Now it is admitted that a bond shall be | "(1) To guarantee the completion of the work construed strictly, but that strict construc- comprehended in this agreement; and (2) to tion must likewise be a just and reasonable there may be for the payment of material and further guarantee the payment of any claims construction, and must accord with the inten- labor required in the erection of this building." tion of the parties. It is not limited to the letter of the bond as therein written, but to justify the judgment, contains this lanNow, the syllabus of this case, which seeks what is necessarily implied in the bond is as much a part of it as what is expressly written in the bond.

Indeed, in order in any wise to justify the "And to further guarantee the payment" construction placed upon this bond by the-not to the owner certainly, for on complemajority of this court, something additional needs to be read into the bond, else this language of the bond means nothing, accomplishes nothing, obligates nobody.

"Of any claims"-claims of whom? Not the owner, because he had not any, but the laborers, subcontractors, and materialmen. Again, note the broad, comprehensive scope of the words "any claim," which would in"And to further guarantee the payment of any claims there may be for the payment of clude, of course, accounts, notes, liens, etc. material and labor required in the erection of "There may be for the payment of matethis building (provided the owner of the build-rial and labor"-past or future, which; and ing has been compelled to make previous pay for "material and labor"-who furnished it, ment, or the materialmen and laboring men have filed mechanics' liens upon the building, the owner or third parties? for which the building would be liable)."

So that it turns out that the majority-this is as broad in scope as words can be. opinion does not adhere to the strict letter After assembling these separate italicized of the bond but reads into it something that limits and qualifies the language used, so as to destroy the protection evidently to be furnished to the subcontractors, materialmen and laboring men in the erection of the building.

take any pleasure in having some one pass his building and say:

"I put $1,000 worth of labor or $1,000 worth of material into that building and it never was paid for."

By the same doctrine, a thing which is clearly implied in the contract must be as much a part of the contract as if it were within the letter or words of the contract, all of which I hold justifies reading into the bond the parenthetical words heretofore referred to.

"The obligation is 'to make full payments to all persons supplying it with labor or materials in the prosecution of the work provided for in said contract.' light of the statute, looks to the protection of This language, read in the those who supply the labor or materials provided for in the contract, and not to the parlabor or materials were supplied. If the conticular contract or engagement under which tractor sees fit to let the work to a subcontractor, who employs labor and buys materials which are used to carry out and fulfill the engagement of the original contract to construct a public building, he is thereby supplied with the materials and labor for the fulfillment of his engagement as effectually as he would have been had he directly hired the labor or bought the materials."

Men in this age are trying to get away from the old, narrow, selfish idea of every man for himself, and, upon the contrary, the individual does feel that he is, in some sense, "his brother's keeper." It was the most natural thing for the owner of this building to undertake to provide by a proper bond that all claims "for material and labor required in the erection of this building" should be paid for under the bond. The policy of our federal laws in this respect has been ably discussed and determined in Hill v. American Surety Co., 200 U. S. 197, 26 Sup. Ct. 168, 50 L. Ed. 437, decided January 2, 1906. The syllabus reads as follows: "The act of August 13, 1894, c. 280, 28 Stat., 278 [U. S. Comp. St. 1901, p. 2523], was passed, as the title declares, for the protection of While there is a statute governing this persons furnishing materials and labor for the matter in national public work, it is equally construction of public works, and nothing in the statute, or in the bond therein authorized, the policy in the several states, not merely limits the right of recovery to those furnishing as to public work but as to private work, material or labor to the contractor directly; and specially where bonds are executed for but all persons supplying the contractor with the faithful performance of such work. labor or materials in the prosecution of the work are to be protected. The rule which permits a surety to stand upon his strict legal rights does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract. Such statutes are to be liberally interpreted and not to be literally construed so as to defeat the purpose of the Legislature. Under the circumstances of this case, a materialman, who had complied with the provisions of the statutes as to filing notice, was entitled to recover from the surety company on a bond given under the statute, although the materials were furnished to a subcontractor and not directly to the contractor." Judge Day in his opinion uses this lan

guage:

A more recent case by the Supreme Court of the United States, in which the same judge, Judge Day, rendered the opinion, was decided December 1, 1913, under the title of United States Fidelity & Guaranty Co. v. United States, for the Benefit of Bartlett, 231 U. S. 237, 34 Sup. Ct. 88, 58 L. Ed. 200. This was a suit on a bond which included this provision, i. e., that the contractor or contractors would "promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in such contract." In the contract it was provided that the contractor "The courts of this country have generally should be held responsible for and pay all given to statutes intending to secure to those furnishing labor and supplies for the construc- liabilities incurred in the prosecution of the tion of buildings a liberal interpretation, with work for labor and material. The contraca view of effecting their purpose to require tor, Donavin, executed the bond. There was payment to those who have contributed by their labor or material to the erection of buildings to be owned and enjoyed by those who profit by the contribution of such labor or materials. * And the rule which permits a surety to stand upon his strict legal rights, when applicable, does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract in the light of the language used and the circumstances surrounding the parties."

If there should be a liberal construction of a statute to effect its purpose, why should there not be at least a fair and reasonable construction of a contract or of a bond with a view of effecting its purpose?

Judge Day goes on in the following guage:

no existing indebtedness, and Bartlett's name
The lower
was not mentioned in the bond.
courts held with Bartlett. The Supreme
Court affirmed their judgment.

The New York decisions, of course, support the doctrine announced and defended in the majority opinion, but Iowa, Nebraska, Michigan, Minnesota, and some other central and western states, together with the federal decisions, strongly support the doctrine here contended for. And why should we virtually overrule the Raeder Case? There is now no occasion for any backward step. Between

the strict technical interpretation of the lan-eighteenth century that severely followed the letter that killeth, and the liberal, progressive interpretation of the twentieth century that follow the spirit and maketh alive, giving wages to labor and payment to subcontrac tors and materialmen, I prefer the latter.

"Statutes are not to be so literally construed as to defeat the purpose of the Legislature. A thing which is within the intention of the makers of the statute is as much within the statute as if it were within the letter.'"

(218 Mass. 454)

JOHNSON v. VON SCHOLLEY et al. (Supreme Judicial Court of Massachusetts.

Suffolk. Aug. 4, 1914.)

1. RELEASE (§§ 29, 37*)—JOINT TORT-FEASORS. An unqualified release under seal of one joint tort-feasor releases the other, but a mere Covenant not to sue has no such effect.

[Ed. Note.-For other cases, see Release, Cent. Dig. 8 63-71; Dec. Dig. §§ 29, 37.*] 2. EVIDENCE ($ 424*)-PAROL EVIDENCE.

Where plaintiff, injured through the negligence of defendants and another, compromised with the other joint tort-feasor, defendants, who were not parties, may show by parol that the agreement did not express the actual compromise, but was a general release, relieving all the tort-feasors from liability.

[Ed. Note. For other cases, see Evidence, Cent. Dig. §§ 1966-1968; Dec. Dig. § 424.*] 3. RELEASE (§ 56*)-JOINT TORT-FEASORS— EVIDENCE.

Where defendants claimed that plaintiff's covenant not to sue their joint tort-feasor was an unqualified release, evidence of correspondence between the various attorneys representing plaintiff and the tort-feasor preliminary to the settlement is admissible.

[Ed. Note.-For other cases, see Release, Cent. Dig. §§ 101-105; Dec. Dig. § 56.*] 4. RELEASE (8 56*)-JOINT TORT-FEASORS EVIDENCE.

Where plaintiff, injured through the joint negligence of defendants and a railroad company, specified the terms upon which his attorneys could settle with the company, evidence of negotiations between the agent of the company, to whom the instructions had been transmitted, and plaintiff's attorney, which took place before the execution of a contract not to sue, is admissible, if limited to the restrictions imposed by the instructions.

[Ed. Note.-For other cases, see Release, Cent. Dig. §§ 101-105; Dec. Dig. § 56.*]

5. RELEASE (§ 58*)-JOINT TORT-FEASORS QUESTION FOR JURY.

Where the evidence on the question whether an agreement by plaintiff not to sue one of several joint tort-feasors was a release was conflicting, the question was for the jury.

[Ed. Note. For other cases, see Release, Cent. Dig. §§ 109-114; Dec. Dig. § 58.*] 6. RELEASE (§ 55*)-JOINT TORT-FEASORS BURDEN OF PROOF.

Where defendants claimed that plaintiff's covenant not to sue their joint tort-feasor was a general release, they have the burden of proving that fact.

[Ed. Note. For other cases, see Release, Cent. Dig. 88 94-100; Dec. Dig. § 55.*]

Exceptions from Superior Court, Suffolk County; Frederick Lawton, Judge.

Supply Co. v. Rubin, 214 Mass. 217, 101 N. E. 133. But the covenant not to sue put in evidence by the defendants did not operate as a discharge of the plaintiff's cause of action; it only barred the remedy against the company for reasons stated in Matheson v. O'Kane, 211 Mass. 91, 97 N. E. 638, 39 L. R. A. (N. S.) 475, Ann. Cas. 1913B, 267. The amended answer, however, pleaded in general

terms an accord and satisfaction with the company whereby they had been relieved from liability. It is settled that, not having been parties or privies to the instrument, the defendants could show by parol evidence that it did not express the actual compromise. Kellogg v. Tompson, 142 Mass. 76, 6 N. E. 860. See Snow v. Alley, 151 Mass. 14, 23 N.

E. 576.

[3] The correspondence between the various attorneys representing the plaintiff and the company, as well as his personal letter to it, were admissible as evidence of a demand for damages, and as preliminary to the final agreement in so far as the negotiations were authorized by him. Pickert v. Hair, 146 Mass. 1, 15 N. E. 79; Loomis v. N. Y., N. H. & H. R. R., 159 Mass. 39, 34 N. E. 82; James v. Boston Elev. Ry., 201 Mass. 263, 87 N. E. 474. It is to be noted that previous to September 21, 1912, the correspondence relates only to a claim against the company, or notice to it by the plaintiff of the discharge of former counsel and retaining of new counsel. No offer to settle without suit appears. The authority of an attorney under a general retainer to compromise a claim of his client's, while referred to in Brewer v. Casey, 196 Mass. 384, 386, 82 N. E. 45, where the earlier cases are cited, is not presented by the record. See, also, Gilman v. Cary, 198 Mass. 318, 84 N. E. 312.

[4] The plaintiff's instructions in writing to counsel then acting for him, offered in evidence by the defendants, but improperly excluded, expressly authorized a settlement upon condition "that my rights be reserved against the Burkhardt Brewing Company," the name under which the defendants are in which the settlement should be expressed described in the writ, although the legal form

is not stated. It was left to his counsel. The

conversations between the agent of the company to whom the instructions had been transmitted, and the plaintiff's attorney which took place before the covenant not to sue was executed, also were admissible if limited to the restrictions imposed by the W. instructions. N. Y., N. H. & H. R. R. v. Mar

Action by Caswell Johnson against Ferdinand Von Scholley and others. There was a verdict for plaintiff, and defendants excepted. Exceptions sustained.

Wm. Burns, of Boston, for plaintiff. C. Cogswell, of Boston, for defendants.

tin, 158 Mass. 313, 316, 317, 33 N. E. 578; Riley v. Boston Elev. Ry., 195 Mass. 318, 322, 81 N. E. 197; Lewis v. Gamage, 1 Pick. 347.

BRALEY, J. [1, 2] The defendants and the railway company upon the record were [5, 6] The jury should have been permitted concurrent tort-feasors, and an unqualified to determine on all the evidence whether the release of the company under seal would have covenant not to sue embodied the settlement discharged them. Feneff v. Boston & Maine the plaintiff had authorized, and which had R. R., 196 Mass. 575, 82 N. E. 705; Boston been actually effected. If they found that it For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes 106 N.E,-2

PFISTERER v. TOLEDO, B. G. & S. TRAC- of summons was quashed. A new petition

3. FRAUDULENT CONVEYANCES (8_301*)-SUB- the par value of $1,075,000, and all its capital SEQUENT CREDITORS-PROOF OF FRAUD-SUF-stock (less 25 shares already issued). May Where the vendee is a natural person who | 7th he paid to Schenck, treasurer of the Fre purchases for himself and others associated mont Company, $186,750. All but three share. with him, and he and his associates afterwards holders (who held $5,000 each) had filed their form an incorporated company; and after the purchase price is actually paid to the vendor stock with Schenck and Huston, the presicompany's treasurer, the latter company, at dent, for delivery to the purchaser. They the request of the vendee, makes the deed of delivered over to the purchaser the stock held conveyance directly to the new incorporated company; and some of the stockholders of the by them. The holdings of the other three vendor company take stock in the new com- shareholders were transferred through a Mr. pany, as well as some money, for the transfer | Tracy, as attorney for the holders, about the to the purchaser of their certificates of stock same time, and were also delivered, and all in the vendor company, which are destroyed; and the treasurer of the vendor company dis- the stock was canceled. tributes to its stockholders the balance of the

May 18, 1901, the stockholders of the Fremont Company authorized the transfer of the property to the Traction Company, and a deed was executed on June 15, 1901, contain

money so paid to him, after having paid to its
acknowledged and listed creditors $70,000, to
discharge their claims, leaving unpaid only the
plaintiff's unlisted and unliquidated claim finally
adjudicated to be $1,250-held, these circum-ing the following recital:
stances are not sufficient to establish a con-
structive fraudulent purpose of the new com-
pany to defeat the vendor's creditors, and
thereby avoid the conveyance.

[Ed. Note.-For other cases, see Fraudulent Conveyances, Cent. Dig. §§ 904-907; Dec. Dig. § 301.*]

Johnson and Wanamaker, JJ., dissenting.

ing Green & Southern Traction Company and the mortgage bonds of said company, and that the shareholders receive said shares of stock and bonds in exchange and payment for their shares of stock in the Toledo, Bowling Green & Fremont Railway Company."

The money which was paid for the stock of the Fremont Company was raised upon the bonds of the Traction Company. In the contract of sale there was a stipulation that the Fremont Company had no debts, but that four or five suits were pending, which the Traction Company agreed to settle and did settle. Pfisterer's suit was not one of them. About that time his first suit was quashed, and the second suit was not begun till about four months later.

of the Fremont Company, that said companies were then consolidated and merged under the laws of Ohio, and that by reason thereof the Traction Company became liable for the payment of all of the obligations of the Fremont Company, including the amount due to the plaintiff, and assumed for valuable consideration to pay all indebtedness of the Fremont Company. The basis of this contention is the usual proposition of law, as stated in his brief:

"Assets of a corporation, being a trust fund for the benefit of creditors, may be followed into not purchased in the usual course of business, the hands of a purchasing corporation, when under a device which protects the stockholders, but leaves the company insolvent."

The plaintiff in error alleges that the value The defendant denies that the directors of of the property was $300,000. The money the Fremont Railway Company authorized consideration paid upon the transfer of the its president and secretary to convey its stock, as appears at one place in the record, property to the Traction Company; that it was $239,250. It appears that $70,000 of did convey its property to the Traction Comthis money was paid to creditors and the bal-pany without consideration; that the Tracance distributed to the stockholders. The con- tion Company exchanged its certificates of sideration expressed in the deed is "the sum of ten thousand ($10,000) dollars and the exchange of stock certificates to be paid by the Toledo, Bowling Green & Southern Traction Company." Mr. Kerper's attention being drawn to this, he testified: "It is not correct; it was all cash. We paid cash for the property."

The record book of the Traction Company, in the minutes of a directors' meeting on April 25, 1901, shows that:

"Pursuant to notice for bids, George B. Kerper, Jr., submitted to the board his proposition and bid for the acquisition and purchase of the Toledo, Bowling Green & Fremont Railroad, and the Findlay Street Railroad, and conveyance of title to the Toledo, Bowling Green & Southern Traction Company. Also the acquisition of the right of way from Trombley in Wood county to Mortimer in Hancock county, and the construction thereon of an electric road with all suitable turnouts so as to connect the tracks of the Toledo, Bowling Green & Fremont Company with the tracks of the Findlay Street Railway Company. Also to thoroughly equip the entire line from Findlay to Perrysburg, * and offered and agreed to receive in full compensation thereof at the face value, the bonds of the Toledo, Bowling Green & Southern Traction Company to the amount of $1,075,000 and certificates or shares of the capital stock of the company to the amount of $1,500,000, less 25 shares already

issued."

A formal resolution was passed accepting this bid, and authorizing the president and secretary to enter into contract with Mr. Kerper "for the acquisition of the roads named and the completion of the road ready for full operation from Toledo to Findlay." Another entry on the books shows, under date of August 15, 1901, "Capital stock. To George B. Kerper, Jr. For 14,475 shares of stock issued to him as per certificates Nos. 16 to 74, inclusive."

The plaintiff contends that the conveyance was without consideration, except that the Traction Company exchanged an equal amount of its capital stock for all the stock

stock for an equal amount of the Fremont Company's stock; that the latter company had a right of way from Perrysburg to Trombley; that the purchase of the Fremont and Findlay properties by the Traction Company operated as a merger or consolidation of said companies; that the Traction Company became liable for any debts or obligations of the Fremont Company; that it had any knowledge at the time it purchased the Fremont railway property of any claim of the plaintiff; that the Fremont Company was insolvent; that the conveyance of the Fremont property was for the purpose of any one to defraud its creditors; and it avers that when said conveyance was made all debts and obligations of the Fremont Company were satisfied; that the Traction Company had no notice or knowledge that plaintiff was a creditor or making any claim against the Fremont Company until long after it purchased the property of said company; that the purchase price was fully paid by the defendant to the Fremont Company, and not to its stockholders individually, and thereupon its stock certificates held by it were fully canceled and it passed out of existence as a corporation, and that the said purchase was in good faith, without fraud upon the Fremont Company, its stockholders or any of its creditors.

The defendant bases its defense upon the following proposition taken from its brief:

"Where a solvent corporation makes a real sale of all of its assets in consideration of the payment either of money or of stock to its stockholders, such sale will be valid as against even the existing creditors of the selling corporation, in the absence of fraud participated in by the purchaser, and in such event the creditors of the selling corporation may follow the proceeds of its property into the hands of its stockholders, but cannot follow the property into the hands of the purchaser."

The minute statement of the details of the transaction would be a tedious repetition of