goods were to be considered the goods of the seller until they were purchased and paid for in Spokane by the respondent. The expression in the contract "Terms cash with documents attached" was explained by the testimony, and such explanation becomes important in the determination of this cause. Mr. Amos, who was the agent for the appellant and the man who sold the goods to the respondent, in answer to the question, "I will ask you what that sentence means; what is the technical meaning of that phrase?" (the question referring to the phrase "Termscash with documents attached") said: "It means that the goods are shipped, the shipping receipt and invoice to be attached to the

accepts the same and mails his acceptance and under the terms of the contract, the to the person sending the proposition, the contract is to be governed by the law of the state where it is so accepted. But these cases do not apply to the case under consideration, for the offer in the first instance was made in Spokane by the agents of the appellant. The acceptance of that offer was also made here, notwithstanding the appellant was doing business in California, for the acceptance was made not through the mail in answer to an offer made, but through the agent of the appellant, resident at Spokane. The contract was delivered at Spokane. The case cited from this court-Izett v. Stetson & Post Mill Co., 22 Wash. 300, 60 Pac. 1128-is not controlling. That was a case where sawlogs had been delivered to the purchaser under a contract of sale providing for payment when they should be scaled, and it was held that the title to the logs passed to the purchaser, and he became liable for the value of the logs in case they should be lost through his negligence prior to their being scaled. That case involved the proposition so frequently discussed that, where it appears that there has been a complete delivery of the property in. They would not be delivered to the Humaccordance with the terms of the sale, the title passes, although there remains something to be done in order to ascertain the total value of the goods at the rates specified in the contract. And that was the basis of the de

cision in that case, following the doctrine announced in Hatch v. Standard Oil Company,

100 U. S. 124, 25 L. Ed. 554.

But, outside of any extraneous testimony, the contract itself shows that the title of the goods had not passed to the respondent, and would not have passed to it if they had been shipped at Fresno, Cal.; because, under the contract, the buyer had the right to examine the goods before he was compelled to accept them, and was given three days to exercise such right. All that was meant by the expression "these prices are f. o. b. California" was that the purchaser was to pay the freight from California to the place of destination. The rule applicable to the circumstances of this case is announced on page 1339, subd. 2, of 22 Am. & Eng. Enc. Law (2d Ed.), as follows: "The place of sale of goods is the place of delivery, where the sale is completed by delivery. Thus, if a person residing in one state orders goods of one residing in another state, who there delivers the goods ordered to a carrier for the purchaser, the contract is deemed to be made there, in the absence of an agreement to the contrary. But if the parties agreed that the goods should be delivered by the carrier as the seller's agent in the state of the purchaser, the law of the latter state will govern." Under the undisputed testimony in this case,

draft.

And afterwards it passes through the bank for collection; the goods thereafter to be paid for before the draft will be delivered by the bank; and the bill of lading would have to be delivered to the railroad before they would deliver the goods. Q. In other words, the goods would not be delivered until they were paid for? A. They would not be released by the railroad until paid for.

phrey-Ball Company until paid for? Is that the fact? A. Yes, sir." The witness further testified that the bill of lading was attached to the draft sent to the bank, and was not delivered until the draft was paid; that the Humphrey-Ball Company could not get the goods until they were paid for, and that the goods were to be shipped under this contract to the Phoenix Packing Company instead of to the respondent. The witness D. J. O'Callahan testified to exactly the same interpretation of the contract, and stated that the purchaser could not touch the goods; they remained the property of the seller until paid for. To the same effect was the testimony of F. M. Ball. So that it seems plain that this case falls squarely within the rule just cited from 22 Am. & Eng. Enc. Law; that the contract should be construed with reference to the laws of the state of Washington; and, there being no proof of any damages under the laws of the state of Washington, the court was justified in arriving at the conclusion at which it did.

It is contended by the appellant that the court erred in admitting the testimony as to the construction of this phrase in the contract. But this was an expression which is plainly open to explanation. The explanation offered had no tendency to dispute the terms of the contract, but simply to determine its meaning. It was therefore admis

sible.

The judgment of the court will be affirmed.

RUDKIN, C. J., and PARKER, CROW, and MOUNT, JJ., concur.

*For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes

case had a direct and positive interest to protect the community from frauds and impositions in food products or from false weights and measures, for as was said in State ex inf. Hadley v. Goffee, 192 Mo. 670, 91 S. W. 486, without some protection one who ships his grain to a public warehouse would be at the mercy of those who handle it and would in the ordinary course of business have no convenient or adequate means of verifying the classification and weight of his grain. It is upon these theories that the public warehouse and inspection laws are sustained. But this case does not fall within any of them. We cannot assume that an owner who ships and consigns his grain to himself needs any protection, or will be guilty of a fraud against himself. The design of the law is to protect an owner against the acts of third parties.

The act so plainly carries its own meaning | Ct. 862, 43 L. Ed. 191, the public in each and construction that it would seem to be sufficient to rest our judgment upon its title: "An act for the regulation of public warehouses, relating to the shipping, grading, inspection and weighing of grain and hay, defining the duties of railroads, warehousemen and millers in relation thereto, providing penalties," etc. It, like the act of 1895 (Laws 1895, c. 109), was clearly designed to protect the owner or shipper of grain from the frauds practiced by public warehousemen in returning false weights and grades. The whole tenor of the act, as well as every express declaration, is aimed at the regulation and the protection of the public from the impositions of the warehousemen. Section 9 of the act refers to the charges made by any public warehousemen providing that they shall be just, fair, and reasonable. Sections 10, 11, 12, 17, 18, 19, 20, 21, and 30 refer in terms to public warehouses or warehousemen, and do not even inferentially refer to shipments made by an owner which are consigned to himself. There is nothing in the law, nor, indeed, is it so contended except as it may appear inferentially, to sustain the theory that the state has the right to impose a tax for inspecting grain in the possession of the owner, and which may never be stored or offered for sale. Nor can the act be sustained by reference to the police power of the state. The public can have no possible interest in the character or quality of the grain shipped by an owner from one station in the state of Washington to another, although it be one of the points designated for inspection. Nor is there anything in the character of the shipment calling for the exercise of this extraordinary power. Grain is not in itself dangerous to handle; it is not perishable so as to become, under ordinary conditions, unfit for food; it is not explosive; it does not carry or breed disease; its shipment or use does not tend in any degree to incite a breach of the peace, lower the moral standards, or encourage crime.

The cases cited in no way bear out the contentions of the state. In the case of McDaniels v. J. J. Connelly Shoe Co., 30 Wash. 549, 71 Pac. 37, 60 L. R. A. 947, 94 Am. St. Rep. 889, the law (sale of goods in bulk) was sustained upon the theory that it was designed to prevent frauds among individuals. The court recognized in express words that there must be some abuse in the suppression of which the public is interested. In Gundling v. Chicago, 177 U. S. 183, 20 Sup. Ct. 633, 44 L. Ed. 725; McLean v. Arkansas, 211 U. S. 546, 29 Sup. Ct. 206, 53 L. Ed. 315; Powell v. Pennsylvania, 127 U. S. 678, 8 Sup. Ct. 992, 1257, 32 L. Ed. 253; Public Clearing House v. Coyne, 194 U. S. 497, 24 Sup. Ct. 789, 48 L. Ed. 1092; State v. Wilson, 61 Kan. 32, 58 Pac. 981, 47 L. R. A. 71; and Patapsco Guano Co. v. Board of Agriculture, 171 U. S. 345, 18 Sup.

We therefore conclude: (1) That the grain inspection law is not broad enough to cover inspection of grain shipped by an owner to himself, there being nothing in the record to indicate that it is to be stored in a public warehouse; (2) that, if it were so, a tax upon such shipment could not be sustained by reference to the police power. Judgment affirmed.

RUDKIN, C. J., and CROW, MOUNT, and DUNBAR, JJ., concur.

(58 Wash. 371)

CUNNINGHAM v. INDEPENDENCE CON-
SOL. MINING CO., Limited, et al.
(Supreme Court of Washington. May 18, 1910.)
1. CORPORATIONS (§ 82*) — SUBSCRIPTIONS —

CONSTRUCTION "FREE OF INCUMBRANCE."

Plaintiff, who was interested in options on mining claims, associated H. with him, who expended considerable money in developing the property. A corporation was formed of which plaintiff was elected secretary and H. president. Plaintiff asserted an interest in the company to the extent of 100,000 shares of the capital the latter agreed to "protect all present substock, under an agreement with H. in which scribers to the extent of assessing 750,000 shares fully 15 cents before any further assessments shall be levied against those of such subscribers who shall pay their full subscription to said stock, that is, 15 cents per share, fully guaranteeing to carry free from all assessment or incumbrance 100.000 shares of said stock of (plaintiff), who shall not be assessed for said 100,000 shares until all the aforesaid 750,000 shares shall have paid into the treasury fully 15 cents per share." Held, that the words "free of incumbrance" cannot be construed as but the agreement would be construed to mean meaning free from any charge or payment; that plaintiff would not be called upon to pay any assessment upon, or any part of the purchase price of, the stock until H. had paid in full for the 750,000 shares.

[Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 285-295; Dec. Dig. § 82.*

For other definitions, see Words and Phrases, vol. 3, p. 2964.]

the company and, out of his own funds, paid the full amount due upon all the options, excepting the sum of either $500 or $750, and the balance of the purchase price of one claim which he deemed worthless. The whole sums so paid by him aggregated $47,200.

Plaintiff

In 1901 the company had become indebted to numerous creditors. A suit was brought by the Coeur d'Alene Hardware Company in its own behalf and as assignee of others. This suit was prosecuted to judgment. The several option agreements, together with their accompanying deeds, had been left at the First National Bank of Wallace. was named as grantee in all of these, and, they not having been withdrawn and recorded, the company had no record title to its property. These facts being known to the hardware company, at its solicitation, and upon the request of the creditors who gave plainbalance due on one of the claims, plaintiff tiff the $500 or $750 necessary to cover the took up the deeds, put them on record, and then made a deed to the Independence Company. Thereupon an execution was levied, and the property sold and bid in by the hardware company. Prior to the transactions just noted, plaintiff had an understanding and agreement with the hardware company that,

CHADWICK, J. In the spring of 1898, plaintiff became interested in certain mining claims in the Coeur d'Alene country, Idaho. These he held under verbal or written options expiring September 10th of that year. With another he had done some little work on the claims and had made several unsuccessful efforts to interest capital, so that on or about September 1st he sought defendant Kennedy if the property was not redeemed by the IndeJ. Hanley, who went with him to look over the ground, and who thereupon agreed to fur-pendence Company, it would sell the claims nish the money to take up the options, provid- to him for the amount of the judgment, intered extra time could be arranged and the prop- est, and costs. Plaintiff says that he intended to buy the property for the benefit of the comerty on further investigation proved to be an attractive investment. New options were ob- pany; but there is no evidence of this when tained by plaintiff in his own name, not only considered in the light of the fact that a reon the property then held by him, but upon demption would have accomplished the same some other ground adjoining. Between that purpose, leaving him in a position of a pretime and March, 1899, Hanley expended con- ferred equitable lienholder. Defendant Hansiderable money in exploring and developing ley had made unsuccessful attempts to raise the property. In March, 1899, a corporation, the money to accomplish the redemption, and the Independence Consolidated Mining Com- on the last day he, with another, who, so far pany, Limited, was organized. A board of as the record shows, was vice president of trustees was elected. This board selected de- the company, went to Wallace and sought an fendant Hanley as president and plaintiff as extension of 24 hours. This was refused by secretary. The price of the stock was fixed the hardware company. Hanley and Argyle, at 15 cents per share, and plaintiff was made the vice president, then arranged with Mr. selling agent. He also acted as general super- August Paulsen for the money; but the sherintendent of the work at the mines, and re-iff, acting under the direction of the hardware ceived a salary of $150 per month. 152,000 shares of stock had been sold or subscribed under contract to pay upon call, up to September 1, 1899. On or about that date a meeting of the trustees was held, at which at least one of the stockholders was present, representing himself and some others who refused to carry out their contracts of purchase for the reason that the company did not have ti-est within six months, he would reconvey the tle to the property. Bad feeling had come between plaintiff and Hanley, and in consequence at that meeting the plaintiff resigned as secretary, and another was elected. From that time the plaintiff took no active interest in the affairs of the company. Defendant Hanley assumed the active management of

company, refused to accept his certified check, demanding United States currency, and that alone. The amount necessary for redemption was finally gotten together and received by the sheriff. Hanley, as president, and the vice president, acting as secretary, executed a deed to Paulsen under an agreement that, if the amount was repaid with 8 per cent. inter

property. Paulsen executed a deed to the company at the time and left it in escrow at the bank. Mr. Paulsen insisted upon this arrangement in order to avoid the complications of a mortgage and possible foreclosure. His attorney advised him that by so doing he took the absolute title subject only to his

For other cases see same topic and section NUMBER in Dec. & Am. Digs. 1907 to date, & Reporter Indexes

1

cents per share;" it being plaintiff's claim that up to that time he and defendant were equal partners and had equal interest in the company; that they had subscribed for 500, 000 shares of the stock, each 250,000, and the balance was to be left in the treasury and sold for the benefit of the company; that, the affairs of the company at that time being in bad shape, he proposed an agreement similar to the one he says Hanley made; but that because of Hanley's financial interest in the company the directors accepted the one made by Hanley. It will be seen that the 750,000 shares, together with the 152,000 already sold, left approximately 100,000 shares unaccounted for. It is this stock that Cunningham claims as his own. On the other hand, Hanley insists that no such agreement was ever made; that the only interest he had in the meeting was to make the subscribers pay up or get out of the company; that plaintiff was never at any time interested other than as his agent; that he was paid a salary for all his services; and that, while he was a trustee and officer of the company, it was understood that his interest was only nominal and sufficient to comply with the law in that respect. Plaintiff does not give a very satisfactory ex

agreement to resell within a certain time at a certain price. The money was not paid to Paulsen within the time limited, and some time thereafter Hanley paid the full amount due, $13,505.92, being the amount advanced with interest, and took a deed to the company. This deed was never recorded, and Hanley now claims it to be lost. The deed from the company to Paulsen was recorded June 14, 1904. and came to the actual notice of plaintiff within the ensuing year. Plaintiff claims that he then sought Argyle, who told him the deed was intended as a mortgage and that it was all done for the benefit of the company; that he and Argyle then went to the bank and examined the escrow agreement with Paulsen, but not the accompanying deed, it being sealed. This he says satisfied him. Argyle, who, at the time his testimony was taken, had no interest in the company, does not remember this circumstance. In January, 1907, the Independence Lead Mines, Limited, was organized, at the instance of and under the direction of the attorneys of third persons who had become interested in the property, and title passed to the lead mines company by deeds executed by Hanley, the consolidated company, and Paulsen; Paulsen in the meantime having, at the re-planation of these preliminary transactions. quest of Mr. Hanley, made another deed direct to him. No stock in the consolidated company had ever been issued; but, prior to the organization of the lead mines company, Hanley paid to all of the stockholders of the consolidated company who had paid 15 cents per share the full amount paid in by them, and became the owner of all the stock, or the right thereto, unless it be held that plaintiff is the owner of the amount claimed by him. The affairs of the consolidated company were not carried on with any formality after September, 1899. Such books and records as there were were turned over by plaintiff to the new secretary elected at that meeting, and have been lost as Hanley claims, or, at any rate, they were not before the court at the trial.

He says that he signed the subscription book of the company; but, in answer to a question, "How much did you subscribe?" he says, "I don't remember." Although Hanley had, prior to the organization of the company, advanced $5,250 as against his possible $1,000, in answer to the question, "Was it your understanding that he was to have credit for this amount of $5,250?" he says, “No, sir.” The trial court found that plaintiff was entitled to 100,000 shares of consolidated stock free of all charge, and appointed a receiver to take over the property. From this decree the defendants other than Argyle and Newel who had no interest in the result of the litigation have appealed.

The testimony is so contradictory and so unsatisfactory, and respondent and appellant Plaintiff asserts an interest in the consoli- Hanley are so antagonistic, and as we believe dated company to the extent of 100,000 equally determined to get the advantage of shares, or one-tenth of the whole capital the other, that we shall be governed as far as stock, under an agreement made by Hanley at possible, as the trial judge evidently was, by the September, 1899, meeting. In the ab- the written evidence. The writing upon sence of the minute books, he submits the fol- which respondent bottoms his case was conlowing memorandum, which he says is the strued as follows: "At said meeting the deoriginal draft of the proposition made by fendant Hanley entered into an agreement Hanley and taken down by him as secretary with the consolidated company and with the at that time: "I will protect all present sub- plaintiff, by the terms of which he purchased. scribers to the extent of assessing 750,000 from the company seven hundred and fifty shares fully fifteen cents before any further thousand (750,000) shares of its capital stock assessments shall be levied against those of at fifteen (15) cents per share, to be paid for such subscribers who shall pay their full sub- in installments in such manner as to provide scription to said stock; that is, fifteen cents funds necessary to make all the payments due per share, fully guaranteeing to carry free under the terms and conditions of the said from all assessment or incumbrance 100,000 options and to continue development work upshares of said stock of Clarence Cunningham on said mineral claims until the full amount who shall not be assessed for said 100,000 of said purchase price of seven hundred and shares until all the aforesaid 750,000 shares fifty thousand (750,000) shares should be paid