doubt that the contract between appellee and the Hydraulic Building Stone Company was in violation of this statute. The court not only finds that the contract was ultra vires, but the evidence shows that the performance of the contract would involve the necessary expenditure of considerable sums of money for labor, material, etc., other than that necessary in the manufacture, or the purchase, or sale of material in the transaction of the business of the corporation. In supplying such additional sums the corporation of necessity would be required to "use its stock, means, assets, or other property," directly or indirectly in violation of the article of the statute referred to. The contract, therefore, as we conclude, was affected with a positve illegality which rendered it void for all purposes and as to all persons. See Revised Statutes 1911, art. 1164; Edwards County v. Jennings, 89 Tex. 621, 35 S. W. 1053; Republic Trust Co.. v. Taylor, 184 S. W. 773; Brenham v. Water Co., 67 Tex. 561, 4 S. W. 143; Levy v. Wise, 15 La. Ann. 38; Lancaster Township v. Graves, 48 Ind. App. 499, 96 N. E. 172; Schaun v. Brandt, 116 Md. 560, 82 Atl. 551; First National Bank v. Clark's Estate, 59 Colo. 455, 149 Pac. 612; Denison v. Gibson, 24 Mich. 187; Tandy v. Elmore-Cooper Live Stock Com. Co., 113 Mo. App. 409, 87 S. W. 616.

The simple citation of the above authorities would perhaps be all that is necessary to do, as the principles involved are therein fully discussed, and what we could say would, in a measure, be largely mere repetition; but for the sake of clearness it may not be amiss to here add that in the case of Edwards County v. Jennings, supra, it was held by our Supreme Court that the sureties for the performance of a contract between the county and Jennings, which was in violation of our Constitution and laws against monopolies, were not bound. The court makes clear the distinction between contracts which are merely ultra vires-that is, contracts that merely extend beyond the charter purposes or powersand those which are not only beyond such purposes or powers but also positively forbidden, as here, by some statutory or constitutional law. The statute quoted had in view the protection of the stockholders of corporations. It was part of the law of the land and, in contemplation of law, was known to appellee at the time he entered into the contract with the Hydraulic Building Stone Company, and it must be held that, in a legal sense, he then knew that the contract was forbidden. In the case of the Republic Trust Co. v. Taylor, cited above, the Dallas Court of Appeals held that a promissory note was void, even in the hands

of an innocent purchaser, which had been given for stock in a corporation in violation of the Constitution, art. 12, § 6, declaring that no corporation shall issue stock except for money paid, labor done, or property actually received. Other illustrations doubtless could be given, but we think the authorities cited and what we have said sufficiently support the conclusion already stated.

It follows that the appellant sureties, in our opinion, were not bound upon the indemnity bond given by them, and that other questions presented upon this appeal need not therefore be discussed. The trial court's findings of fact not inconsistent with what we have hereinbefore stated are, accordingly, adopted; but thereon the judgment will be reversed and here rendered for appellants.

Reversed and rendered.

NOTE.-Surety on Void Contract of Corporate Principal. It generally has been held that one who becomes surety for a person who is incapable of contracting is nevertheless obligated. In Gates v. Tebbetts, 83 Neb. 573, 119 N. W. 1120, 20 L. R. A. (N. S.) 1000, in the opinion by the court and in an elaborate note thereto in L. R. A. (N. S.) 1000, the authorities to this effect are said to be almost universal. In the case of a person it is said the defense is personal and for this very reason it may be that a surety has been required. In Winn v. Sanford, 145 Mass. 302, 14 N. E. 119, 1 Am. St. Rep. 461, it was said: "Where one becomes a surety for the performance of a promise made by a person incompetent to contract, his contract is not purely accessional, nor is his liability necessarily ascertained by determining whether the principal can be made liable. Fraud, deceit in inducing the principal to make his promise, or illegality thereof, all of which would release the principal, would release the surety, as these affect the character of the debt; but incapacity of the principal party promising to make a legal contract, if understood by the parties, is the very defense on the part of the principal against which the surety assures the promisee." Is the principle in the last clause modified by the fact, that the contract is by a corporation not merely ultra vires but absolutely forbidden by law to be entered into, as the instant case decides?

In Weare v. Sawyer, 44 N. H. 198, there was a promissory note signed by a school district as principal and by one of defendants as surety. The court said: "There can be no question that the district, at the time the money was hired and the note given in their behalf had power under the statute, to hire the money and give the note. ***The money has been received by the authorized agents of the district and applied to the use of the district. ***This is not the case where an agent has attempted to involve the district in an unauthorized amount of expense." This is said arguendo, but what would be the effect on the obligation of the surety is merely suggested.

But the court, further arguing, says: "It is laid down in respect to infants, married women and

other persons incompetent to contract, that the surety must respond, and we see no reason why the same doctrine does not apply to the case of a want of authority." This remark applied to want of authority by an agent and not want of power by a principal to contract.

In Poindexter v. Davis, 67 N. C. 112, it was held that where a county contracted a debt during the civil war for the purpose of equipping soldiers for the Confederate service, its bond for money to pay such debt was valid. Both the county and its surety were held liable because the illegality was remote. But afterwards the surety sued for reimbursement (Davis v. Commissioners, 72 N. C. 441), and recovery was denied. The language in the case suggests it was by a judge in the reconstruction era. It was said: "While the county court had no power to give the bond, the plaintiff Davis had the power to do it; and there being no moral or political turpitude he is bound by it. But when he calls upon the people of Stokes County to reimburse or indemnify him, they have the right to answer that he was not their surety."

In Maledon v. Leflore, 62 Ark. 387, 35 S. W. 1102, it was claimed surety was not liable because board of directors had no right to execute the note for which he was sued upon as surety. The court said such a defense was not tenable "for the reason that a surety is as a general rule liable on a note executed by him as such, although his principal has no capacity or authority to make such a contract. The rule has frequently been applied in cases where the principal was an infant or married woman, and we see no reason why it should not apply when the note is executed by a corporate principal without proper authority."

In Yorkshire Ry., etc., v. Maclure, 19 Ch. D. 478, the question was treated of surety on an illegal contract by a corporation and it was held that though this as a defense was available both in law and equity to the corporation, nevertheless the sureties were liable thereunder. Reference was made to Chambers v. Ry. Co., 5 B. & S. 588, wherein Lord Blackburn said: "The plaintiff had become security for a loan to the company by signing a joint promissory note. When the note became due the bank had a right to come upon him and the co-surety, but he could not have sued the company for money paid to their use; he paid it to discharge a loan which was not contracted by the company in compliance with restrictions imposed by their act." The case using this excerpt says: "Lord Blackburn does not doubt the right of the lender to recover against the sureties, although the loan was to a railway company which could not borrow. Probably the very reason for requiring the guarantee was the doubt that existed whether the company could be compelled to repay the money."

It is to be noticed that in the cases regarding incapacity of persons to contract this very reason is given for holding the surety liable. It seems to us, therefore, that unless there is some immorality or policy antagonistic to law in holding the surety liable, there is no difference in a surety for a corporation upon an absolutely void contract and one where he signs for a person having no capacity to contract. C.

CORRESPONDENCE

RESPECT FOR LAW FUNDAMENTAL IN A DEMOCRACY.

Coeur D'Alene, Idaho, Aug. 7, 1917.

Editor Central Law Journal:

I desire to commend your very excellent article in the Journal for August 3rd upon "Respect for Law Fundamental in a Democracy," by Judge Wade.

How very great is the need of such instruction has been brought vividly home to us during the past two or three months. As you know, this section has been the hot-bed for I. W. W. agitation during the past few weeks. Because of their ignorance and unfamiliarity with the real good in American institutions many men fall easily a prey to the agitator. We may not be able to save these men but it is possible to save the schoolboys of to-day from following their lead.

Judge Wade's program is excellent; but to begin with the high school is not even soon enough. Adapt it to the boys and girls in the eighth grade, who may never see high school. Good citizenship is so fundamental to the life of a republic that there is no place where such teaching is too early.

Editor Central Law Journal:

Referring to 85 Central Law Journal 68, Home Insurance Co. v. Union Trust Co., it seems to me that this case is wrongly decided. I believe that the following statement in Cooley's Briefs on Insurance, page 916, is a correct statement of the law:

"If a policy delivered to the mortgagee contains a clause providing that no negligence on the part of the mortgagor shall invalidate the insurance, and that in case the mortgagor refuses and neglects to pay any premiums due, the mortgagee shall pay it on demand. This amounts to a contract on the part of the mortgagee to pay the premium on the mortgagor's default, and not merely a condition on the performance of which he may at his option entitle himself to the benefit clause."

The best reasoning of any case on the subject, it seems to me, is the case in 50 North

western 702, St. Paul, etc., v. Upton, cited by you, and the point of that case is this-the mortgagee gets two valuable considerations:

1. The mortgagee gets insurance.

2. It gets insurance in such form as not to be invalidated by certain acts of the mortgagor which usually avoid liability on insurance policies.

These considerations the mortgagee gets from the moment the policies are delivered to it, and hence it is sheer nonsense when the time comes for payment, for the mortgagee to be allowed to decline, for the simple reason that it has already received valuable consideration.

In seizing on the word "providing" and working out an artificial result on the theory of condition, the courts have hardly done themselves credit on the subject matter in cases similar to the present. As a matter of fact, a mortgagee can always protect itself when it pays the premiums, as it has a lien on the mortgaged premises, not only for the amount of the mortgage and interest, but also for any payments made, while the insurance company has no lien whatever.

Very truly yours,

WALTER H. BUCK.

Baltimore, Md., Aug. 6, 1917.

NOTE. Our annotation disputes the correctness of the conclusion in the case referred to. We are in accord with our correspondent in regard to the ruling being based too greatly on verbal terms rather than on the intent in view. There surely ought to exist some consideration moving to the insurance company from the mortgagee, and the way the case criti cised by our correspondent was decided appears to us to ignore this feature.

EDITOR.

AN INQUIRY.

August 1, 1917.

Editor Central Law Journal:

I inquire if you can name the author of this expression: "This is a Government of Law and not of Men," and give the text in which the expression is found?

If the author is living, I want him to admit his mistake before he departs this life; and if he is dead we ought to honor him for his distinguished ability to make men believe in the unreal. H. HALDERSON.

Newman Grove, Neb.

[ED. NOTE. Will some subscriber furnish our correspondent the information he seeks?]

In a recent speech at the American Irish Historical Society's dinner in New York, Irvin S. Cobb told a story about an Irishman. This Irishman on Sunday heard a clergyman preach on the judgment day. The priest told of the hour when the trumpet shall blow and all peoples of all climes and all ages shall be gathered before the Seat of God to be judged according to their deeds done in the flesh. After the sermon he sought out the pastor and he said, "Father, I want to ask you a few questions touching on what you preached about to-day." Do you really think that on the judgment day everybody will be there?"

The priest said: “That is my understanding." "Will Cain and Abel be there?"

"Undoubtedly."

"And David and Goliath-will they both be there?"

"That is my information and belief." "And Brian Boru and Oliver Cromwell will Le there?"

"Assuredly they will be present.”
"And the A. O. Hs. and A. P. As.?"

"I am quite positive they will all be there together."

"Father," said the parishioner, "there'll le little judgin' done the first day."-Current Opinion.

1. Adverse Possession-Claim of Right.-That strip of land was used for dumping refuse from quarry, that marble blocks were placed thereon, or that guys and ropes or cables were maintained upon same, would not give title by adverse possession where such occupancy was not under claim of right.-Vermont Marble Co. v. Eastman, Vt., 101 Atl. 151.

2. Arrest-Resistance to Officer.-Where person being arrested without warrant has knowledge of official character of officer, and is engaged in actual commission of public offense, officer's duty is to make arrest, and citizen's duty is to submit; if officer is resisted, he has right to use force necessary to accomplish arrest and protect himself, but no more.-Tarwater v. State, Ala., 75 So. 816.

nal Code denouncing use of unlawful violence upon another's person, and custom was not defense to superintendent when sued for assault by pupil whom he chastised.-Prendergast v. Masterson, Tex., 196 S. W. 246.

Bankruptey-Ancillary Proceeding.-Proceeding to impress trust on cotton, as to which ancillary proceeding by trustee was pending, held not within jurisdiction of the court, after such ancillary proceeding terminated adversely to the trustee.-Jaffe v. Pyle, U. S. C. C. A., 242 Fed. 67.

6.- -Deficiency.-The trustee in a mortgage given by a corporation to secure an issue of bonds, who has foreclosed upon and sold the mortgaged property, cannot prove a claim for a deficiency against the estate of the mortgagor in bankruptcy. In re A. J. Ellis, Inc., U. S. D. C., 242 Fed. 156.

7.Trustee.-Under Bankruptcy Act, § 45. upon appointment of trustee by referee, person held not ineligible merely because he was one of the unsuccessful candidates voted for by the creditors. In re F. & D. Co., U. S. C. C. A., 242 Fed. 69.

8. Banks and Banking-Capital.-Capital of bank held not paid in cash, and bank's authority to do business fraudulently obtained, where capital was represented principally by credit with another bank, which was to be charged off on demand.-McKinney v. United States Nat. Bank of Centralia, U. S. C. C. A., 242 Fed. 48.

9.- Notice.-Knowledge of cashier of bank discounting notes that payee indorser was in danger of going into receivership did not prevent bank from becoming a holder in due course, where cashier did not know of outstanding contract with the payee for which note was given. -People's Nat. Bank of Tarantum, Pa., v. Cramer, N. J., 101 Atl. 204.

10. -Notice.-A bank, which received money from a depositor under circumstances which charged it with notice that it was a trust fund, held liable to the beneficiary for so much of the fund as it afterward received from the depositor in payment of his personal debt.-Santa Marina Co. v. Canadian Bank of Commerce, U. S. D. C., 242 Fed. 142.

11. Bills and Notes-Evidence.-In suit by bank on a discounted note, where the note was charged back to payee, maker's testimony showing a collateral agreement with payee was admissible.--Adair v. Bank of Hickory Flats, Miss., 75 So. 758.

12. Indorsement.-Paper attached to note reciting that "we do hereby assign to and deposit with said bank" note "executed *** to our order," and signed by maker, held sufficient indorsement to make instrument complete upon its face making bank holder in due course within Code 1904, § 2841, subsec. 52, in view of subsection 31.-Colona v. Parksley Nat. Bank, Va., 92 S. E. 979.

ست

14. Building and Loan Associations-Authority of Officer.-President of loan society, whom the by-laws made the chief executive officer and active manager, was authorized to accept money paid to company by cash or by check to its order, and his misappropriation of funds so paid was the society's loss.-Schwehm v. Chelten Trust Co., Pa., 101 Atl. 93.

15. Cancellation of Instruments-Equity.-On bill to avoid release, claim that release, if valid against releasor, is not answer to suit by his executor claiming damages for injury as to which release was given, which resulted in death of releasor, is answer at law to plea, and presents no ground for equitable intervention.Cogswell v. Boston & M. R. R., N. H., 101 Atl. 145. 16. Carriers of Goods--Bill of Lading.-In action against carrier for damages to goods, bill of lading requiring written statement of loss, plaintiff must show not only that he delivered such statement, but terms of statement itself. Erisman v. Chicago, B. & Q. R. Co., Iowa, 163 N. W. 627.

17. Negligence.-In suit to recover value of goods which carrier had failed to deliver, proof of non-delivery upon demand made prima facie case of negligence which was not overcome by proof that after failure to deliver, goods were seen in defendant's warehouse.-Yazoo & M. V. R. Co. v. Altman, Ark., 196 S. W. 122.

18. Carriers of Passengers-Intoxication.— Defendant carrier could not show injured passenger's statement to another that her husband was too intoxicated to render assistance at time of accident testified to by wife, where defendant offered no evidence showing husband's condition. -Stutsman v. Des Moines City Ry. Co., Iowa, 163 N. W. 580.

19. Invitation to Alight.-Where an infirm, aged passenger had disclosed his destination to the trainmen, statement of one of them, "Well, we are here," was not an invitation for the passenger to alight, while the train was moving. -Viviano v. San Antonio, U. & G. R. Co., Tex., 196 S. W. 267.

23. Commerce—Common Carrier. Being a common carrier within interstate commerce statutes, and engaged in interstate commerce with respect to message from Kansas to Missouri, telegraph company was governed by federal law, as applied by federal courts, to exclusion of all state laws and decisions, as to liability for mistake in transmission.-Poor v. Western Union Telegraph Co., Mo., 196 S. W. 28.

24. Constitutional Law-Due Process of Law. -That school district was not given opportunity to present oral testimony and make an oral argument on appeal from school inspector's order to state superintendent was not deprivation of property rights without due process of law. where there was opportunity to present all facts and arguments in writing.-State v. Cary, Wis., 163 N. W, 645.

25. Corporations General Assignment. Where corporation did not make general assignment for creditors, but made chattel mortgage or conveyance in trust to private trustee for creditors, title to cause of action against director for corruptly disposing of assets vested in trustee.-Millsaps v. Johnson, Tex., 196 S. W. 202.

was

26. Purchase of Claims by Director.-A director, while acting as such, may not lawfully buy at a discount claims against the corporation and have them allowed by the corporation or its receivers on the basis of full value.In re Allen-Foster Willett Co., Mass., 116 N. E. $75.

27. Receivership.-Where a company, the stock of which is owned entirely by a corporation of an enemy country is under the control of an antagonistic board of directors, a receiver will be appointed to protect the interests of the stockholders.-Posselt v. D'Espard, N. J., 101

Atl. 178.

28.

acts of

Covenants-Estoppel.-Although council in building pavilion in violation of building line restriction might estop municipality from enforcing restriction, it would not estop property owners not concerned therein.-Heyniger v. Levinsohn, N. J., 101 Atl. 189.

29. Damages-Aggravation of Disease.—When diseased person is injured through another's negligence, and injury aggravates and excites disease, and accelerates it to stage of disability or death, injured person or his representative has remedy at common law.-In re Bowers, Ind., 116 N. E. 842.

30. Evidence.-In passenger's action for injuries causing miscarriage, her testimony that she had before been frequently confined, showing nature of normal delivery, was admissible to show abnormal character of the delivery in question.-Stutsman v. Des Moines City Ry. Co., Iowa, 163 N. W. 580.

31. Profits.--Under written contract to pay architect for plans and services upon failure to construct building, he may recover for the work done such portion of entire price as the fair cost of his work bears to cost of whole work, and as to the work not done, the profits he night have realized by doing it.-Kitchell v. Crossley, N. J., 101 Atl. 179.

32. Mental Suffering.-Mental suffering of pregnant woman consequent upon apprehension and anxiety as to effect of injury upon foetus