author: HUNT, J. Brantly, C. J.

text:
    DURFEE, Appellant, v. HARPER et al., Respondents. THOMPSON INVESTMENT CO., Respondent, v. DURFEE, Appellant.
    [No. 1,352.]
    [Submitted February 27, 1899.
    Decided March 28, 1899.]

      Constitutional Amendments ■ — • Enactment — Assignments for Creditors — Powers of Assignee- — Pledges— Waiver of Lien— Stock — Mandamus—Appeal.
    1. Constitution. Article VIII, Section 5, as amended in 1897 (Session Laws, 5th Session, page 57), by providing for calling m a district judge when a supreme court judge is disqualified, is void for failure to enter on the journals of both branches of the legislature a full copy of the proposed amendment, before its submission to the people, as required by Article 19, Section 9.
    2. The fact that the attorney for the assignee for the benefit of creditors was a bidder in behalf of a third person at a sale of the debtor’s property by the assignee, where known to both the persons buying and the persons selling, and no injury resulted therefrom, is not, per se, sufficient to warrant the cancellation of the purchase by the attorney for the third person.
    3. An assignee for the benefit of creditors, to whom is assigned the title to stock pledged by the assignor, — notice of the assignment being given to the pledgee, — stands in the shoes of his assignor, in so far as his rights as a pledgor are concerned.

      4. An assignee lor the benefit of creditors, in making a sale announced to be for cash only, may set aside a sale to one who could pay but a small part'of the amount bid, and may resell the property on a smaller cash bid.
    5. An assignee for the benefit of creditors may redeem property pledged by the assignor.
    6. A pledgee and the pledgor’s assignee for benefit of creditors may agree that the assignee shall sell the pledged property at private sale, and for cash only.
    7. A surrender of the pledged property to the assignee of a pledgor for the purpose of a sale does not waive the pledgee’s lien, where the rights of creditors have not been prejudiced.
    8. As a general principle, mandamus will not lie when other adequate and specific remedies may be had.
    9. Where the ownership of shares of stock is litigated in an injunction suit, as the court can order an officer of the corporation, who is a party to the suit, to issue the stock to the successful party, though the corporation is not a party, it being entirely disinterested, the remedy is complete, so that mandamus will not lie to compel such issuance.
    10. An objection based on an entirely different theory from the one used by both parties in the trial court cannot be urged on appeal.

      Appeal from District Court, Granite County; Theodore Brantly, Judge.

    Separate actions by F. M. Durfee against Joseph H. Harper, assignee of F. M. Durfee and F. W. Sherman, and others, and by the Thompson Investment Company against F. M. Durfee. From a decree against Durfee in both cases, he appeals.
    Modified.
    Statement of the case by the Justice delivering the opinion.
    The action under the first above mentioned title was brought by Durfee, plaintiff and appellant, against Harper, assignee of Durfee & Sherman, and the other defendants, to set aside a sale of two certificates of the capital stock of the Sunrise Mining & Milling Company, and to prevent the transfer of said certificates on the books of the company. The second cause was an action by the Thompson Investment Company for a writ of mandamus. It arose out of the transactions involved in the first suit, and was brought to compel F. M. Durfee, the defendant, as the president of the Sunrise Mining & Milling Company, to execute and deliver to the Thompson Investment Company, plaintiff, the shares of stock which it had bought at the sale heretofore referred to. By prder of the District Court, the causes were tried together, and one decree entered. The trial court refused the injunction prayed for by Durfee, enjoining the defendants from transferring the property and stock of the Sunrise Mining & Milling Company, but granted the mandamus applied for in the second action.
    It appears that the Merchants’ & Miners’ National Bank was a banking corporation at Philipsburg, Mont.; that the Thompson Investment Company is a corporation doing business at Butte, Mont.; that in 1896 the plaintiff Duriee and one F. W. Sherman owned in common 127,029f,shares of the stock of the Sunrise Mining & Milling Company, and about. -, 1896; pledged the said shares of stock to the Merchants’ & Miners’ National Bank (which we shall hereafter call the “Bank”) for the purpose of securing the payment of an indebtedness of Durfee & Sherman to said bank amounting originally to about $40,000, and $15,000 at the time of this, suit. The ■ authority of sale given to the bank was only such as the law generally confers upon pledgees. (Civil Code, Sec. 3890 et seq.) It further appears that on May 11, 1896, Durfee & Sherman made an assignment of all their joint and several property to the defendant James H. Harper, for the benefit of their creditors. Harper qualified and has acted as assignee ever since. In this assignment made to Harper were included 138,371 shares of the Sunrise Mining & Milling-Company, owned jointly by Durfee & Sherman; the certificates representing this latter number of shares were duly delivered to Harper as assignee, and the stock was issued to him as assignee upon the books of the Sunrise Company. D. M. Durfee was the secretary of the Sunrise Mining & Milling Company and at the time of the transactions hereinafter mentioned E. B. Howell was counsel for the assignee, Harper, and for the defendant the Thompson Investment Company. The complaint in the injunction suit avers that the defendant Harper and the bank, through its agent, one McDonald, and the defendant Howell conspired together for the purpose of obtaining the 265,400f shares of the stock of the Sunrise Company, which included the 127,029|- shares that had been assigned as collateral to the bank, and, to defraud and cheat this plaintiff, F. M. Durfee, out of his rights in said property, agreed between themselves that they would sell the whole number of the shares of stock in one block; and that the bank never complied with the law with reference to the sale of stock so deposited as collateral with it, and never gave plaintiff any notice that the stock would be sold to satisfy the debt due it. It is then averred that Harper, pretending to act for this plaintiff, but in reality conspiring to defraud plaintiff, agreed with the bank to sell the stock and deliver the same to Harper, to be sold along with the 138,371 shares that had been assigned to Harper; that the bank entered into the conspiracy with Harper, and that Howell also conspired and directed Harper as to the method and manner of selling, and bid upon the purchase of the same at the sale. It is alleged that the property was advertised for sale on October 27, 1S98, but that the sale was postponed to November 29th thereafter, and that on November 29, 1898, the whole number of shares in the Sunrise Company was offered for sale, and McDonald, the agent of the bank, bid for it the sum of §10,000. It is alleged that, over and above the debt due by Durfee & Sherman to the bank, there was a debt due to Hoge, Brownlee & Co. and the expenses of the assignment, amounting in all to not more than §2,500, and that the stock was sold first to satisfy the indebtedness of Hoge, Brownlee & Co., and the costs of the assignment, but that this preferred debt applied only to the 138,371 shares of the stock assigned to Harper, and that the balance of the indebtedness against the said 138,371 shares, and the total indebtedness against the 127,-029|- shares was the debt due to the bank as aforesaid; that notwithstanding the bid of McDonald of §10,000, and his offer to pay to the assignee all the money required to discharge the debt due to Hoge, Brownlee & Co., and to hold and retain the said shares of stock for and on behalf of the bank, the said Harper, as assignee, disregarded his duty, and demanded that the said McDonald should deposit and pay him, as assignee, §10,000 in cash; that McDonald refused to pay the same, and thereupon Harper, on the night of November 28th, sold the entire block of stock to E. B. Howell, his own attorney and agent, for $9,500. It is averred that in thus consenting, and directing the bank to sell the stock for the plaintiff, Harper committed a fraud, and that in demanding of the bank $10,000 in cash, when as a matter of fact only $2,500 or less was required to discharge all of the debt over and above the debt of said bank, Harper committed a fraud, and that, in consenting that the whole of the stock be offered in one block, he acted to the disadvantage of the plaintiff, because, if the stock had been sold in small blocks, it would have realized more. It is also averred that Harper is one of the creditors of the Sunrise Company, and that Howell at the time he bid for the stock was acting for the Thompson Investment Company, that the Thompson Investment Company in July, 1898, bought the whole property of the Sunrise Mining & Milling Company for the creditors of said company, including the defendant Harper; that the stock so sold to Howell was for the Thompson Investment Company, acting as the agent of the creditors aforesaid; that Howell deposited the stock, after the sale to him, with D. M. Durfee, the secretary of the mining company, and demanded the transfer of the same to him, or his assignee, on the books of the company; and that, unless Durfee is enjoined from making the transfer, he will transfer the stock to Howell, to the injury of plaintiff.
    The defendants set up that the 12T,029f shares which had been assigned to the bank were also assigned by Durfee & Sherman to Harper, subject only to the right of defendant bank in said stock as collateral security for the debt due by Durfee & Sherman to the bank. The allegations of a conspiracy are denied. They admit the bid of $10,000 by the bank, and plead that the aggregate number of shares, to wit, 265,400-J, constituted a majority of the capital stock of the Sunrise Company, and that the assignee, Harper, and McDonald, as the agent of the bank, believing that the stock would sell to better advantage if sold in a lump, agreed that it should be sold together, and that the bank thereupon waived the right to sell the 127,029f- shares pledged to it, and delivered the same to Harper, to be sold with the 138,-371 shares; that at the sale on November 29, 1898, it was announced that the terms would be for cash; that Howell, for the Thompson Investment Company, bid $9,500, and that McDonald thereupon bid $10,000 for the bank, but was unable to pay the said sum, or any portion thereof; and that the costs of the assignment, together with the claims against the estate of Durfee & Sherman, which had priority over the debt due the bank, amounted to more than $2,500. It is also alleged that it was necessary for Harper to realize a sufficient sum to pay the costs and expenses and the prior claims, and that the said bank and its agent, being unable to pay the necessary amount of cash, requested Harper to resell the stock; that the assignment authorized the assignee to sell the property assigned, or any portion thereof, at public or private sale, as he might deem best for the interests of the creditors of Durfee & Sherman, and that thereupon Harper sold at private sale the whole number of shares of stock to defendant Howell, as the agent of the Thompson Investment Company, for $9,500 in cash, it being the next highest bid for said stock; and that said amount is the reasonable value of the stock, and the highest amount which Harper was able to obtain for the same at the time of its sale. Defendants admit that by reason of the failure of the bank to purchase the stock and to pay the cash, and by reason of the subsequent sale of the stock for $500 less than the amount bid by the bank, Durfee & Sherman, and Harper, as their assignee, became entitled to the credit of $500 upon the indebtedness of Durfee & Sherman held by the bank; but it is averred that the plaintiff, before the commencement of this suit, made no demand-for such credit. Defendants also set up that the plaintiff, who is the president of the Sunrise Mining & Milling Company, refuses to sign the certificates of stock necessary to effect a transfer, and that the Thompson Investment Company will be prevented from participating in the election of trustees, unless relief is granted; that the plaintiff and the Sunrise Company-are insolvent, and, unless injunction is issued, great injury will be done.
    Thereafter, plaintiff, by leave of the court, amended his complaint by alleging that the 265,400f shares of the stock in the Sunrise Company were worth largely in excess of what it was sold for, to wit, the sum of §15,000.
    In the proceeding for mandamus, the affidavit of William B. Thompson, after setting forth the more formal matters substantially as embraced in the pleadings in the action heretofore referred to, prayed for an alternative writ of mandate, commanding the defendant therein, F. M. Durfee, to sign, as president, the certificate of stock to be issued by the Sunrise Company to the Thompson Investment Company for the block of stock purchased by the said Thompson Investment Company.
    F. M. Durfee filed an answer to plaintiff’s affidavit for a writ of mandate, denying the allegations therein contained, and reiterating the charges of conspiracy and fraud as hereintofore recited, and affirmatively praying for an order prohibiting the transfer of the mining stock to Howell, and prohibiting Harper from proceeding any further in the matter of the assignment, and asking the removal of Harper, and that the sale of the stock to Howell be declared void, and for further relief. F. M. Durfee appeals.

      W. E. Moore, Jos^ali Shull, Sanders c& Sanders and Toole, Bach (& Toole, for Appellant.

      Durfee ds Brown, E. W. Harney and E. B. Howell, for Respondents.
   HUNT, J.

At the outset of this case we find ourselves confronted with a constitutional point of much importance, necessitating a decision of the question whether the amendment to the Constitution of the State relative to the j ustices of the Supreme Court, proposed by the act of the Fifth Legislative Assembly, approved March 3, 1897, and voted upon at the general election held in November, 1898, became, and now is, a portion of the Constitution itself. The inquiry arises in this way: The Fifth Legislative Assembly provided for the submission to the qualified electors of the state, at the general election of 1898, of an amendment to Section 5 of Article VIII of the State Constitution, relating to the Supreme Court. The substance of the proposed amendment was that, in case any justice of the Supreme Court should be disqualified to sit in a cause brought before said court, the remaining justices not disqualified should have the power to invite a district judge to sit with them on the hearing of such cause, and the decision and opinion of the district judge sitting in such cause should have the same force and effect as if regularly participated in by a justice of the Supreme Court. (Session Laws, 5th Sess., page 57.) This proposed amendment was duly advertised, and was voted for by a majority of the qualified voters voting thereon at the general election of 1898, and was subsequently declared adopted.

When the case now before us was assigned for hearing, it appeared that Chief Justice Brantly was disqualified. Accordingly, assuming that the aforesaid constitutional amendment was in force, Justice Pigott and myself, by invitation, called upon the Honorable Frank Henry, Judge of the District Court of the Sixth Judicial District, to sit with us in the cause. But, before the case was regularly called, Hon. Wilbur F. Sanders, as amicus curies, addressed our attention to the fact that it was probable Judge Henry could not properly sit ior the reason that the amendment to the Constitution under the provisions of which we had acted in calling upon him had never been legally proposed for adoption by the Fifth Legislative Assembly, inasmuch as it never had been entered in lull on the respective journals of the two houses of the assembly, as required by Section 9 of Article XIX of the Constitution. The Attorney General appeared, and stated that it was a record fact that there never had been an entry in full of the proposed amendment upon the legislative journals. Thereupon, of its own motion, the Court, without delay, invited and heard arguments upon the point, and is now pleased to acknowledge the assistance of both Mr. Sanders and Attorney General Nolan in the premises. We have also availed ourselves of many decisions found by original research, and are thoroughly convinced, on reason and case, that the consequence of the disobedience of the mandate of the Constitution, requiring that proposed amendments to the Constitution “shall be entered in full” on the respective journals of the houses of the legislative assembly, is not such as may sometimes follow mere omission by the Legislature in respect to a statute, but is the inevitable nullification of the proposed amendment, now that its history is judicially examined.

An amendment to the Constitution, like the Constitution, obtains life by the direct power of the people. No other authority can be put above them, or act for them, in respect to effecting changes in their organic law. A legislative assembly may amend or enact statutes, and, within their province as representatives of the people, legislators are supreme in the exercise of a constitutional lawmaking power (State v. Long, 21 Mont. 26, 52 Pac. 644); but, in respect to the Constitution, they are by that instrument’s terms proposers of amendments, — machinists operating intermediate machinery, through means of which, as the people’s agents, they may propose an amendment to their Constitution, but which the people have provided must eventually come directly before them in its molded form, to be adopted or rejected by their votes, and by them alone.

This distinction between the authority of the Legislature in relation to enacting laws and proposing changes in the Constitution must not be overlooked, for it emphasizes in an unmistakable way the measure of power which can be exercised effectively by delegated representatives, and that which can alone be exercised by the people in their own sovereignty. The legislative assembly can no more subtract from the various steps specified in the organic act to be taken by itself antecedent to submitting amendments to'the Constitution, than can it amend the Constitution without such submission to the people. It may attempt to propose amendments to the full number allowed, but it is powerless to make its proposals operative to accomplish the fact of amendment, without first exercising and pursuing its authority in the single mode of proceeding which the people have directly prescribed in all instances where the Legislature passes a proposed amendment at all. No argument is needed to uphold the rule that the provisions of our Constitution are mandatory and prohibitory, unless by express words declared to be otherwise. The Constitution so declares, and the reasoning of Justice De Witt in State v. Tooker, 15 Mont. 8, 37 Pac. 840, is conclusive upon that proposition. That decision, too, is to a great extent controlling of the point under examination, as it was there decided that, where the mode by which an amendment to be made to the Constitution is clearly pointed out by the Constitution itself, such mode is a substantial and essential part of the instrument itself, to be regarded by the Legislature as exclusive, and as not permitting any other mode or form to be observed.

Thus the proposition comes back to the statement that from the people, as a source, alone flows the delegated power of the Legislature to even propose amendments to those “unvarying rules” by which “alike the government and the governed” are controlled, and where those rules adopted by the people are part of their Constitution, and lay down how this power may be exercised by the Legislature, there is no discretion in that body to ignore the commands of the fundamental authority, or override its limitations in great or small matters; and this principle holds good, not only for the legislative, but, so far as applicable, for the judicial and executive, departments of the government as well.

We conclude, therefore, that the failure to enter on the legislative journals the proposed amendment under which Judge Henry was invited to sit was a disobedience of the Constitution itself, and that our duty in expounding the supreme law compels us to decide that the proposed amendment never was proposed as required, and therefore never ought to have been submitted. It was a nullity before it reached the people, and was not animated by them, because their own solemn commands empowering its proposal, and specifying the mode thereof, had been entirely ignored by the proponent.

The following authorities are cited to sustain our opinion: In re Convention, 14 R. I. 649; State v. McBride, 4 Mo. 303; State ex rel. Morris v. Secretary of State, 43 La. Ann. 590, 9 South. 776; Collier v. Frierson, 24 Ala. 100; Answer of the Justices, 6 Cush. 573; Oakland Paving Co. v. Hilton, 69 Cal. 479, 11 Pac. 3; Koehler v. Hill, 60 Iowa, 543, 14 N. W. 738, and 15 N W. 609; Russie v. Brazzell, 128 Mo. 93, 30 S. W. 526; Miller v. Johnson, 92 Ky. 589, 18 S. W. 522; Cooley, Const. Lim. p. 44; Jameson, Const. Con. Sec. 564 et seq.; State v. Tufly, 19 Nev. 391, 12 Pac. 835.

2. Upon the merits it is strenuously contended that the sale of the 127,029§ shares of the stock to the Thompson Investment Company was void because of a conspiracy; because it was a sale of a pledge before demand made for the performance of the act for which the pledge was a security; because of lack of actual notice of the time and place of the sale, and because the sale was not made by public auction, or upon any notice to the public.

Stating the transaction at the sale very briefly, it was this: The assignee on October 14, 1898, had advertised that 127,-029 shares of the capital stock of the Sunrise Company, held as collateral security by the Merchants & Miners’ Bank, would be sold at public sale, subject to the rights of said bank in said stock, and also that 138,371 shares of the capital stock of said mining company would be sold. On November 29th thereafter, the assignee, with Mr. Howell, his attorney, conducted a sale. Just before the sale it was announced that cash would be required from the successful bidder. The power of sale given to the assignee under the assignment was read by Mr. Howell, and it was announced that, if cash was not paid, the assignee reserved the privilege of rescinding any sale which might be made, and of selling the stock or property to any other person whom he might choose, according to the terms of the assignment, authorizing a public or private sale, the entire 265,400§ shares of the stock in the Sunrise Company were put up in one lot. It was suggested that a bidder would like to bid for 138,000 shares separately, but Mr. Howell announced that the entire block constituted a majority of all the stock of the company, and would be sold in one. Mr. Howell started the bidding at $7,500, in behalf of the Thompson Investment Company; but Mr. McDonald, the agent for the bank, finally bid $10,000, and the stock was sold to him. Mr. Durfee, the plainciff herein, demurred to the sale of the stock which had been pledged to the bank, and desired a further postponement, in order, apparently, that certain persons might have an opportunity to buy the stock. There had been some previous negotiations with a Mr. Smith, from Chicago, concerning the purchase of this stock, but they never amounted to anything definite. The assignee refused to further postpone the sale. The bid made by McDonald, the agent of the bank, was evidently in the interest of Mr. Smith and others, with whom, in behalf of the bank, its agent, McDonald, expected to make some arrangement by which the bank would make the amount of its lien. Mr. McDonald after the sale said that Smith told him he would have to have 48 hours in which to raise $2,500 in cash, and even then he wanted three months’ time to pay the balance of the $10,000 bid by McDonald. The assignee concluded not to accept the proposition of the bank, and upon the same evening notified Mr. Howell, who had made a bid of $9,500 in behalf of the Thompson Investment Company, that he would sell the stock to him for that sum. It was then agreed that the stock should be turned over to the Thompson Investment Company for $9,500 net. Thereupon Mr. Harper, the assignee, with Mr. McDonald’s consent, handed over the certificates of stock to Mr. Howell, for the Thompson Investment Company; and the purchase price, $9,500, was paid to the assignee. Before the public sale, Mr. Howell consulted with the assignee about the propriety of his making a bid for the Thompson Investment Company, and the assignee said that he could not see anything wrong in it, and hoped that he would make such a bid. The assignee’s testimony was that after the sale to McDonald, the agent of the bank, and after the assignee found that no money would be forthcoming under the bid that had been made at the public sale, he rescinded the sale, and accepted the bid of the Thompson Investment Company for $9,500, which was the next best bid offer ed. He further said that he had been anxious for two years to realize upon the property, and that he never had at anytime been offered a larger amount in cash for the stock than the $9,500 for which it was sold, and that he considered the amount realized a fair and reasonable sum. He further stated that there was no arrangement between himself and the officers or agents of the Thompson Investment Company by which the judgment creditors should realize on the property or stock, and that Mr. Howell informed him that he intended to bid for the stock. He also said that he felt that the stock, unless sold, would have soon been worthless, and that he was anxious to make the sale for these reasons, and because the time for redemption of the property would have expired within a few months thereafter. It is evident that the parties behind McDonald wanted to buy the property by paying only $2,500 in money. The agent of the bank, McDonald, testified that after consultation with them he rejected their propositions for time, in justice to the stockholders of the bank, and that he thought it to the best interests of the bank for him to allow Harper, as assignee, to sell the stock to the Thompson Investment Company, and that it was his wish that the sale should be made that day, because there was money in sight, and he did not know whether there would be at any other time.

As we regard the case, the sale to the Thompson Company was fairly and honestly conducted. Mr. Howell’s attitude is satisfactorily explained. We grant that he was in a delicate position, — one such as a lawyer always should avoid. But it having been honestly and openly assumed, and known by the parties buying and selling, and it being apparent that no injury has been done to any person’s rights on account of it, and that the relationships themselves do not necessarily or actually conflict, it will not be regarded as wrong per se, -or sufficient to lead to a cancellation of the several acts performed by the attorney. The assignee also evidently acted fairly, and within the limits of the authority given him by the assignment. Nor is there any evidence of bad faith on the part of the bank, — much less of any concerted agreement between its agent and Howell and the Thompson Investment Company to do an unlawful act, or to dispose of the stock at any price except the best that could be had. It follows that the finding of the lower court to the effect that there was no conspiracy, and no dishonesty or unfairness in the sale of the stock to the Thompson Company, must be affirmed.

The legal status of the parties was this: Durfee & Sherman owned the stock pledged to the bank prior to their assignment; — that is, the general property in the security remained in them. The bank had a lien only, dependent upon possession. (Civil Code, Sec. 3890 et seq.) Had no assignment to Harper been made, before the stock pledged could have been sold, demand of payment, and actual notice to Durfee & Sherman of the time and place at which the stock pledged would be sold by the bank, would have been essential, unless waived. But, it being a correct proposition that the general property in the stock remained in Durfee & Sherman, they had a perfect right to assign or transfer their interest in it, by any proper instrument, and upon valid consideration, subject always to the lien of the Merchants’ & Miners’ Bank. And, in so transferring it, the actual custody and possession being in the bank, under lawful lien, a constructive or symbolical delivery to Harper, assignee, was sufficient, where the bank knew of the assignment, as was the case here. Notice brought to the bank put it in the position of pledgee of the assignee, who stood in the shoes of the assignors, Durfee & Sherman. Story (Bailm. Sec. 350) says:

“Subject to the rights of the pledgee, the owner has a right to sell or assign his property in the pawn; and in such a case the vendee will be substituted for the pledgor, and the pledgee will be bound to allow him to redeem, and to account with him for the pledge and its proceeds. If he refuses, an action at law will lie for damages, as well as a bill in equity to compel a redemption and account.” To like effect is Jones on Pledges, Sec. 364.

The correct rule is stated by Edwards (Bailm. Sec. 316) as follows:

“When the general owner-sells the property held in pledge, the purchaser necessarily takes it subject to the rights of the bailee; that is to say, he acquires the title to the property, including the remedies given by law for its protection. As purchaser, he is entitled to redeem on the same terms as the original owner. On a tender of the amount due, the pledgee must deliver up the property to him. A refusal to do so on demand is a conversion. The owner’s right to sell the goods pending the pledge draws after it these rules of law. If the general owner become bankrupt, his assignee succeeds to his title and rights; the bailee retaining his lien unaffected. The same rule holds good where the bailee is summoned as a trustee of' the general owner, or where an attachment is procured against him. The process takes effect subject to the rights of the bailee. It enables the plaintiff to reach the interest of the general owner, and nothing more. The officer cannot, unless authorized by statute, seize and sell the property. A factor under advances is a pledgee entitled to hold the goods; so that an attachment binds only the surplus.”

Under the assignment, therefore, Harper, as assignee, succeeded to the title and rights of Durfee & Sherman, the assignors. While he is not to be regarded as a purchaser for value, yet his rights are as great as his assignors had in respect to things transferred by the assignment. (Civil Code, Sec. 4521.)

By the assignment it was his right, and, if he deemed it best for the creditors, his duty to discharge the note due by Durfee & Sherman to the bank, and redeem and take possession of the stock pledged as collateral to secure its payment. It was also a duty of the assignee with all convenient diligence to sell and dispose of the property assigned, which, as ■ said before, included the stock pledged, at public or private sale, as he might deem most beneficial to the interests of the creditors, and convert the same into cash. .

A sale .at auction- on November 29, 1898, was tried, and, although announcement was made that the sale would be for cash only, the bidder, the agent of the bank, was unable to pay the amount of his .bid, or any considerable part thereof. The assignee had a clear right to set aside this sale, and he committed no violation of his trust in doing so.

Standing in the same position that his assignors had occupied towards the bank, as the assignee of the general title to the pledged stock, Harper had authority to sell the interest of his assignors, Durfee & Sherman, in the stock, subject always to the lien of the bank. This sale of their general property right could be made publicly or privately. The assignee finally chose to make it by the latter way. To this method the pledgee assented, and, to permit the assignee to deliver the stock to the buyer, the pledgee surrendered the certificates of stock to the assignee, who thereupon sold the entire holdings of his assignors in one block, receiving a sufficient consideration therefor, and the best-then" obtainable.

The agreement between the assignee and the bank that he could sell the pledged stock at private sale was a fair one. The original pledgors could have made any reasonable arrangement with the bank looking to the disposition of the stock for cash, and under the assignment the assignee could do the same with a like end in view.

The bank, by surrendering its actual possession to the assignee, in order that he might .sell the stock, can scarcely be said to have waived its lien, where the rights of third persons, creditors, have not been prejudiced. The facts bring this feature of the case within the rule stated, as follows, by Jones (Pledges, Sec. 43): delivering the goods on his order to the purchaser. By allowing the pledgor to contract in his own name, the pledgee takes the usual risk of such an authority; and, if the purchaser has paid the agent in full, the pledgee cannot reclaim the goods, nor recover the price, but will be compelled to look only to his agent for the proceeds. But he also retains the rights of a principal; and, by notifying the purchaser of these rights, he becomes entitled to receive the unpaid purchase money, in preference to his agent.5 ’

“A pledgee may employ the pledgor as his agent to sell goods held in pledge, and he does not lose his lien by allowing the pledgor to contract in his own name for their sale, or by

Surely, the bank never intended to waive its lien, and the delivery of the possession was in the best of faith, to permit all the stock to be sold and delivered by the assignee, still having due regard to the lien of the bank. In Thayer v. Dwight, 104 Mass. 254, the court said: “We do not understand that the pledgee loses his lien by permitting the pledgor to have possession or control of the property for a special and limited purpose, consistent with the enforcement of the lien, and not for his own use merely. The general owner may be the depositary of his own pledge. (Story, Bailm. Secs. 58, 230.) The formal possession of the depositary or agent is the legal possession of the depositor or principal.5 ’

The sale, as made by the assignee, was not a sale under the pledge, but one with regard to the rights of the pledgee. It was really a redemption by the assignee, and a delivery of the certificates by the bank to the assignee, in order to permit him to obtain money sufficient to redeem the pledge. And, as said, the assignee having had a right to redeem at law, and a right to sell at private sale under the assignment, we are unable to perceive how the assignors can complain that their rights have been impaired by any act of the assignee or the bank, or any one else, in the sale to the Thompson Investment Company.

3. Referring to the mandamus proceeding, it is said that mandamus will not issue to compel a corporation or its officers to issue a certificate of stock, where there is a dispute as to its ownership, especially in an action or proceeding like that at bar, to which the corporation itself is not a party. We shall not here lay down a precedent which will deny in all cases a writ of mandate to compel a corporation or its officers to make transfer to a purchaser of shares of its capital stock upon its corporate books, or to compel a corporation, by its officers, to issue certificates of stock; but we do recognize the general principle that mandamus in such instances will not lie when other adequate and specific remedies may be had. And in this case, where the ownership of the stock was involved in the litigation, and where in the equitable action tried the relief sought could have been appropriately granted, mamdamus was not the proper remedy. (High, Extr. Rem. Sec. 313; Cook, Stocks & S. Sec. 391; Mor. Priv. Corp. Sec. 215; Merrill, Mand. Sec. 160; Freon v. Carriage Co., 42 Ohio St. 30; Beach, Priv. Corp. Sec. 657.)

That ample remedy could have been given in the injunction suit seems quite clear. Recovery for damages against Durfee would be inadequate compensation, for he is insolvent; and, remedy by mamdamus being improper, a court of equity alone could grant the proper relief. In Cushman v. Thayer Manfg. Jewelry Co., 76 N. Y. 365, it was expressly decided that an equitable action will lie to compel a transfer upon its books by a corporation of shares of its capital stock to the owner of the same. (See, also, Cook, Corp. Sec. 391.) And, if it could be compelled by the corporation, why could not an officer of a corporation be compelled to sign a certificate to make a transfer effectual ? If the corporation itself has a claim upon the stock, its rights are not affected, because it is not a party to this suit; but it does not follow that, because it is not joined, one of its officers cannot be made to do a ministerial duty.

We observe that neither the corporation itself nor its secretary appears to be directly at fault. It is the president only, F. M. Durfee, who refuses to sign the certificate of shares to the purchaser. This is apparent by the pleadings in the injunction suit, wherein F. M. Durfee, the president, made D. M. Durfee, the secretary, a defendant; alleging that, unless injunction issued to him as secretary, he would transfer the stock sold by the assignee to the Thompson Investment Company. Under such a state of facts, the coporation itself is not- a necessary, party to the suit. (Beach, Priv. Corp. Sec. 657; Cook, Corp. Sec. 391, note; Gould v. Head,, 41 Fed. 240.) Thompson (Corp. Secs. 2440, 7572) cites Gould v. Head, supra, as if in doubt of its correctness, and refers to Sayward v. Houghton and Riverside Irrigation Co., 82 Cal. 628, 23 Pac. 120, to support his doubt. That case was an appeal from an order granting a motion for a change of venue in an action to require Houghton to transfer certain shares of the irrigation company to plaintiff. We do not construe it as against the rule laid down above, for the Supreme Court affirmed the order, saying:

‘ ‘There is nothing in the complaint showing, or tending to show, that the corporation, defendant is in any sense interested in this action. So far as can be seen from reading the allegations of the complaint, the attitude of the defendant corporation towards its co-defendant Houghton and the plaintiff is one of absolute indifference, — quite as much so as any stakeholder could be between conflicting claimants to a fund in his hands to which he had no claim himself. Not having any interest in the action which can be affected in any degree by the result of the trial, it makes no difference to the corporation defendant where the action is tried. Although not improperly made a party, the corporation defendant is not a party in interest. And it does- not appear that it. has ever manifested any interest in the case. We think the corporation defendant is not a necessary party to the action. The plaintiff might obtain all the relief he demands without making it a party.”

Here, as in the California case, the corporation seems indifferent, and, though its president and secretary were disagreeing with one-another, neither thought that his company’s attitude was one of interest in the suit; for neither asked to have it made a party thereto when the issues between the parties were being made up, or at any time thereafter.

The sequel of what we have said is that it was error in the District Court toissue the writ of mandate, for the relief sought by the defendants in the injunction suit could and should have been granted in the equitable action.

4. Finally, counsel for appellant object to the purchase of the stock of the Sunrise company by the Thompson Investment Company, upon the ground that such purchase was beyond the powers of the Thompson Company. We do not feel called upon to pass upon this contention, for the reason that it was not made in the lower court, hence is not properly for review here. The case was tried below by all parties upon the theory that the Thompson company could buy the stock; the principal question having been whether it did so honestly and fairly, and without infringing upon the rights of Durfee & Sherman as pledgors and assignors. We hold the sale was fair and legally made, and cannot now declare the purchase ultra vires of the buying corporation, and void.

The cause is remanded, with directions to the District Court to set aside the decree made, and to dismiss the proceedings in mandamus. It is also ordered that a decree be entered in the injunction suit conforming to the views expressed in this opinion, and, when so made, judgment in defendants’ favor in the injunction suit will be affirmed. Each party to pay his or its own costs.

Remittitur forthwith.

Pigott, J., concurs.

Brantly, C. J.

I concur in the opinion and decision of the constitutional question passed upon, but, being disqualified as to all other points decided, and having taken no part in the hearing thereof, I express no opinion thereon.


source: Caselaw Access Project

author: HUNT, J.

license: Public Domain

text:
    DURFEE, Respondent, v. HARPER et al., Appellants.
    [No. 1,354.]
    [Submitted February 27, 1899.
    Decided March 29, 1899.]

      Appeal — Supersedeas— Corporations — Execution of Stock Certificate — Right to Vote Pending Appeal.

      Pursuant to Code of Civil Procedure, Sec. 1728, providing that a judgment directing the execution of any instrument cannot he stayed on appeal until such instrument is executed, and deposited in court to abide the judgment of the appellate court, the president of a corporation, on appealing from a judgment which directed him to execute and deliver to a certain person a certificate of a certain number of shares in the corporation, executed the certificate, and deposited it in court to abide the appeal, and then gave the supersedeas bond required to stay the execution. Seld, that the person named in the certificate as the owner of the shares therein mentioned was not, during the pendency of the appeal, entitled to vote such shares at corporate meetings.

      Appeal from District Court, Granite County; Welling Napton, Judge. .
    Suit by F. M. Durfee against Joseph H. Harper and others for an injunction. From an order granting a preliminary injunction, defendants appeal.
    Affirmed.

      Durfee da Brown, E." W. Barney and E. B. Howell, for Appellants.

      W: E. Moore, Josiah Shull, Sa/nders da Sanders and Toole, Bach da Toole, for Respondent.
   HUNT, J.

This is an appeal from an order of the District Court granting a preliminary injunction. It grows out of the decision in the cases just heretofore decided by this Court, wherein F. M. Durfee was plaintiff, and Joseph H. Harper, assignee, and others, were defendants, and wherein the Thompson Investment Company was plaintiff and F. M. Durfee defendant [ante page 854, 56 Pac. 582). After the Court had found in those actions that the Thompson Investment Company was entitled to have the stock transferred to it upon the books of the Sunrise Mining & Milling Company, it was ordered that F. M. Durfee, as president of the Sunrise Company, execute a certificate for the 265,400f shares. Upon notice of appeal by thb plaintiff in those suits, the certificate referred to was ordered deposited with the Clerk of the District Court. Thereafter, about January 14, 1899, the plaintiff herein brought this action to restrain the Thompson Investment Company from voting the. said stock at the annual meeting of the Sunrise Company, to be held on January 20, 1899. In his complaint, plaintiff set forth the proceedings in the suits referred' to, in injunction and mandamus, together with the pleadings in said actions, and the decree of the court. He alleged the execution of the certificate, the deposit of the same with the clerk, and his appeal to the Supreme Court, together with the execution of an undertaking on appeal in the sum of $300, and a separate undertaking on appeal in the sum of $10,-000, both of which undertakings were in compliance with the Code of Civil Procedure; the latter being designed to operate as a supersedeas in both of the suits referred to, which had been appealed. He also pleaded that notwithstanding said appeal the Thompson Investment Company threatened to vote said stock at the said annual meeting, and to elect a board of trustees. He prayed for an order restraining the Thompson Investment Company from voting the stock at the annual meeting referred to, and while suit to determine the ownership of the stock is pending, and for an order restraining the Sunrise Mining & Milling Company from receiving or counting any votes so attempted to be had on account of said stock. The order of injunction was in accordance with the prayer.

We think the District Court committed no error in granting plaintiff’s application for a preliminary injunction. The judgment appealed from in the actipns referred to in the foregoing statement directed the execution of a certificate for 265,400|-shares of the stock of the Sunrise Mining Company to the Thompson Investment Company. Section 1728 of the Code of Civil Procedure was thereafter complied with by Durfee’s depositing an executed certificate of shares with the clerk, with whom the judgment was entered, to abide the judgment of this Court. The appeal was perfected as provided by the Code. Thereupon all further proceedings in the District Court upon the judgment appealed from, and'upon the matters embraced therein, were stayed. The principal matter embraced in the judgment was the ownership of the stock represented by the certificate in the clerk’s hands. The object of the law in requiring an executed certificate to be deposited with that official was to preserve the rights of parties until it might be determined by this Court who owned the stock; and until such determination there could be no delivery of it, and no exercise of ownership by using those incidental rights dependent upon the decision of this Court as to the ownership. A contrary ruling would oftentimes make a stay of execution by appeal valueless; for it would not stop the doing of acts to prevent which the suit may have been brought, and which, if done, are equivalent to the-possession of all that the lower court may have awarded the successful party. The effect, in turn, would be to make an appeal useless, for the execution of the judgment and matters necessarily affected theredy would not have been stayed as the law says they shall be.

The order appealed from is affirmed. Remittitur forthwith.

A firmed.

Pigott, J., concurs. Brantly, C. J., disqualified.


author: PER CURIAM.

text:
    STATE ex rel. BOSTON & MONTANA CONSOL. C. & S. MINING CO. v. SECOND JUDICIAL DISTRICT COURT et al., Defendants.
    [No. 1,372.]
    [Sunmitted March 25, 1899.
    Decided March 31, 1899.]

      Prohibition — Jurisdiction of Lower Court— Corporations.

    1. Where the district court, having jurisdiction, appoints a receiver, the supreme court cannot, on application for a writ of prohibition to restrain further proceedings in the lower court because, as stated in the moving affidavit, subsequent events have rendered a receiver unnecessary, assume such statements as true, so as to warrant it in holding that the lower court was without jurisdiction to proceed further.
    2. The district court, having jurisdiction, appointed a receiver for a corporation, which thereafter moved to be allowed to file a supplemental answer setting up subsequent events, which it claimed dispensed with the necessity of a receiver, and also moved for the receiver’s discharge, and a stay of proceedings. The court refused to stay proceedings, and delayed the hearing of the other motions. Held, that the court did not thereby lose jurisdiction so as to warrant the granting by the supreme court of a writ of prohibition restraining the lower court and the receiver from proceeding further.

      Application by the State, on the relation of the Boston & Montana Consolidated Copper & Silver Mining Company, against the Distict Court of the Second Judicial District of Silver Bow county and others, for a writ of prohibition.
    Dismissed.
    Statement of the case, by the Court.
    This is an original application to this Court for a writ of prohibition against the District Court of Silver Bow county and the Honorable William Clancy, the judge thereof, and Thomas R. Hinds, as receiver, to restrain them from proceeding any further im taking possession of the property of the relator under an order appointing the said Hinds receiver, made by that court on December 15, 1898, in the suit of For:. rester and MacGinniss against the relator and others. Three phases of this suit have been before this Court in Forrester v. Mining Go. et al., 21 Mont. 544, 55 Pac. 229; State v. District Court, 22 Mont. 220, 56 Pac. 219; Id., 22 Mont. 241, 56 Pac. 281. An affidavit in support of the application is made by Ransom Cooper, Esq., of counsel for relator. From this, with exhibits attached, appear all the ¡facts contained in the statements preceding the opinions in the cases of Forrester v. Mining Co. and State v. District Court, referred to above. To these statements reference is here made, it not being necessary to repeat them. The affidavit further recites that on December 15, 1898, Forrester and MacGinniss, plaintiffs in Forrester v. Mining Co., made and filed a petition in that cause in the District Court asking for the appointment of a receiver to take charge of the property of the relator to manage and control it pending the final determination of that suit; that, as a result of that application, Thomas R. Hinds, respondent herein, was appointed receiver; that the appointment was made without notice; that he was, by the order appointing him, directed to take charge of all- the property of the relator; and that at the hearing upon said petition no proof was heard except the affidavit of John MacGinniss, one of the parties. This affidavit is substantially the same statement as the complaint of Burdett O’Connor, which is set forth in the statement in State v. District Court, supra. The affidavit of Mr. Cooper then proceeds to state that, after this appointment was made, the relator applied to this Court for a writ of certiorari to review and annul the order of appointment so made, and a stay of proceedings in the District Court until a hearing could be had on this application: that this stay was granted; that this Court afterwards, and on February 27, 1899, rendered its decision, refusing to grant the writ, and affirming the order of the District Court appointing Thomas R. Hinds receiver; but that the Court, on motion of relator, withheld the remittitur in this proceeding until the end of fifteen days from that date, pending a motion in the District Court to discharge the receiver. The opinion of this Court upon the application for this writ will be found in State v. District Cotvrt, supra. The affidavit then proceeds: That meanwhile, on February 23d, pending the hearing in this Court, the New York company, by good and sufficient deed, reconveyed and delivered to the Montana company, the relator, all the property mentioned in the deed of April 6, 1898, and at the same time accounted to it for all moneys and effects of every description the New York company had obtained from the Montana company by said conveyance; that the relator and the other defendants in the suit of Forrester v. Mining Co., on the 23d of February, 1899, prepared a supplemental answer in that cause, alleging the reconveyance of the property made by the New York company to the Montana company, and a full, accounting to. the relator of all the effects and moneys coming into the hands of the New York company by means of the deed of April 6, 1898; that, after giving notice to Forrester and MacGinniss, the District Court having shortened the time for that purpose, they moved the District Court for an order permitting the same to be filed; that the Court set this motion for hearing on February 27, 1899; that, upon request of counsel for Forrester and MacGinness, on the day of the hearing this .motion was, over the objection of counsel for relator, continued until March 4th; that the relator and its co-defendants in Forrester v. Mining Co., on February 28th, filed a motion, with notice thereof, in that cause, asking that the receiver theretofore appointed be discharged; that this motion was accompanied by an affidavit of John F. For bis, „ Esq., of counsel for relator, setting forth the facts occurring since the decision on February 27th, and also the facts touching the reconveyance by the New York company to relator; that on February 28th the relator also made a motion in the District Court that all proceedings be stayed in the matter of the receivership until the motion to discharge the receiver set for March 6th be heard and disposed of; that the motion for the stay of proceedings was also set for. March 6th; that the motion for leave to file the supplemental answer, set for March 4th, when the time for hearing arrived, was continued by the Court until March 9th, and also the motions set for hearing on March 6th, the Court refusing to hear any of said motions because the remittitur in the case of State v. District Court had been by this Court withheld until March 14th; that on March 9th all .these motions were again continued by the Court, for the same reasons, until March 18th; that on March 15th, after the remittitur-from this Court was filed in the District Court, the relator and its co-defendants made a motion in the District Court asking that the receiver be required to give an additional undertaking before taking possession of the property of the relator, and thereupon asked the court to hear and determine this and the other three motions then pending; but that the court refused to ■ hear any of said motions, except that it denied the motion for stay of the proceedings; that the Legislative Assembly of the State -of Montana, on February —, 1899, passed and adopted an act known as “House Bill No. 124,” entitled “An act to amend ■ Sections 1722 and 1723 of Chapter I of Title III of Part II of the Code of Civil Procedure of Montana, relating to appeal to the Supreme Court, ’ ’ by which it is provided, among other things, that an appeal may be taken to the Supreme Court from-the District Court from an order appointing a receiver, or giving directions with- respect to a receivership, or refusing to vacate an order appointing or affecting a receiver, and from an order directing the delivery, transfer or surrender of the property; that said District Court has refrained from passing upon any of said motions, and refused to pass upon any of them, or to make any other order touching the said receivership, for the sole purpose of depriving the relator of the right of appeal under said law; that the said Hinds, receiver, with the acquiescence of the said court, is now seeking by violence and threats, and by causing the arrest of the employes of relator, to take possession of all the property of relator, and will accomplish his purpose unless he is restrained from doing so by this court; that the said Hinds declines to obtain, and the said court declines to make, any order directing the said Hinds to take, or the said relator to surrender, the said property in order to deprive the relator of the right to. appeal; that the relator has failed to get any relief from the said court, and that the said acts of the said Hinds and said court are oppressive, and indefensible in law and equity; that the acts of said District Court in failing and refusing to give relator relief are beyond and in excess of its jurisdiction, and that the acts of said Hinds in trying to obtain the property of relator without an order to relator is in excess of his power and jurisdiction in the premises; that the relator has filed in said District Court the affidavits of its officers and attorneys showing that no wrong has been done its stockholders by it, and that it has obtained from the New York company all the property conveyed away on April 6, 1898, to the New York company, and that its officers are now in charge of the same, controlling and using it for the benefit of the stockholders; that, since the motions above mentioned were made, the said District Court has been daily in session, and has had ample time and opportunity to hear and determine them; and that the delay of said court in deferring the hearing of them until March 18th is an excessive and unauthorized application of judicial force. This Court is asked to issue a writ to restrain the said court and the said Thomas E. Hinds from proceeding any further in the matter of the receivership, on the ground that by virtue of the reconveyance made by the New York company to the Montana company on February 23d, and the accounting made by the former to the latter, all cause has been removed for the appointment of a receiver, or for his taking possession of the property of relator under and by virtue of the order made by the District Court on December 15, 1898. On March 12, 1899, upbn the filing of this application, an order was made directed to respondents requiring them to show cause on March 22d why the writ should not issue, and directing them in the meantime to stay proceedings until the hearing could be had. The respondents filed a motion to vacate and set aside this order, alleging several grounds, all being substantially to the effect that the facts stated did not warrant the making of the order. The hearing was had on March 25, 1899.

      Wm. H. De Witt, Forbis dh Evans, JVm. Scallon, W. W. Dixon, and D. Cooper, for Relator.

      Mo Hatton .dh Cotter, Clayberg' ds Corbett, Cullen, Day dh Cullen, R. B. Smith, Chas. B. Leonard, W. Y Pemberton, and John B. Me Ciernan, for Defendants.
   PER CURIAM.

It was held by this Court in State v. District Court, supra, that the District Court had jurisdiction to appoint the receive!'. In the opinion in that case (ante page 241, 56 Pac. 281), Justice Pigott, for the Court, said: “The showing upon which the court below based its action in appointing a receiver was sufficient to confer upon the court jurisdiction to take the action it did take without giving notice of the application, for the facts which were presented tended to show that there was then imminent danger that the property ordered to be taken charge of by the receiver would be removed beyond the jurisdiction of the court, and unlawfully disposed of, and brought the case within the provisions of Section 951, Code of Civil Procedure.” To the same effect this Court also held in State v. District Court, ante page 220, 56 Pac. 226, where the court said: “As a shareholder, O’ Connor has a right to ask this relief, and in doing so he has brought himself squarely within the doctrine of State v. Second Judicial District Court, 15 Mont. 324, 39 Pac. 316, the reasoning of which we must approve, and here apply. ’ ’ The showing in the case of Forrester v. Mining Co., upon which the order appointing the receiver was made which was sought to be reviewed in State v. District Court, was practically the same as in C Connor against Mining Co., the proceedings in which were sought to be prohibited in State v. District Court. All matters connected with the question of jurisdiction of the District Court in the Forrester case occurring prior to February 23, 1899, have theretofore been finally settled and determined by this Court. The law has been declared after a most careful and painstaking investigation, and the precedents thus established cannot be disturbed.

Counsel insist, however, that the alleged reconveyance by the New York company to the relator of the property which was conveyed to the former by the latter on April 6, 1898, and the accounting by the former to the latter, all of which have occurred since February 23d of this year, have dispensed with the necessity of putting the receiver in charge of the property; and that the refusal of the District Court to hear the various motions made therein in the matter of the receivership warrants this Court in saying that the District Court is without, or in excess of, its jurisdiction. If, in view of recent events, the District Court puts the receiver in charge of the property, this action on its part, counsel say, will be an £ ‘excessive and unauthorized application of judicial force,” This Court cannot, in a proceeding of this character, assume as true, and so declare, the allegations in the affidavit that the conveyance from the New York company to the Montana company, the relator, is a good and sufficient conveyance, and that the accounting rendered by the former to the latter is a full and complete accounting. Nor can we venture to say that the District Court has lost jurisdiction of the matters touching the receivership by reason of the fact that it has refused to stay the hand of the receiver until the various motions have been disposed of, and has postponed the hearing of these motions from time to time. That court properly has jurisdiction of all the matters involved in these motions. They were properly made there. It is a part of its duty to hear and dispose of them as speedily as it may. Whatever wrong may have been done the relator by the action of the court in these matters, this application does not invoke the proper remedy for it. We cannot at one time say that the lower court has jurisdiction, and at another time say it has not because the various matters touching the receivership have not been heard and disposed of as speedily as counsel for relator seem to think they should. Litigants have a right to insist that vital questions affecting their interests, great or small, should be speedily heard and determined; but failure on the part of the court in this regard does not deprive it of jurisdiction. If the court refuses to act, or defers the hearing needlessly, it can be compelled to perform-its duty; but such nonaction does not warrant this Court in performing the duty which the lower court refuses to perform.

Owing to the great interests involved in this litigation, and the earnestness of counsel for relator in urging this Court to interfere, we have taken the pains to go into the facts presented here very carefully for the third time. A careful consideration of everything presented leaves us with the conviction that we have no authority to interfere with the proceedings of the lower court by issuing the writ. The motion to set aside and vacate the preliminary order will therefore be sustained, and the application dismissed. It is so ordered.

Dismissed.


author: PER CURIAM

text:
    STATE ex rel. STATE PUBLISHING CO. v. HOGAN, Secretary of State, Defendant.
    [No. 1,376.]
    [Submitted March 27, 1899.
    Decided March 31, 1899.]

      Mandamus — Affidavit — Sufficiency — How Tested — Public Printing— Contract with, State — Essentials to Vdlicbity.

    1. The sufficiency oí the affidavit on which an alternative writ of mandate is based may be tested by a motion to quash the writ.
    2. Under the practice in Montana, a motion to quash performs the same office as a general demurrer does in some states to the more formal writ and brings the law of the case before the court.
    3., A compliance with the Constitution, Art. V, Sec. 30, and Political Code, See. 710, providing for the approval by the governor and state treasurer of a contract with the state for public printing, is indispensable to its validity.
    Application for mandamus by the State, on the relation of the State Publishing Company, against Thomas S. Hogan, Secretary of State.
    Motion to quash the writ sustained, and petition dismissed.
    Statement of the case by the Court.
    W. J. MacHaffie, as Secretary and General Manager of the State Publishing Company, applied to this Court for a writ of mandate requiring Thomas S. Hogan, Secretary of State of the State of Montana, to deliver to the State Publishing Company copies of the laws and resolutions, with marginal notes, of the Sixth Legislative Assembly, to the end that the same might be printed by the said company, or that the said Hogan, secretary aforesaid, appear and show cause why he has not delivered the said papers to the State Publishing Company.
    In the affidavit it is stated that the duty devolves upon the Secretary of State to deliver to the printer entitled to the same, at the earliest day practicable after the final adjournment of each session of the Legislative Assembly, copies of all laws and resolutions, with marginal notes, and journals kept, passed or adopted at such session, with the proper indexes to the same; that on November 28, 1898, the State Board of Examiners advertised for more than twenty days, in two daily papers published at the seat of government, for the furnishing and doing all the printing, binding and distributing of the laws, journals, reports, and other printing and binding of any books used by any state officer or department, and did invite proposals therefor to be delivered by 12 o’clock noon of December 20, 1898, and required each bid to be accompanied by a bond as provided by law; that among other bids for the printing, binding and distributing of the laws, journals, department reports, and other printing and binding, the State Publishing Company made a bid therefor, accompanied by a bond as required by law; that upon December 20, 1898, upon the opening of said bids by the said Board of Examiners, it was declared and decided by the said board that the bid (for printing the things aforesaid) of the State Publishing Company was the lowest and best, and that the said company was the lowest and best bidder for doing said work; that the State Board of Examiners did award the contract for doing said work, and furnishing said printing of the laws and journals in book form, to the State Publishing Company, by means whereof there then and there ‘did become a contract between the State of Montana and the State Publishing Company for doing said work upon the terms and conditions in said advertisement and bid set forth and declared; that thereafter the said contract was further put in writing in due form of law, and the bond theretofore filed by the State Publishing Company was in fact, and was deemed taken and held to be, sufficient in form and amount to be given by the State Publishing Company as a compliance with Section 708 of the Political Code; and that thereupon the said State Publishing Company entered upon the discharge of its duties under said contract, and from December 20, 1898, until the day of filing this affidavit it has done and performed divers and sundry of the duties devolved upon it by virtue of said contract, and has in all things complied therewith. Affiant further says that the said contract and the bond filed were in fact, and in the judgment of the board, valid and correct in substance and in form, and were in compliance with the requirements of Section 708 of the Political Code; that Thomas S. Hogan, as secretary aforesaid, has caused to be prepared copies of all the laws and resolutions, with marginal notes, passed by the Sixth Legislative Assembly, and also copies of the journals kept, passed and adopted at such session, with proper indexes of the same, as kept for the public printer of said state; but although the said State Publishing Company is the printer entitled to the same, and is, and has been for some time past, ready and willing to discharge its duty, the said secretary does not and will not deliver to it or its agents the copies of said laws and resolutions, with marginal notes, and with proper indexes to the same. Affiant then says that he has made demand for said papers, to the end that they might be printed under the contract, but that the Secretary of State would not deliver the same. Wherefore affiant says that the State Publishing Company is entitled to have the said copies delivered, and that the delivery of the same is especially enjoined upon the said Hogan, as secretary, and that for a redress of the said wrong the State Publishing Company has not a plain, speedy and adequate remedy in the ordinary course of law.
    An alternative writ was issued, to the effect that whereas, it appearing by the affidavit of the relator, in behalf of the State Publishing Company, that the said Hogan will not deliver to the said company or its agent the copies of the laws and resolutions, with marginal notes and indexes to the same, which have been prepared by him for the public printer, as ‘ it is in said affidavit said to be his duty to do,” therefore he was commanded to forthwith deliver to the State Publishing Company the said copies, or appear before the Supreme Court on March 27, 1899, then and there to show cause why he has not so done.
    The defendant moved to quash the alternative writ upon several grounds, among which were these: That it does not appear from the affidavit upon which the alternative writ was issued that the plaintiff is entitled to any relief by writ of mandate; that the facts set forth are not sufficient to authorize the issuance of the writ; that it does not appear that any contract for doing any printing, binding and distributing the laws and reports used by any state officer or department was ever entered into between the State Board of Examiners and the plaintiff; that under the constitution all contracts entered into by the State Board of Examiners for the printing, binding, or distributing, of the kind referred to in the affidavit, are subject to the approval of the Governor and State Treasurer, and, if not approved by them, are invalid, and in effect no contracts; that it does not appear from said affidavit that the alleged contract therein referred to was ever approved by the Governor or State Treasurer; and that the allegation in the affidavit that, by means of the making of the award as therein stated, ‘ ‘there then and there did become a contract between the said State of Montana and the said State Publishing Company for doing said work, ’ ’ is merely the statement of a legal conclusion.

      Sanders do Sanders, for Relator.

      G. -Z?. Nolan, Attorney General, and Carpenter do Carpenter, for defendant.
   PER CURIAM

1. Relator’s counsel argues that the motion to quash the alternative writ is not a proper way to test the sufficiency of the affidavit. We hold otherwise. If the .affidavit fails to state the facts necessary to justify the issuance of an alternative writ of mandate, of course it ought not to be issued at all. But applications are usually ex parte, and in the limited time generally taken by a court to examine into the question of the sufficiency or insufficiency of the affidavit when application is made, and with no pleading or argument before it testing the sufficiency of the allegations, if a prima facie .showing seems to be clearly made the court usually issues the alternative writ; and fatal defects, if any there be, are not made apparent until the return day, when the defendant enters his appearance. Upon the return day, respondent (or defendant) may attack the affidavit by motion to quash the writ. This practice by motion was laid down in Territory ex rel. Tanner v. Potts, 3 Mont. 364, and is supported by other authorities. - (State ex rel. Cothren v. Lean, 9 Wis. 279.) A motion to quash challenges both the sufficiency of the writ, and also the sufficiency of the affidavit upon which the writ is based. (High, Extr. Leg. Rem. Sec. 522.) Motion to quash is occasionally regarded as going further than a demurrer, which is sometimes held to test those defects only which appear in the alternative writ itself, while motion to quash reaches back to the petition upon which the. writ was issued. This distinction was noted in State v. County Court, 33 W. Va. 589, 11 S. E. 72, and in Fisher v. City of Charleston, 17 W. Va. 595, where it was held that, if the petition does not state the necessary facts to justify the issuing of an alternative writ, it ought not to be issued, and, if issued, on the return day this fatal defect should be taken advantage of, not by demurrer, but by a motion to quash the alternative writ, or discharge the rule, as improvidently awarded. “The petition and affidavit, ’ ’ said the court, ‘ ‘bear to the mandamus nisi a relation similar to that which an affidavit bears to an attachment.” Merrill (Mandamus, Sec. 269) looks upon a motion to quash the alternative writ as equivalent to a demurrer; adding that it is “a matter of little moment whether the objections to the writ be urged by demurrer, or by a motion to quash.”

In the practice of this state it has been usual, where an alternative writ is issued, to regard the affidavit as part of the alternative writ, when it is referred to in the writ, and when a copy of such affidavit is served with it. Such an alternative writ, it would seem, “states generally the allegation against the party to whom it is directed.5 ’ (Code of Civil Procedure, Sec. 1963.) The two papers are looked upon as interdependent, and a writ with such reference to the affidavit has been assumed to be sufficient. Under this practice, adopted for convenience, a motion to quash performs the same office as a general demurrer does in some states to the more formal writ; and brings the law of the case before the court. (High, Extr. Leg. Eem. 455; Code of Civil Procedure, Sec. 1970; Gill v. State, 72 Ind. 266.) But, whatever the exact office of the demurrer to an alternative writ may be, we have no doubt ■that the scope of the motion to quash enables us to pass upon the sufficiency of the affidavit, under our codes. (Code of Civil Procedure, Sec. 1970.)

2. Upon the affidavit, relator must be denied relief. Section 30, Art Y, of the Constitution, provides asfollows: “All stationery, printing, paper, fuel and lights used in the legislative and other departments of government, shall be furnished, and the printing and binding and distribution of the laws, journals and department reports and other printing and binding, and the repairing and furnishing the halls and rooms used for the meeting of the Legislative Assembly, and its committees, shall be performed under contract, to be given to the lowest responsible bidder below such maximum price and under such regulations as may be prescribed by law. No member or officer of any department of the government shall be in any way interested in any such contract; and all such contracts shall be subject to the approval of the Governor and State Treasurer.”

Construction of the Constitution demands that every word shall be rendered operative, if it be practicable to make it so. This rule obviously finds its reason in the presumption that in their Constitution the people have expressed themselves with care, and in words that have been weighed. “Every word employed in the Constitution is to be expounded in its plain, obvious and common sense, unless the context furnishes some ground to control, qualify or enlarge it. ’ ’ (Story on Constitutions, Sec. 451.)

Relator has failed to show a clear legal right to have the Secretary compelled to deliver to it the papers it alleges it is ready and willing to print. -The Constitution says that such a contract for printing as relator claims to have shall be given, not only to the lowest responsible bidder, below such maximum price and under such regulations as may be prescribed by law, but that it shall be subject to the approval of the Governor and State Treasurer. The approval of these officials completes the contract. With such approval, the agreement between the printer and the State becomes one whereby the printer acquires a right in relation to the printing; but without it he has no right whatever to demand the papers to print, or to compel their delivery to him. And to the same effect is Section 710 of the Political Code, which provides that all contracts made by the Board of Examiners “must be approved by the Governor and the State Treasurer.” If relator has done work for the State under any agreement made with the Board of Examiners, purporting to be a valid contract, that fact cannot help it in this proceeding, or make a contract where none exists.

It being indispensable that the agreement of the Board shall be approved by the Governor and Treasurer, before there can be a valid contract, mere allegations that the Board of Examiners received bids, and made a contract with relator, whose bid was the lowest, are wholly insufficient; for the conclusion therefrom that a contract exists is unsupported by such facts, independent of certain other facts, which, as said, must exist, to make a contract. The approval of the Governor and Treasurer is by way of a check upon possible extravagances of the Board of Examiners. Call it a power like the veto power of a governor, as the court did in People v. Croton Aqueduct Board, 26 Barb. 210, or one of annihilation, as did the counsel for relator in his argument herein; it nevertheless exists as a portion of the Constitution, in clear and unambiguous language, — so plain that but the one construction can possibly obtain. And, until relator can show that such approval has been had, it fails to set forth those substantial matters essential to constitute the contract which it would have the Secretary of State ordered to comply with.

Motion to quash sustained, and petition dismissed.

Dismissed.


text:
    STATE ex rel. KNIGHT et al., Appellants, v. HELENA POWER & LIGHT CO., Respondent.
    [No. 1,316.]
    [Submitted February 13, 1899.
    Decided March 31, 1899.]

      Street Bailroads — Duty to Operate — Ordinance—Mandamus.
    An ordinance granting a street railway company the right to construct and operate lines .in certain streets, and providing that,i£ the company shall not construct and operate a certain portion of the line within a certain time, the right shall be forfeited, as to the parts where the failure occurs, does not impose on the company the duty to continue the operation of any portion of the line; and mandamus cannot issue to compel it to do so.

      Semble: — There may be cases where failure; on the part of a street railway company, to operate a part of its line, might be ground for forfeiting its franchise to the whole line; the remedy in the case at bar, however, is to forfeit the franchise to operate the branch line in controversy.

      Appeal from District Court, Lewis de Clarke County; Henry C. Smith, Judge.

    Application by the State, on the relation of E. W. Knight, Jr., and another, against the Helena Power & Light Company, for mandamus to compel respondent to operate a portion of its line of street railway in the city of Helena. Prom a judgment sustaining a demurrer to the application, relators appeal.
    Affirmed.

      Clayberg, Corbett & Gunn, for Appellants.
    The right and privilege of occupying the streets and avenues of the city of Helena for the purpose of constructing, maintaining and operating a street railroad thereon is a franchise. The ordinances made a part of the amended petition when accepted constituted contracts between the city and the grantees named therein. (City By. Co. v. Citizens’ Street By. Co., 166 U. S. 557; Cook on Corporation Law, Sec. 913 and note; Supply Co. v. Bailroad Co., 26 N. E. 189; Africa v. Board of Mayor, etc., 70 Fed. 729; Mayor v. Street Bail-road Co., 19 S. W. 127.) The grant of a right to lay down, maintain and operate a street railroad in the streets of a city, when accepted and acted upon, vests the grantee with an easement and property in the streets. (Dillon on Municipal Corporations, Sec. 68 a; Africa v. Board of Mayor, etc., 70 Fed. 729; Mayors. Africa, 77 Fed. 507; People v. O'Brien, 111 N. Y. 1.) The powers of a municipal corporation in respect ,to its streets are held in trust for the public, and it is not authorized to permit private persons or corporations to occupy the same for purely private purposes. (Dillon on Municipal Corporations, Sec. 716; ■ Savage v. City of Salem, 31 Pac. 832-; Florida B. Co. v. Ocala B. Co., 22 So. 692.)
    The consideration and benefit to the public supporting this contract and grant is the continued operation of the road. (City-By. Co. v. C. S. By. Co., 166 U. S. 557;. Wright v. Milwaukee FI. By. Co., 60 Am. St. Rep. 74 (95 Wis. 29); Mayor v. Dry Dock Co., 30 N. E. 563; Thomas v. By. Co., 101 U. S. 71; IY Thompson on Corporations, Sec. 5355; Gibbs v. Gas.Co., 130 U. S. 396; Chicago Gas L. Go. v. Gas L. Co., 2 Am..St. Rep. 124; Art. XY, Sec. 17, Constitution of the State of Montana; City-of Potwin Place v. Topeka By. Co., 37 Am. St. Rep. 312.)
    The street railway company can be compelled by mandamus to continue the operation of its road. (State ex rel. Grinsfelder v. Spokane Street By. Co., 53Pac. 719; Antonio Street By. Co. v. State of lexas, 30 S. W. 266 (10 Tex. Civ. App. 12.)

      Toole, Bach dé Toole and Massena Bullard, for Respondent.
   PER CURIAM.

Relators applied to the District Court of Lewis and Clarke County for a peremptory writ of mandate requiring the respondent, a street railway company, to operate a portion of its system. The affidavit in support of the petition or application discloses the following facts: That respondent is a corporation under the laws of Montana, and for several years last past has been, and now is, engaged in the business of operating street railways in the city of Helena; that on July 13, 1889, and on October 8, 1890, by two several ordinances of the said city there were granted to the predecessors in interest of the respondent the right, license, franchise and easement of laying down and maintaining in certain streets of Helena a street railway track, and of operating a line of street cars thereon, by which ordinances it was, among other things, substantially provided that unless the grantees, or their successors or assigns, should within a certain period of time construct and operate a designated portion of the line of railway, the right and privilege so granted would be forfeited as to the parts of the line where the failure occurred; that by Section 12 of Article VIII of Chapter XIX of the Revised Ordinances of the City of Helena of 1890 it is provided: ‘ ‘On all routes the cars shall be run for such number of hours.each day, and at such intervals, and allowed to stand for such length of time at either terminus of the road, as the city council may from time to time direct by resolution or order;” that in 1894 respondent succeeded to the rights of the original grantees named in the ordinances; that the respondent, after acquiring the rights granted by the ordinances, operated the railways from 1894 until June 30, 1898, and that on or about the date last mentioned it refused to run its cars on its line known as the ‘ £Lenox Addition Line, ’ ’ or to operate the same, although requested so to do, and- has abandoned the same, and threatens to, and will, unless otherwise directed, take up and destroy the track built to and through the Lenox addition; and that the railway company is fully equipped with apparatus necessary for its operation. Respondent demurred for insufficiency. The demurrer was sustained, and a judgment entered dismissing the application. Relators appeal.

The writ of mandate may be issued to compel the performance of an act which the law specially enjoins as a duty resulting from an office, trust, or station. (Code of Civil Procedure, Sec. 1961.) Is the operation of the line of street railway which respondent has abandoned an act specially enjoined as a legal duty ? We think it is not. It does not appear that the charter of respondent, or the statute under which it was organized, requires it to maintain or operate a line of railway; nor is it claimed that the State has delegated to respondent the right to exercise the power of eminent domain. It does not appear, indeed, whether it owes its existence to a special act of the Legislature, or to a compliance with the terms of some general act authorizing the formation of corporations thereunder. At the argument the statement was made that respondent was organized and exists under Chapter XXV, Division 5, Compiled Statutes of 1887, entitled “Corporations for Industrial or Productive Purposes;” but nothing contained in that chapter may be so interpreted as to impose upon the respondent the obligation to continue the operation of any portion of its system of railways. The ordinances of the city are barren of language expressing or implying the intention of the council to impose such duty. On the contrary, they merely grant the right and privilege of constructing, operating and maintaining railways in particular streets. The precise point arose in State ex rel. Elmendorf v. San Antonio St. Ry. Co., 10 Tex. Civ. App. 12, 30 S. W. 266, where the court held that, under such circumstances as those presented in the case at bar, the specific duty was imposed upon the corporation to operate its line, and that mandamus would issue to compel performance. The case was taken to the Supreme Court by writ of error to the Court of Civil Appeals, and in the court of last resort the judgment was reversed. (San Antonio St. Ry. Co. v. State, 90 Tex. 520, 39 S. W. 926, 35 L. R. A. 662.) The question received the most careful consideration of the Supreme Court of Texas, and its opinion, which was filed in 1897, is the latest enunciation of the principles applicable thereto. So clearly and accurately does the court state the reasons for its decision, that we, believing them sound, and controlling the determination of this cause, quote and adopt the following: “It is one thing to hold that a company which has accepted a charter authorizing it to construct a line of railroad, with power to condemn property, and has constructed and is maintaining its line, may be compelled to . so operate its line as reasonably to meet the necessities of the public; and, as we think, it is quite a different one that a railroad company, by the acceptance of its charter, which simply makes it lawful to construct and maintain a railroad, assumes an obligation to construct it, and to maintain its operation so long as its corporate existence may continue. * * * The Legislature, in creating a corporation, has the power to give it an option to do or not to do the acts which it is authorized to perform. On the other hand, it may impose upon the corporation, as the law of its creation, the obligation to exercise to their fullest extent the powers which are granted. In either case the proposed corporators may accept or not; and in the latter, if they do accept, they may be compelled by mandamus to perform the duties so imposed. But to say that in granting a charter to do a public service there is no difference between making it lawful to do an act, and imposing it as an obligation to perform it, is to say that, by reason of the public interest involved, language is to have a different construction and effect from what it would have in statutes in general or in private contracts. Expressions may be found in the opinions of courts which countenance that doctrine, but we think there it is based upon an assumption that cannot be maintained upon sound principles. In legislating, the lawmaking power undertakes to determine what is to the interest of the public, and, under the limitations of the constitution, it is the sole judge of what will promote the public utility, and must be presumed to be capable of expressing its will in intelligible words. When, therefore, a corporation, whether quasi public or purely private, is granted the privilege of doing an act, and there are in its charter no express ’terms which make it obligatory to do the act, or other words from which by fair construction that intention can be gleaned, we do not see upon what sound principle the duty can be imposed. The allegations in the petition in this case show that the respondent company was chartered merely for the purpose of constructing and operating street railways in the city. The special act merely gave it the right of corporate existence for the purpose indicated. (Tugwell v. Eagle Pass Ferry Co., 74 Tex. 480, 492, 9 S. W. 120, and 13 S. W. 654.) The streets were under the control of the city council. The company could do nothing without the consent of the council. The franchise in question was granted by the city council, and the claim is that it is by virtue of that concession, and its acceptance by the company, that the duty arose. But the ordinance, which is quoted above, merely grants ‘the privilege’ of constructing and maintaining street railways over the lines therein designated. No clearer words of mere permission could have been employed. Not only this, but there is in the ordinance neither sentence, phrase nor word that indicates that it was the intention of the council to make it a condition of the acceptance of its grant that the company should be bound to construct and operate railways over the streets which were therein specified. The company are required to observe all the ordinances of the city then existing, but it is not averred that there was any ordinance in existence at the time of the acceptance of the franchise which imposed that obligation. * * * It is clear that the ordinance in this case neither by express terms nor by implication imposes the duty upon the company. If the duty to construct and maintain the line is to be established, it must be upon the assumption that every privilege granted by a legislative body in reference to matter of public interest imposes upon the grantee who accepts it the duty to perform the acts he is allowed to perform. The assumption, in our opinion, is, as we have already intimated, not based upon sound reason; and is in opposition, at least, to the weight of authority. * * * We are of the opinion, also, that the fact that the road has been constructed and operated, and that a part is now operated, makes no difference. Under the grant of a privilege to construct and maintain, if, after acceptance, it is permissive only to construct, it is not obligatory, to maintain. But we do not hold that the company can, against the will of the city, operate a part of its line, and not the whole. A [privilege to establish an entire line of street railway may be granted when the privilege of constructing and operating a part only would not be, and for a failuie to operate a part it would seem that .the whole might be forfeited. It seems to us that the remedy-in this case is to forfeit the franchise to operate the branch line in controversy. * * * We would not be understood as holding that the common law does not impose some duties upon companies chartered as common carriers, which may be enforced by mandamus, although no mention of such duties may be found in their charters. All carriers who undertake to transport goods or passengers for the public assume certain duties to the public, but certainly carriers who are not corporations may at any time discontinue the business, if they elect to do so; and we see no good reason why corporations may not discontinue their enterprises, when the charter does not in express terms or by fair implication forbid it. If it is the will of the Legislature, or of a municipal body to whom the power to confer the privilege may have been granted, to impose upon the corporation the duty to construct and to continue to operate the work, instead of a mere permission to do so, it is not difficult so to provide by incorporating into the grant some language which evinces that intention.” (See, also, Booth, St. Ry. Law, Sec. 65.)

If the council, by resolution adopted or order made under the authority of Section 12 of Article III of Chapter XIX, supra, should attempt to regulate the running of the cars on a portion of the system not abandoned, but in operation, a question different from that involved in this case, and requiring the application of other principles, would be presented.

The judgment is affirmed.

Affirmed.