in evidence, but the abstract does not so show. The genuineness of the defendant's signature was admitted, which rendered it unnecessary to introduce the note in evidence for any purpose except to show its appearance.

very creation of the bank, of which he was one of the corporators. As a condition precedent to the granting of letters of incorporation, they were required by the sixth section of the charter "to raise and form a capital of not less than five nor more than fifty thousand dollars, in shares of twenty dollars each " for the security of depositors. The defendant subscribed for one bundred shares of the capital stock thus required and

the board, after the assignment, the remaining seventyfive per cent was "called in for liquidation of the indebtedness of the corporation." He refused to pay in obedience to the call, and when suit was brought by the assignee in the name of the bank, to recover the balance due and owing by him on his subscription, his defense was that the bank was indebted to him as a depositor in a much larger sum, and therefore he should not be compelled to pay.

We see no error, and the judgment is affirmed.

If such a defense were entertained, the effect would be to withdraw from depositors and other creditors of the insolvent bank a portion of the very fund which was specially provided for the common benefit of all alike, and apply it to the sole benefit of the defendant, who, at best, has no better right thereto than other depositors. If every delinquent subscriber to the capi

The bank was incorporated in 1867, when defendant subscribed for one hundred shares of its stock. The par value of each share was $20, but defendant only paid $5 per share. In 1878 the bank made an assignment for creditors. The assets were not sufficient to pay the debts and an assessment of $15 per share was made on the stockholders. In this action defendant set up that he had deposited in the bank $4,425, which he claimed to set off against his liability on his stock subscription. The court below held that he was entitled to the set-off. To review such decision plaintiff took a writ of error.

C. J. Erdman, for plaintiff.
Henninger & De Walt, for defendant.

STERRETT, J. The capital stock of a corporation, whether fully paid or partly outstanding in the hands of subscribers thereto, is undoubtedly a trust fund for the benefit of its creditors. Germantown Railway Co. v. Fitler, 10 P. F. Smith, 131; Woods v. Dummer, 3 Mason, 308; Mann v. Pentz, 3 Comst. 422. While such unpaid subscriptions pass, as assets, to the assignee under a voluntary assignment for the benefit of creditors, and the directors of the insolvent corporation may be required to make such calls on subscribers to the stock as may be necessary to enable him to collect the same, they still retain the impress of trust funds and must go into the hands of the assignee intact, for the purpose of distribution among those for whose benefit they were intended. In this respect they differ from ordinary choses in action belonging to the assignor at the date of assignment. Against the latter, legitimate claims of set-off may exist, and what remains after deducting the same is all that can properly be considered a part of the trust fund.

The demand against defendant in this case is not grounded on business transactions between him and the bank since its organization. It originated in the

become of other depositors and creditors of the insolvent bank? It is not difficult to see what a perversion it would be of the trust fund, and to what gross injustice it would necessarily lead. From the fact that the directors called in the whole of the outstanding subscriptions for the purpose of liquidating the indebtedness of the bank, we have a right to assume that it is all required for that purpose. If defendant's indebtedness to the bank at the date of the assignment had been founded on an ordinary business transaction, such as making or indorsing a note, he might with some show of reason insist on setting up by way of defense a counter-claim as depositor. This would bring him within the principle of Jordan v. Sharlock, 3 Norris, 368.

In Sawyer v. Hoag, Assignee, 17 Wall. 610, it is held that a stockholder indebted to an insolvent corporation for unpaid shares cannot set off against this trust fund for creditors a debt due him by the corporation; that the fund arising from such unpaid shares must be equally divided among all creditors. That case, it is true, arose under the National Bankrupt Act; but so far as the principle now under consideration is concerned, the right to set-off and rule of distribution, under that act, do not materially differ from our voluntary assignment law.

The defense set up in this case derives no support from the principle involved in Fox's Appeal, 8 Week. Notes, 556. The fund for distribution there included proceeds of outstanding subscriptions to capital stock of the Kutztown Savings Bank, which had been collected by the assignee. The whole fund was insufficient to pay depositors, who claimed that as a preferred class they were entitled to the fund for distribution to the exclusion of other creditors, and if not entitled to the entire fund, they had at least an exclusive right to that portion of it which represented capital, collected by the assignee; but it was held that the depositors as a class had no exclusive right to the whole or any particular portion of the fund.

As the case was presented to the court below, we are of opinion that the plaintiff was entitled to judgment for want of a sufficient affidavit of defense.

It is ordered that the record be remitted to the court below with instructions to enter judgment against the defendant for fifteen hundred dollars with interest from the time the same was due and payable according to the call, unless other legal or equitable cause be shown to said court why such judgment should not be so entered.

Zab. 100, it was held that the by-laws of a company requiring a periodical examination of a cashier's accounts were for the security of the company, and that a surety would not be discharged for a neglect of his duty by the directors. In Union Bank v. Forrest, 3 Cr. C. C. 218, the neglect of a cashier to settle the daily | accounts of the teller, according to a by-law of the bank, was held not to discharge the teller's sureties. See, also, Amherst Bank v. Root, 2 Metc. 522. (3) Where fines and dues are not actually received by the treasurer, the damage sustained thereby is the rule for making the assessment. People's Building and Loan Association of Camden v. Wroth. Opinion by Scudder, J.

UNITED STATES CIRCUIT COURT ABSTRACT.*

CORPORATION -ULTRA VIRES- UNDER AUTHORITY TO BORROW MONEY CANNOT ISSUE IRREDEEMABLE

BONDS. Under an authority to borrow money a railroad company has no right to raise money by the issue of irredeemable bonds entitling the holder merely to a share of the earnings after the payment of a certain dividend to the stockholders. Nor has it the right to issue interest-bearing bonds, secured by mortgage, if a portion of such bonds are perpetual. A railroad company, after insolvency and appointment of receivers, adopted a plan by which, in order to pay the floating debt, income bonds were to be issued and sold entitling the holder to a certain dividend and share in the profits after payment of a dividend to stockholders; and in order to retire and pay the mortgage debts of the company, bonds secured by a new mortgage for the whole amount of such debts were to be executed, some of which were to be payable in fifty years, and the others to be perpetual. Held, that in the absence of express legislative authority the issue of such obligations was beyond the power of the company, and would be restrained by injunction at the suit of stockholders. Thomas v. West Jersey R. Co., 101 U. S. 82. (See, also, note to this case in 7 Fed. Rep. 395, by J. C. Harper, where the authorities bearing upon this question presented are collated). U. S. Circ. Ct., E. D. Pennsylvania, April 21, 1881. Taylor v. Philadelphia and Reading Railroad Co. Opinion by McKennan, J. MANDAMUS -OFFICE OF WRIT. - The only office of the writ of mandamus, when addressed to a public officer, is to compel him to exercise such functions as the law confers upon him, and such part of the mandate of the writ as enjoins the performance of duties he has, under the law, no power to perform, is void. High on Extr. Rem., § 32; Johnson v. Lucas, 11 Humph. 306; Houston Tap., etc., R. Co. v. Randolph, 24 Tex. 317; Williams v. Smith, 6 Cal. 91; People v. Forquer, Breese, 68; United States v. County of Clark, 95 U. S. 769. U. S. Circ. Ct., Kansas, March, 1881. United States v. Labette County. Opinion by McCrary, C. J.

CORRESPONDENCE.

PLEADING CONTRACT AND FRAUD.

Editor of the Albany Law Journal:

The LAW JOURNAL for this week has just been received, and among the communications I find one entitled, "Pleading Contract and Fraud," by "G. H. P." In this young practitioner I recognize with pleasure a friend of childhood and of later years, but of whose whereabouts I have for some time been igno

* Appearing in 7 Federal Reporter.

rant, and with your permission I will pay my respects to him by answering his questions.

As your correspondent has stated the principles and doctrines of the two lines of decisions, viz., those of Ross v. Mather, 51 N. Y. 108, etc., and Connaughty v. Nichols, 42 id. 83, etc., there does seem to be an inconsistency which might well shake one's faith in the soundness of the Court of Appeal; but a critical examination of the facts, and more especially of the pleadings of these cases, will disclose the distinction upon which the court has frequently insisted when opposing counsel cited these apparently irreconcilable decisions.

By Ross v. Mather, and the cases following it, the rule was established that where the complaint is based on fraud, pure and simple, and contract alone was proven, the action could not be sustained; but the doctrine of Connaughty v. Nichols, etc., is that when the complaint states a good cause of action on contract and contains additional allegations of fraud, and no fraud is proven, the latter is treated as surplusage and a recovery may be had on contract. Let me refer "G. H. P." to Greentree v. Rosenstock, 61 N. Y. 583, and the remarks of the learned Judge Dwight, page 590, in which he discusses Ross v. Mather, and Connaughty v. Nichols, and says they may well stand together.

In Graves v. Waite, 59 N. Y. 156, he will find an opinion per curiam (the appellant relying on the first case above), which will throw further light on the matter. Judge Earl has been one of the court by which each of these cases was passed upon, and has concurred in the rulings made; he writes the opinion in Neftel v. Lightstone upon the authority of Connaughty v. Nichols; but to see that in his mind as well as in that of the court of which he was a member, there was this distinction, we have but to read Matthew v. Cady, 61 N. Y. 651, where he writes the opinion distinguishing these much-abused doctrines.

The judiciary committees of the Legislature recognize it by the amendments in 1879, to the Code, which has now become subdivision 4 of section 549, and is in substance as follows: In an action on contract, where the complaint alleges fraud in contracting the liability, the plaintiff cannot recover unless he proves the fraud. Hoping "G. H. P." will be satisfied after a study of the reports to which reference is made, I am, very respectfully, S. A. S. BUFFALO, August 20, 1881.

TAXATION OF MORTGAGES.

Editor of the Albany Law Journal: Would not the device for avoiding taxation of mortgages, referred to in your issue of August 6th, under the head of Notes, on page 120, be liable to the objection that such a transaction would be a fraud upon the face of it, and against public policy, and therefore void? And would not a man loaning money upon any such terms, run the risk of losing the whole of his money? J. C. BUXBIE. WINSTON, N. C., August 17, 1881.

A QUERY.

Editor of the Albany Law Journal:

I would like your opinion, through the columns of your valuable JOURNAL, as to whether or not a county judge, of the county where the person is arrested, has jurisdiction to take bail in a case of a person arrested for obtaining goods under false pretenses, when the warrant is issued by a judge of a foreign county. Respectfully, yours, T. P. H.

LE ROY, N. Y., August 8, 1881.

The Albany Law Journal.

IN

ALBANY, SEPTEMBER 3, 1881.

CURRENT TOPICS.

N answer to many inquiries, hints and suggestions for several years, we are now able to announce that an index-digest of the first twenty volumes of the ALBANY LAW JOURNAL is in press and will soon be issued. This is a work long needed, involving a vast amount of labor, and which we think will prove peculiarly acceptable and valuable to our readers. It has been prepared with great care by very competent and experienced hands. We shall be sadly disappointed if it does not save ourselves, as well as our readers, a great deal of time and prevent vexation.

The executive committee of the New York State Bar Association have resolved "that any city or county, or other local bar association in this State, may appoint delegates, not exceeding three in number, to the next annual meeting of the association, to be held in the city of Albany, on the 20th day of September, 1881, and that such delegates shall be entitled to participate in the proceedings at and during such meeting." Mr. Julien T. Davies, the corresponding secretary, writes us: "I have made efforts to obtain a complete list of the bar associations in this State by addressing the various county clerks and others, but I have received very few replies to my inquiries, and feel by no means sure that I am in communication with all the city, county or other local bar associations in this State. For that reason it may occur that some of the local bar associations who have the right to appoint delegates to the annual meeting under the eighth resolution, herewith inclosed, will omit to avail themselves of this privilege." It is to be hoped that this invitation will be heeded, and that the managers of the association will not be forced, in order to get an audience, to the shifts of the man in Scripture who gave the feast. We shall feel very much ashamed if Mr. Justice Matthews has no larger an audience than Mr. Clarkson Potter had for his address at the late convention of the American Bar Association at Saratoga.

In common with some others we had supposed that our last Legislature had pensioned the judges. But a scrutiny of the laws will show that they have done nothing of the sort. By chapter 62 of the Laws of 1881, it is provided that any judge or justice who shall be "removed," pursuant to section 11 of article 6 of the Constitution, for any cause not involving moral delinquency, shall continue to receive, during life and until the expiration of the term for which he was elected, one-half his salary, not exceeding $3,000 annually. This refers to removal by joint resolution, on charges to be heard. It does not touch the case, provided for in section 13, VOL. 24.- No. 10.

The

of retirement by reason of arriving at the age of seventy years. The latter is a case constantly occurring; the former never or seldom occurs. act probably was passed with special reference to disability and removal by reason of sickness or mental incapacity. The other is a case which should at once be provided for. It seems to us much more important to set apart a few thousands for aged and faithful judicial servants of the State, than to heap millions upon the "white elephant" at the top of Capitol Hill.

An important amendment of the Judiciary Article of our State Constitution is pending, to be voted on at this fall's election. It provides for twelve additional justices of the Supreme Court — two in the first, fifth, seventh, and eighth districts, respectively, and one in the second, third, fourth, and sixth districts, respectively. This amendment should certainly prevail. It would have been better to provide for two additional justices in the Third District, which contains the great and litigious counties of Albany and Rensselaer, but we shall be thankful for even one. This amendment must be supplemented by legislation calculated to send business into the county courts; for example, an act denying costs in actions in the Supreme Court of which the county courts have jurisdiction. The proposed amendment of the Constitution will alleviate, but it will not cure, our ills. Something must be done by distribution and equalization of judicial labor. Of course the act which we propose should not apply in counties where there is no separate surrogate.

It has long been observed that queer cases travel in "schools." No matter how novel a legal question arises, it is sure to come up somewhere else and be contemporaneously decided. This fact has received three striking illustrations of late. When Lazier v. Horan, Iowa Supreme Court, 23 Alb. L. J. 150, on the question of the liability of the maker of a note payable at bank, who has deposited the amount in the bank, to meet the note, and the bank fails, and the note is not presented at maturity, was before the court, there was not a precedent known for the decision there made; but the same question was about the same time decided the same way in Bank v. Zorn, South Carolina Supreme Court, ante, 142, and the other way in Indig v. National City Bank, 80 N. Y. 100, ante, 82. So in Monk v. Packard, 71 Me. 309; S. C., 36 Am. Rep. 315; 23 Alb. L. J. 366, it was held that a burial ground near dwellings is not necessarily a nuisance; and the like was held by the Alabama Supreme Court, in Kingsbury v. Flowers, 2 So. L. J. 382. And so in Winspear v. Accident Ins. Co., 6 Q. B. D. 42; S. C., 23 Alb. L. J. 79, it was held that where a man was seized with a fit while fording a river, and falling down was drowned, this was a death by accident and not by disease; and now in Lawrence v. Accidental Ins. Co., 7 Q. B. D. 216, the same is held where a man was seized with a fit at a railway sta

tion, and falling off the platform across the rails, was killed by a train. These latter cases we shall state more fully next week.

We have now read Mr. Phelps' address before the American Bar Association, as we hope all our readers have done. It is in the main a most admirable

piece of work. It gives us pain however to observe that Mr. Phelps is not only heretical about codification, but about married women, and about accused persons as witnesses in their own behalf. While he may be described as conservative on the Code business, he must be styled reactionary on the other two matters. These have passed into successful and approved operation in nearly every community, and it is safe to say there will never be a retrograde movement in respect to them. It is singular to observe that Mr. Phelps treats the privilege of the accused to testify for himself as affording "facilities for escape." One of the most common of the stock arguments formerly advanced against it was the idea that it was cruel to the accused, tending generally to his conviction! As to married women, we have no scruple in saying that "the husband is the antagonist against whom the wife chiefly needs protection." Under the old system he absorbed her property and she was at his mercy as to her pecuniary interests. Even in this State, after so much has been done to ameliorate the wife's condition, if she has no

We

property of her own, or if her husband has succeeded, as he too often does, in coaxing her means away from her, she still has no indemnity for her own, or any right in his, which he cannot deprive her of by will, except her dower, and that is offset by his curtesy. We have very small faith in "the old-time sacred ness" of the married state in respect to property rights. It was a "sacredness" that equity always denounced, and provided remedies against. We are often inclined to think the law of community in goods acquired after marriage, which prevails in several of our States, is the fairest and best. see no inequitable or impolitic "transposition of sex" in allowing to a wife her own property and her own share of the joint savings and earnings. As to the subject of codification, Mr. Phelps has undoubtedly touched upon the weak spot, namely, the proneness of Legislatures to meddle with the fundamental law to suit particular interests. But this is inherent in our system. The same is possible now with our unwritten law, and although we grant that it is not so apt to happen, yet it frequently does happen, and not always for the worse. Our Legislatures must be "educated up" to a wise conservatism. But after all, it is a weak objection to the practicability of a written law, that the Legislature can write it differently. The same is true of statute law, but it never has been deemed a valid objection. What men need is a written law; no matter how often it may be changed, so that it is not in the caprice of a judge to make or unmake it in the particular case. If the suitor knows what it is at a particular time, that is the main thing. Mr. Phelps deprecates the substitution of a "skeleton "

for the present body of the law. What codification proposes is not to substitute a skeleton, bnt to put a skeleton into the present boneless jelly-fish body of the common law. But of this more next winter.

NOTES OF CASES.

'N State v. Foley, 15 Nev. 64, it is held that one

fense is thereby disqualified from testifying in Nevada. This is a much mooted question. The principal case is based upon and sustained by State v. Chandler, 3 Hawks, 393, and Chase v. Blodgett, 10 N. H. 22. Opposed to it are Com. v. Green, 17 Mass. 539; Nat. Trust Co. v. Gleason, 77 N. Y. 400; S. C., 33 Am. Rep. 632, and Sims v. Sims, 75 N. Y. 466. Greenleaf (1 Ev., § 376) says the weight of modern opinion is the other way, and Bishop takes the same view (1 Cr. L., § 976). The principal case does not refer to the New York decisions above cited. The court say in the principal case: "The argument to which most weight seems to be attached is, that the State will not enforce the penalty of a crime committed beyond its jurisdiction, and the denial to a convict of the right to testify, they say, is a part of his punishment. This argument is very satisfactorily met and entirely refuted in both the North Carolina and New Hampshire cases above referred to. They say, in effect, that the ground upon which a convict is held incompetent to testify is, that there is no presumption that he will speak the truth; he is excluded, not for the purpose of punishing him, but for the protection of the party against whom he offers to testify; if it thereby results incidentally that he is subjected to humiliation and disgrace, this is an inconvenience which it is entirely within the power of the State to impose, and of which he has no more right to complain than an atheist had to complain of the discredit which the laws of many countries formerly attached to his oath." "The common-law rule in substance is, that when it has been shown by evidence which imports verity, that a man has been adjudged guilty of an infamous crime, he is no longer worthy of belief, and no man's life or liberty or property is to be affected by his oath. In England, the country

from which we have received the common law, it is true that a foreign conviction did not disqualify a person from testifying, but the reason of this was that the record of his conviction was not conclusive evidence of the fact in an English court." It is otherwise among the States of the Union, say the

court.

It is rather unusual, we imagine, to grant a new trial on account of leading questions, but this was done in Coon v. People, 99 Ill. 368 (Mr. Freeman's advance sheets). It was there held that where the only witnesses testifying, who show any criminal conduct in one accused of crime, are two little girls, aged eleven and nine years, and the court allows leading questions to be propounded to each of them upon the most material and vital part of the accusa