen v. Ashby, 5 Mont 69, 1 Pac. 204.)

It is claimed by counsel for relator, in the very able brief filed, that there “is no provision of law anywhere, or in force at any time, authorizing a subsequent survey and plat to. be made.” Counsel, perhaps, have reference to the law. in force at the time this townsite was entered, for it cannot be contended that Section 5117 of the present Political Code does not give this authority; and whether the plat filed as a result of this subsequent survey is called a new plat, or the completion of the old one, is immaterial. It must be done before the trustee has jurisdiction to grant title to this land, or any part of it.

Counsel for relator further contend that “the law presumes that everything was done that was required should be done by the predecessors, of the respondent trustee with reference to the entry of the townsite of Missoula, and with reference to the acts required to be done by bis predecessors under' tbe law, immediately following tbe entry of said town,site.”

In tbe case of Ming v. Foote, supra, tbis court quotes with approved tbe following language from tbe opinion of Mr. Jusr tice Field in Smelting Company v. Kemp, 104 U. S. 640, 26 L. Ed. 815: “So, also, according to tbe doctrine in tbe cases cited, if tbe patent be issued without authority, it may be collaterally impeached' ini a court of law. This exception is subject to tbe qualification that when tbe authority depends upon the existence of particular facts, or upon, tbe performance of certain antecedent acts, and it is tbe duty of tbe land department to ascertain whether the facts exist and the acts1 have been performed, its determination is as conclusive of tbe existence of tbe authority against any collateral attack as is its determination upon any other matter properly submitted to its decision.” Tbe court then adds, as a part of the opinion in Ming v. Foote: “The authority of tbe probate judge did depend upon tbe existence of certain facts. It was bis duty to ascertain whether these facts existed1. His determination is evidenced by bis deed, and tbe same is conclusive against collateral attack.”

The respondent trustee made inquiry as to whether these antecedent acts bad been performed, and, finding no record or other evidence that tbe acts required by law bad been complied with, very properly decided that be bad no authority to issue a deed to relator.

Tbe view here taken renders it unnecessary to discuss tbe other questions raised by respondent in this case.

We are of the opinion that tbe application for a, peremptory writ of mandate should be denied.

Pee. Cueiam:. — For tbe reasons given in tbe foregoing opinion, tbe alternative writ of mandate heretofore issued in tbis cause is quashed, and tbe peremptory writ prayed for denied.