author: McPherson, P. J.,

text:
    Smith v. Golden et al.

      John P. Sipes, for plaintiff.
    S. W. Kirk and John R. Jackson, for defendants.
    August 16, 1930.
   McPherson, P. J.,

This action was brought to recover damages for an alleged trespass on the part of the defendants by entering upon the land of the plaintiff and constructing thereon a road at a location other than that described in the order issued by the Court of Quarter Sessions of Fulton County to the defendants, who are Supervisors of Bethel Township, Fulton County, directing them to open or lay out and construct in accordance with the report of the viewers duly had and filed of record in the said court. This change altered the course of the surface water and caused the plaintiff’s fields to wash.

At the trial, the plaintiff failed to show that the defendants, or either of them, ordered or were present at the time of the construction of the road on the ground, but did not show that the construction on a location other than that named in the order of court was done by George Downs, who was employed by the defendants as supervisors of the township, as a road master on the roads of said township. Upon this evidence, on motion of the defendants, a compulsory nonsuit was entered. Later, a motion to take off the non-suit was filed and argued. The reason urged to support this is that George Downs was a servant or agent of the defendants to construct this road for them, and his trespass, as their servant or agent in the course of his employment, makes them liable, personally, under the maxim of respondeat superior.

In support of this contention, the plaintiff cited a number of cases wherein this maxim is applied to a master whose servant has in the course of his employment, through negligence or otherwise, committed a trespass. It will be noted, however, that all the cases cited by the plaintiff are cases of private employment, to which relationship the maxim unquestionably applies. In this case, however, the defendants are public officers, being supervisors of Bethel Township. As such, the order of the court to open the road in question was directed to the defendants, and as such officials they directed the road master of the township, George Downs, to open the road in accordance with the instructions of the order of court.

The road master is an officer of the township appointed by the road supervisors under the authority of law and is an employee of the township. As to this character of employment, it seems well established that for trespasses occasioned by an employee, public officials are not personally liable under the maxim of respondeat superior. In the case of Boyd v. The Insurance Patrol of Philadelphia, 113 Pa. 269, 278, the Supreme Court says:

“It is true also, as a general rule, that a public officer is not liable for the negligence of his official subordinate, unless he commanded the negligent act to be done, Schroyer v. Lynch, 8 Watts, 453; the rule is founded in considerations of public policy (Sawyer v. Corse, 17 Grat. 230), has been long recognized, and is one of general application. ‘The distinction generally turns upon the question whether the persons employed are his servants, employed voluntarily or privately, paid by him and responsible to him, or whether they are his official subordinates, nominated perhaps by him, but officers of the government; in other words whether the situation of the inferior is that of a public officer or a private servant.’ In the former case the official superior is not liable for the inferior’s acts, in the latter he is: American Lead. Cases, 641. A subordinate officer, when he is an independent officer, must stand or fall by himself; and to him, unless otherwise provided by statute, the maxim respondeat superior does not apply: Wh. Neg\, 289.”

Because of the relationship between the defendants, the supervisors of the township and George Downs as road master, we are of the opinion that the defendants are not liable personally for the trespass of Downs.

The motion to take off the nonsuit should, therefore, be dismissed.

And now, August 16, 1930, the motion to strike off is hereby overruled and dismissed.

From John P. Sipes, McConnellsburgr, Pa.


source: Caselaw Access Project

author: Biddle, Jr., P. J.,

license: Public Domain

text:
    Karper v. Koser.

      Joseph P. McKeehan, for plaintiff; W. R. Johnston, for defendant.
    July 29, 1930.
   Biddle, Jr., P. J.,

The plaintiff brought an action of assumpsit against the defendant before S. H. Carothers, Esq., justice of the peace, and on March 18, 1930, the justice entered a judgment in favor of the plaintiff and against the defendant in the sum of $270 and costs. The defendant appealed from this judgment on March 26, 1930, and filed his appeal in this court on March 29, 1930, to the above number and term. Owing to the default of his attorney, notice of the filing of the appeal was not given as provided for by Rule 30 of the rules of court. On May 27th he presented a petition, setting out the above facts and asking for a rule on the plaintiff to show cause why he should not be given leave to give notice of the filing of the appeal nunc pro tunc, and a rule was then granted as prayed for, to which rule the plaintiff filed an answer, stating that no knowledge of the filing of the appeal was had by the plaintiff or his counsel until May 24, 1930, when they endeavored to have an execution issued on the judgment entered before the justice of the peace; and the plaintiff prayed the court to discharge the pending rule and to strike from the records of this court the appeal filed by the defendant. No depositions were taken by either side.

The rule of court involved, Rule 30, reads as follows:

“Rule 30. In all civil actions brought into court on appeal from magistrates, justices of the peace or aldermen, the appellant shall, within ten days, give written notice to the opposite party of the filing of the appeal, and proof of service thereof shall be filed of record. Within fifteen days after the service of notice, the plaintiff shall file a statement of his cause of action and serve a copy thereof, and thereafter the proceedings shall be the same as in actions originally brought in the common pleas.”

It will be noticed that this rule provides no penalty for a failure on the part of the defendant to give the notice of the filing of the appeal required by the rule, and no such penalty is provided elsewhere.

The failure of defendant’s counsel to give notice of the filing of the appeal is not excused by any sufficient reason, nor would it alone justify the court in relieving the defendant from any penalty that might be provided by the rules of court; but, as mentioned above, no penalty is provided. It is true that in a number of jurisdictions the courts of common pleas have, under conditions entirely similar to those disclosed in the instant ease, stricken the appeal from the records, and in some instances, so far as the reports indicate, where the rules of court provided no penalty for this default on the part of the defendant: Specht v. Moyer, 10 D. & C. 311; Acor v. Acor, 7 Dist. R. 360.

In some other cases cited by the plaintiff, namely, those from Dauphin County (Soulliard v. Ochs, 29-A Dauphin, 467; Triangle Mfg. Co. v. Baker, 32 Dauphin, 349; Bloser v. Insurance Co., 33 Dauphin, 163; Everhard v. Reist, 33 Dauphin, 295), the rules of court specifically provided that in case of default in giving the required notice, the appeal should be stricken off; and, as will be seen, this difference in the rule makes an essential difference in the appropriate action of the court.

Irrespective of our own inclination in the matter, we feel that we must be controlled in the present case by the recent rulings of our appellate courts on this point. In the case of Schenck v. Goodman, 98 Pa. Superior Ct. 384, a similar question was presented, and in the opinion in that case the Superior Court said:

“The same question came before us in Sporkin v. MacBride, 95 Pa. Superior Ct. 71, where, speaking through our Brother Trexler, we said: ‘The rule of court provides no such penalty for a departure from its demands, and, such penalty not being provided for, the striking off of the judgment seems unauthorized. Nicholson v. Schaffer, 94 Pa. Superior Ct. 318.’ It is true that in that case a general appearance had been entered by the party moving to strike off the appeal, which is not the case here; but our decision, reversing the action of the court below, was based on both grounds. . . .
“The rule does not say how notice shall be given the adverse party, or Ms attorney, beyond that it shall be in writing, nor what shall be the effect of a failure strictly to comply with its provisions. It would seem that if such a drastic penalty had been contemplated, as a final judgment in the case — for, that is what striking off the appeal amounts to — the rules of court should have been specific both as to how service was to be made and the penalty that would follow the slightest infraction or neglect of the rule; but in both respects they are silent. ... It was a ‘default which ordinarily would be relieved against:’ Spinelli v. Costello, 271 Pa. 204, 205, and should not be so construed as finally to conclude a defendant with a meritorious case, and certainly not where the court had not adopted a rule specifically imposing such a penalty for its default. The punishment should ‘fit the crime.’ In recent years our Supreme Court has relaxed the stricter, more technical practice in force in earlier times.”

In view of this determination of the appellate court, we feel that we would not be justified in striking off the appeal, and that the default of the defendant in regard to notice should be relieved against. That default, however, should not go unpunished; and in our order providing for making absolute the rule we shall impose what seems to us an appropriate penalty for the default.

While the objection was not raised in the plaintiff’s answer to the rule, it is suggested in the brief filed in behalf of the plaintiff that the petition was insufficient because the jurat accompanying the petition was not signed by the defendant as well as by the officer who administered the oath. TMs objection is not good: 2 C. J. 357; Burns v. Judge, 12 Luz. Leg. Reg. 425.

And now, July 29, 1930, it is directed that if within ten days from this date the defendant shall pay all the costs in the case which have accrued to this time, such payment to be irrecoverable irrespective of the final outcome of the case, then the pending rule to show cause why he should not be permitted to give notice of the filing of the appeal nunc pro tunc and to file proof of such notice of record is made absolute; otherwise, the rule will be discharged.

From Francis B. Sellers, Carlisle, Fa.


author: Lewis, J.,

text:
    Weller v. The Broad Street National Bank.

      Joseph M. Smith, for plaintiff.

      Edmonds, Obermayer & Rebmann, for defendant.
    May 7, 1931.
   Lewis, J.,

This is an action by the plaintiff, a depositor in defendant’s bank, to recover the sum of $300, which the defendant charged plaintiff when it paid a check drawn by him on which he had ordered payment stopped. The matter was heard by the court without a jury, and involves solely a question of law. The check in question was drawn by plaintiff on November 1, 1927, and on November 2, 1927, he notified the defendant to stop payment on the check, which the defendant, notwithstanding the notice, paid on November 9, 1927.

The general principle is that “where a bank pays a check after receipt of notice from the drawer to stop payment thereon, it is liable to the latter for its failure to comply with his instruction:” Wall v. Franklin Trust Co., 84 Pa. Superior Ct. 392; Thompson v. Republic Trust Co., 84 Pa. Superior Ct. 183; German Nat. Bank v. Farmers’ D. N. Bank, 118 Pa. 294. Unless, therefore, there is some additional fact which removes the instant case from the operation of that principle, or which estops the plaintiff from invoking it, plaintiff is entitled to a finding in his favor.

It is claimed by the defendant bank that such additional fact is to be found in plaintiff’s written stop order, which provides that: “should the above check be paid by the Broad Street National Bank in error in the regular course of business I will not hold said Broad Street National Bank responsible in any way.” The bank claims that the check, though paid seven days subsequent to the date of the stop order, was paid through inadvertence, and relies upon this provision as an escape from liability.

It will be noticed that the check stop order is not under seal; it neither recites nor discloses any consideration for the release of liability; nor is there any intimation, either in the release or in the evidence, that the bank demanded such release as a condition for performing its obligation. Even if we are to assume, as a mere conjecture, that the bank undertook to carry out the check stop order in reliance upon the release (the record is bare of any evidence that the bank did anything in that regard), plaintiff’s release is, nevertheless, nothing more or less than a gratuitous promise, and, like every other nudum pactum, is not enforceable because there is no consideration to support it.

“A promise cannot be conditioned on a promise to do a thing to which a party is already legally bound:” Wimer v. Overseers of Worth Township, 104 Pa. 317; Erny v. Sauer, 234 Pa. 330; Robb v. Mann, 11 Pa. 300.

In the last case the Supreme Court said: “The promise, if made, cannot bind the estate, but the administrator himself; nor him, if the promise is without consideration . . . because he merely did what he was bound to do by his contract.”

In Fink v. Smith, 170 Pa. 124, the Supreme Court held that a promise made by one in order to obtain possession of his own goods, which at the time are wrongfully withheld from him, is without consideration.

In Cleaver v. Lenhart, 182 Pa. 285, 292, defendant had entered into a contract for the sale of his business to plaintiff, which had been fully performed; thereafter, in consideration of the purchase of said business, defendant agreed that he would not for a period of three years engage in the same business within a fixed radius. The Supreme Court held that the latter covenant had no consideration to support it, saying:

“But it has no consideration to support it. The previous sale being complete in all respects, the duty of the parties on both sides was clearly defined, and the obligation to perform it was comprehended within its express provisions. The agreement in restraint was no part of its terms and there was no obligation on the part of Lenhart to restrain his operations thereafter. . . . Hence the obligation of Lenhart to perfect the sale under the first agreement and the obligation of Cleaver to comply with its terms could not be a consideration for the restraining agreement of the subsequent date. The latter paper was a mere voluntary agreement in restraint of trade and, as such, cannot have legal sanction.”

In Erny v. Sauer, 234 Pa. 330, a mortgagee, at a time when the mortgagor was already in default in his interest instalments, agreed to release the latter from further liability if he would surrender to the mortgagee possession of the premises and give him a deed of conveyance for the same. The Supreme Court held the release invalid for want of consideration, saying:

“But we are not impressed with the defendant’s contention that the matter and acts he refers to constitute a consideration which will support the agreement. At the time the writ was issued in this case, the defendant had made default in payment of the semi-annual installment of interest due on July 1, 1910, and January 1, 1911. The plaintiff therefore, on March 1, 1911, the date of the alleged oral agreement, could have proceeded by scire facias, obtained judgment, sold the premises, and collected the indebtedness due him, secured by the bond and mortgage; or, he could have entered at pleasure, taken actual possession, used the land and reaped its profits: Tryon v. Munson, 77 Pa. 250. If the defendant refused to give possession, he could have been ousted by an action of ejectment. Assuming that he gave possession in pursuance of the alleged parol agreement, he did nothing more than it was his duty to do or what he could have been compelled by legal process to do. No consideration therefore passed by the plaintiff when the defendant voluntarily surrendered possession of the premises to him in pursuance of the agreement.”

In all of the cases we have referred to there was a definite promise as consideration for the one sued on,- but the latter was held unenforceable because the supporting promise relied on as consideration was to do something which the promisor was already under legal obligation to do; in the instant ease there was not even a promise by the bank to carry out the depositor’s check stop-payment instruction. It may well be said, paraphrasing the words of the Supreme Court in Lewis v. Hamilton’s Exec’rs, 301 Pa. 173, 176: If a promise to do what the promisor is already bound to do cannot be a consideration (13 C. J. 351, § 207), how much less (must we assume that there was no consideration) when there is not even a promise to do that which the promisor is already obliged to do. There is not even any intimation in the instant case that the bank threatened or had any intention of defaulting on its obligation to honor the depositor’s stop-check order. The voluntary and gratuitous promise of the depositor at that time, that he would not hold the bank to its obligation if it paid the check in error, is, therefore, of no effect for want of consideration to support it.

Defendant contends that Cohen v. State Bank of Philadelphia, 69 Pa. Superior Ct. 40, calls for a different conclusion. We find nothing in that decision to support such contention. That case was not, as here, an action in assumpsit to recover a deposit, but an action in trespass for consequential damages for negligence in not honoring a depositor’s check. The question there involved was whether, under all the circumstances, the bank had been negligent in refusing payment. True, the deficiency in plaintiff’s deposit resulting in the «dishonor of the check was due to the fact that the bank had previously paid another cheek after the depositor had directed it not to do so, but there the written stop-check order stated (and the Superior Court carefully calls attention to these unusual facts), “I ask this [the stopping of payment] as an act of courtesy only and in consideration therefor release the State Bank of Philadelphia from any liability on account thereof, or in the event of payment of the said check by error . . . should any check drawn by me be returned insufficient, I hereby release the State Bank of Philadelphia, from any and all liability therefor and on account thereof.” The Superior Court is careful to say: “We do not say that such an order would protect a bank under all circumstances. We think it does in this case.” When the Superior Court said:

“The plaintiff was not required to use the form of order but since he chose in writing to ask the bank to stop payment as an act of courtesy and not as a matter of right, he cannot now complain if the bank be relieved from liability by reason of the terms of the order which he gave,” the Superior Court did not thereby attempt to lay down a general principle, but calls attention to it as one of the facts which robbed the bank’s act of the element of negligence in subsequently dishonoring another check of the depositor. Moreover, the Superior Court clearly indicates that plaintiff was himself guilty of numerous acts which contributed to the dishonoring of his check and which barred his recovery, to wit, that he reported the check to have been lost when it never was lost in fact and when he knew it to be in the payee’s possession; in issuing to the same payee another check including the amount of the Stopped check; and because when the real payee of the stopped check presented it for payment, the bank (under all the circumstances and under the provision of the check stop-payment notice) might infer that the reason for stopping payment on the check had disappeared. Whether that conclusion was based on the theory of estoppel or on plaintiff’s contributory negligence, there certainly is nothing in the opinion dealing with the question of consideration, and the differences in the character of the suits and in the circumstances involved make the Cohen case entirely inapplicable to the instant case.

Our attention is called to a Massachusetts and also to a New York decision where a different conclusion was reached on identical facts. They are, however, based on reasoning and principles inapplicable in our jurisdiction.

In Tremont Trust Co. v. Burack, 235 Mass. 398, 126 N. E. 782, the question as to whether there was consideration for the release was not raised; at least, it is not discussed in the opinion. The only question there involved is whether the release was invalid as against public policy. In holding that it was not against public policy, we believe that that opinion is contrary to the spirit of our own decisions (see Bulakowski v. Philadelphia Saving Fund Society, 270 Pa. 538).

In Gaita v. Windsor Bank, 251 N. Y. 152, the question of consideration for the release is only indirectly referred to; the conclusion is there apparently based on the theory that where the stop-check notice is unqualified and contains no release, “then if the bank does not desire to assume the liability imposed by such notice, it may cancel the account and terminate its relationship with the depositor.’ But the bank’s liability is not imposed by the notice, but flows from the relationship of the parties; and the assumption by the court that because a depositor asks a bank to perform one of its legal obligations, the bank is likely to refuse to do business with him in the future, is the merest kind of conjecture unless it find some support in the evidence. If we are to indulge in surmises not disclosed or supported by the record, it is much more significant that in Thompson v. Republic Trust Co., 84 Pa. Superior Ct. 183, where plaintiff was permitted to recover the amount of a check which the bank had honored after payment had been stopped, the written stop-check order contained a provision similar to that in the instant case, to wit: “I will not hold it [the bank] responsible in case check is paid.” The terms of this release, however, while disclosed by the record, do not appear in the opinion of the court, nor is that provision of the notice discussed therein.

If, however, we are to go outside of our own state, the decision in Hiroshima v. Bank, 248 Pac. 947 (Cal.), is direct authority on the question involved. That case, too, concerned itself specifically with the validity of such a release executed under the same circumstances as at bar, and the court there held that the release was invalid both because there was no consideration to support it and because it was against public policy.

We believe that there is ample authority in our own state for holding that such a release is against public policy (a conclusion contrary to that reached in Tremont Trust Co. v. Burack, supra).

In Bulakowski v. Philadelphia Saving Fund Society, 270 Pa. 538, the Supreme Court held that a savings bank is liable to its depositors for a want of ordinary care, as a matter of public policy. The court there upheld a rule of a savings bank that payment to any person presenting the passbook should exonerate the bank unless the depositor had given previous notice of its loss or theft, but, nevertheless, held that even where no such notice was given “the bank must not be negligent in paying the money on deposit to another than the true owner or authorized agent, even though the passbook is presented as authority for the payment and the true owner does not give the notice required by the rule. The bank is bound to exercise ordinary care to safeguard its depositors.”

In Wronski v. Frankford Trust Co., 84 Pa. Superior Ct. 511, 513, the Superior Court also said of such a rule:

“Its effect, however, was not to relieve the company of liability, in such circumstances, if in making such payment it neglected to use ordinary care: Bulakowski v. Phila. S. F. Society, supra; 3 R. C. L. 708, section 340; 7 C. J. 870, section 919.”

In Bulakowski v. Philadelphia Saving Fund Society, 270 Pa. 538, 541, the Supreme Court said:

“A savings bank is not held to the same high degree of care as that required of a commercial bank, respecting its depositors or creditors: Kelley v. Buffalo Savings Bank, 180 N. Y. 171; 69 L. R. A. 317.”

It seems to us all the more reason for not absolving a commercial bank from its negligence where the claimed exoneration is not in the original contract but in a subsequent gratuitous writing, and where notice to stop payment was served by the depositor.

However, we rest our conclusion squarely on the proposition that the stop-cheek order asked for that which the. bank was under a legal obligation to. do, and that the incorporated release in the event of payment through error must fall for lack of consideration to support it.

It follows, therefore, that the plaintiff must prevail. Accordingly, the court enters a finding for the plaintiff in the sum of $362.


author: Alessandroni, J.,

text:
    Adler v. Spector Brothers.

      H. Moskowitz, for plaintiff; Rose & Watkins, for defendant.
    February 19, 1931.
   Alessandroni, J.,

In the suit of Morris Adler in trespass for malicious prosecution the jury returned a verdict in favor of the plaintiff on May 16, 1930, in the sum of $1000. Defendant’s motion for new trial and judgment non obstante veredicto were refused and judgment entered on the verdict on August 12, 1930.

Subsequently, on September 10, 1930, the defendants were allowed a rule to show cause why a judgment in their favor obtained against the plaintiff prior to the rendition of the verdict in this case should not be set off against the plaintiff’s judgment of August 12, 1930. The petition for this rule recited that on October 11, 1923, the plaintiff executed a judgment note to the defendants in the sum of $500, with interest, that said note was recorded as of Common Pleas Court No. 4, June Term, 1930, No. 17625, and damages assessed in the sum of $753.75. It further averred that no part of the sum had ever been paid and concluded with the prayer to set off this judgment against that of the plaintiff.

The answer to this petition avers that the entire sum of $500 due on the note was paid prior to the entry of judgment thereon in two instalments, namely, by check dated October 29, 1923, for $200, and by another cheek dated November 3, 1923, for $300. Photostatic copies of the checks and endorsements thereon are attached to the answer, which show, in addition to the regular endorsements on the back, a notation as follows: “Payable on account of judgment note.”

The answer also makes the important averment that proceedings have been instituted in the Court of Common Pleas No. 4 to have the judgment marked satisfied of record. The rule was argued on petition and answer. The facts disclose that the judgment note held by Spector Brothers was dated October 11, 1923; that no action was taken on this note until September 9, 1930, when Spector Brothers entered the note. As may be readily seen, Speetor’s note was not entered until after the plaintiff had recovered a verdict and entered a judgment thereon in the malicious prosecution action. Examination of the record in the Court of Common Pleas No. 4, June Term, 1930, No. 17625, shows that a rule has been granted to satisfy Spector’s judgment. This rule has not yet been disposed of. Spector Brothers are either mistaken or consciously misstating a fact when they state in the title of their petition that the judgment obtained against Adler was entered prior to the rendition of the verdict in this case. It is clear, therefore, that no effort was made to enter judgment on the Spector note until after Adler had entered his judgment on the verdict and after refusal of the motions for judgment non obstante veredicto and new trial. Waiving aside these considerations, it is clear to the court that so long as Spector’s judgment is under attack and pending the determination of the rule to mark that judgment satisfied, the petitioners have no standing to have their judgment set off against Adler’s judgment. It is unnecessary, therefore, to discuss the right to set off one judgment against another, since Speetor’s judgment is not now in condition to be set off. The rule to set off judgment, therefore, should be discharged.

And now, to wit, February 19, 1931, the rule to set off judgment is discharged.


author: Sinkler, J.,

text:
    Crean’s Estate.

      J. Lawrence Wetherill, for exceptants.

      James A. Montgomery, Jr., and Thomas Stokes, contra.
    March 27, 1931.
   Sinkler, J.,

The evident intention of the testator as to the distribution of the principal of his estate was to give the status of primary takers to the children of Augustus C. Heaton and Rosalie Heaton Tows, although they belonged to a generation younger than the other primary takers. In attributing this intention to the testator, the learned Auditing Judge has carefully weighed the opposing contentions that were presented before him, and the able argument of counsel for the exceptants has not convinced us that any error exists in the adjudication.

The exceptions are, therefore, dismissed and the adjudication is confirmed absolutely.

Lamorelle, P. J., did not sit.


author: Finletter, P. J.,

text:
    Simsohn v. Southern Co-operative Building and Loan Ass’n.

      Wolf, Block, Schorr & Solis-Cohen, for plaintiff.

      Hirschwald, Goff & Davis and Gable, Vaughn & Gaul, for defendant.
    July 6, 1931.
   Finletter, P. J.,

Plaintiff is a withdrawing stockholder of the defendant building and loan association. The proceedings to withdraw have so far advanced that he has given notice in writing in accordance with the by-laws; the secretary has made the proper endorsement upon the notice, and plaintiff is waiting his turn to receive payment.

The defendant is said to be planning a merger with another such association. The merger has not yet been accomplished, and plaintiff’s bill prays that it be enjoined until the value of his stock shall have been paid or secured to him.

Preliminary objection is made on the ground that on the face of the bill plaintiff is not, as he describes himself, a “stockholder,” but is a creditor.

As a stockholder, he would have a right to the relief he asks: Barnett v. Phila. Market Co., 218 Pa. 649; but not so as a creditor. In our opinion, he is still a stockholder.

It is conceded that, for many purposes, he has some of the rights of a creditor, but nevertheless he cannot free himself from his liability as a stockholder, nor be deprived of his rights as such, so long as he holds his certificate, or book, or other evidence of his stock ownership.

Building and loan associations are created under the terms of the General Corporation Act of April 29, 1874, P. L. 73, and its supplements. Section two (page 74) provides that the purposes for which corporations may be formed are: “XV. Building and Loan Associations.” Section thirty-seven (pages 96-99) makes special provisions for such associations. Except for these special provisions, they are corporations like any other created under the Corporation Act.

Among the special provisions applicable' alone to such associations is the right of the stockholder to withdraw and receive the value of his stock. The provision to that effect is in clause two of section thirty-seven of the Corporation Act, as follows:

“Any stockholder wishing to withdraw from the said corporation, shall have power to do so by giving thirty days’ notice of his or her intention to withdraw, when he or she shall be entitled to receive the amount paid in by him or her, less all fines and other charges; but after the expiration of one year from the issuing of the series, such stockholder shall be entitled in addition thereto, to legal interest thereon: Provided, That at no time shall more than one-half of the funds in the treasury of the corporation be applicable to the demands of withdrawing stockholders without the consent of the board of directors, and no stockholder shall be entitled to withdraw whose stock is held in pledge for security.”

The Act of 1879 makes some changes not important in the present discussion.

This right of the stockholder of a building and loan association to withdraw his contributions to capital, together with their earnings, is peculiar to such associations. A stockholder in any other class of corporations under the act does not possess such a right. It is additional to the other rights of a stockholder. The successive stages of the exercise of this right are usually a written notice submitted at a regular meeting, an acceptance of notice by the 'secretary of the association, the lapse of thirty days, payment of the full withdrawal value, or a period of waiting until the turn of the stockholder-creditor is reached for payment, and finally payment.

Taking alone the language of the act, it would seem that the act of withdrawal consisted of two parts: first, the notice by the stockholder, and, second, payment by the corporation. The withdrawal would then be complete. It is true that the limitation of payment to certain funds, not always available, results often in the lapse of some time between notice and payment. It does not seem that this should affect the relations of the parties. Certainly the party not in default should lose nothing by the temporary incapacity of the other party to perform on its part. The status of the member, with all its advantages, should remain unaffected until the corporation has fully completed its performance.

While we think the attitude of the appellate courts upon the question is, on the whole, clear, there are phrases in some of the decided cases which require consideration, which we propose to give herein.

In the earliest cases the only question was the right of the withdrawing stockholder to payment.

In the United States B. & L. Ass’n v. Silverman, 85 Pa. 394, this was all that was before the court. Mr. Justice Gordon said, after reciting the provisions of the statute giving the right of withdrawal: “It will be seen from the above, that after thirty days’ notice the membership of the stockholder is determined and he becomes a creditor of the corporation to the amount he has paid. ... He may . . . recover judgment just as any other creditor.”

There can be no two meanings of this language. The “membership is determined,” meaning “ended,” and he becomes a creditor. But it must be observed that the decision to this effect is not necessary to the conclusion that the stockholder is a creditor; that is, is entitled to be paid the withdrawal value.

In Lepore v. Twin Cities B. & L. Ass’n, 5 Pa. Superior Ct. 276, the same statement was made. But again the only question involved was the right to sue the corporation, and the computation of his claim.

In McGovern v. Cosmopolitan Savings and Loan Ass’n, 44 Pa. Superior Ct. 212, the effect of section two of the Act of 1879, P. L. 16, upon the two decisions (above) was alone before the court.

So that in none of the three was the question raised that is before us in the instant case, that is: Is the withdrawing stockholder a creditor and nothing more, or does he retain his status as a stockholder until relations between him and the corporation are severed by the payment back to him of his capital and the surrender of his certificate.

In Christian’s Appeal, 102 Pa. 184, there had been an assignment for the benefit of creditors by the association. Four classes of stockholders’ claims were presented: (1) Those who had withdrawn and been paid their withdrawal value (the treasurer who had made the payments asked credit for them) ; (2) holders of orders on the treasurer issued to withdrawing stockholders more than six months before the assignment; (3) stockholders who had given notice of their intention to withdraw several months before the assignment, but who had received no orders; (4) all other stockholders.

As to the first class the treasurer was held to be entitled to the status of a general creditor. That is, the stockholders bad ceased to be (upon payment of full withdrawal value) either stockholders or creditors. The treasurer was entitled to be fully paid in preference to any of the other classes, whose claims were founded upon the relation they sustained to the association as stockholders thereof.

The auditor had, however, distributed the fund among the withdrawing stockholders, classes (2) and (3) above. This was manifest error. “That result was reached by holding that members of the association who had given requisite notice of withdrawal thereby ceased to be stockholders and became creditors to the extent of the withdrawal value of their stock. . . In this we think there was manifest error. While, in a qualified sense, withdrawing stockholders may be considered creditors .... their rights as against those with whom they have been associated are very different from those of general creditors. . . If the association has been prosperous, they have a right under' certain limitations ... to demand and receive their proportionate share of the accumulated fund; but if . . . losses have been sustained before actual withdrawal, they must bear their just proportion thereof. . . . Orders issued, to withdrawing stockholders are merely evidence of their interest in the assets remaining after paying general creditors.”

In Assigned Estate of National Savings, Loan and Building Association, 9 W. N. C. 79, the difference between general creditors of an association on the one hand, and stockholders, on the other hand, who have become creditors either, by the maturity of their stock; by judgment upon withdrawal value claims; or by notice of intention to withdraw, was pointed out by Judge Ludlow: “While it may be true,” he said, “that a stockholder may recover judgment against the corporation and thus . . . become in a sense a creditor, yet the peculiar nature of the . . . building association, clearly, we think, indicate that an assignment for the benefit of creditors, . . . was never intended to reach such creditors as . . . members of a building association must be who have even obtained judgment upon their claims.”

This was cited with approval by Mr. Justice Sterrett in Christian’s Appeal, supra, who, after saying that the above was “well said,” added: “While it may be true that a stockholder may recover judgment against the corporation, and thus become in a certain sense, a creditor thereof, he is nevertheless not a creditor within the meaning of our assignment laws.”

It is plain then that the unpaid withdrawing stockholder is not a creditor and nothing else, and that nothing short of payment of the withdrawal value of his stock frees him from a stockholder’s liability. It would follow as a corollary that nothing else would deprive him of his rights as a stockholder.

The recent cases of Brown v. Victor Building Ass’n, 302 Pa. 254, and Stone v. Schiller B. & L. Ass’n, 302 Pa. 544, confirm the limitations upon the creditor rights of the withdrawing stockholder, and inferentially tend to preserve to him his rights and liabilities as a stockholder.

In addition there is Assigned Estate of Brown Building and Loan Assocition, 12 W. N. C. 207, in which it is held that a withdrawing stockholder may withdraw his withdrawal, and that a suit in his capacity as stockholder amounts to such a withdrawal.

Judge Endlich’s views are these: “The status of a member who has given notice of withdrawal is to some extent a peculiar one. Ordinarily under the rules of the association, he has no right to exercise the general functions of a member. Indeed, his doing so, — as where after giving notice of withdrawal he by proxy knowingly and intentionally participates as a stockholder in the deliberations of the society’s meetings, — has been held to be a waiver of his right to withdraw under said notice:” Endlich on Building Associations, § 109; Decatur B. & I. Co. v. Neal, (Ala.) 12 So. 780.

“But during the period which his notice has to run before the association is bound to pay him out he does not cease to be a member. Thus prima facie a three months’ notice to withdraw means a notice to withdraw at the end of the three months for which the notice is required. Hence in the interval between the giving of the notice and its maturity the true mode of describing him [the withdrawer] is to describe him as a member who has given notice of withdrawal and is entitled to payment:” Endlieh on Building Associations, § 109.

Judge Endlieh concludes: “His membership is only determined after the expiration of the required period of notice,” citing United States B. & L. Ass’n v. Silverman, 85 Pa. 394, 397.

Undoubtedly this view of his status is correct. The suggestion we have to make is that such status is not ended at the expiration of the thirty-day period, unless the association has performed by paying the withdrawal value. There is implicit in the notice, accepted by the association, a demand by the member for payment and a recognition of his right by the association which carries with it the duty of payment. The provisions of the Act of 1874, section thirty-seven, supra, are that the stockholder shall have power to withdraw “by giving thirty days’ notice . . . when he . . . shall be entitled to receive the amount paid in, . . .” Of course, the duty to pay is limited by the provision that payment must not deplete the funds more than a half. If the funds are insufficient, and payment is not made, we think the effect is to extend the thirty-day period until the association can perform on its part, i. e., pay. Meanwhile the status of the member remains unchanged.

The plaintiff in the case before us seems to peculiarly require protection. His contract of subscription was with the corporation as originally constituted. He is being forced by the merger into a new contract with strangers, to which he never assented. As an ordinary creditor his position would not be weakened because no doubt the assets of the original corporation would pass to the merged association charged with the debt to him. But he is not an ordinary creditor. If he is a creditor only he is one with limited rights to payment and execution, to wit, out of half the funds in the treasury of the first corporation, and to them only after earlier withdrawals have been paid. What will happen to him when the two treasuries of the two merging corporations are merged into one, and the two lists of withdrawing stockholders are also merged we do not know. Neither does the plaintiff. And he should not be forced into these complications against his will and beyond his contract of subscription.


author: Houck, J.,

text:
    Ringheiser v. Ringheiser.

      A. D. Entitle and George M. Gerber, for libellant.

      M. M. Burke and P. H. Burke, for respondent.
    July 28, 1930.
   Houck, J.,

This is an action for divorce on the ground of desertion. In the libel it is alleged that the desertion took place on or about February 14, 1924. This date was later amended to February 13, 1925. The master found, in effect, that respondent on February 13, 1925, willfully and maliciously deserted libellant without reasonable cause, which desertion continued for a period of more than two years. The master has recommended that a decree be entered. The respondent has filed three exceptions: The first, to the master’s finding of fact respecting the desertion; the second, to his conclusion of law; and, the third, to his recommendation.

A divorce should not be granted unless the evidence discloses a case clearly within the statute. Desertion, which is the cause alleged in this case, is an actual abandonment of matrimonial cohabitation, with an intent to desert, willfully and maliciously persisted in without cause for two years. The guilty intent is manifested when, without cause or consent, either party withdraws from the residence of the other: Deitrick v. Deitrick, 95 Pa. Superior Ct. 542. The guilty intent to desert is rebutted where the separation is encouraged by the other party or is by mutual consent. What may have been desertion in its inception, but has become a separation with mutual consent within two years, is not ground for divorce. The mutual consent that will prevent a divorce upon the ground of desertion may be inferred from* the conduct of the parties and need not be put in the form of a solemn written agreement: Neagley v. Neagley, 59 Pa. Superior Ct. 565, 571. Mutual consent to the separation, not revoked by either party, is as fatal to an application for divorce on the ground of desertion as would be acts on the part of the libellant which would give the respondent legal cause to leave him: Thompson v. Thompson, 50 Pa. Superior Ct. 159, 166. Absence of any attempt on libellant’s part to relieve the situation or to open the way for respondent’s return justifies the conclusion that the separation was by consent: Reynolds v. Reynolds, 62 Pa. Superior Ct. 280; Bracken v. Bracken, 77 Pa. Superior Ct. 219; Grimm v. Grimm, 8 D. & C. 484.

It is our duty to examine the evidence in the light of the foregoing well established principles. It appears that the parties were married in New York City when they were each about twenty-one years of age. They had become acquainted prior to marriage in Ringtown, Schuylkill County, where both attended school. After marriage, libellant secured employment at Hazelton and respondent lived with libellant’s parents in Ringtown. Some months later libellant returned to Ringtown and the parties lived together in their own home, which was given or rented to them by libellant’s parents, who lived about fifty yards away. Since that time libellant has resided continuously in Ringtown, Pennsylvania. According to libellant’s testimony, respondent told him the night before she left that she intended to leave the next day. He said he just joked about it and did not ask why she was going to leave, nor does he remember that she gave any reason. The next morning libellant talked to his wife and made an attempt to go to work, but missed the conveyance, whereupon he returned to his home. His wife was then packing her clothing. He said he pretended to help her and admits that he handed her some articles to be put in the package which she was preparing. He denied that he carried any of her bundles out of the house, and was then asked what he said to his wife as she carried them out and got ready to leave. His answer was: “Well, I suppose I told her if she would go she should not come back.” He admitted also that he made no effort to persuade his wife to leave the articles in the house. This occurred on February 13, 1925. Respondent was then pregnant, and the child, their second, was born in the following August. Libellant testified that he did not know his wife was pregnant at the time she left. He did not see this child until during the summer of 1927, although it was living with its mother at her parents’ home, about a mile and a half from libellant’s home. Respondent’s version of the manner of her leaving is somewhat different. She testified that her husband continually applied vile and opprobrious epithets to her and that he struck her at least once. Libellant does not deny that he used vile language, but seeks to excuse it on the ground that he did rough work, so that rough language became his ordinary speech. He admits also that he struck his wife on one occasion, which he says was several months before she left him. Respondent said that her husband assisted her in moving her belongings out of the house, that he carried out a valise and urged her to get out sooner. She said that her husband told her he would help her pack so that she could leave sooner “and told me to get the hell out.” Under the circumstances here presented, ignoring respondent’s testimony entirely, the conclusion is clearly justified that libellant consented to his wife’s leaving. If he did not actually consent to the separation, there is nothing to indicate that it was seriously disagreeable to him. This conclusion finds support in the subsequent events.

Some weeks after the separation respondent prosecuted her husband for desertion and non-support. Libellant was directed to pay her $40 per month. The record itself was not offered in evidence, and while the order of court is not conclusive evidence that libellant deserted his wife, it is some evidence of that fact: Grimm v. Grimm, supra. Respondent testified that at the hearing in court she agreed to return to her husband if he would live as far from his parents as they lived from her parents. While this was not an unconditional offer to resume marital relations, it is an indication that the door was not entirely closed and tends to rebut the element of malice in the separation. The offer, of course, was not accepted. About July 7, 1925, libellant was seriously injured and was removed to a hospital. His wife and child went there to visit him. His testimony as to what occurred at that time is evasive. He said that he was delirious at the time. This testimony is not corroborated. On the other hand, libellant’s father, who was at the hospital when respondent called, and who testified for libellant, said respondent asked whether she could do anything for libellant, and libellant replied: “You can get out of here.” Respondent said that she spoke to libellant and asked him whether he recognized her; he replied that he did, and said that he did not want to see her. According to respondent, the conversation proceeded as follows: “I said: ‘We are going to have a baby, don’t you want to see him?’ He said: ‘Get to hell out.’ I said: ‘Francis, do you realize what you are saying?’ He said: ‘Yes.’ ” Here, again, according to the undisputed testimony, respondent clearly indicated by her conduct a desire to return to her husband. ' This circumstance also tends to rebut the contention that the desertion was willfully and maliciously persisted in for a period of two years. Again, in the summer of 1927, more than two years after the separation, libellant went to respondent’s home and asked permission to take his children with him, presumably for an automobile ride. Respondent said they could not go unless he took her too. His reply was that he could suit himself about that, and the outcome was that neither the wife nor the children went for a ride with libellant. Finally, at the hearing before the master, respondent reiterated her desire to resume marital relations with libellant; libellant was asked whether he was ready to take his wife back, and his reply was: “I don’t feel I should now.”

The foregoing circumstances, concerning which there is not much, if any, dispute, show clearly, we think, that respondent’s separation was not willful and malicious. In addition to this, there is not a word of evidence that libellant ever made any effort whatsoever to have his wife return to him. Apparently he stood firm on his original resolution, that if his wife left she could never return. All of this leads to the conclusion that the separation was by mutual consent and, that being the case, libellant is not entitled to a decree: Reynolds v. Reynolds, supra; Grimm v. Grimm, supra.

The reason assigned by respondent for leaving Her husband is his cruel and barbarous treatment. The reasonable cause which would justify a desertion must be such as would authorize a dissolution of the marriage bond: Rosa v. Rosa, 95 Pa. Superior Ct. 415. We agree with the master’s conclusion that respondent failed to show a course of conduct on libellant’s part which would entitle her to a divorce and which, therefore, would be reasonable cause for the separation. However, it is unnecessary to decide this point, since we have concluded that the separation was by mutual consent. On this conclusion we are bound to dismiss the libel.

And now, July 28, 1930, the libel is dismissed, at the cost of the libellant.


author: Fleming, P. J.,

text:
    In re Allison.

      Edward J. Thompson, for petitioner.
    August 26, 1930.
   Fleming, P. J.,

At the hearing held pursuant to the provisions of the act of assembly in this matter it appeared from the testimony of the petitioner, who was the only witness called, that the presumed decedent was, when last heard from in these parts, a resident of Decatur Township, Clearfield County, Pennsylvania.

Section six (a) of the Fiduciaries Act of June 7, 1917, P. L. 447, provides as follows:

“Section 6 (a). Whenever, hereafter, any person shall be presumed to be dead on account of absence for seven or more years from the place of his or her last domicile, whether the same be within this Commonwealth or in any other State, Territory, or possession of the United States, or in any foreign country, any person entitled, under the last will and testament of such presumed decedent or under the intestate laws to any share in his or her estate within this Commonwealth, or under any deed, will, or other instrument in writing, or in any other way, method, or manner, to any share or interest in any estate held by or for such presumed decedent, for years or for the term of his or her natural life, or the escheator for the Commonwealth, may present a petition to the orphans’ court of the county of such person’s last residence, or, where the presumed decedent was a nonresident of this Cpmmonwealth, in the orphans’ court of the county where the greater part of his property within this Commonwealth may be situated, setting forth the facts which raise the presumption of death. . . .”

It appears nowhere in the testimony of the petitioner that the presumed decedent had ever resided within this jurisdiction, or that any of her property was located herein.' The Fiduciaries Act plainly states that the proper forum is the orphans’ court of such person’s last residence, or, where the presumed decedent was a nonresident of this Commonwealth, the orphans’ court of the county where the greater part of his property within this Commonwealth may be situated. Neither of these jurisdictional facts appears in the instant case, and we are of the opinion that we do not have jurisdiction to entertain the petition filed.

And now, August 26, 1930, the petition is dismissed at the cost of the petitioner, for reasons above stated.

From S. D. Gettig, Bellefonte, Fa.


author: Wickersham, J.,

text:
    First National Finance Corporation v. Pennsylvania Securities Commission.

      Hause, Evans & Baker, for petitioner.

      Michael E. Stroup, Deputy Attorney General, for defendant.
    August 4, 1930.
   Wickersham, J.,

TÍds is an appeal from the decision of the Pennsylvania Securities Commission refusing to register plaintiff as a dealer in securities. The appellant is a corporation of the State of Pennsylvania authorized to engage in the making of small loans and has been licensed to engage in that business by the Banking Department. It applied to the Securities Commission in March, 1929, for registration as a dealer in securities and was refused in July, 1929. From that decision it took an appeal to this court, which, on December 24, 1929, following Bagley Co. v. Cameron, 282 Pa. 84, and Insuranshares Corp. v. Pennsylvania Securities Comm., 298 Pa. 263, reversed the commission and directed that the present applicant be registered as a dealer in securities.

Because the Securities Commission was taking a vacation over the Christmas holidays, it did not notify the appellant that the order of this court would be complied with until after the first of January, 1930, and it then refused to register the appellant because the necessary fees had not been received prior to the end of the previous calendar year.

A rule was then granted to show cause why the order of the court should not be complied with, and, after argument, this court decided that it could not at that time direct the commission to register the appellant for the year which was passed (see 33 Dauphin Co. Rep. 336). The appellant then made the pending application for registration for the year 1930, a hearing before the commission was held, and the commission made the determination from which the present appeal was taken.

Since the decision of this court in December, 1929, directing the registration of the appellant as a dealer, there has been no change in the proposed plan of business of the appellant, its officers, its financial condition, or in its stockholders, except that a subscriber for preferred stock who had only partly paid for the same has completed his payment, and two additional shares of preferred stock have been sold to other persons. The financial set-up to which the Securities Commission objects is exactly the same in every particular as it was when the court decided the previous appeal.

We find nothing new in the record except a circular marked Exhibit No. II, reference to which is made on pages 21, 27 and 43 of the record, together with other literature which the plaintiff proposes to use in its stock-selling campaign if approved by the commission. The objection on the part of the commission to the said circular No. II is as follows: “(a) The First National is a member of the Philadelphia Chamber of Commerce. [We do not understand this to be contradicted.] (b) Its bank references are of the first order. [We do not understand this to be controverted.] (c) Its officers are all men of broad financial experience and enjoy high standing in their community.”

It was stated in the testimony that the plaintiff would not send out this circular unless it was approved by the commission. It was stated by a member of the commission that it never approved circulars. This, we think, is true if it refers to literature which a corporation proposes to use in its stock-selling campaign and -which is submitted to the commission prior to the registration of the applicant as a dealer in securities. However, if the appellant issues circulars after registration which are not approved by the commission, the said commission can then proceed against the appellant under section fourteen of the act — see Securities Act of 1927, page 280 — which provides:

“No dealer, agent, or salesman shall issue or publish within this State any circular, advertisement, pamphlet, prospectus, program, or other matter in the nature thereof, concerning any security or securities which such dealer handles or proposes to sell, until such dealer shall have been registered or temporary permission obtained as in this act provided. Nor shall any dealer, agent or salesman issue or publish within this State any circular, advertisement, pamphlet, prospectus, program, or other matter in the nature thereof, concerning any security or securities to be sold or offered for sale, unless the name of the dealer shall be subscribed thereto, and a true copy thereof filed in the office of the commission. ... Nor shall any dealer, agent, or salesman issue or publish within this State any circular, advertisement, pamphlet, prospectus, program, or other matter in the nature thereof, after notice in writing given to him by the commission that, in the commission’s opinion the same contains any statement that is false, or misleading, or otherwise likely to deceive a reader thereof.”

It seems very clear to us, therefore, that the commission may, if it sees fit, approve or disapprove the literature which the applicant proposes to issue. For a violation of any of the requirements of said section fourteen, the commission may proceed against the dealer or agent under the provisions of section sixteen of the Securities Act. And it seems to follow that if the commission, as in the instant case, objects to literature and the applicant promptly agrees not to use it, such literature should not be held as a proper ground for refusing to register the applicant. Aside from this objection there is, as we have stated, nothing new on this record which we did not have before us when we filed our opinion last December, and for the reasons therein expressed the order of the Securities Commission refusing to register the plaintiff is reversed, and, upon the payment of the necessary fees by the applicant, the commission is ordered to register the appellant as a dealer in securities in the Commonwealth of Pennsylvania. Costs to be paid by the defendant.

From Homer L. Kreider, Harrisburg-, Pa.


text:
    Ormsby’s Estate.

      Paul Van Reed Miller and Fred Taylor Pusey, for exceptions.

      Matthew Randall and Clinton A. Sowers, contra.
    March 27, 1931.
   Sinkler, J.,

The exceptions to the adjudication relate to the construction by the Auditing Judge of the paper admitted to probate as the testatrix’s last will. She thereby left to her niece the power to draw all the money she had in the Philadelphia Saving Fund at the time of her death.

The evidence produced before him is, in our opinion, admissible for the purposes set out in his adjudication. It reveals that the testatrix had authorized her niece to withdraw money from her account in the Philadelphia Saving Fund on three occasions within sixteen months of her death, and exclusively for her, the decedent’s, use. Between the first and second occasions, she wrote the paper which the Auditing Judge has properly interpreted. But for two reasons we should be doubtful as to whether it had testamentary effect: First, she used the verb “leave” (the power to draw all the money I have in the Phila. Saving Fund at the time of my death); and, second, on two occasions after she had written it she executed other orders authorizing her niece to draw money from her account. Otherwise the paper would appear to be a letter of attorney which would have been revoked by her death, and which would have had no testamentary effect. The evident intention of the testatrix was to continue after her death the authority given her niece on the several occasions during her life. She doubtless contemplated the possibility of her savings being reduced to an amount no more than sufficient to settle her estate. We are of the opinion that the Auditing Judge was correct in his construction of the will, and that it has only the limited testamentary effect of enabling the niece to administer the moneys in the Philadelphia Saving Fund to settle the estate. We concur in his conclusion that it does not constitute a residuary bequest to the niece, and his finding that there is an intestacy as to the residue.

The exceptions are dismissed and the adjudication confirmed absolutely.

Gest, J., did not sit.


author: Taulane, J.,

text:
    Rader et ux. v. Bernstein et al.

      J. Jerome Katz, for plaintiffs; Harry Shapiro, for defendants.

      March 18, 1931.
   Taulane, J.,

Plaintiffs entered into a written contract with Robert R. Breen and wife to exchange certain of their real estate in Philadelphia for certain real estate of Breen and his wife in Wildwood, New Jersey.

The statement of claim alleges that though the legal title to the land in New Jersey is in the name of Breen and his wife, the actual and real owners are the defendants, Louis Bernstein and Jacob J. Creskoff; that Breen and his wife in holding title to said land in New Jersey and in entering into the agreement of exchange with the plaintiffs were mere straw people and acting as agents in behalf of the defendants; that there was a default on the part of the defendants and Breen and his wife in making the exchange; that the suit is to recover the amount of liquidated damages stipulated in the contract; and that the suit is instituted against Bernstein and Creskoff because they are the undisclosed principals of Breen and his wife. The agreement between the plaintiffs and Breen and his wife is under seal.

Can suit be maintained on a sealed instrument against an undisclosed principal?

The prevailing view is that no one can sue or be sued on a sealed instrument except the parties thereto: 32 A. L. R. 162; Crowley v. Lewis, 239 N. Y. 264; Shermet v. Embick, 90 Pa. Superior Ct. 269.

There has been some departure from this technical rule in our Pennsylvania cases. Thus in Ottman v. Nixon-Nirdlinger, 301 Pa. 234, 241, it is said:

“It is admitted that if the writing in question was a simple contract, though under seal, an action would lie against the undisclosed principals of the assignee (Lancaster v. Knickerbocker Ice Co., 153 Pa. 427), but also urged that, since the demise passed an interest in land, it can be enforced only against those named as parties thereto. . . . Though a seal retains in part its common law force in limiting a right of action (Greene Co. v. Southern Surety Co., 292 Pa. 304), yet this is not true where its use is mere surplusage (Dick v. McWilliams, 291 Pa. 165; Swisshelm v. Swissvale Laundry Co., 95 Pa. 367), or, where added, it appears from the writing itself the one signing acts for another (Yentis v. Mills, 299 Pa. 25).”

In Greene Co. v. Southern Surety Co., 292 Pa. 304, 316, the court said:

“There is one other reason why this plaintiff cannot maintain a suit on the bond. This is an action on a sealed instrument, and in Strohecker v. Grant, 16 S. & R. 237, 241, we held that, whatever the rule might be in assumpsit, there could be no recovery in covenant by one not a party to the instrument. This rule was followed in De Bolle v. Penna. Ins. Co., 4 Wh. 68. See also Mississippi Cent. R. R. Co. v. Southern Assoc., 8 Phila. 107, 108. It is true that in Brill v. Brill, supra, the court below said that the rule fell when the distinction between pleadings in covenant and assumpsit was abolished. As we pointed out above, that case was decided purely upon the ground of public policy. Furthermore, we cannot agree that the proposition that one not a party to a sealed instrument cannot sue upon it rests entirely upon rules of pleading. Prof. Williston says (sec. 401) that ‘none of the earlier cases which allowed a right of action to one who was not a party to the contract related to contracts under seal, and where statutes have not taken away the importance of the distinction between sealed and parol contracts the rule that one who is not a party to a contract under seal cannot sue upon it is still applied to contracts (either) to benefit or pay a debt to a third person.’ In this State, speaking generally, a seal retains its common law force, and we must conclude that the rule remains unchanged.”

In Shermet v. Embick, 90 Pa. Superior Ct. 269, 271, Keller, J., said:

“ ‘The general rule is, that the action should be brought in the name of the party whose legal right has been affected:’ 1 Chitty on Pleadings 1. ‘It is an inflexible rule that if a deed be inter partes, that is, on the face of it expressly describe and denote who are the parties to it (as “between A. of the first part, and B. of the second part”), C., if not expressly named as a party, cannot sue thereon:’ Ibid., p. 3. ‘In [the case of a contract under seal] the implied right of action of the principal merges in the higher security taken, by his authority, by the agent, and the remedy is in the name of the latter only:’ Ibid., p. 9. ‘The party having the legal cause of action can alone be plaintiff: ’ 2 Troubat & Haly’s Practice (Brightly’s Ed.) sec. 1655. These eminent authorities are supported by a wealth of decisions.”

The title to the land in New Jersey, which is in question here, is in the name of Breen and Wife, one of the parties to the contract of exchange, and in view of this and in view of the authorities we have quoted, we think we are bound to hold that the plaintiffs cannot maintain suit against the defendants on the sealed instrument to which they are not parties.

Until the distinctions between sealed and unsealed contracts are abolished by statute, the time has probably come when the courts should decide that a seal has no legal significance — that it is mere surplusage — except on instruments required to be sealed, such as a deed, mortgage or bond. It is for the Supreme Court, and not for us, to say whether this step should be taken.

Something can be said, however, in favor of continuing the law as it is. In Crowley v. Lewis, 239 N. Y. 264 (1925), the court held that an undisclosed principal could not be sued on an agreement under seal for the exchange of real estate, though strongly urged to declare that the addition of a seal was mere surplusage, and that the agreement should be interpreted as an ordinary agreement not under seal. Chief Justice Cardozo, who was a party to the decision, has observed:

“The rule was settled at common law that an undisclosed principal might not be held to liability upon a contract which had been executed under seal. Much of the law as to seals has small relation in society as now organized to present-day realities. The question came up whether we would adhere to the rule that I have mentioned, or hold it to have faded away with the fading significance of seals. The decision was that the old rule would be enforced. Precedents of recent date made departure difficult if stare decisis was not to be abandoned altogether, but there were other and deeper grounds of policy. Contracts had been made and transactions closed on the faith of the law as it had been theretofore declared. Men had taken title in the names of ‘dummies,’ and through them executed deeds and mortgages with the understanding, shared by the covenantees, that liability on the covenant would be confined to the apparent principal. They had done this honestly and without concealment. Something might be said, too, in favor of the social utility of a device by which the liability of the apparent principal could be substituted without elaborate forms for the liability of another back of him who was to reap the profits of the transaction. The law has like devices for limiting liability in other situations, as, e. g., in joint stock associations, corporations, and limited partnerships. In any event, retrospective change would be unjust. The evil, if it was one, was to be eradicated by statute.” (Cardozo on The Paradoxes of Legal Science, 70). The dissenting judges in Ottman v. Nixon-Nirdlinger, 301 Pa. 234, expressed similar views.

There is another point fatal to the plaintiffs’ recovery. The defendants have neither signed nor authorized any one to sign their names to the agreement of exchange in question. The defendants’ names do not appear in the contract of exchange. It is true, as decided in Siegel v. Robinson, 56 Pa. 19, that our statute of frauds applies only to contracts for the sale of land in Pennsylvania, and not to contracts for the sale of land in other states.

In the Siegel case, which was an action to enforce a contract for the sale of land in Ohio, there was no proof of the law of Ohio. It is suggested here, and the suggestion is sound, that in the absence of evidence it will be presumed that the law of New Jersey is the same as the law of Pennsylvania even though it be statutory law. (Bennett et al. v. Cadwell’s Exec’r, 70 Pa. 253.) If this be so, the statute of frauds of New Jersey, like our statute of frauds, would make such a contract void and unenforceable as against the defendants.

There is no merit in the contention that the defendants were present at the time of the execution of the agreement and directed Breen, their alleged agent, to execute the contract in their behalf. No facts support this contention except the mere fact that Creskoff, one of the defendants, appears as a witness on the agreement without any indication whose signature he witnessed.

It is the generally accepted rule that if a person, who is a party to a written agreement, is present at the time of its execution and directs a third person to sign his name to the agreement, it is equivalent to the person signing his name himself, and this is a good execution even under the statute of frauds (Fitzpatrick v. Engard et al., 175 Pa. 393), but to be a sufficient execution, the signature put on the document must be the signature of the person to be charged or that of the person deputed to sign who signs as agent of the person to be charged. No such thing appears in this case. The agreement is with the Breens as individuals, and they signed their own names as individuals and not as agents. The defendants are not mentioned or referred to in the agreement at all.

And now, to wit, March 18, 1931, the questions of law raised in the affidavit of defense are sustained and judgment is now entered in favor of the defendants and against the plaintiffs. Exception to plaintiffs.


author: Broomall, J.,

text:
    Com., to use, v. United States Fidelity and Guaranty Company.

      Albert J. Williams, for rule; D. Malcolm Hodge, contra.
    August 22, 1930.
   Broomall, J.,

This is an action of assumpsit brought against the surety on the official recognizance of Thomas W. Allison, former sheriff of Delaware County, for an amount alleged to have been received by the said sheriff during his term of office, which was due and payable to the County of Delaware, but which had never been paid over to said county. The statement of claim sets out in detail the various amounts alleged to have been received by Mr. Allison, and it claims thereon an aggregate of $8372.94, with interest from May 20, 1925. The affidavit of defense admits the essential averments of the statement of claim, but points out certain errors therein, so that the amount admitted to be due, if there had been no set-offs, would be $8183.75, with interest from May 20, 1925.

The affidavit of defense, however, sets up a counterclaim of $4780.84, which it contends should be set off against the aggregate of the plaintiff’s claim.

The counterclaim and set-off arose out of the following alleged facts.:

That during the years 1922 and 1923 many felonies were committed in the County of Delaware, particularly in the City of Chester, and that as a result the County Commissioners of the County of Delaware “authorized, delegated and directed the defendant’s principal, Thomas W. Allison, then sheriff of Delaware county, the highest peace officer of the county, to employ in their behalf detectives for the detection and apprehension of the persons who were charged with perpetrating said felonies; that in pursuance of said authorization, delegation and direction, the defendant’s principal, the said Thomas W. Allison, sheriff of Delaware County, employed detectives from the Bryant Detective Agency to investigate and apprehend those charged with perpetrating the felonies as aforesaid;” that as the work of investigation and apprehension progressed, the said Thomas W. Allison, sheriff of Delaware County, paid from his official sheriff’s account to the Bryant Detective Agency on one occasion the sum of $2575, for which he was subsequently reimbursed by the County Commissioners of the County of Delaware; on another occasion, the sum of $2575.79, for which he was subsequently reimbursed at his request by the County Commissioners of the County of Delaware; and a third payment, on April 7, 1924, of $4780.84, also from his official account, for which third payment he requested payment from the county commissioners, but the county commissioners refused to reimburse him. The defendant’s counterclaim as surety of Mr. Allison is for this $4780.84, which the defendant asks to have set off against the plaintiff’s claim. The plaintiff has entered a rule for judgment for want of a sufficient affidavit of defense, and alleges as the ground for asking for judgment that the counterclaim above suggested was a claim of Thomas W. Allison in his individual capacity, and, therefore, cannot be set off in a suit brought as a result of what he received in his official capacity as sheriff; and, secondly, that the county commissioners had no right to delegate the employment of detectives to the sheriff or to anyone else.

Defendant’s counsel admit the validity of the principle contended for by the plaintiff, that the private claim of a public officer or of his estate cannot be set off against a claim made against a sheriff in his official capacity; but the defendant contends that the set-off advanced by the defendant was not a private claim of Sheriff Allison, but was a claim made for services performed in his official capacity.

We think that the principle set up by the plaintiff has been generally recognized: Wilson v. Lewistown Borough, 1 W. & S. 428; Fitch’s Appeal, 10 Pa. 461; Todd v. Patterson Borough, 55 Pa. 496.

And we think that the plaintiff is correct in contending that the defendant’s set-off is a private claim and not a claim of the sheriff in his official capacity. Defendant does not contend that the sheriff, by reason of his official position, had the right himself to employ detectives and to charge the expense of their employment to the county; and if such claim was made, we feel that it could not be sustained, as there is nothing in the laws relating to the duties of the sheriff, so far as we have been able to ascertain, that would in any manner justify such a claim. The defendant contends, however, that under the provisions of the Act of April 4, 1919, P. L. 41, the county commissioners had the right to employ detectives for the apprehension of felons, and that, having decided that such employment was necessary, they might delegate the power to select particular detectives and to control their employment to another. We think that there is decided doubt as to the right of the county commissioners to delegate the employment and the control of the employment of detectives to others; but, under our view of the other question, the determination of this point becomes unnecessary. If the sheriff had not the right, of his own motion, to employ detectives and to make the county liable for the cost of their employment, then clearly such employment was no part of his official duty, and if, at the instance of the county commissioners, he did employ detectives and did pay them, that fact would not make such acts any part of his official duties. The county commissioners had and have no control over the sheriff in the discharge of his official duties, and they could not by action or inaction on their part either increase or diminish the scope of his duties. When they delegated to him the authority to employ these detectives, even though they selected him on account of his official position, this selection simply made him their agent. Any indebtedness to the detectives, where he was acting as their agent, would be primarily the indebtedness of his principals and not of himself; and if, by reason of his failure to disclose his principal, he made himself personally liable to the detectives for their pay, any claim that he might present against the county by reason of paying the detectives would be his private claim and not his claim as sheriff against the County of Delaware. The fact that he made payments out of his official account, even though made in good faith, as may well be the ease, would not in any manner control the question, particularly as the counterclaim does not allege or suggest that the fact that he was paying the detectives from his official account was known to the county commissioners or was ever in any manner approved by them.

In the very able brief filed by the learned counsel for the defendant, it is admitted that “if Sheriff Allison had had a claim against the County of Delaware for damages occasioned his private real estate by reason of the taking of a portion of it for road purposes by the county and it was attempted to set off such a claim in the above case, the plaintiff’s contention would be well taken.” In effect, that is just what is attempted here. If, instead of paying three bills of a detective agency from his official account, Sheriff Allison had recognized and settled claims against the County of Delaware for three separate pieces of real estate taken for road purposes, had at one time paid himself from his official account for the first piece and had then been reimbursed by the county commissioners, and had placed the sum that they paid him back in his official account, had repeated that transaction in regard to the second piece of real estate, had again been reimbursed, and had again replaced the sum in his official account, and had then similarly paid himself -from his official account for the third piece of land and the commissioners had then refused to reimburse him, the situation would be identical with that which under the pleadings exists before us at present. The defendant admits that in the case of a real estate claim for damages such a set-off as is claimed here could not be admitted. We can see no distinction in principle between that condition and the present one; and we think that the same principle applies. In Fitch’s Appeal, supra, the claim of the sheriff was for services performed for the defendant in an execution in connection with that execution, yet there the Supreme Court held that what he did created merely a private claim against the defendant and not one that would give him any claim whatever on the proceeds of the sale which was subsequently held under the execution in his hands. Again, we can see no distinction in principle between that case and the instant one; and it follows, therefore, that the pending rule must be made absolute.

And now, August 22, 1930, the rule for judgment for want of a sufficient affidavit of defense is made absolute to the extent of $8183.75, with interest thereon from May 20, 1925. From William R. Toal, Media, Pa.