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was intended by the point to raise the question whether a recovery could be had for a consequential injury, where the legal requirements were not complied with, the reply is that this was not an action for a consequential injury, and therefore that question cannot arise. But in addition to that consideration the Legislature has provided a special remedy for that kind of injury by the Act of 24th May, 1878, P. L., 129, and that form of proceeding must, therefore, be adopted in all cases coming within its terms. The act provides that in all cases where the proper authorities of any borough may at any time change the grade or lines of any street or alley, or in any way alter or enlarge the same, thereby causing damage to the owner or owners of property abutting thereon, without the consent of the owner, or in case they fail to agree with the owner for the proper compensation for the damage so done, or likely to be done or sustained by reason thereof, the Court of Common Pleas of the proper county, on application of either the borough or the owner, shall appoint viewers, who shall proceed to assess the damages in the mode pointed out by the act. This being the method established by law, for the recovery of damages for changing grades or lines of streets or alleys in the boroughs of the Commonwealth, it must be strictly pursued in accordance with the provisions of the Act of 21st March, 1806, 13, which enacts that, in all cases where a remedy is prescribed or duty enjoined or directed to be done by any Act or Acts of Assembly of this Commonwealth, the directions of the said acts shall be strictly pursued and no penalty shall be inflicted or anything done agreeably to the provisions of the common law in such cases, further than shall be necessary for carrying such act or acts into effect. See 1 Purd. Dig., 58, pl. 5, and cases cited in note (a). Criswell v. Clugh, 3 W., 330; Oliphant v. Smith, 3 Pa. St., 180; Thomas v. Simpson, 3 Barr, 68; Ensworth v. Commonweaealth, 2 P. F. Smith, 324. We see no error in the other assignments. Undoubtedly the authority to grade and pave streets is among the implied powers of a municipal corporation : City of Williamsport v. Commonwealth, 3 Norris, 493. The eighth clause of the third section of the general borough law (P. L. of 1851, p. 323), requiring notice to be given of a proposition to fix or change the roads, streets, etc., of a borough is merely directory, and the omission to give the notice does not invalidate the proceeding: Pittsburgh v. Coursin, 24 P. F. Smith, 400.

of Fifth street, opposite the plaintiff's house, was a question of fact to be determined by the jury under all the evidence, nor in saying that if the fences corresponded with a width of fifty feet for twenty years it would be good evidence that the road was fifty feet wide. We see no error in the comments complained of in the eighth assignment. As the width of the road was a controverted fact, and the plaintiff's third point practically asked the court to decide that question, we think there was no error in refusing the point and leaving the question to the | jury. Judgment affirmed.

For plaintiff in error, Messrs. W. B. Rodgers and W. A. Dunsher.

Contra, Messrs. J. W. Baillie and Hampton & Dalzell.

CHAS. B. WRIGHT and WM. H. KEMBLE v. THE ANTWERP PIPE COMPANY and THE OIL CITY PIPE COMPANY.

Where a corporation enters into a contract, which, though prohibited by its charter, has been fully executed on the one side, and nothing remains but to pay the consideration money, it will not be allowed to set up, as a defense to an action to recover the consideration money, that the contract was ultra vires.

Where the plaintiff in such action has made out his case, without calling to his aid the alleged illegal transaction, the defendant, who has enjoyed the benefit of the transaction, will not be permitted to set up as a defense that the transaction was ultra vires.

The defense of ultra vires is never allowed out of regard for the defendant, but rests solely upon public policy. Oil Creek & Allegheny River Railroad Co. v. Pennsylvania Transportation Co., 2 Norris, 160, followed.

Error to the Court of Common Pleas of Venango county.

Assumpsit by Charles B. Wright and William H. Kemble against the Antwerp Pipe Company and the Oil City Pipe Company, upon a joint note of the defendants for $20,000 to the order of Henry Harley, and by him indorsed for value, before maturity, to the plaintiffs.

At the trial the following facts appeared: The note in suit was the joint note of the defendants, given by them to one Henry Harley, in part payment for 18,360 shares of stock in the Pennsylvania Transportation Company, which they jointly had bought from him. The note was signed "H. M. Hughes, trustee for Antwerp and Oil City Pipe Cos.," and the minute-books of the said corporations, put in evidence by the plaintiff, showed that each company formally approved and ratified the giving of said note, for the consideration mentioned.

The note was discounted by the plaintiffs beThere was certainly no error in the court fore maturity for full value. The stock, for saying to the jury that the width and location | which the note had been given, had been already

transferred to, and accepted by the defendants, before the sale of the note by Harley to plaintiffs. It was further proved that the plaintiffs knew what the original consideration for the note was.

The Antwerp Company was incorporated under Act of July 18, 1863, and the Oil City Pipe Company, the other defendant, was incorporated under Act of April 29, 1874.

The court below charged the jury, inter alia, as follows: "It is in evidence, and not disputed, that the Oil City Pipe Company was organized under the provisions of an Act passed the 29th of April, 1874, and under that act it is provided that it should not be lawful for any such corporation—that is, for any corporation organized under that act-to use any of its funds in the purchase of stock in any other corporation, or to hold the same, except as collateral security for a prior indebtedness. It is not disputed that the consideration for this note was the purchase by the companies defendant of stock in the Pennsylvania Transportation Company; and it appears, and is not disputed by the plaintiffs, that, before and at the time of the purchase of the note by the plaintiffs, they knew what formed the consideration of the note. They knew that the note was given to Harley in part payment of the purchase, by these two companies, of stock in the Pennsylvania Transporta, tion Company. And they were bound to know the law. They were bound to know that the transaction was an illegal transaction." (First assignment for error.)

"Our construction of the statute is that this provision of it (namely, that interdicting the purchase of stock) was not made alone for the security of the stockholders; if it were, then the fact that appears in evidence in this case is that all the stockholders, in behalf of these companies, assented to the transaction; we think that would bind them. But we think the statute itself is grounded upon public policy, and that it is our duty to enforce it. That that view, the reading of it, the purpose to make unlawful the purchase by one corporation of the stock of another corporation, we think is grounded upon principles of public policy. And hence, although all of the stockholders of both companies defendant may have assented to the transaction out of which the note grew, we think that it is a matter prohibited by law, and that no ratification by them can make it valid, and that, consequently, the plaintiffs in this suit cannot recover." (Second assignment of error.) "The plaintiffs claim that, as to the Antwerp Pipe Company, they are entitled to recover, notwithstanding, as against the Oil City Pipe

Company, organized under the Act of 1874, they would not be entitled to recover as against the Oil City Pipe Company. The note is the joint note of the Antwerp Pipe Company and the Oil City Pipe Company. The consideration of the note in part is the illegal purchase by the Oil City Pipe Company of the stock of the Pennsylvania Transportation Company. The Antwerp Pipe Company signed this note, not alone as a payment of their purchase, but also as indicating the liability of that company for the Oil City Pipe Company, and hence we think that the illegal consideration attaches to the whole consideration of the note, and that there can be no recovery against either company." (Third assignment of error.)

Verdict and judgment for defendants. The plaintiffs thereupon took this writ, assigning for error the charge of the court as above quoted. For plaintiffs in error, Messrs. Wm. S. Lane and C. Heydrick.

Contra, Messrs. Osmer, Dale & Freeman. Opinion by PAXSON, J. Filed November 20, 1882.

It is conceded that the plaintiffs are holders for value of the note in controversy, and that they are not affected with notice of any fraud on the part of Harley, the payee. It was alleged, however, that the consideration of the note was illegal, and that the plaintiff's knew, or were affected with notice of this fact.

The note is the joint note of the Antwerp Pipe Company and the Oil City Pipe Company, and was given in part payment of 18,360 shares of the stock of the Pennsylvania Transportation Company. The Oil City Pipe Company was organized under the provisions of the Act of 29th April, 1874, and under that act it is provided that it should not be lawful for any corporation organized under it to use any of its funds in the purchase of stock in any other corporation, or to hold the same except as collateral security for a prior indebtedness. The court below instructed the jury that the consideration of the note being unlawful the plaintiff's could not recover. This ruling is the only material error assigned.

The note contained upon its face no evidence of illegality, and was issued by corporations having ample power to make and issue commercial paper. The contract claimed to be illegal had been fully executed and the stock delivered. If the Oil City Pipe Line Company exceeded its corporate powers in the purchase of this stock, can it now repudiate its note in the hands of a holder for value upon the grounds that the transaction out of which it grew was

ultra vires? The law never sustains a defense of this nature out of regard for a defendant; it does so only where an imperative rule of public policy requires it. The instances are rare in which a corporation or individual has been permitted to set up its own wrong in order to retain both the property and its price. The defendant corporations have obtained the stock which they now allege they had no right to buy, and propose to retain it without payment. It would be difficult to imagine a defense with less merit, and the law would be exceedingly impotent were it to allow it to succeed. The very point was decided in the Oil Creek & Allegheny River Railroad Co. v. The Pennsylvania Transportation Co., 2 Norris, 160, where it was held that where a corporation has entered into a contract which has been fully executed on one part, and nothing remains but for it to pay the consideration money, it will not be allowed to set up that the contract is ultra vires. This judgment was approved by all the members of the court who heard the argument, and was but declaratory of the law as ruled in a number of earlier cases. In Swan v. Scott, 11 S. & R., 164, it was said by | Justice DUNCAN: "The test whether a demand connected with an illegal transaction is capable of being enforced at law is whether the plaintiff requires the aid of the illegal transaction to establish his case." The converse of this proposition is equally true, that where the plaintiff has made out his case without calling the illegal transaction to his aid, the defendant who has enjoyed its benefits cannot set up the defense of ultra vires. In Northampton County's Appeal, 6 Casey, 305, it was said by PORTER, J.: "A man who has enjoyed a privilege has no right to say that because he ought not to have enjoyed it he will not pay for it. However unlawful the act, it would be unsound policy to give him this immunity." To the same point are the remarks of Chief Justice GIBSON, in Lestapies v. Ingraham, 5 Barr, at page 81: "True it is that an illegal contract will not be executed; but when it has been executed by the parties themselves, and the illegal object of it has been accomplished, the money or thing which was the price of it may be a legal consideration between the parties for a promise, express or implied, and the court will not unravel the transaction to discover its origin." In Hipple v. Rice, 4 Casey, 406, it was held that where lots in a town were disposed of by lottery, each purchaser of a ticket being entitled to a lot of equal size and value, to be determined by the drawing, and the owner of the land after the drawing of the lottery made a deed to the grantee, in which the making of the lottery, the purchase of the ticket by

the grantee, and the drawing of the number were recited, and in which same deed the grantor reserved a ground-rent of one dollar per year, a subsequent holder of the title of the grantee could not set up the lottery as a defense to the payment of the ground-rent. In Bly v. Second National Bank of Titusville, an indorser upon a note discounted by the bank defended upon the ground that the loan was in contravention of the twenty-ninth section of the Act of Congress of June 3, 1864, commonly called the National Bank Act, which provides that "The actual liabilities to any association of any person, or of any company, corporation or firm for money borrowed *** shall at no time exceed onetenth part of the amount of the capital stock of such association actually paid in." The court below, TRUNKEY, J., in an opinion which was adopted by this court, held the defense insufficient, and said: "The plaintiff needs no aid from the original transaction to make out his case. Garfield is no party to the note. The defendant attempts its defeat, not by showing anything done at the time it was given, but because of the turpitude of the borrower and lender when Garfield borrowed money of the bank in excess of the amount the latter was permitted to loan to one person.”

When the plaintiffs offered the note in evidence, they had a perfect prima facie case, and did not need the aid of any illegal transaction to entitle them to a verdict. They required no aid from the contract for the sale of the stock. That, as before observed, had been fully executed, and was a matter with which the plaintiffs had nothing whatever to do.

After the plaintiff's had made out their case, the defendants set up their want of corporate power to buy the stock, by way of defense. This with the stock transferred to them and unpaid for. The object of this defense, if successful, would be to punish innocent parties who had no connection with the illegal transaction for the wrongful act of the defendant corporations.

It may be that as between the original parties the defendant could have rescinded the contract and declined to receive the stock. But they executed it; they accepted the stock, and gave their note in payment, for which note the plaintiffs paid value in good faith. The defense of ultra vires by a corporation comes with a better grace if made before it has discovered that it has made a bad bargain.

If, as the defendants allege, they have violated their charters, it is a matter that is within the cognizance of the attorney-general.

Judgment reversed and venire facias de novo awarded.

Court of Common Pleas, No. 2.

the question whether the doctrine announced in Faikney v. Reynons, and the line of cases which follow it, is the law of Pennsylvania:

H. H. COLLINS, for use, v. EDWIN H. NEVIN. Faikney v. Reynons, 4 Burrows, 2069, was tried

C. and N. engaged in buying and selling stocks on
margins. No stocks were actually bought or sold or
intended to be. C. advanced the money and N. man-
aged the speculation, which resulted in a large loss.
Two years after the close of their operations, they made
a settlement by which it appeared that N.'s share of
the loss amounted to $20,131.93, for which he gave to
C. a judgment bond, upon which judgment was entered
in favor of C. to the use of a third person. Upon a rule
taken by the defendant to open the judgment, held,
(1.) That the transactions were illegal, immoral and
against public policy.

(2.) The entry of the judgment upon the bond, by virtue
of the warrant of attorney accompanying it, did not
preclude the defendant from alleging the illegality of
the transaction or prevent the court from inquiring

into it.

(3.) The courts are not open to enforcing such contracts, and will not give relief to those who voluntarily participate in them.

Rule to open judgment.

before Lord MANSFIELD in 1767. Faikney & Richardson were partners in stock-jobbing transactions, prohibited by the Act of Parliament. They lost £3,000. This suit was on a note given by defendant as surety for Richardson, for Richardson's share of the losses, £1,500. The illegality of the transaction was set up as a defense. Lord MANSFIELD held the defense insufficient; that while the transaction in stockjobbing was prohibited it was not malum in se, and that the giving of the note to make up Richardson's share of the loss was a fair and honest transaction between him and the plaintiff.

This case was followed by Petrie v. Hannay, 3 T. R., 418, decided in 1789. The plaintiff's testator with the defendant and others were engaged, through a broker, in illegal stock-job

Opinion by WHITE, J. Filed January 13, bing. The defendant accepted a bill drawn on

1883.

Judgment was entered, October 21, 1882, on bond and warrant of attorney dated July 1, 1871, in penal sum of $40,000, for payment of $20, 131.93, payable in four equal installments, seven, eight, nine and ten years after date. Judgment entered for $24,861.22.

The testimony establishes these facts: That plaintiff and defendant in the years 1868 and 1869 were engaged in buying stocks on margin, the plaintiff advancing the money, and the defendant buying the stocks. No stocks were actually bought or sold or intended to be. All the transactions were on margins. They lost heavily. On the 1st of July, 1871, some two years after their operations had closed, they made a settlement, showing that defendant was indebted to plaintiff in the sum of $20,131.93 as his share of the losses, for which this bond was given.

him for a portion of the loss incurred in their joint operations. He failed to pay it; suit was brought by the broker against the plaintiff's testator and recovery had. This suit was brought by the plaintiff to recover from the defendant the amount paid the broker, being the amount of the bill he had accepted. The defense set up was the illegality of the transactions. KENYON, C. J., who dissented in Faikney v. Reynons, thought this case could be distinguished from that. But BULLER, J., placed it on the same ground. The defense was held insufficient.

Tenant v. Elliott, 1 Bos. & Pul., 3, was decided in 1797. The defendant, a broker, obtained an insurance for plaintiff on goods shipped to the East Indies, in violation of an Act of Parliament. The goods were lost, and the defendant received the insurance money. He refused to pay over to the plaintiff, and this action was brought to recover the money. The defendant set up as defense the illegality of the shipment and insurHis defense was unavailing. EYRE, C. J., said: "The defendant is not like a stockholder. The question is, whether he who has received money to another's use on an illegal contract, can be allowed to retain it, and that not even at the desire of those who paid it to him. I think he cannot."

There can be no doubt that their transactions were illegal, nothing more than gambling ad-ance. ventures, immoral and against public policy: Brua's Appeal, 55 Pa. St., 294; Morris Coal Co. v. Barclay, 68 Id., 173; Fareira v. Gabell, 89 Id., 89.

The fact that a judgment was entered on the warrant of attorney accompanying the bond does not preclude the defendant from alleging the illegality of the consideration, or prevent the court from inquiring into it: Ham v. Smith, 87 Pa. St., 63.

The next case was Farmer v. Russell, 1 Bos. & Pul., 296, decided in 1798. The defendants were common carriers, who had transported some counterfeit money and received the pay

Do the facts above stated constitute a good therefor for the plaintiff but refused to pay over, defense? because of the illegal character of the transaeThe plaintiff recovered; EYRE, C. J.,

The plaintiff's right to recover depends upon | tion.

afterwards received the bill in question for that sum, then according to Petrie v. Hannay he might have recovered. But here the bill was given for those very differences, and therefore

holding that the evidence did not convict the defendants of knowledge of the fraud; BULLER, J., holding that that was immaterial, for the money was received for the plaintiff, and the defendant could not on any ground withhold | Wilson himself could not have enforced payit; but ROOKE, J., thought that as the plaintiff was engaged in a foul fraud, he should have no standing in court, if his agents cheated him the court should give him no relief.

Ex parte Bulmer, 13 Ves., 313, was decided in 1807. Bulmer had placed in a broker's hands money to be invested in illegal stock-jobbing transactions. He had a large balance in his hands for which he gave twelve promissory notes to Bulmer. He was held liable on the notes. Lord ERSKINE said: "If the illegality be malum prohibitum only, the plaintiff may recover, unless it be directly upon the contract prohibited." And referring to Faikney v. Reynons said, the principle of that case "though doubted by high authority, has stood its ground, wherever it has been questioned, and must be taken to be law."

The doctrine announced in Faikney v. Reynons, was frequently questioned in the English courts, and several early cases decided in conflict with it.

Mitchell v. Cockburne, 2 H. Bl., 379, decided in 1794, was similar in its features, and almost identically the same. The plaintiff and defendant were engaged jointly in illegal insurance business, and lost. They referred their accounts to an arbitrator who found that Cockburne'owed Mitchell. Suit was brought to recover the amount, EYRE, C. J., nonsuited the plaintiff. He referred to Faikney v. Reynons and Petrie v. Hannay, and thought they should have been decided otherwise. "But be that as it may," he said, "it is sufficient now to say that those cases go one step short of the direct illegal transaction, but the present case arises immediately out of it." In Faikney v. Reynons "the bond was given to secure repayment by a third person of his proportion of the money paid by the plaintiff' in the stock-jobbing." And in Petrie v. Hannay "the money had been paid by Keeble, and the action was brought to reimburse his executors for the defendant's share."

Steers v. Lashly, 6 T. R., 61, was decided in 1794. The defendant and one Wilson had been jointly concerned in illegal stock-jobbing. An arbitrator found a difference in favor of Wilson for £306, for which Wilson drew his bill on defendant who accepted it, in favor of the plaintiff, who knew the facts of the case. Plaintiff sued on the bill and was defeated. KENYON, C. J., said: "If the plaintiff had lent his money to the defendant to pay the differences, and had

|

ment." Nor could the plaintiff for he took it with knowledge.

This case was followed in 1798 by Brown v. Turner, 7 T. R., 630. The defendant employed a broker in illegal stock-jobbing transactions. The broker drew on him for the differences which he accepted. On suit by the broker defendant set up the illegal transaction, and it was held a good defense under the authority of Steers v. Lashly.

Cannan v. Bryce, 3 Bar. & Ald., 179, was decided in 1818. The plaintiff loaned money to the defendant for the express purpose of paying losses by the defendant in stock-jobbing transactions, which was so paid, and took defendant's notes for the amount. Held, that he could not recover on the notes, although he was not a party to the illegal transaction. ABBOTT, C. J., in referring to Faikney v. Reynons aud Petrie v. Hannay, says: "The propriety of those decision has been questioned in several subsequent cases; and the distinction taken in the former of them between malum prohibitum and malum in se was expressly disallowed in the case of Aubert v. Maze. Indeed we think no such distinction can be allowed in law.”

Faikney v. Reynons and Petrie v. Hannay have been cited and approved in several American cases. In the Supreme Court of the United States in Armstrong v. Toler, 11 Wheaton, 258; Planters' Bank v. Union Bank, 16 Howard, 483, and Brooks v. Martin, 2 Wall., 71. In the Supreme Court of Pennsylvania in Swan v. Scott, 11 S. & R., 155; Lestapies v. Ingraham, 5 Pa. St., 71, and Morris' Run Coal Co. v. Barclay Coal Co., 68 Id., 173.

Armstrong v. Toler was an action by Toler to recover moneys paid out by him at request of Armstrong, on account of goods imported by Armstrong in 1812 in violation of law. They were consigned to Toler, but seized by the govvernment, and by request of Armstrong, Toler paid the duties, etc. Armstrong resisted payment on the ground of the illegal transaction. It was tried before Judge WASHINGTON in the Circuit Court, plaintiff recovered and judgment affirmed in the Supreme Court of the United States. It was held that, although Toler may have been privy to the illegal importation, yet after the government had seized the goods, his contract to pay the duties was based upon a new and independent consideration sufficient to sustain assumpsit against Armstrong for the money

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