majority over the minority as to acts intra | a duty which it is capable of performing. vires is implied from the very nature of That a corporation owes duties to its stockthe contract. But the corporate authority holders outside of mere business duties we is considered to have been conferred by the think should admit of no question. One stockholders upon the trust and confidence such duty is that it will perform its corthat it will be exercised within the char-porate functions, according to, and within tered powers, and with a view to advance the interests of the stockholders. Dodge v. Woolsey, 18 How. 331, 15 L. ed. 401; Wright v. Oroville Gold, S. & C. Min. Co. 40 Cal. 20, 3 Mor. Min. Rep. 558; Forbes v. Memphis, E. P. & P. R. Co. 2 Woods, 323, Fed. Cas. No. 4,926. No stockholder is bound to submit to the doing of ultra vires acts. Such submission is not a part of his contract. He may have relief from ultra vires acts. 2 Cook, Corp. § 669.

It seems also to be well settled that for practical purposes a corporation may, in some respects, be treated as a trustee for the benefit of its stockholders, whenever necessary for the protection of their interests. In a sense it holds the corporate property in trust for the stockholders. Peabody v. Flint, 6 Allen, 52; Sawyer v. Hoag, 17 Wall. 623, 21 L. ed. 736; 1 Morawetz, Priv. Corp. § 237.

the meaning of, its charter. The manner of performing those duties may be left to the discretion of its directors or majority stockholders. But the corporation should not be permitted to abdicate its corporate functions and utterly abandon the performance of its corporate duties, to the prejudice of stockholders. These are matters which involve more than mere internal administration, and they are matters which affect the interest of each individual stockholder.

We recur again to the facts. The defendant corporation is the owner in fact of more than $3,500,000 of the capital stock of the New Jersey corporation. It is the owner of a controlling interest. Its one corporate power involved in this inquiry is the power to "hold" it. Growing out of that power is a duty to hold it so as to enjoy the privileges of ownership. That we think is necessarily implied in the case of a holding corporation. For ten years it has neglected, and, as we must assume, now de

none but stockholders of record can vote (Warren v. Pim, 66 N. J. Eq. 353, 59 Atl. 773), it has thereby voluntarily disenabled itself from performing its most important function as a stock owner. It has permitted that function to be usurped, so far as minority stockholders are concerned, by individuals. It has had no corporate voice in the management of the New Jersey corporation. It has subjected itself to the liability of loss with respect to the shares themselves. In the present status it is unable to perform the duties which it owes to its stockholders.

There is no doubt, we think, that a court of equity may, at the instance of a stockholder, afford a remedy from the conse-clines, to become the owner of record. As quences, not only of fraudulent acts of the corporation or its officers, but of such acts as are a breach of the trust and confidence which are implied by the very nature of the corporate relations. It may control a corporation and its officers, and restrain them from doing acts even within the scope of corporate authority, if such acts would amount to a breach of the trust upon which the authority had been conferred. Dodge v. Woolsey, supra; Wright v. Oroville, Gold, S. & C. Min. Co. 40 Cal. 20, 3 Mor. Min. Rep. 558; March v. Eastern R. Co. 40 N. H. 548, 77 Am. Dec. 732; Taylor v. Holmes (C. C.) 14 Fed. 498; Forbes v. Memphis, E. P. & P. R. Co. 2 Woods, 323. Fed. Cas. No. 4,926. It may also control them with respect to acts tending to the destruction of the corporate franchises, and acts in violation of, or inconsistent with, the charter. It may prevent the misuse or the misapplication of corporate power prejudicial to the stockholders, and amounting to a breach of trust. Pond v. Vermont Valley R. Co. 12 Blatchf. 280, Fed. Cas. No. 11,265.

We do not say that a corporation may not, for business reasons, hold property in the name of another. We do not say that it may not so hold temporarily the capital stock which it owns in another corporation. What we do say is that when a holding corporation, intentionally, persistently, and unreasonably deprives itself of the exercise of the highest function and privilege of a stockholder, and so proposes to continue, it is such a breach of its duty to its stockholders, and so far removed from any It should be borne in mind that this characteristics of internal management and is not a bill brought in behalf of a corpora- control, which the majority stockholders tion which is unwilling or unable to sue, may properly exercise, that a minority against directors who have undertaken to stockholder may invoke the intervention of do ultra vires or otherwise illegal acts, but the court. It is essentially a breach of one against the corporation itself to compel trust. If a corporation has no lawful it to perform a corporate duty which it is power to give away its property, and it claimed it owes to all its stockholders, and ' has none,—no more should it have authori

ty to devest itself of corporate power and virtually to give away to others the exercise of its essentially corporate functions.

The essential purpose of such a holding corporation as the defendant is not only to hold shares of stock, but so to hold them

as to be able to vote upon them and give them their proper effective influence in the management of the subsidiary corporation. For such a holding corporation to decline

to hold in its own name the shares of stock that it owns, and thereby to abdicate its functions and privileges as a stock owner, seems to us to be a perversion of the spirit of the one corporate power which it has so far undertaken to exercise. It is inconsistent with the character of the contractual duties which it owes to its stockholders. It is not only a breach of trust, but it is a neglect to perform the duties which are implied from the very fact that it is a holding corporation.

The complaint alleges that the defendant, a bank in Fayetteville, cashed a check, purporting to be drawn by the Wade Trading Company, on the plaintiff bank in LaurinIt is no answer to say that the same burg, and purporting to be indorsed by D. gentlemen who now hold of record, and C. Jackson, but that the signature of the vote upon, these shares, will, by reason said drawer and said indorser were forged, of their interests and of the intercorporate and that thereafter in the course of busiassociations, be able to control the exercise ness the said forged check was sent through of the defendant's privileges of stock ownera bank in Wilmington to the plaintiff with ship after they shall have been transferred the indorsement, "All prior indorsements to it of record. Whatever shall be done guaranteed," and that it was the custom then will be done under corporate responsi- and practice to take such checks relying bility, of which there is none at present. upon the exercise of due prudence and diliBesides that, it is, humanly speaking, cergence on the part of the bank which first tain that the gentlemen who now control cashed the check, and alleging that, the the defendant, and in whose interests Dodge signature of the drawer being forged, the and Smith are supposedly acting, will not defendant should refund to the plaintiff do so forever. We think the bill is sus- the amount of said check which the plaintiff tainable. had paid by reason of the negligence of the Decree below affirmed, with additional defendant bank in failing to use due pru

costs.

NORTH CAROLINA SUPREME

COURT.

STATE BANK

V.

dence and diligence in accepting and paying the said check. The defendant demurred upon the ground that the complaint does not state facts sufficient to constitute a

cause of action. The judge overruled the demurrer, and the defendant appealed.

The drawee bank pays a check upon the faith of the genuineness of the signature of

CUMBERLAND SAVINGS & TRUST COM- the drawer.
PANY, Appt.

Note. - As to right of drawee of forged check or draft to recover money paid thereon, see notes to First Nat. Bank v. Bank of Wyndmere, 10 L.R.A. (N.S.) 49; Title Guarantee & T. Co. v. Haven, 25 L.R.A. (N.S.) 1308; and Farmers' Nat. Bank v. Farmers' & T. Bank, L.R.A.1915A, 77.

When a drawee pays a check "upon which the drawer's signature had been forged, he cannot, upon the discovery of the forgery, recover back the amount if the party to whom he paid it was a bona fide holder. The drawee is held bound to know the signature of his drawer, and the banker, even more, to know that of his depositor; and if they fail to discover the forgery before payment, they must stand the loss." This is the heading of an extended note to be found in 17 Am. St. Rep. 890, citing very numerous authorities. This rule seems to have been established by Lord Mansfield in 1762 in Price v. Neal, 3 Burr. 1355, who said that it was incumbent upon the drawee

to be satisfied of the genuineness of the drawer's signature before accepting or paying the bill, and that if he made a mistake it was his neglect or misfortune, and not that of the drawer.

In Bank of United States v. Bank of Georgia, 10 Wheat. 333, 6 L. ed. 334, decided in 1825, Mr. Justice Story, referring to Price v. Neal, supra said: "After some research we have not been able to find a single case in which the general doctrine thus asserted has been shaken or doubted."

even

A proposition of mercantile law considered beyond question as correct by Mansfield and Story must be deemed settled unless changed by statute.

before receiving on deposit the check drawn on another bank does not excuse the drawee bank from its duty to examine its customer's signatures to checks presented by another bank or other holder in due course. See also numerous citations 10 L.R.A. (N.S.) 57-59,

The same proposition is fully discussed and held in Commercial & F. Nat. Bank v. First Nat. Bank, 30 Md. 11, 96 Am. Dec. 567, and notes,-a very carefully considered case. In Howard v. Mississippi Valley Bank, 28 La. Ann. 727, 26 Am. Rep. 105, it is held, as above stated, that the drawee of a bill is presumed to have a better knowledge of the signature of the drawer than the holder.

In 2 Morse, Banks, 4th ed. § 463, it is said, quoting many cases: "A bank cannot recover money paid on a forgery of the drawer's name from the person to whom it was paid. The bank is bound to know the signature of the drawer."

Morse, supra, cites among other authorities, Bank of St. Albans v. Farmers' & M. Bank, 10 Vt. 141, 33 Am. Dec. 188, which was exactly like the present case, in that the signature of the drawer was forged, and the drawee bank, in action against the cashing bank, asked for instructions that if the jury should find that the

In Farmers' & M. Bank v. Bank of Rutherford, 115 Tenn. 64, 112 Am. St. Rep. 817, 88 S. W. 939, it is held: "It is negligence for a bank to pay a forged check drawn on it in the name of one of its customers whose signature is well known to it, where the cashier does not examine the signature closely, which would have disclosed the forgery, but is thrown off his guard my indorsements on the paper. An indorser of a check does not warrant to the drawee, but only to subsequent holders in due course, the genuineness of the signature." This last proposition seems to be now the cashier of the purchasing bank received well-settled law, though there were some earlier decisions which would seem to indicate a liability on the part of the indorser who negligently pays a check without fully satisfying itself as to the genuineness of the signature of the drawer. The proposition which now obtains, almost universally, is thus laid down in Howard v. Mississippi Valley Bank, 28 La. Ann. 727, 26 Am. Rep. 105:

"The drawee of a bill is presumed to have a better knowledge of the signature of the drawer than the holder. So, where a bank cashed a draft and afterward collected it of the drawee, and the draft was a forgery, the drawee cannot recover the amount paid from the bank to which it was paid, though the latter had received the draft from an unknown holder without requiring his indorsement."

In Salt Springs Bank v. Syracuse Sav. Inst. 62 Barb. 101, and Germania Bank v. Boutell, 60 Minn. 189, 27 L.R.A. 635, 51 Am. St. Rep. 519, 62 N. W. 327, it is held: The holder of a check or draft, presenting it to the drawee for payment, owes

it no duty to inquire into the genuineness thereof.

The drawee bank has no right to assume that the holder has made such investigation. Failure of a bank to follow the usage or practice adopted for its own security of requiring evidence of the payee's identity

the check without due circumspection or the exercise of due diligence in ascertaining its genuineness, or the title of the person presenting it, the drawee bank was entitled to recover; but the court held that it was only necessary that the cashing bank should appear to have received the check in ordinary course of business and in good faith.

In 5 Cyc. 544, there is quoted in the notes the following proposition: "A factor who has received drafts from his principal drawn on him, which have been discounted by a bank, and he has paid them, must stand the loss on those which are discovered to be forgeries."

The latest and fullest discussion of the subject will be found in 3 Ruling Case Law, § 244, with full citations of the more recent authorities. The law is thus summed up: "Where a bank receives in good faith for collection a check upon another bank, the signature of the drawer of which is forged, and receives payment and pays over the proceeds to its customer, the drawee bank cannot recover from the collecting bank the money so paid to it. In order, however, that the collecting bank may claim protection, it must have been a bona fide holder; but the mere fact that the collecting bank receives the check from a stranger does not itself prevent it from claiming protection as a bona fide holder.”

Where the cashing bank acts in good, at the logical end shown by the matter of faith, the drawee cannot recover the amount the will. which it has paid on the forged check. The drawee should know the signature of the drawer, its own depositor, better than the holder. The drawee cannot plead a custom that would entitle it to pay such draft without the signature being genuine.

The demurrer should have been sustained.
Reversed.

A will from which testator tore his signature, and by so doing mutilated a portion of a codicil, is properly admitted to probate together with the codicil if it was originally duly executed and he restored the portion of the paper torn off, rewrote his signature and the mutilated portion of the codicil, and left it among his papers

at the time of his death.

A

(January 2, 1915.)

Swire's Estate, 225 Pa. 188, 73 Atl. 1110; Stinson's Estate, 228 Pa. 475, 30 L.R.A. (N.S.) 1173, 139 Am. St. Rep. 1014, 77 Atl. 807; Baker's Appeal, 107 Pa. 381, 52 Am. Rep. 478.

There is nowhere in the act or in the law any requirement or provision that a testator must keep on signing and resigning his will.

Sheaffer's Estate, 240 Pa. 83, 87 Atl. 577; Wikoff's Appeal, 15 Pa. 281, 53 Am. Dec. 597; Tomlinson's Appeal, 133 Pa. 245. 19 Am. St. Rep. 637, 19 Atl. 482.

This will can be sustained as a valid will by republication.

Forquer's Estate, 216 Pa. 331, 66 Atl. 92, 8 Ann. Cas. 1146; Kerchner's Estate, 41 Pa. Super. Ct. 112; Manning's Estate, 46 Pa. Super. Ct. 607.

Elkin, J., delivered the opinion of the court:

The testator was a lawyer and wrote his own will. The language is plain and unambiguous, and the intention is clearly March 29, 1906, when it was formally expressed. The original will is dated executed in the presence of witnesses. After giving directions as to the removal of the remains of his wife and the erection of a monument, the testator made a small bequest to his granddaughter and devised a cemetery lot to his brother. The residue of his estate, which was practically all of it, he gave to his two daughters and a Af-granddaughter, share and share alike. In

PPEAL by contestants from a decree of the Orphans' Court for Allegheny County, dismissing an appeal from a decision of the register admitting to probate the will of Cyrus C. Brock, deceased. firmed.

The facts are stated in the opinion. Messrs. F. P. Iams and J. D. Iams for appellants.

other words, he directed a division of his estate into three equal parts and named the beneficiaries who were to take under his will. At a subsequent date, January 17,

Mr. George H. Stengel for appellee 1907, he added a codicil which provided that Trust Company.

Mr. James G. Hays, for appellee Hare: Meaningless words, or words not testamentary, following the signature, are not sufficient to strike down the will.

Wikoff's Appeal, 15 Pa. 281, 53 Am. Dec. 597; Swire's Estate, 225 Pa. 188, 73 Atl. 1110; Beaumont's Estate, 216 Pa. 350, 65 Atl. 799, 9 Ann. Cas. 42; Taylor's Estate, 230 Pa. 346, 36 L.R.A. (N.S.) 66, 79 Atl. 632; Teed's Estate, 225 Pa. 633, 133 Am. St. Rep. 896, 74 Atl. 646.

The wills act does not compel a testator to sign at the end, the physical end,-but

his grandson should share equally with the three legatees named in the original will. The effect of the codicil was to divide the residue of the estate into four equal shares instead of three. If the situation had remained as it then was, no one could have seriously questioned the proper execution of the will and codicil. They were testamentary in character, were signed at the end thereof, and disposed of the entire estate in language too plain to be misunderstood. The present controversy grows out of what subsequently happened. During a visit to his daughter who lived in Oregon, the testator had a dispute with his granddaughter, a beneficiary under the will, and, while angry as a result of that dispute, he tore his signature from the lower right-hand corner of the paper upon which the will was written, and in doing so mutilated the codicil, which was written on the reverse side

thereof. He did this in the presence of testator was signed after the paper was his granddaughter and others and then attached; and, while this precise question threw the will and that part of the paper was not certified for determination by the which contained his signature upon the jury, it was found as a fact by the learned floor, saying, "You have not only cut your- orphans' court, and in our opinion no other self out, but your little brother also." Very conclusion could be reached without doing soon thereafter the testator picked up the violence to what is plain and obvious to will which he had thrown upon the floor anyone who inspects the writing. With and put it in his pocket. There is no evi- all of these facts found on ample evidence dence as to what became of the detached either by the jury or by the court, the inpart of the will which contained his signa- tention of the testator regarding the dispoture; but the mutilated will, with such ad-sition of his property is too manifest to additions and corrections as he subsequently mit of doubt. Under these findings of fact, made to it, remained in his possession from the time he put it in his pocket after tearing his signature therefrom until the date of his death, when it was found among his papers. The will when found showed on its face that someone had very carefully and neatly attached to the original will another piece of paper of the exact size as that containing the signature of the testator which had been torn from it by him. This attached piece of paper was at the lower right-hand corner of the original will, and across it at the proper place was written the name of the testator. On the back of it were also written the words of the first codicil which had been eliminated by tearing the signature from the first page of the original will.

there is presented for our consideration upon review, a writing testamentary in character, signed at the end thereof by the testator, with his signature proved by more than two witnesses, and this is all the law requires in the execution of a will. We also agree with what the learned court below said as to the intention of the testator in republishing his first codicil, and are of opinion that this codicil was properly admitted to probate.

The second so-called codicil was in the nature of a letter addressed by the testator to his brother, and as to the refusal to admit this paper to probate we concur in the views expressed by the learned orphans' court.

Decree affirmed. Costs to be paid out of the estate.

TENNESSEE SUPREME COURT.
J. W. SHAW, Plff. in Certiorari,

V.

J. W. WEBB.

(131 Tenn. 173, 174 S. W. 273.)

Mechanics' lien -statute - priority to conditional vendor.

It will thus be seen that, when the will was found among the papers of the testator at the time of his death, it was a complete testamentary instrument with both will and codicil signed at the end thereof as required by the statute. If in point of fact the testator attached the piece of paper to the will with such great care, or caused it to be done, then rewrote his name at the end thereof, and followed this by rewriting with his own hand those words which had been eliminated from the first codicil, his intention to republish the provisions of the original will and first codicil which he had attempted in a spirit of pique or anger to destroy could not be made to appear more clearly. This was the view entertained by the orphans' court, but the facts were in dispute, and hence it was that these questions were certified to the court of common pleas for determination by a jury. The jury found that the signature on the attached piece of paper was in the handwriting of the testator, as were also the words written on the reverse side thereof which | Note. - Right to lien for repairs or supplied the words of the first codicil that had been torn therefrom when the testator tore his signature from the original will. The jury also found that the testator either attached the paper to the will or authorized someone to do it for him. In either event his intention would be the same. An inspection of the will shows that the name of the

The claimed lien of one who has, without the knowledge or consent of the vendor, made repairs on an automobile conditionally sold to a vendee in possession, under a statute providing therefor in case of repairs made at the request of the owner or his agents, is subordinated to the title of the vendor, which is retained in the purchasemoney notes, although the mechanic had no notice of the vendor's title.

(March 6, 1915.)

other services under contract with purchaser under conditional sale.

As to the priority of a lien for services on personal property over a prior chattel mortgage, see note to Reeves & Co. v. Russell, post, 1149.

For priority as between the lien of a chattel mortgage and a lien acquired by furnish