« AnteriorContinuar »
was intended by the point to raise the question of Fifth street, opposite the plaintiff's house, whether a recovery could be bad for a conse- was a question of fact to be determined by the quential injury, where the legal requirements jury under all the evidence, nor in saying that were not complied with, the reply is that this if the fences corresponded with a width of fifty was not an action for a consequential injury, feet for twenty years it would be good evidence and therefore that question cannot arise. But that the road was fifty feet wide. We see no in addition to that consideration the Legisla- error in the comments complained of in the ture has provided a special remedy for that eighth assignment. As the width of the road kind of injury by the Act of 24th May, 1878, was a controverted fact, and the plaiutiff's third P. L., 129, and that form of proceeding must, point practically asked the court to decide that therefore, be adopted in all cases coming within question, we think there was no error in refusits terms. The act provides that in all cases | ing the point and leaving the question to the where the proper authorities of any borough jury.
Judgment affirmed. may at any time change the grade or lines of For plaintiff in error, Messrs. W. B. Rodgers any street or alley, or in any way alter or en- and W. A. Dunsher. large the same, thereby causing damage to the Contra, Messrs. J. W. Baillie and Hampton owner or owners of property abutting thereon, & Dalzell. without the consent of the owner, or in case they fail to agree with the owner for the proper CHAS. B. WRIGHT and WM. H. KEMBLE v. compensation for the damage so done, or likely THE ANTWERP PIPE COMPANY and THE 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 Where a corporation enters into a contract, which, though owner, shall appoint viewers, who shall pro
prohibited by its charter, has been fully executed on
the one side, and nothing remains but to pay the conceed to assess the damages in the mode pointed
sideration money, it will not be allowed to set up, as a out by the act. This being the method estab defense to an action to recover the consideration money, lished by law, for the recovery of damages for that the contract was ultra vires. changing grades or lines of streets or alleys in
Where the plaintiff in such action has made out his case,
without calling to his aid the alleged illegal transacthe boroughs of the Commonwealth, it must be
tion, the defendant, who has enjoyed the benefit of the strictly pursued in accordance with the provis
transaction, will not be permitted to set up as a defense ions of the Act of 21st March, 1806, % 13, which that the transaction was ultra vires. enacts that, in all cases where a remedy is pre The defense of ultra vires is never allowed out of regard scribed or duty enjoined or directed to be done
for the defendant, but rests solely upon public policy. by any Act or Acts of Assembly of this Com
Oil Creek & Allegheny River Railroad Cb, v. Pennsylvania
Transportation Co., 2 Norris, 160, followed. monwealth, the directions of the said acts shall be strictly pursued and no penalty shall be in
Error to the Court of Common Pleas of Veflicted or anything done agreeably to the pro- | nango county. visions of the common law in such cases, further Assumpsit by Charles B. Wright and William than shall be necessary for carrying such act or H. Kemble against the Antwerp Pipe Company acts into effect. See 1 Purd. Dig., 58, pl. 5, and and the Oil City Pipe Company, upon a joint cases cited in note (a). Criswell v. Clugh, 3 W., note of the defendants for $20,000 to the order of 330; Oliphant v. Smith, 3 Pa. St., 180; Thomas Henry Harley, and by him indorsed for value, v. Simpson, 3 Barr, 68; Ensworth v. Common- before maturity, to the plaintiffs. weaealth, 2 P. F. Smith, 3:24. We see no error At the trial the following facts appeared: The in the other assignments. Undoubtedly the note in suit was the joint note of the defendants, authority to grade and pave streets is among given by them to one Henry Harley, in part the implied powers of a municipal corporation : payment for 18,360 shares of stock in the PennCity of Williamsport v. Commonwealth, 3 Norris, sylvania Transportation Company, which they 493. The eighth clause of the third section of jointly had bought from him. The note was the general borough law (P. L. of 1851, p. 323), signed “H. M. Hughes, trustee for Antwerp requiring notice to be given of a proposition to and Oil City Pipe Cos.," and the minute-books fix or change the roads, streets, etc., of a bor- of the said corporations, put in evidence by the ough is merely directory, and the omission to plaintiff, showed that each company formally give the notice does not invalidate the pro- approved and ratified the giving of said note, ceeding : . Pittsburgh v. Coursin, 24 P. F. Smith, for the consideration mentioned. 400.
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, Company, organized under the Act of 1874, they before the sale of the note by Harley to plain- would not be entitled to recover as against the tiffs. It was further proved that the plaintiffs Oil City Pipe Company. The pote is the joint knew what the original consideration for the note of the Antwerp Pipe Company and the Oil note was.
City Pipe Company. The consideration of the The Antwerp Company was incorporated un-note in part is the illegal purchase by the Oil City der Act of July 18, 1863, and the Oil City Pipe Pipe Company of the stock of the Pennsylvania Company, the other defendant, was incorporated | Transportation Company. The Antwerp Pipe under Act of April 29, 1874.
Company signed this note, not alone as a payThe court below charged the jury, inter alia, ment of their purchase, but also as indicating as follows: “It is in evidence, and not disputed, the liability of that company for the Oil City that the Oil City Pipe Company was organized | Pipe Company, and hence we think that the under the provisions of an Act passed the 29th illegal consideration attaches to the whole conof April, 1874, and under that act it is provided sideration of the note, and that there can be po that it should not be lawful for any such cor-recovery against either company.” (Third asporation that is, for any corporation organized signment of error.) : . under that act—to use any of its funds in the Verdict and judgment for defendants. The purchase of stock in any other corporation, or to plaintiffs thereupon took this writ, assigning for hold the same, except as collateral security for error the charge of the court as above quoted. a prior indebtedness. It is not disputed that For plaintiffs in error. Messrs. Wm. S. Lane the consideration for this note was the purchase and c. Hendrick. by the companies defendant of stock in the
Contra, Messrs. Osmer, Dale & Freeman. Pennsylvania Transportation Company; and it appears, and is not disputed by the plaintiffs, Opinion by PAXSON, J. Filed November 20, that, before and at the time of the purchase of | 1882. the note by the plaintiffs, they knew what It is conceded that the plaintiffs are holders formed the consideration of the note. They for value of the note in controversy, and that knew that the note was given to Harley in part they are not affected with notice of any fraud payment of the purchase, by these two compa- on the part of Harley, the payee. It was alleged, nies, of stock in the Pennsylvania Transporta, however, that the consideration of the note was tion Company. And they were bound to know illegal, and that the plaintiff's knew, or were the law. They were bound to know that the affected with notice of this fact. transaction was an illegal transaction." (First The note is the joint note of the Antwerp Pipe assignment for error.)
Company and the Oil City Pipe Company, and “Our construction of the statute is that this was given in part payment of 18,360 sbares of provision of it (namely, that interdicting the the stock of the Pennsylvania Transportation purchase of stock) was not made alone for the se- Company. The Oil City Pipe Company was curity of the stockholders; if it were, then the organized under the provisions of the Act of fact that appears in evidence in this case is that 29th April, 1874, and under that act it is proall the stockholders, in behalf of these compa- | vided that it should not be lawful for any cornies, assented to the transaction; we think that poration organized under it to use any of its would bind them. But we think the statute funds in the purchase of stock in any other coritself is grounded upon public policy, and that poration, or to hold the same except as collateral it is our duty to enforce it. That that view, the security for a prior indebtedness. The court reading of it, the purpose to make unlawful below instructed the jury that the consideration the purchase by one corporation of the stock of of the note being unlawful the plaintiff's could another corporation, we think is grounded upon not recover. This ruling is the only material principles of public policy. And hence, al- error assigned. though all of the stockholders of both compa- The note contained upon its face no evidence nies defendant may have assented to the trans- of illegality, and was issued by corporations action out of which the note grew, we think having ample power to make and issue comthat it is a matter prohibited by law, and that mercial paper. The contract claimed to be ille no ratification by them can make it valid, and gal had been fully executed and the stock dethat, consequently, the plaintiffs in this suit livered. If the Oil City Pipe Line Company cannot recover." (Second assignment of error.) exceeded its corporate powers in the purchase
"The plaintiff's claim that, as to the Antwerp of this stock, can it now repudiate its note in Pipe Company, they are entitled to recover, the hands of a holder for value upon the grounds notwithstanding, as against the Oil City Pipe that the transaction out of which it grew was
--- --- - - -
-- -ultra vircs? The law never sustains a defense the grantee, and the drawing of the number of this nature out of regard for a defendant; it were recited, and in which same deed the grantor does so only where an imperative rule of public reserved a ground-rent of one dollar per year, a policy requires it. The instances are rare in subsequent holder of the title of the grantee which a corporation or individual has been per could not set up the lottery as a defense to the mitted to set up its own wrong in order to retain payment of the ground-lent. In Bly v. Second both the property and its price. The defend National Bank of Titusville, an indorser upon a ant corporations have obtained the stock which note discounted by the bank defended upon the they now allege they had no right to buy, and ground that the loan was in contravention of propose to retain it without payıņent. It would the twenty-ninth section of the Act of Congress be difficult to imagine a defense with less merit, of June 3, 1861, commonly called the National and the law would be exceedingly impotent Bank Act, which provides that “The actual were it to allow it to succeed. The very point liabilities to any association of any person, or was decided in the Oil Creek & Allegheny River of any company, corporation or firm for money Railroad Co. v. The Pennsylvania Transporta- borrowed * * * shall at no tiine exceed onetion Co., 2 Norris, 160, where it was held that tenth part of the amount of the capital stock of where a corporation has entered into a contract such association actually paid in." The court which has been fully executed on one part, and below, TRUNKEY, J., in an opinion which was nothing remains but for it to pay the considera-adopted by this court, held the defense insuffition money, it will not be allowed to set up that cient, and said: “The plaintiff needs no aid the contract is ultra vires. This judgment was from the original transaction to make out his approved by all the members of the court who case. Garfield is no party to the note. The heard the argument, and was but declaratory of defendant attempts its defeat, not by showing the law as ruled in a pumber of earlier cases. anything done at the time it was given, but beIn Swan v. Scott, 11 S. & R., 164, it was said by cause of the turpitude of the borrower and lender Justice DUNCAN: “The test whether a demand when Garfield borrowed money of the bank in connected with an illegal transaction is capable excess of the amount the latter was permitted of being enforced at law is whether the plaintiff to loan to one person.". requires the aid of the illegal transaction to When the plaintiff's offered the note in eviestablish his case." The converse of this propo-dence, they had a perfect prima facie case, and sition is equally true, that where the plaintiff did not need the aid of any illegal transaction has made out his case without calling the illegal to entitle them to a verdict. They required no transaction to his aid, the defendant who has aid from the contract for the sale of the stock. enjoyed its benefits cannot set up the defense of That, as before observed, had been fully exeultra vires. In Northampton County's Appeal, cuted, and was a matter with which the plain6 Casey, 305, it was said by PORTER, J.: “A tiffs had nothing whatever to do. man who has enjoyed a privilege has no right! After the plaintiffs had made out their case, to say that because he ought not to have enjoyed the defendants set up their want of corporate it he will not pay for it. However unlawful the power to buy the stock, by way of defense. This act, it would be unsound policy to give him this with the stock transferred to them and impaid immunity.” To the same point are the remarks for. The object of this defense, if successful, of Chief Justice GIBSON, in Lestapies v. In-would be to punish innocent parties who had graham, 5 Barr, at page 81: “True it is that no connection with the illegal transaction for an illegal contract will not be executed; but the wrongful act of the defendant corporations. when it has been executed by the parties them- It may be that as between the original parties selves, and the illegal object of it has been ac- the defendant could have rescinded the contract complished, the money or thing which was the and declined to receive the stock. But they price of it may be a legal consideration between executed it; they accepted the stock, and gave the parties for a promise, express or implied, their note in payment, for which note the plainand the court will not unravel the transaction tiffs paid value in good faith. The defense of to discover its origin." In Hipple v. Rice, 4 ultra vires by a corporation comes with a better Casey, 406, it was held that where lots in a town grace if made before it has discovered that it has were disposed of by lottery, each purchaser of a made a bad bargain. ticket being entitled to a lot of equal size and | If, as the defendants allege, they have violated value, to be determined by the drawing, and the their charters, it is a matter that is within the owner of the land after the drawing of the lottery cognizance of the attorney-general. made a deed to the grantee, in which the mak- Judgment reversed and venire facias de novo ing of the lottery, the purchase of the ticket by l awarded.
Court of Common Pleas, No. 2.
| the question whether the doctrine announced in Faikncy 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 r'. Reynons, 4 Burrows, 2069, was tried C. and N. engaged in buying and selling stocks on
before Lord MANSFIELD ju 1767. Faikney & margins. No stocks were actually bought or sold or Richardson were partners in stock-jobbing intended to be. C. advanced the money and N, man transactions, prohibited by the Act of Parliaaged the speculation, which resulted in a large loss.
ment. They lost £3,000. Tbis suit was on a Two years after the close of their operations, they made a settlement by which it appeared that Ni's share of
note given by defendant as surety for Richardthe loss amounted to $20,131.93, for which he gave to son, for Richardson's share of the losses, £1,500. C. a judgment bond, upon which judgment was entered Tbe illegality of the transaction was set up as a in favor of C. to the use of a third person. Upon a rule
defense. Lord MANSFIELD held the defense intaken by the defendant to open the judgment, held, (1.) That the transactions were illegal, immoral and
sufficient; that while the transaction in stockagainst public policy.
jobbing was prohibited it was not malum in (2.) The entry of the judgment upon the bond, by virtue se, and that the giving of the note to make of the warrant of attorney accompanying it, did not
up Richardson's share of the loss was a fair preclude the defendant from alleging the illegality of the transaction or prevent the court from inquiring
and honest transaction between him and the into it.
plaintiff. (3.) The courts are not open to enforcing such contracts,
| This case was followed by Petrie v. Hannay, and will not give relief to those who voluntarily par
3 T. R., 418, decided in 1789. The plaintiff's ticipate in them.
testator with the defendant and others were Rule to open judgment.
engaged, through a broker, in illegal stock-jobOpinion by WHITE, J. Filed January 13, bing. The defendant accepted a bill drawu on 1883.
him for a portion of the loss incurred in their Judgment was entered, October 21, 1882, on joint operations. He failed to pay it; suit was bond and warrant of attorney dated July 1, 1871, brought by the broker against the plaintiff's tesin penal sum of $10,000, for payment of $20,131.93, tator and recovery had. This suit was brought payable in four equal installments, seven, eight, by the plaintiff to recover from the defendant wine and ten years after date. Judgment en- the amount paid the broker, being the amount tered for $24,861.22.
of the bill he had accepted. The defense set up The testimony establishes these facts: That was the illegality of the transactions. KENYON, plaintiff and defendant in the years 1868 and C. J., who dissented in Faikney v. Reynons, 1869 were engaged in buying stocks on margin, thought this case could be distinguished from the plaintiff advancing the money, and the de- that. But BULLER, J., placed it on the same fendant buying the stocks. No stocks were ground. The defense was held insufficient. actually bought or sold or intended to be. All Tenant v. Elliott, 1 Bos. & Pul., 3, was decided the transactions were on margins. They lost in 1797. The defendant, a broker, obtained an heavily. On the 1st of July, 1871, some two insurance for plaintiff on goods shipped to the years after their operations had closed, they East Indies, in violation of an Act of Parliament. made a settlement, showing that defendant was The goods were lost, and the defendant received indebted to plaintiff in the sum of $20,131.93 as the insurance money. He refused to pay over his share of the losses, for which this bond was to the plaintiff, and this action was brought to given.
recover the money. The defendant set up as There can be no doubt that their transactions defense the illegality of the shipment and insurwere illegal, nothing more than gambling ad ance. His defense was unavailing. EYRE, C. ventures, immoral and against public policy: J., said: “The defendant is not like a stock. Brua's Appeal, 55 Pa. St., 294; Morris Coal Co. holder. The question is, whether he who has v. Barclay, 68 Id., 173; Fareira v. Gabell, 89 received money to another's use on an illegal Id., 89.
contract, can be allowed to retain it, and that The fact that a judgment was entered on the not even at the desire of those who paid it to warrant of attorney a::companying the bond | him. I think he can not." does not preclude the defendant from alleging The next case was Farmer v. Russell, i Bos. the illegality of the consideration, or prevent & Pui., 296, decided in 1798. The defendants the court from inquiring into it: Ham v. Smith, were cominon carriers, who had transported 87 Pa. St., 63.
some counterfeit money and received the pay Do the facts above stated constitute a good therefor for the plaintiff but refused to pay orer, defense?
because of the illegal character of the transacThe plaintiff's right to recover depends upon tion. The plaintiff recovered; EYRE, C. J., holding that the evidence did not convict the afterwards received the bill in question for that defendants of knowledge of the fraud; BULLER, sum, then according to Petrie v. Hannay he J., holding that that was im niaterial, for the might have recovered. But here the bill was money was received for the plaintiff, and the given for those very differences, and therefore defendant could not on any ground withhold Wilson himself could not have enforced payit; but ROOKE, J., thought that as the plaintiftment." Nor could the plaintiff for he took it was engaged in a foul fraud, he should have no with knowledge. standing in court, if his agents cheated him thie! This case was followed in 1798 by Brown ». court should give him no relief.
| Turner, 7 T. R., 630. The defendant einployed Ex parte Bulmer, 13 Ves., 313, was decided in a broker in illegal stock-jobbiny transactions. 1807. Bulmer had placed in a broker's hands The broker drew on bim for the differences money to be invested in illegal stock-jobbing which he accepted. On suit by the broker detransactions. He had a large balance in his fendant set up the illegal transaction, and it was hands for which he gave twelve pronjissory held a good defense under the authority of Steers notes to Bulmer. He was held liable on the v. Lashly. notes. Lord ERSKINE said: “If the illegality Cannan v. Bryce, 3 Bar, & Ald., 179, was debe malum prohibitum only, the plaintiff may cided in 1818. The plaintiff' loaned money to the recover, unless it be directly upon the contract defendant for the express purpose of paying prohibited." And referring to Faikney v. Rey- losses by the defendant in stock-jobbing transacnons said, the principle of that case “though tions, which was so paid, and took defendant's doubted by high authority, has stood its ground, notes for the amount. Held, that he could not wherever it has been questioned, and must be recover on the notes, although he was not a taken to be law."
party to the illegal transaction. ABBOTT, C. J., The doctrine announced in Faikney v. Rey- | in referring to Faikney v. Reynons and Petrie v. nons, was frequently questioned in the English | Hannay, says: “The propriety of those deciscourts, and several early cases decided in con- ion has been questioned in several subsequent flict with it.
cases; and the distinction taken in the former Mitchell v. Cockburne, 2 H. B1., 379, decided of them between malum prohibitum and malum in 1794, was similar in its features, and almost in se was expressly disallowed in the case of identically the same. The plaintiff and defend-Aubert v. Maze. Indeed we think no such disant were engaged jointly in illegal insurance tinction can be allowed in law." business, and lost. They referred their accounts Faikney v. Reynons and Petrie v. llannay to an arbitrator who found that Cockburne owed have been cited and approved in several AmeriMitchell. Suit was brought to recover the can cases. In the Supreme Court of the United amount, EYRE, C. J., nonsuited the plaintiff. States in Armstrong v. Toler, 11 Wheaton, 258: He referred to Faikney v. Reynons and Petrie Planters' Bank v. Union Bank, 16 Howard, 483, v. Hannay, and thought they should have been and Brooks v. Martin, 2 Wall., 71. In the Sudecided otherwise. “But be that as it may," preme Court of Pennsylvania in Swan v. Scott, he said, “it is sufficient now to say that those 11 S. & R., 155; Lestapies v. Ingraham, 5 Pa. cases go one step short of the direct illegal trans St., 71, and Morris' Run Coal Co. v. Barclay action, but the present case arises inmediately | Coal Co., 68 Id., 173. out of it." In Faikney v. Reynons “the bond Armstrong v. Toler was an action by Toler to was given to secure repayment by a third per recover moneys paid out by him at request of son of his proportion of the money paid by the Armstrong, on account of goods imported by plaintiff in the stock-jobbing." And in Petrie Armstrong in 1812 in violation of law. They v. Hannay “the money had been paid by Kee were consigned to Toler, but seized by the govble, and the action was brought to reimburse vernment, and by request of Armstrong, Toler his executors for the defendant's share.” | paid the duties, etc. Armstrong resisted pay
Steers v. Lashly, 6 T. R., 61, was decided in ment on the ground of the illegal transaction. 1794. The defendant and one Wilson had been It was tried before Judge WASHINGTON in the jointly concerned in illegal stock-jobbing. An Circuit Court, plaintiff recovered and judgment arbitrator found a difference in favor of Wilson affirmed in the Supreme Court of the United for £306, for which Wilson drew his bill on de- States. It was held that, although Toler may fendant who accepted it, in favor of the plaintiff, have been privy to the illegal importation, yet who knew the facts of the case. Plaintiff sued after the government had seized the goods, his on the bill and was defeated. KENYON, C. J., contract to pay the duties was based upon a new said: “If the plaintiff had lent his money to and independent consideration sufficient to susthe defendant to pay the differences, and had l tain assumpsit against Armstrong for the money