prevent him from reclaiming his property. | blank, and in this condition a bona fide purAt first it occurred to the court that, inasmuch chaser for value accepted the deed from the as Robinson had seen fit to leave this certifi- grantee whose name was thus inserted, it cate in such condition as to indicate that some- was held that the purchaser stood in no betbody was authorized to acquire it and fill in ter position than the fraudulent holder, and the indorsement, he was barred; but the court that no title passed. In the case of Arriis unable to find any authorities sustaining this son v. Harmstead, 2 Pa. 191, where a conveysuggestion, and is compelled to treat this cer- ance reserving a rent in fee was altered by the tificate, indorsed in blank and stolen, as it insertion of material words after delivery by would any other stolen property aside from the agent of the grantor, it was held that the strictly negotiable securities.' In the case of effect of the fraudulent alteration was to avoid Baxendale v. Bennett, L. R. 3 Q. B. Div. 525, the covenants reserving rents, and to preserve the defendant gave H. his blank accept- the fee simple to the innocent grantee disance on a stamped paper, and authorized charged from the covenants in the deed, and him to fill in his name as drawer and it was that the innocent purchaser from the fraudureturned to the defendant with the blank un-lent grantor would not be entitled to collect the filled, and was placed by him in an unlocked rents reserved. Rogers. J., in the opinion, drawer of his writing table at his chambers, to says: "It is said that Mrs. Lewis is a bona which his clerk, laundress, and other persons fide purchaser, without notice, and that the accoming there had access. From this place it tion may be sustained on that ground. But was lost or stolen, and came into possession of conceding that she is, her situation is no better C, who, without authority, filled in the blank than the fraudulent grantor's. Although the with his name; and in this condition the bill title of the grantor was, in its inception, good, came into the hands of the plaintiff, who was it became absolutely void by matter ex post a bona fide purchaser for value, without notice facto. At the time of the assignment, the title of the fraud. The defendant was held not being avoided, the assignor had nothing to conliable on the bill. Bramwell, L. J., in his vey; of course nothing passed to the assignee. opinion, says: "But a crime was committed It may be, and perhaps is, a hard case. Fraud in this case by the stealing of the document, may be committed on an innocent purchaser, and without that crime the bill could not have who may find it difficult to guard against imbeen complete, and no one could have been de- position. This is conceded; but it is far better frauded. Why is not the defendant at liberty to encounter this risk, than to give the least to show this? Why is he stopped? What has countenance to any alteration whatever of a he said or done contrary to the truth, or which solemn instrument of writing, which would should cause anyone to believe the truth to be certainly be the result, if the guilty party could other than it is? Is it not a rule that everyone escape the consequences of his fraud by a has a right to suppose that a crime will not be transfer, real or pretended, to a person who committed and to act on that belief? Where might assume the garb of an innocent puris the limit if the defendant is estopped here? chaser for a valuable consideration. We canThe defendant here has not volun- not lay too many restraints upon trick, artifice, tarily put into anyone's hands the means, or and fraud." This is no doubt a hard case part of the means, for committing a crime. upon Mrs. Luther. To hold that she is proBut it is said that he has done so through negli-tected would be equally hard upon the estate gence. I confess I think he has been negligent; of McWilliams. Under the view we take of that is to say, I think that if he had had this the matter, McWilliams was not guilty of such paper from a third person, as a bailee bound to negligence as would deprive him of any of his keep it with ordinary care, he would not have legal rights. Indeed, he seems to have done done so. But then this negligence is not the no more than an ordinarily prudent person proximate or effective cause of the fraud. A would have done under similar circumstances; crime was necessary for its completion.' In and, following the authorities which seem to the case of Van Amring v. Morton, 4 Whart. be conclusive upon the subject, we hold that 382, 34 Am. Dec. 517, where it appeared that the purchaser from Knapp, although she pura deed executed and acknowledged by the chased in good faith, without notice of the grantor with a blank for the grantee's name fraud and forged cancelation by him, and in was kept by the grantor locked in his drawer, the honest belief that the forged cancelation and that he trusted his brother with the key, was valid, took the property subject to the lien who, being induced by a third person, surrep- of the mortgage. titiously took out the deed, and filled up the 39 L. R. A.

Judgment affirmed.

PENNSYLVANIA SUPREME COURT.

John J. CARTER, Appt.,

V.

PRODUCERS' OIL COMPANY, Limited,

et al.

(182 Pa. 551.)

voke this principle, for the proof was abundant and practically uncontradicted.

"The proposition, however, raises the question of the good faith of the plaintiff in bringing this suit, and this is a broader question. It is said that he is 'shown to be acting in conspiracy with the Standard Oil Trust, in fur

A rule of a partnership association ex-therance of its interests and purposes, and not cluding the right of a member to purchase additional shares and exercise the rights of a member in respect of them until he shall be re-elected to membership in respect of those shares, is valid under the act of June 25, 1885, providing that interests in such associations shall be personal estate and transferred under such rules and regulations as the associations prescribe.

for the welfare of the defendant.' The findings of fact establish that the plaintiff, in purchasing the stock in question, sought to obtain the control of the company; that his avowed purpose is to change its policy, so as to make it unobjectionable to the Standard Oil Trust, and so that it will be against the wishes and purposes of the other members of the company; also, that the Standard Trust is engaged in the same business as the defendant company, and that, at the time the National Transit Company sold the stock to the plaintiff, its agents received assurances, not amounting to an enforceable contract, that his action would be such as they desired. In my opinion, the motives and intentions of the persons composing the Producers' Oil Company, Limited, in organizing that company, are not material, except so far as they are expressed in the contract which they made with each other. We deal exclusively with the means which they adopted to carry out their purposes, whatever they were. A large amount of testimony was given relating to the preliminary steps looking towards the organization of the company, but, as it failed to show an agreement between the body of subscribers to the capital, we give it no consideration. Its only relevancy, if fully proved, would be to show that the purpose in the minds of the promoters was to deprive the Standard Trust of the Producers' oil, and to furnish a competitive market for the same. These purposes are not unlawful, and, if the means adopted were adequate, might be accomplished. But whether accomplished or not must depend upon the adequacy or inadequacy of the means.

"I have found as a fact that the plaintiff is the bona fide owner of the stock which he seeks by his bill to have transferred to him. In so doing, I have negatived so much of paragraph c of the defendant's 5th proposition of law as avers that the plaintiff has not overcome the responsive denial of the answer as to the bona fides of his ownership. The proof of ownership offered by the plaintiff consisted of the production of the certificates issued by the Producers' Oil Company, Limited, evidence establishing their genuine character, and the due execution by the holders thereof of the trans. fers printed on the back of the certificates. To this was added his own testimony that he purchased the shares from the National Transit Company, and paid for the same in cash with his own money, and that no other person had any interest therein. He produced the check by which payment was made, the receipt of the National Transit Company, and other documents corroborating his testimony. This was certainly enough, in the absence of countervailing proof, to establish his unqualified ownership against the general and vague de nial of the answer. It was declared in Riegel v. American L. Ins. Co. 153 Pa. 134 (the present chief justice delivering the opinion), that an averment of a fact in an answer which could not, in the nature of the case, be within the personal knowledge of him by whom it is sworn, and which is no more than 'an expression of his strong conviction of its existence, or what he deems an infallible deduction from the facts which were known to him,' is not responsive in the sense that it is evidence in his favor, so as to put the plaintiff upon proof by two witnesses. But it is unnecessary to in-policy which the plaintiff desires to adopt is

"Nor can I see my way clear to refuse the relief prayed for on the ground that the plaintiff's motives and intentions are at variance with the purpose and wishes of his fellow members. If what he desires and intends to do as a member of the company, controlling a majority in value of interest of its capital, is legally and equitably his right, the court cannot refuse to aid him because it may think he ought not so to act; and, if it is not legally or equitably his right, the power of the court may be invoked to prevent his abuse of his power, but it does not justify refusing him such rights as he clearly has. The action of the court is not invoked by reason of any supposed equity in the plaintiff, but by reason of an alleged deprivation of his legal rights as a member of an association over which the court is given, by express statute, the supervision and control. Nor does the fact, which is apparent, that the

Trust Co. v. Abbott (Mass.) 27 L. R. A. 271, and note;
Ireland v. Globe Milling & Reduction Co. (R. I.) 29
L. R. A. 429; and Victor G. Bloede Co. v. Bloede
(Md.) 33 L. R.A. 107.

also desirable to the Standard Oil Trust, in my | defendant's 1st, 2d, 3d, and 4th, propositions mind furnish a reason for refusing relief, since of law. Under the law governing partnership we are compelled to believe that, although associations' formed under the act of June 2, agreeing with that organization in opinion and 1874, and its amendments, and the agreement, policy, the plaintiff appears in his own right as rules, and regulations governing the Produa bona fide owner of shares. cer's Oil Company, Limited, is a member of that company who purchases additional shares entitled to represent such additional interest in the capital in the meetings of the company, without being elected to membership in respect to such additional interest? The 4th section of the act of June 2, 1874, as amended by the act of 25th of June, 1885, provides as follows: 'Section 1. Interest in such partnership associations shall be personal estate, and may be transferred, given, bequeathed, distributed, sold, or assigned, under such rules and regulations as such partnership associations shall, from time to time, prescribe, by a vote of a majority of the members in number and value of their interests, and in the absence of such rules and regulations the transferee of any interest in any such association shall not be entitled to any participation in the subsequent business of such association, unless elected to membership therein by a vote of a majority of the members in number and value of their inter

"The cases cited for the defendant on this point are clearly distinguishable from the case in hand. Baker's Appeal, 108 Pa. 510, 56 Am. Rep. 231, and Gould v. Head, 41 Fed. Rep. 240, turned upon the fact that the plaintiff was not the real owner of the stock. Kenton v. Union Pass. R. Co. 54 Pa. 452, and Cambios v. Philadelphia & R. R. Co. 4 Brewst. (Pa.) 592, were cases in which it was attempted to control the action of a corporation by suits brought in the character of stockholders by persons who had bought stock for the mere purpose of bringing suit in the interest of outsiders. Foll's Appeal, 91 Pa. 434, 36 Am. Rep. 671, was a bill to compel specific performance of a contract to deliver stock in a national bank. The mere right of the plaintiff under his contract furnished no ground for the specific performance sought in equity, but the relief was demanded on the supposed equity arising from the fact that the plaintiff was already the owner of stock which with the stock con-ests. And any change of ownership, whether tracted for would give him control of the bank, and enable him to elect himself and his friends directors and officers. Specific performance was refused, on the ground that the circumstances relied upon raised no equity in the plaintiff. It was said that the bank was a quasi-public corporation, and that it was against public policy that the control should be in the hands of a single individual. Gage v. Fisher, 5 N. D. 297, 31 L. R. A. 557, was similar, but there was only a contract to permit the plaintiff to control the stock without actually buying it. None of the cases cited involved the right of a stockholder to be recognized as such; nor do any of them involve the denial of the ordinary equitable remedies to one standing wholly upon a legal right. On the other hand, the case of Rice v. Rockefeller, 134 N. Y. 174, 17 L. R. A. 237, seems to me fully in point upon the present question; and Camden & A. R. Co. v. Elkins, 37 N. J. Eq. 273, furnishes even a closer analogy. If the plaintiff is the bona fide owner of the interest in the capital of the defendant company which he claims, and is entitled, under the laws and rules of the company, to represent that interest in the meetings of its members, it cannot be that any legal or enforceable equitable right of the company can be infringed by requiring it to recognize his title. If, by his action or attempted action, the rights, legal or equitable, of any other member are infringed, that action may be restrained or controlled. But no other member of the company is before the court as a party in that character. The real contention of the defendants seems to be, not so much that the company will suffer if the relief prayed for be granted to the plaintiff, as that other members in their individual character as producers of oil will be injured; and this is a controversy which we are manifestly unable to determine in this proceeding.

"I turn, therefore, to the question raised upon the undisputed facts by the plaintiff's 1st, 24, 3d, 4th, 5th, 7th, 8th, and 10th, and the

by sale, death, bankruptcy, or otherwise, which occurs in the absence of any rules and regulations of such associations regulating such transfer, and which is not followed by election to membership in such association, shall entitle the owner or transferee only to the value of the interest of the date of acquiring such interest, at a price and upon terms to be mutually agreed upon, and in default of such agreement at a price and upon terms to be fixed by an | appraiser to be appointed by the court of common pleas of the proper county, on the petition of either party, which appraisement shall be subject to the approval of said court.' The provisions of this section affecting the status of transferees of interests are only operative in the absence of rules and regulations prescribed by the association by a vote of a majority of the members in number and value of their interests. On June 5, 1894, over a year before the plaintiff purchased any of the shares involved in this controversy, the Producers' Oil Company, Limited, in the manner prescribed by the act, and also in conformity with the provision in the rules governing amendments thereto, adopted the amended rule set forth in the findings of fact. It is conceded that this rule, if valid, is conclusive against the rights claimed by the plaintiff in his bill. But it is contended that the rule is invalid, because no authority to make such a rule is given by the statute, because it is against the terms of the statute, and because it is in restraint of trade, in derogation of the rights of the members, and unreasonable in its provisions.

"The provision forbidding sales of shares except to a particular class of persons, and that requiring a member purchasing additional shares to be elected to membership in respect to such shares, are independent; either may stand though the other fall. The plaintiff, although he had never been lawfully expelled from membership in the P. P. A., was not at the time he purchased this stock qualified for membership therein by reason of his business

that the general law of corporations cannot be applied to it without important modifications; if a partnership, it so differs from the common type that the general law of partnerships is but slightly applicable. Both the law of corporations and the law of partnerships are to be resorted to in the absence of statutory regulations, the choice being determined by the nature of the feature under consideration. In the present case we derive little assistance from either. The general rule of corporations invoked by the plaintiff has been laid down to meet the conditions existing in corporations in which the ownership of stock carries with it ipso facto membership in the corporate body. If there are corporations in which the conditions are different, it is manifest that the rule is inapplicable to the extent of the difference.

associations with the Standard Oil Trust. But | corporation, it is so peculiar in its features the first clause of this rule deals with the right of a member to sell, and not to buy. No member of the company sold his stock to the plaintiff; nor are we able to determine whether or not the persons to whom they did sell were or were not qualified under this clause. We pass it by, therefore, to consider the last para graph of the rule, which specifically covers the case in hand. Many cases are cited for the plaintiff to show that the right of a corporation to make by-laws for the regulation or transfers of stock does not include the right to place restrictions upon transfers. For the protection of the corporation, its stockholders and creditors, it may prescribe, by by-laws, the mode of transfer; but it cannot, without express authority in the charter, impose restrictions upon the free alienability of its shares, which is an incident of such property. The argument, however, fails when it is attempted to apply it to a 'partnership association;' for it is quite clear that the rules and regulations authorized by the act of 1885 are intended to govern more than the mere mode of transferring shares, and to embrace the status of a transferee in respect to the association. The language is: Interests may be transferred, given, bequeathed, distributed, sold, or assigned under such rules and regulations as such partnership association shall from time to time prescribe.' And as the act prescribes, not the manner of registering transfers, but the status of a transferee who has become the owner of an interest in the capital by gift, bequest, distribution, sale, assignment, or other mode of transfer, only in the absence of rules and regulations, it is necessarily implied that these rules and regulations, which are to take the place of the statutory provisions, may cover the same subject; and this is precisely what the first sentence of this section declares. If the association may not make rules and regulations covering the status of transferees as well as the manner of transfer, it follows that, in every association having rules and regulations governing the formal transfer of interests, any transferee becomes immediately a member without election, for the statute operates only in the absence of rules and regulations. Every association, if this be a correct construction of the law, will be required to choose between doing business without any rules at all governing the transfer of shares and the loss of all control over the membership through the adoption of such rules.

"It is quite too clear for argument that the power of partnership associations under the statute to make rules and regulations extends to the general subject of the status of transferees, and the manner in which they may become members, as well as to the mode of transfer; and the question is therefore narrowed to this: Is the provision requiring members of the company purchasing additional shares to be re-elected in respect thereto within this general power, or is it void as against the spirit and intention of the law? Whether the partnership association ought to be classified by the professor of legal science as a species of the genus corporation, or the genus partnership, or whether it should be set apart as a new genus, seems to me unimportant. If a

It

"The delectus personarum, as it exists in partnerships, grows out of the contract of the partners to be associated with each other, and with no others. The reason for it is found in the right of each partner to act as agent for all the others, the liability of each for the partnership obligations, and the right of each to contribution from the others. None of these conditions exist in partnership associations. The case of a transfer of interest from one partner to another is not analogous to the case in hand, for the dissolution is caused in such a case, not by the addition to the interest of one of the partners, which adds nothing to his power, but by the dropping out of the assigning partner, whose continuance is necessary to the partnership existence. A partnership association differs from the common type of partnerships in that the members vote and do not act with the powers of partners, and in that they are subjected to no joint liability. differs from the common type of corporations in that the members have a right to admit or refuse membership in the company to the transferee of the interest, as well as in some other particulars. In determining whether the act of 1885 should be strictly construed against the power of the association to limit the right of one of its members to acquire control by increasing his interest, we ought to look to the spirit and intention of the act. The peculiar form of delectus personarum, so carefully guarded in partnership associations, cannot be based upon the same consideration which gives rise to the common form in partnerships, for there is no mutual agency, no joint liability. Looking at the general scheme of the act, it seems apparent that it was intended to enable persons desiring to combine their capital in any business enterprise to do so without incurring, on the one hand, the general liability of partners, or, on the other, the risk of having the business taken out of the control of those in whom it was originally placed without their consent, which exists in ordinary corporations. If this be true, it is manifest that transfers of interests from one member to another are within the mischief sought to be prevented, for the member's vote by value of interest as well as number upon most important questions.

"If the case of a member transferee is not included within the provisions of the statute, it is not because the letter of the law does not