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CONTRACT- Continued.

plaintiff cashed after notifying defendant that he did not accept it as full pay-
ment, and it further appears that defendant while claiming to have been told
the services were worth only seventy-five dollars, later admitted that he was
mistaken and promised to pay the balance, it is error for the court to nonsuit at
the close of plaintiff's case, for it is for the jury to say whether there was an
honest dispute as to the claim.

Allegations that the defendant fraudulently misrepresented that he had a policy
due from the insurance company and that he later withdrew the money therefor
are inconsistent, but eliminating these, plaintiff could recover on an allegation of
the fraudulent conversion by defendant of the funds held by the insurance
company after he had assigned the same. Cornell v. Taylor, 496.

9. Discharge of judgments-extending contract by implication. Where a con-
tract provided merely that the defendant shall "cause to be satisfied and dis-
charged sundry judgments, and assume and pay certain claims" against the plain-
tiff, there is no absolute agreement to cause the docket of the judgments to be
canceled, and the defendant's obligation cannot be so extended by implication.

A clause in such contract that nothing therein shall be construed to prevent
any of the creditors from collecting their claims from any other person liable
thereon, shows an intention that the plaintiff only should be discharged from lia-
bility. King v. Siedler, 523.

10. Privity of parties — consideration — extension of charter party — shipbrokers.
A charter party which recites that a commission of five per cent is due to the ship-
brokers who had negotiated it, and "also upon any continuation or extension" of
it, is not an agreement to pay the commissions, for the brokers were not parties
thereto.

Where the brokers were under no obligation to do anything and did nothing
to bring about an extension of the original charter party, a promise to pay them
commissions thereon, if proved, would be without consideration.

A second charter party entered into between the same parties in regard to the
same subject-matter and for the same amount of hire, but differing from the
first in several essential particulars, is not a continuation of the former contract,
and the brokers cannot recover commissions thereon. Notman v. Galveston Steam-
ship Co., 851.

Retainer agreement must be fair-novation

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See ATTORNEY AND CLIENT, 5.

failure of consideration.

Bill of lading construed — limiting liability of carrier.

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Statute holding initial carrier liable for default of connecting carrier — liberty
of contract not infringed.

See CONSTITUTIONAL LAW.

Subscription agreement accompanied by oral condition - effect as to debtors
of corporation.

See CORPORATION, 1.

Promoters' agreement — reducing number of directors of corporation.

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See CORPORATION, 2.

Breach several causes of action

See COSTS, 2.

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Manufacture of goods-profits as elements of damage.

See DAMAGES, 2.

Release under seal - conditional delivery - parol evidence.

See EVIDENCE, 1.

Breach of contract before time of performance.

See EVIDENCE, 3.

Release fraud - remedy.

See FRAUD, 4, 5.

Operatic singer-personal services injunction denied.

See INJUNCTION, 3.

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Contract of employment — judgment for partial breach-action for subse-
quent breach.

See MASTER AND SERVANT, 10.

Suit to enforce license agreement.
See PATENT.

Action on several contracts.

See PLEADING, 7.

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Stocks-speculation on margin - sale of securities without notice.

See PRINCIPAL AND AGENT, 3.

Stockbroker-margin account - unauthorized sale.

See PRINCIPAL AND AGENT, 6.

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1. Delivery of pledged article to debtor for special purpose — when third person
returning article to debtor not liable for conversion. The plaintiff having a lien
upon an automobile chassis for money loaned allowed his debtor to deliver it to
the defendant for the purpose of having a body placed on the machine on the
condition that the debtor should obtain a receipt from the defendant and deliver
it to the plaintiff. The defendant gave the debtor the receipt stating that the
chassis was to be delivered only on return of the receipt properly indorsed, and
the debtor in his turn indorsed the receipt "Deliver to the order of" the plaintiff.
Subsequently the defendant returned the machine to the debtor equipped with a
body without requiring a surrender of the receipt. The plaintiff having failed to
collect his claim from the debtor sued the defendant for converting the machine,
but it was not shown that the defendant had knowledge or notice of the trans-
actions between the plaintiff and his debtor or knowledge that the former had any
claim upon the chassis.

Held, that an action for conversion did not lie, as under the circumstances the
defendant had a right to return the machine to the persons from whom he
received it. Manny v. Wilson, 140.

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2. Demand after delivery — negotiable instruments — receipt - Penal Code, section
633, construed manufacturer not warehouseman. A demand upon the defendant
by the plaintiff made long after the delivery of the machine was no foundation
for an action for conversion.

The receipt given by the defendant was not equivalent to a warehouse receipt
so as to become endowed with the qualities of a negotiable instrument.

Section 633 of the former Penal Code, providing that a person mentioned in
section 629 who delivers merchandise to another for which a bill of lading,
receipt or voucher has been issued unless such receipt or voucher bears upon
its face the words “not negotiable" or unless the receipt is surrendered at the
time of delivery, is punishable, etc., applies only to warehousemen, wharfing-
ers or other depositaries. It has no application to a manufacturer who receives
the chassis of an automobile for the purpose of equipping it with a body, and
this is true although he stored other automobiles for hire. Id.

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CONVERSION - Continued.

Stockbroker-margin account — unauthorized sale.
See PRINCIPAL AND AGENT, 6.

Assignment of wages · concealment of usury.

See USURY.

COPYRIGHT.

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Breach of contract by taking copyright in name of corporation.
See CONTRACT, 3.

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CORPORATION.
1. Stockholder - stock not fully paid — creditor's action against stockholder —
facts justifying recovery — subscription accompanied by oral condition — dissolution
of corporation. The holder of stock not fully paid is liable to creditors of the cor-
poration under sections 56 and 59 of the Stock Corporation Law, where he
signed the preliminary subscription paper providing for the organization of the
corporation, although he did not sign the certificate itself, and although the cer-
tificate gives wider powers to the corporation than those originally contemplated,
if he was the owner of lands which the corporation acquired, made loans to it
in order that it might improve the property and held himself out as a stockholder.
The legal effect of such subscription is not altered by an oral agreement that
the subscription shall not be binding unless the corporation raises certain moneys
to pay a mortgage given to the subscriber.

Such stockholder cannot escape liability because the incorporators did not sign
the certificate of incorporation at the end if they did sign it above the attesta-
tion clause, acknowledged the execution and filed the certificate as required by
law. Under such circumstances there was at least a de facto corporation, and
the stockholder having held himself out and acted as such cannot question its
legal existence.

An action by the creditor of a corporation against a holder of stock not fully
paid is not barred by a dissolution of the corporation and the appointment of
a receiver of its assets. Lyell Avenue Lumber Co. v. Lighthouse, 422.

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2. Directors - promoters' agreement — reducing number of directors. A corpo-
ration is not bound by a contract made by its promoters unless it be subsequently
ratified or adopted by the directors or officers acting within the apparent scope
of their authority.

An agreement was made between a committee formed for the purpose of organ-
izing a corporation and representing substantially all the stockholders of three
other corporations and the stockholders whom they represented, providing that
a corporation should be organized to take over the stock and assets of the exist-
ing corporations by an exchange of stock. The certificate of the new corpora-
tion was to provide for cumulative voting, and, as soon as the new corporation
had agreed to the exchange of the stock, the committee was to cause the number
of directors to be increased to twelve, divided into three classes. The new
corporation was organized, its certificate providing for three directors and cumu-
lative voting. Subsequently a consent was duly filed increasing the number
of directors to twelve, divided into three classes, and the by-laws were amended
to provide for such classification of directors, but the original certificate of incor-
poration was never amended. It appeared that the by-laws could be altered or
amended by majority vote, and that some of the shares of the new corporation
were issued for the purchase of property without regard to the agreement.
Some of the stock originally issued had changed hands, and the present owners
were not bound by the agreement. There was no charge of fraud or bad faith.
Held, that a stockholder of the new corporation, who was a party to the agree
ment, was not entitled to an injunction restraining the corporation, its officers
and agents, from taking steps to reduce the number of directors from twelve
to six.

It seems, that an agreement by stockholders not to increase or decrease the num-
ber of directors of a corporation is not binding on subsequent owners of the
stock purchased in good faith and without notice. Bond v. Atlantic Terra Cotta
Co., 671.

3. Same-failure to show contract — injunction —vested rights. Neither the
agreement nor the acts of the corporation in consummation thereof, nor the con-
sent increasing the number of directors, nor the by-law governing the classifica-

CORPORATION- Continued.

tion, was intended to constitute a contract that the stockholders should not
exercise their statutory authority to increase or decrease the number of directors.
A decrease in the number of directors does not impair any vested right of the
stockholders, even though in order to secure representation on the board it will be
necessary for a greater number of them to combine.

In such case an injunction which runs only against the corporation cannot
be sustained, for the corporation itself has no power to decrease the number of
directors.

When stockholders may vote on a proposition to reduce the number of direct
ors, the officers cannot be enjoined in an action against the corporation from
performing their duty in carrying into effect the will of the stockholders. Id.

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4. Payment of individual indebtedness with corporate funds — bills and notes -
acceptance of check of corporation in payment of personal debt of president. One
who receives the money or property of a corporation from its officer in payment
of his personal debt does so at his peril. If the person receiving the payment
knows-or facts are presented which if acted upon would disclose-
officer was thereby misappropriating the funds of the corporation he is liable
to it for the amount so received.

that such

Thus, where a trust company having a claim against the president of another
trust company for money loaned, received in payment of the loan the check of
the other corporation, signed by the treasurer and payable to its own order, it is
liable to the receiver of the drawer, for the check upon its face showed that the
president had no title to or interest in the money. This is true although the check
was not signed by the president, but by another officer, where the payee knew
that the check represented a large portion of the drawer's capital and that it was
used to pay a personal debt of the president. Lanning v. Trust Co. of America,

722.

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5. Inspection of stock book—right of stockholder is absolute — penalty — refusal
to allow inspection pursuant to right established by unreversed decision — subsequent
reversal. The statutory right of a stockholder to inspect the stock book of his
corporation is absolute and the corporation must allow him to take memoranda
therefrom in the course of his examination in order to assist his recollection.

But a corporation is not liable for the statutory penalty for refusing to allow
a stockholder to inspect its stock book and also to take memoranda therefrom
if the refusal was made at a time when, by an unreversed decision of the Appellate
Division, it was held that a corporaton could rightfully refuse to allow its stock-
holder to investigate the stock book and copy names therefrom, although such
decision was subsequently reversed by the Court of Appeals.

This, because of section 1961 of the Code of Civil Procedure, which provides
that where the Appellate Division has construed a statute an act done in good
faith in conformity with that construction before reversal by the Court of Appeals
is valid and the party is not liable to any penalty or forfeiture. Hollaman v. El
Arco Mines Co., 862.

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Suit to restrain reorganization committee - examination of witness before trial.
See DISCOVERY, 4.

False representations inducing stockholder to retain stock.

See FRAUD, 1.

Fraudulent representations inducing one to purchase stock - complaint.

See FRAUD, 3.

Electric companies.

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CORPORATION—Continued.

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Electric light company- issue of stock and bonds.

See PUBLIC SERVICE COMMISSION.

Religious corporation — expulsion of church from denomination.

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See RELIGIOUS CORPORATION.

Review of franchise tax-purpose of return.

COSTS.

See TAX, 1.

See RAILROAD.

1. Action in Supreme Court, county of New York, which could have been tried in
City Court- section 3228, Code of Civil Procedure, construed - change of venue to
other county for convenience of witnesses. Subdivision 5 of section 3228 of the Code
of Civil Procedure, denying costs to a plaintiff unless he recover over $500 in
an action brought in the Supreme Court, county of New York, against a defend-
ant served in said county, if the action could have been brought, except for
the amount claimed, in the City Court of said city, was designed to relieve
the congested calendars of the Supreme Court in said county, and should be
construed in the light of its purpose.

The words "triable in the county of New York," as used in said section, refer
not to conditions as they exist when the action is brought, but to the condi-
tions existing when the issues are tried.

Thus, where the venue of an action in the Supreme Court against a person
served in the county of New York was originally laid in Westchester county,
but after being changed to New York county at the defendant's instance was
again changed to Westchester county for the convenience of witnesses and
there tried, the plaintiff is entitled to costs, although he recovered less than
$500, even though the action could have been brought in the City Court.
This, because the object of the section was accomplished, as the Supreme Court
in New York county was not burdened with the trial. Seymour v. Wheeler, 52.
2. Action on breach of contract complaint uniting causes of action — recovery
by plaintiff upon one cause and by defendant upon another — certificate as to identity
of issues. Where a plaintiff recovers on some of several causes of action set forth
in a complaint, and the defendant upon the other causes, the court cannot make
a certificate that the substantial cause of action is the same upon each issue, so
as to deprive the defendant of costs, if the nature of the causes be such that a
recovery upon one would not bar a recovery upon the other.

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Thus, where a municipal contractor recovered against the city on a first cause
of action for a sum deducted by the city as a penalty for delay, but the city
recovered on the second cause of action set forth, which was for damages
alleged to have been caused by a breach of contract by the city, it is error for
the court to grant a certificate that the causes of action are the same so as to
deprive the city of costs. Gearty v. Mayor, etc., of New York, 216.

3. Additional allowance-partition — appeal — review of discretionary order —
case. Parties wishing to review the discretion of the court in making an additional
allowance should see to it that the record on appeal properly presents the
question.

Under section 3253 of the Code of Civil Procedure providing for additional
allowances in certain actions including partition, the total additional allowances
in such action made to all parties cannot exceed five per cent of the sum recov-
ered or claimed or the value of the subject-matter involved. Van Meter v.
Kelly, 455.

4. Reference-death of referee. A referee's right to fees does not accrue until
he has completed the reference and filed or delivered his report.

Where a referee died before completing the reference, and defendant was
then allowed to amend upon payment of costs, a fee for the deceased referee is
not a proper item. Hebard v. City of New York, 752.

Appeal from order denying new trial-appeal from judgment.

See APPEAL, 2.

Action against members of school board - official capacity.

See LIEN, 2.

Partnership-accounting.

See PARTNERSHIP, 1.

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