has the right to require that separate lots or parcels shall be sold separately, and may also direct the order in which they shall be sold. The practice act in force prior to the adoption of the Code of Civil Procedure contained a chapter relating to the execution of judgments in civil cases substantially the same as the one upon the same subject in the Code of Civil Procedure; and in the case of Leviston v. Swan, 33 Cal. 480, it was held that a decree of foreclosure need not contain any special directions as to the mode or place of sale, because such matters are regulated by law, and that, by virtue of process to enforce such a judgment, the sheriff is required "to sell the mortgaged property in the mode and manner, and at the place, designated in the practice act for the sale of real estate under judicial process, and make a return of his proceedings, as in the case of an execution upon a money judgment." Judgment and order denying motion for new trial affirmed. The order refusing to set aside the sale of the prop erty directed by the judgment to be sold is reversed.

1. Civil Code Cal. § 5322, provides, among other things, that each stockholder of a corporation is individually and personally liable only for such proportion of any corporate debt as the amount of his stock bears to the whole subscribed capital stock. Held that, where one stockholder and director pays more than his proportionate share of such debt, the payment is not voluntary, and he is entitled, as against a co-director who knew of and acquiesced in such payment, to contribution, and to be subrogated to the rights of the creditor, since he has a beneficial interest in the property of the corporation, which is answerable for the debt, and from which the other stockholders' proportion must be paid, if not paid by them individually.

2. Where, in such action, the stockholder asks to be subrogated to the rights and remedies of the creditor, the period of limitation is that defined by Code Civil Proc. Cal. § 359, providing that actions against a stockholder of a corporation to enforce a liability created by law must be brought within three years after the creation of the liability.

3. Although an amended complaint is filed after the cause of action is barred, it is not demurrable on this ground when it does not show upon its face when the original was filed, or that the cause of action is different from that set up in the original.

4. The original complaint is not superseded by an amendment which alleges substantially the same cause of action, and it remains a "plead ing," within the meaning of Code Civil Proc. § 670, subd. 2, which makes the pleadings part of the judgment roll, and it may also be brought up by bill of exceptions, under Code Civil Proc. $$ 617, 648, providing that "documents on file in the action" may be incorporated therein.

5. Where the original complaint declares on two notes, alleging that they were given for value received," and were assigned by indorsement, and also alleges facts from which an equitable assignment would result, an amended complaint which omits the allegation of iudorse

ment, and alleges that the debt was for money loaned, and for a balance due on account, sets up substantially the same cause of action, the averment as to value received being equivalent to the more specific allegations of the items of money loaned and due on account.

Commissioners' decision. Department 2. Appeal from superior court, Napa county; R. CROUCH, Judge.

Action in equity by John H. Redington against George N. Cornwell. The amend ed complaint alleged that plaintiff, who was a stockholder in a corporation, had paid the whole of a certain debt owed by it, and asked to be subrogated to the rights and remedies of the creditor, and for contribution from another stockholder. Civil Code Cal. § 5322, provides, among other things, that each stockholder of a corporation is individually and personally liable only for such proportion of any corporate debt as the amount of his stock bears to the whole subscribed capital stock. Code Civil Proc. Cal. § 359, provides that actions against a stockholder of a corporation to enforce a liability created by law must be brought within three years after the creation of the liability. It was claimed by defendant that under these statutes the payment by plaintiff of more than his proportion was voluntary, and that he had no right of contribution or subrogation, and also that the action was barred. A demurrer to the amended complaint was sustained, and plaintiff appeals.

Olney, Chickering & Thomas, for appelant. F. E. Johnston, for respondent.

VANCLIEF, C. This appeal is from a final judgment in favor of the defendant, rendered on demurrer to plaintiff's third amended complaint in two counts, and presents for decision the general question, should the demurrer have been sustained? The facts alleged in the first count of the complaint are substantially as follows: During a period of time embracing all the transactions alleged, the plaintiff and defendant were stockholders and directors of the Redington Quicksilver Company, a California corporation, and the plaintiff was president of the board of directors. During the same period the subscribed capital stock of the corporation consisted of 1,260 shares, of which the defendant owned 461 shares. From September 1, 1879, until June 1, 1882, the corporation had "a mutual, open, and current account" with Redington & Co., a copartnership. At divers times during that period the copartnership received from the corporation consignments of quicksilver, which it sold and disposed of for the corporation, and collected the proceeds thereof, advanced and loaned money to the corporation, and paid out money for its use, and also received partial payments from the corporation on the account. In this account the corporation was debited with all moneys loaned and advanced to it, and with all sums paid out and expended for its use by the copartnership, and was credited with all proceeds of sales of quicksilver, and with all payments made on the account. On June 1, 1882, the copartnership and the corporation had

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an accounting, by which it was found that there was a balance of $64,126.24 due from the latter to the former, for which the corporation then made its promissory note, of which the following is a copy: "$64,126.24. San Francisco, June 1st, 1882. On demand, for value received, the Redington Quicksilver Company hereby promises to pay to Mess. Redington & Company, or order, at its office in San Francisco, sixty-four thousand one hundred and twenty-six 24-100 dollars, with interest thereon at the rate of eight (8) per cent. per annum until paid. Interest payable monthly, and, if not so paid, to become a part of the principal, and bear a like interest. [Signed] THE REDINGTON QUICKSILVER COMPANY, JOHN H. REDINGTON, President. [Corporate Seal.] GEORGE PENLINGTON, Secretary." After formally alleging the above facts, the complaint proceeds as follows: "(6) That thereafter, to-wit, on or about the 7th day of June, 1882, said firm of Redington & Co. pressed for and demanded of the said corporation the collection and payment of the balance of the indebtedness aforesaid and of said promissory note; that at the time of said demand said corporation was wholly without funds where with to pay the same; that thereupon, to-wit, on or about the said last-named day, at said city and county of San Francisco, this plaintiff, in good faith, and for the honor, use, and benefit of the said the Redington Quicksilver Co., advanced and paid the said sum of $64,126.24 to said firm of Redington & Co. in full satisfaction and discharge of the said balance, and of the said indebtedness evidenced by the said promissory note; that thereby all of the indebtedness of said corporation then subsisting to said Redington & Co., and all claims and demands of said firm upon said corporate note, were fully paid and extinguished; that said Redington & Co. thereupon surrendered and delivered said promissory note to this plaintiff. (7) That no payments have been made by said corporation, or on its behalf, or at all upon said account, or the said balance thereof, or upon said indebtedness evidenced by said promissory note, or upon or on account of said sum so advanced by said plaintiff, except the sum of $24,126 24, which was repaid to plaintiff thereon, on or about the 31st day of May, 1884, and that on said 31st day of May, 1884, there remained and was, and that there now is, due and wholly unpaid from said the Redington Quicksilver Co. to this plaintiff of the said balance, and of the said indebtedness, and of said sum advanced by plaintiff as aforesaid, the sum of $40,000, with interest thereon from said last-named day, together with interest upon the sum of $24,126.24 from the 7th day of June, 1882, up to said 31st day of May, 1884. (8) That at all the times and dates aforesaid the said defendant was one of the directors of the said the Redington Quicksilver Co.; that, as such director, he acted for said corporation in and about the execu. tion of said promissory note, and also in incurring the indebtedness evidenced thereby, and in making the payments that have been made on account of the same as

* * #

aforesaid; that said defendant, as such director, and also individually, had at all times and dates aforesaid full notice and knowledge of the facts hereinabove alleged, and of each and every one thereof; that he has at all the times, and with notice and knowledge as aforesaid, acquiesced in, confirmed, and ratified all and singular the acts of said corporation, and of said firm of Redington & Co., and of this plaintiff hereinabove mentioned and averred. (10) That by reason of the premises defendant is, and at all the times since the said 31st day of May, 1884, has been, liable and holden to plaintiff for 461-1260 of the said sum of $40,000, and of the interest remaining due to plaintiff from said corporation as aforesaid, towit, the sum of $14,635, together with interest thereon from the said 31st day of May, 1884, at the legal rate, together with 461-1260 of the interest at the legal rate upon the said sum of $24,126.24 from the 7th day of June, 1882, to the 31st day of May, 1884. (11) That, though frequently requested so to do, the said defendant has hitherto wholly failed, neglected, and refused to pay to plaintiff the said last-mentioned sum, or the said interest, or any part thereof. (12) That upon receiving from defendant payment of his proportionate part of the balance and indebtedness aforesaid due from said corporation to this plaintiff, and of the moneys so as aforesaid advanced and paid by plaintiff, and of said interest, this plaintiff is ready and willing, and now here and hereby offers, to discharge and satisfy, to the extent of such payment, the said obligation of the said corporation, or of its stock. holders to this plaintiff, and otherwise to abide by and perform the judgment of this court touching the same." The second count is upon another promissory note of the corporation to the same copartnership firm for the sum of $14,800.43 dated December 31, 1883, for a balance of the account running to the date of this second note. In all other respects the second count is like the first. The grounds of the demurrer are (1) that neither count states facts sufficient to constitute a cause of action; and (2) that both counts appear to be barred by the first subdivision of sec. tion 338 of the Code of Civil Procedure.

1. It is contended by counsel for respondent that the payment of the debt of the corporation by the plaintiff, in excess of that part for which he was individually liable as a stockholder, was purely voluntary, and extinguished the debt as to all other stockholders; and, therefore, that plaintiff cannot be subrogated to the rights or remedies of Redington & Co. against the stockholders. It is true that the doctrine of subrogation "is not to be applied in favor of one who has, officiously and as a mere volunteer, paid the debt of another, for which neither he nor his property was answerable, and which he was under no obligation to pay," nor where "it would work injustice to the rights of others." Sheld. Subr. § 1. It is also true that the plaintiff was not directly liable to pay defendant's proportion of the debts of the corporation, but, as a stockholder, he had a common, well-de

fined beneficial interest, with all other stockholders, in the fund (the property of the corporation) from which defendant's proportion of the debts must have been paid if not paid by defendant; and that fund was answerable for the debt. Ditch Co. v. Zellerbach, 37 Cal. 591; San Diego v. Railroad Co., 44 Cal. 116. There can be no doubt that the plaintiff was entitled to contribution from the defendant to the extent of defendant's proportion of the debt paid. Cook, Stocks, § 27, and authorities there cited; Larrabee v. Baldwin, 35 Cal. 156. From which it follows that his payment was not voluntary since contribution no more than subrogation, is allowed in favor of a mere volunteer. But in this case the plaintiff, in addition to contribution, asks to be subrogated to the rights and remedies of Redington & Co. against the defendant "for the purpose of compelling contribution. Sheld. Subr. § 45; Lamb v. Montague, 112 Mass. 353. Should he be thus subrogated, he will be entitled to the same remedy that Redington & Co. were entitled to, as to which the statute of limitations is three years, (Green v. Beckman, 59 Cal. 545; Moore v. Boyd, 74 Cal. 167, 15 Pac. Rep. 670;) whereas, if he simply sought contribution upon an implied assumpsit, his remedy would be barred in two years, (Chipman v. Morrill, 20 Cal. 131.) This seems to be all he can gain by subrogation, as it does not appear that Redington & Co. held any securities for the debt except the promissory note of the corporation, which added nothing to their remedy against the stockholders, so far as the statutes of limitation are concerned. Larrabee v. Baldwin, 35 Cal. 168; Stilphen v. Ware, 45 Cal. 110; Hyman v. Coleman, 82 Cal. 650, 23 Pac. Rep. 62. In Mosier's Appeal, 56 Pa. St. 76, THOMPSON, C. J., said: "I regard the doc. trine [of subrogation] as applicable in all cases where a payment has been made under a legitimate and fair effort to protect the ascertained interests of the party paying, and where intervening rights are not thereby jeopardized or defeated. Such payments, whatever their effect might be at law in extinguishing the indebtedness to which they apply, will not be so regarded in equity, if contrary to equity to regard them so. See, also, McCormick v. Irwin, 35 Pa. St. 111; Heart v. Bryan, 2 Dev. Eq. 147; Wall v. Mason, 102 Mass. 316; Robinson v. Leavitt, 7 N. H. 99. The case of Guy v. Du Uprey, 16 Cal. 198, recognizes the principle that a payment is not voluntary when made by a party who is interested in having the payment made. In the first section of Sheldon on Subrogation, the author, by way of definition, gives the following, which, so far as it goes, seems to be well sustained by the authorities cited: "It is the subtitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt. The substitute is put in all respects in the place of the party to whose rights he is subrogated. It is derived from the civil law, from which it has been adopted by courts of equity. In this country, under the initial guidance of Chancellor Kent, its principles

have been more widely developed, and its doctrines ore generally applied, than in England. It is treated as the creature of equity, and is so administered as to secure real and essential justice without regard to form, and is independent of any contractural relations between the parties to be affected by it. It is broad enough to include every instance in which one party pays a debt for which another is primarily answerable, and which, in equity and good conscience, should have been discharged by the latter; but it is not to be applied in favor of one who has, officiously and as a mere volunteer, paid the debt of another, for which neither he nor his property was answerable, and which he was under no obligation to pay; and it is not allowed where it would work any injustice to the rights of others."

The complaint is unnecessarily verbose, and perhaps uncertain and ambiguous as to some material matters; but I think it shows that plaintiff was interested in hav ing the debt to Redington & Co. paid, and that he made the payment "under a legit. imate and fair effort to protect" his own interest in the fund which was liable for the whole debt; and, therefore, that the payment was not voluntary in that legai sense which would preclude his right to contribution from the defendant, or his right to be subrogated to the remedies of Redington & Co. as a necessary means to enforce such contribution. Counsel for respondent insists, however, that the complaint shows that the debt of the corporation to Redington & Co. was extinguished, and that it necessarily follows that the debt of the stockholders was also extinguished. After sufficiently alleging the payment of the indebtedness on the account and the note, the complaint adds, as a conclusion from those facts, "that thereby all of the indebtedness of said corporation then subsisting to said Reding. ton & Co., and all claims and demands of said firm upon said corporate note, were fully paid and extinguished.' Even if the averment had been that the debt of all the stockholders was extinguished by the payment, it would have been only an erroneous conclusion from the facts stated, and evidently contrary to the intention of the pleader, whose sole object, plainly expressed, was to recover a stockholder's proportion of the debt. The word "extinguished" was probably used as synonymous with "paid and satisfied." But it is not alleged that the debt of the defendant or other stockholders was "thereby extinguished." As to what will so extinguish the debt that the party paying cannot be subrogated to the rights and remedies of the creditor, see Mosier's Appeal, 56 Pa. St. 76, and Lamb v. Montague, 112 Mass. 353.

2. It is contended that both causes of action appear to have been barred by section 338 of the Code of Civil Procedure at the time the third amended complaint was filed. But it does not appear on the face of the third amended complaint when the original complaint was filed, nor that the third amended complaint states a cause of action substantially different from those stated in the original complaint;

plaint is of doubtful sufficiency to extend the period of limitation, even against the corporation. As to the stockholders it can have no effect whatever, even though sufficiently alleged. The corporation had no more power to extend the period of limitation, as against the stockholders, by a mutual open account, than by making its promissory note. The liability of the stockholders is created and exists by statute. It arises when a debt is contracted by the corporation. It is limited to three years from the time it arises; and it is well settled in this state that the corporation has no power to extend that limitation without direct authority from the stockholders. The original complaint alleges an assignment of the notes by indorsement and delivery, and also states facts from which an equitable assignment and subrogation would result in the absence of a legal assignment. The amended complaint omits the legal assignment by indorsement, this being the only difference. The effect of each mode of assignment against the defendant would be the same. I think each count of the third amended complaint, subject to some degree of un certainty and perhaps ambiguity, states a cause of action not substantially different from those defectively stated in the original complaint; and that so much of the alleged indebtedness as accrued after the 7th day of October, 1881, does not ap. pear to have been barred by the statute of limitations at the time of the commencement of the action. Unless the payments made by the corporation were otherwise specially applied by either party, they should be applied to the items of indebtedness in the order in which they were contracted, as to time. I think the judgment should be reversed, and the cause remanded, with direction to the court below to overrule the demurrer.

1. Civil Code Cal. § 309, provides that "the directors of a corporation must not make dividends except from the surplus profits arising from the business thereof," and for a violation thereof the directors are personally liable "to the corporation and the creditors, in the event of its dissolution, to the full amount of the capital stock so divided." Held, that the directors of a hydraulic mining corporation, which became indebted by acquiring incumbered property, and making improvements on the mine, are not liable to the corporation for dividends declared and paid out of the net profits of the mine before paying the whole of such debt, when a sinking fund has been provided, sufficient to extinguish the debt before the mine shall be exhausted.

2. It was not a violation of the above statute to borrow money temporarily with which to pay

dividends, when the corporation had used the current profits to make improvements.

3. Where investments of the corporation have resulted in loss because of an injunction restraining the company from washing dirt into a stream to the injury of riparian owners, which action could not reasonably have been anticipated, such loss must be treated as a loss of capital, and the directors are not liable because such expenditure was not converted ex post facto into a working expense.

In bank. Appeal from superior court, Santa Clara county; T. K. WILSON, Judge. D. M. Delmas, (W. S. Goodfellow, of counsel,) for appellant. Olney, Chickering & Thomas, for respondent.

BEATTY, C. J. This is an action by a California corporation against one of its former directors to recover the amount of certain dividends declared and paid to its stockholders with the concurrence of the defendant while a director. It is alleged by the plaintiff that such dividends were not paid out of the surplus profits of its business, and the action is based upon the provisions of section 309 of the Civil Code, which reads as follows: "The directors of corporations must not make dividends, except from the surplus profits arising from the business thereof; nor must they divide, withdraw, or pay to the stockholders, or any of them, any part of the capital stock; nor must they create debts beyond their subscribed capital stock, or reduce or increase the capital stock, except as hereinafter specially provided. For a violation of the provisions of this section the directors ander whose administration the same may have happened (except those who may have caused their dissent therefrom to be entered at large on the minutes of the directors at the time, or were not present when the same did happen) are, in their individual and private capacity, jointly and severally liable to the corporation, and to the creditors thereof, in the event of its dissolution, to the full amount of the capital stock so divided, withdrawn, paid out, or reduced, or debt contracted; and no statute of limitations is a bar to any suit against such directors for any sums for which they are made liable by this section. There may, however, be a division and distribution of the capital stock of any corporation which remains after the payment of all its debts, upon its dissolution or the expiration of its term of exist. ence." The complaint counts upon 19 separate dividends, aggregating about $266,000, but, it appearing that the defendant had ceased to be a director before the last dividend was paid, plaintiff limits its claim to the first 18. As to these there is but one question to be decided here: Were they or were they not paid out of the surplus profits of the plaintiff's business? To this issue the attention of the superior court seems to have been confined, and in reviewing its decision it will not be necessary for us to consider any question relating to the special defense interposed by defendant to some of the separate counts upon particular dividends. Aside from this special defense, the only matter put in issue by the pleadings of the parties was that above stated; and, the superior court