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given in exchange for one of his of like amount, etc. Sir Ir. Phillimore and J. G. Barnes, appeared for
This would appear to be conclusive upon the question. appellants.
It certainly should be so regarded as against any false

Bucknill, Q. C., and Nelson, for respondents.
and fraudulent entries made on the books of the com-
pany without defendant's kpowledge or consent. In Lord HERSCHELL. My Lords: This appeal arises upon
addition to this the defendant was a witness in the a special case stated in actious in which the respond.
case, and he testified that the pote was given to Med- ents are plaintiffs. They are both actions brought un-
burst as an accommodation to him and without any der Lord Campbell's Act to recover damages against
consideration. His testimony is very explicit and the appellants for the loss sustained owning to the
clear, and he is corroborated by appellant's book- deaths of the persons of whom the respondents are
keeper, Fox, who certainly could have no motive, so the personal representatives; and it is alleged that
far as appears from the evidence, to give false testi they lost their lives through the negligence of the ap-
mony. That this note in suit was given to Medhurst, pellants. The appellants are the owners of the steam-
and that he was the payee, is certainly established by ship Berning, between which vessel and the steamship
the great preponderance of the evidence. The appel- | Bushire a collision took place, which led to the loss of
laut selected and sent to Utah a man who was a fifteen persons, who were on board the latter vessel.
stranger here to manage a large business. By this act It is admitted that the collision was caused by the
it commended him to business men and vouched for fault or defnult of the master and crew of both ves-
his integrity. The defendant dealt with him and be sels. J. H. Armstrong, whose administratrix one of
lieved his representations, and the appellant uow in- | the respondents is, was a member of the crew of the
sists on taking advantage of a gross fraud practiced Bushire, but had nothing to do with its careless navi-
upon the defendant by its agent to take this large sum gation. M. A. Toeg, of whom the other respondent
of money from him without any consideration what is administratrix, was a passenger on board the Bush-
ever.

ire. The question arises, whether under these circumI am of the opinion that the court below was right stances the appellants are liable. The appellants havin finding that the note in suit was made and de | ing, as they admit, been guilty of negligence from livered to Medhurst personally for his accommoda which the respondents has suffered loss, a prima facie tion and without consideration.

case of liability is made out against them. How do they defend themselves? They do pot allege that those whom the respondents represent were personally

guilty of negligence which contributed to the acciVEGLIGENCE IMPUTABLE - PASSENGER

dent. Nor again do they allege that there was con. ON SHIP.

tributory vegligence on the part of any third person

standing in such a legal relation toward the deceased HOUSE OF LORDS, FEB 28, 1888.

men as to cause the acts of that third person, on prin.

ciples well settled in our law, to be regarded as their MILLS V. ARMSTRONG; THE BERNINA.*

acts as, e. g., the relation of master and servant or em

ployer and agent acting within the scope of his auAn ordinary passenger by a ship or public conveyance is not thority. But they rest their defense solely upon the

affected either in a question with contributory wrong ground that those who were vavigating the vessel in doers or with innocent third parties, by the negligence of

which the deceased men were being carried were the master and crew by whom the ship is navigated, or

guilty of negligence, without which the disaster would of the driver, unless he actually assumes control over

not have occurred. In support of the proposition that their actions and thereby occasions mischief. And there.

this establishes a defense, they rely upon the case of fore in the case of a collision between two ships causing

Thorogood v. Bryan, 8 C. B. 115, which undoubtedly logy of life where both ships were in fault: Held, that the

does support their contention. This case was decided personal representatives of a passenger or seaman not on

as long ago as 1849, and has been followed in some duty who was killed could recover damages against the

other cases; but though it was early subjected to owners of the othership in an action under LordCampbell's

adverse criticism, it has never come for reversion beAct.

fore a Court of Appeal until the present occasion. THIS was an appeal from a judgment of the Court of |

That action was brought under Lord Campbell's Act I Appeal (Lord Esher, M. R., Lindley and Lopes,

against the owner of an omnibus by which the deL. JJ.), reported in 56 L. T. Rep. (N. S.) 258, and 12

ceased man was run over and killed. The omnibus iu Prob. Div. 58, who had reversed a judgment of Butt,

which he had been carried had set him down in the J., reported in 54 L. T. Rep. (N. S.) 449, and 11 Prob.

middle of the road instead of drawing up to the curb, Div. 31, upon a special case.

and before he could get out of the way he was run The action was brought under Lord Campbell's Act

over by the defendant's omnibus, which was coming (9 & 10 Vict., chap. 93) against the owner of the ship

along at too rapid a pace to be able to pull up. The Bernina by the personal representatives of two per

learned judge directed the jury that "if they were of sous who were on board the Bushire, a British ship,

opinion that want of care on the part of Barber's om. and were killed in consequence of a collision with the

nibus in not drawing up to the curb to put the deBernina, which was also a British ship. The collision

ceased down, or any want of care on the part of the was the fault of both ships, but the deceased persons

deceased himself, had been conducive to the injury, had nothing to do with the negligence which caused

in either of those cases, notwithstanding the defend. the accident.

ant, by her servant, had been guilty of negligence, The facts, which were not digputed, are fully set out

their verdict must be for the defendant." The jury in the reports in the courts below.

gave a verdict for the defendant, and the question Butt, J., held that he was bound by the decision in

was then raised, on a rule for a new trial on the ground the case of Thorogood v. Bryan, 8 C. B. 115, and gave

of misdirection, whether the ruling of the learned judgment for the defendauts, but his decision was

judge was right. The court held that it was. It is reversed as above mentioned.

necessary to examine carefully the reasoning by which The owners of the Bernina appealed to the House of

this conclusion was arrived at. Coltman, J., said ; Lords.

“It appears to me, that having trusted the party by

selecting the particular conveyance, the plaintiff has * 59 L. T. Rep. (N. S.) 423. See 35 Alb. L. J. 326.

so far identified himself with the owner and his ser

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vants, that if any injury results from their negligence of conveyance, that is to say, drove in an omuibus he must be considered a party to it. In other words, rather than walked, or took the first omuibus that the passenger is so far identified with the carriage in passed him instead of waiting for another? And when which he is travelling, that want of care of the driver it is attempted to apply this reasoning to passengers will be a defense of the driver of the carriage which travelling in steamships or on railways, the uureasondirectly caused the accident.” Maule and Vaughan | ableness of such a doctrine is even more glaring. The Williams, JJ., also dwelt upon this view of the iden- only other reason given is contained in the judgınent tification of the passenger with the driver of the vehicle of Cresswell, J., in these words: “If the driver in which he is being carried. The former thus expressed of the omnibus the deceased was in had by his neglihimself: “I incline to think that for this purpose gence or want of due care and skill contributed to an the deceased must be considered as identified with the injury from a collision, his master clearly could maindriver of the omuibus in which he voluntarily becomes tain no action. And I must confess I see no reason a passenger, and tbat the negligence of the driver was why a passenger who employs the driver to convey the negligence of the deceased." Vaughan Williams, him stands in any better position.” Surely with defJ., said: “I think the passenger must for this purpose erence the reason for the difference lies on the very be considered as identified with the person having the surface. If the master in such a case could maintain management of the omnibus he was conveyed by." no action, it is because there existed between him and With the utmost respect for these eminent judges, I the driver the relation of master and servant. It is must say that I am unable to comprehend this doc- clear that if his driver's negligence alone had caused trine of identification upon which they lay so much the collision he would have been liable to an action stress. In what sense is the passenger by a public for the injury resulting from it to third parties. The stage coach, because he avails himself of the accommo. | learned judge would, I imagine, iu that case have seen dation afforded by it, identified with tbe driver? The a reason why a passenger in the omnibus stood in a learved judges manifestly do not mean to suggest better position than the master of the driver. I have (though some of the language used would seem to bear now dealt with all the reasons on which the judgment that construction) that the passenger is so far identi- in Thorogood v. Bryan was founded, and I entirely fied with the driver that the negligence of the latter agree with the learned judges in the court below in would render the former liable to third persons in thinking them inconclusive and unsatisfactory. [ jured by it. I presume that they did not even mean will not detain your lordships further on this part of that the identification is so complete as to prevent the the case, beyond saying that I concur with the judg. passenger from recovering against the driver's master, | ments of the learned judges in the court below, aud though if “negligence of the owner's servants is to be especially with the very exhaustive judgment of considered negligence of the passenger,” or if he Lord Esher, M. R. It was suggested in the “must be considered a party" to their negligence, it course of the argument that Thorogood v. Bryan might is not easy to see why it should not be a bar to such be supported on the ground that the allegation that an action. In short, as far as I can see, the identific the negligence which caused the injury was the decation appears to be effective only to the extent of en fendant's was not proved, inasmuch as it was the deabling another person whose servants have been guilty fendant's negligence in conjunction with that of the of negligence to delend himself by the allegation of driver of the other omnibus. It may be, that as a contributory negligence on the part of the person in pleading point, this would have been good. It is not jured. But the very question that had to be deter- | necessary to express an opinion whether it would mined was whether the contributory negligence of the or not. I do not think it would have been driver of the vehicle was a defense as against the pas | a defense on the merits if the facts had been properly senger when suing another wrong-doer. To say that averred. If by a collision between two vehicles a perit is a defense because the passenger is identified with son unconnected with either vehicle were injured, the the driver, appears to me to beg the question, when it | owner of neither vehicle, when sued, could maintain is not suggested that this identitication results from as a defense, “I am not guilty, because but for the any recognized principles of law, or bas any other ef negligence of another person the accident fect than to furnish that defense, the validity of which would not have happened." And I do not see how was the very point in issue. Two persons may no this defense is any more available as against a person doubt be so bound together by the legal relation in being carried in one of the vehicles, unless the reasonwhich they stand to each other, that the acts of one ing in Thorogood v. Bryan be well founded. I have may be regarded by the law as the acts of the other. said that the decision in Thorogood v. Bryan has not But the relation between a passenger in a public vehi- been unquestioned. I do not think it necessary to cle and the driver of it certainly is not such as to fall enter upon a minute consideration of the subsequent within any of the recognized categories in which the cases, after the careful and accurate examination to act of one man is treated in law as the act of another, which they have been subjected by the master of the I pass now to the other reasons given for the judgment rolls. The result may be summarized thus: The in Thorogood v. Bryan. Maule, J., says: “On the learned editors of Smith's Leading Cases, Willes and part of the plaintiff it is suggested that a passenger in Keating, JJ., strongly questioned the propriety of the a public conveyance has no control over the driver. | decision in the notes to Ashby v. White, 1 Sm. Lead. But I think that cannot with propriety be said. He Cas. Parke, B., whose dictum in Bridge v. Grand enters into a contract with the owner, whom by his Junction Ry. Co., 3 M. & W. 244, Williams, J., followed servant, the driver, he employs to drive him. If he in directiug the jury in Thorogood v. Bryan, appears is dissatisfied with the mode of conveyance he is not to have doubted the soundness of the judgment in obliged to avail himself of it. But as regards the that case. Dr. Lushington, in The Milan (Lush. 388), present plaintiff, he is not altogether without fault;/ expressed strong disapproval of it; and though in he chose his own conveyance, and must take the con Armstrong v. Lancashire & Yorkshire R. Co., 33 L. T. sequences of any default on the part of the driver Rep. (N. S.) 228; L. R., 10 Exch. 47, it was followed, whom he thought fit to trust." I confess I cannot and Bramwell and Pollock, BB., to say the least, did concur in this reasoning. I do not think it well not indicate dissatisfaction with it, I understand that founded, either in law or in fact. What kind of cou my noble and learned friend, Lord Bramwell, after trol has the passenger over the driver which would | hearing this case argued, and maturely considering it, make it reasonable to hold the former affected by the agrees with the judgment of the court below. In negligence of the latter? And is it any more reason- Scotland the decision in Thorogood v. Bryan was proable to hold him so affected because he chose the mode 1 nounced unsatisfactory in Adams v. Glasgow & South

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Western Ry. Co., 3 Ct. Sess. Cas. (4th series) 215. In question with the driver or owner of the other omnia America it has been followed in the courts of some bus which ran over him and was the immediate cause States, but it has often been departed from, and upon of his death, Coltman and Cresswell, JJ., express the whole the view taken has been decidedly adverse themselves in terms, which if literally understood, to it. The latest case that I am aware of in that would lead to the conclusion that he would also have country is Little v. Hacket, 9 Davis (Sup. Ct. U. S.), been responsible for damage solely attributable to the 366. That was a decision of the Supreme Court of the fault of the driver. Coltman, J., Baid: “Having United States, whose decisions, on accuunt of its high trusted the party by selecting the particular conveyance character for learning and ability, are always to be re- the plaiutiff has so far identified himself with the garded with respect. Field, J., in delivering judg- l owner and her servants, that if any injury results ment, examined all the Euglish and American cases, | from their negligence he must be cousidered a party and the conclusion adopted was the same as that at to it.” Maule, J., was careful to limit his observations which your lordships have arrived. I have only this to the case before him. “I incline to think,'' said the observation to add : The case of Waite v. North-East- learned judge, “that for this purpose (i. e., recovering Ein Ry. Co., F. B. & E. 710, was much relied on in the damages froni the defendant) the deceased must be conargument for the appellants, but the very learned sidered as identified with the owner of the omuibus in counsel who argued that case for the defendants, and which he voluntarily became a passenger, aud that the all the judges who took part in the decision were of negligence of the driver was the negligence of the deopinion that it was clearly distinguishable from Thoro-ceased." I do not think the very eminent judges who good v. Bryan, and did not involve a review of that decided Thorogood v. Bryan intended to affirm that case. I think they were right. As regards the other the deceased, by taking his seat in the omnibus, inquestions argued before your lordships, I have only to curred the same responsibility for the negligent acts say that I think they were properly dealt with by the of the driver as if the latter had been his servant. If court below. I am requested by my noble and learned they did mean to do so their conclusion might be perfriend, Lord Bramwell, who was unable to remain to fectly logical, but their premises would be directly at read the opinion which he had prepared, to state that variance with the prioiples laid down in Quarmun v. he concurs in the notion which I am about to make. I | Burnett, 6 M. & W. 489, which I have always regarded, move your lordships that the judgment of the Court and still regard, as a sound and authoritative preceof Appeal be affirmed, and the appeal dismissed, with dent. If they did not, then they have affirmed that a costs.

passenger, travelling by a public conveyance, may be

80 unconnected with the driver as to be exempt from Lord Watson. My Lords: The appellants conceded liability for his negligence, and yet be so identified in argumeut that unless it can be shown that Thoro- | with him as to lose all right of action against wronggood v. Bryan, 8 C. B. 115, is a valid precedent, they doers whose negligence, in combination with that of cannot succeed in this appeal. Although nearly forty | the driver, has occasioned personal injury to himself. years have elapsed since that case was decided, I think This is a proposition which it is very difficult to unthe rule which it established must still be dealt with derstand. It must be a singular kind of relationupon its own merits. The decision has not met with ship, and created by very exceptional circumstances, general acceptance, and it cannot be represented as an which results in the superior being affected by his inauthority upon which a course of practice has fol- ferior's negligence, in a question with wrong-doers, lowed, or upon which persons guilty, or intending to and not in a question with persons who are themselves be guilty, of coutributory negligence are entitled to free from blame. It humbly appears to me that the rely. When the combined negligence of two or more identification upon which the decision in Thorogood individuals, who are not acting in concert, results in v. Bryan is based has uo foundation in fact. I am of personal lujury to one of them, he caunot recover com opinion that there is no relation constituted between persation from the others for the obvious reasou that the driver of an omuibus and its ordinary passengers but for his own neglect he would have sustained uo which can justify the inference that they are identiharm. Upon the same principle, individuals who are fied to any extent whatever with his negligence. He injured without being personally negligent are never is the servant of the owner, nos their servant; he does theless disabled from recovering damages if at the not look to them for orders, and they have no right time they stood in such a relation to any one of the to interfere with his conduct of the vehicle, except actual wrong-doers as to imply their responsibility for perhaps the right of remonstrance when he is doing, bis aot or default. That constructive fault, which or threateus to do, something that is wrong and inimplies the liability of those to whom it is imputable consistent with their safety. Practically they have to make reparation to an innoceut sufferer, must also 110 greater measure of control over his actions than the have the effect of barring all claims at their instauce passenger in a railway train has over the conduct of against others who are in pari delicto, is a proposition the engine driver. I am therefore unable to assent to at once intelligible and reasonable. If they are within the principle upon which the case of Thorogood v. the incidence of the maxim, qui facit per alium facit | Bryan rests. In my opinion an ordinary passenger by per se, there can be no reason why it should apply in an omnibus, or by a ship, is not affected, either in a questions between them and the outside public, and question with contributory wrong-doers or with invot in questions between them and their fellow wrong nocent third parties, by the negligence in the one caso doers. But the facts which were before the court in of the driver and in the other of the master aud crew Thorogood y. Bryan do not appear to me to bring the by whom the ship is navigated, unless he actually ascase within that principle. My noble and learned sumes control over their actions, and thereby Occafriend, Lord Bramwell, who is so conversant with the sions mischief. In that case he must of course be reintricacies of Euglish pleading, suggested in the course sponsible for the consequences of his interference. of the argument a technical ground upon which the Counsel for tbe appellauts endeavored to support decision in Thorogood v. Bryan might be justified. In Thorogood v. Bryan upon a totally different principle that view the case would not be an authority for the from that assigned by the learned judges who decided appellants, who accordingly supported the reason as- | the case. They argued alterpately that the maxim signed for the judgment, which was simply this, that respondeat superior does not apply, and that passenthe deceased passenger, by taking the seat on the om- gers are affected by the wrongful acts of the driverpibus, became so far identified with its driver that the l not because he is in any sense their servant, or subjeci negligence of its driver was imputable to him in any to their control, but by reasou of their being for the

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time under his dominion. Waite v. North-Eastern same was occasioned by reckless dealing, or by doing Ry. Co., E. B. & E. 719, was the autbority relied on in business for improper parties. Should the goverusupport of this branch of tbe argument. But there is ing committee, upon this report, determine that a no analogy between the position of an infant incapa member's failure was caused by doing business in a ble of taking care of itself and that of a passenger sui

reokless and unbusiness-like manner, he may be dejuris; and the theory that an adult passenger places clared ineligible for readmission by a majority vote of himself under the guardianship of the driver, so as to the entire goveruing committee. As we have before be affected by his negligence, appears to me to be ab seen, the rules of the association were an incident to solutely without foundation, either in fact or law. 1 | the rights acquired by a person upon admission; and therefore concur in the judgmeut which has been one of those rules was that for conviction of an ofmoved.

fense against or under the laws of the exchange, a susLord MACNAGHTEN. My Lords: I concur in the

pended member might be deprived of right to re

admission to membership. When expelled, he ceases motion which has been proposed and in the reasons

to have any interest in the association. His privilege upon which it bas been founded.

to transact his business at that place has been lost. Order appealed from affirmed, and appeal dismissed The association may fill the vacancy caused by his exwith costs.

pulson or not, as they please. They cannot be com-
pelled to do so; but if they elect to admit a

new member, and can derive from 80 doing NEW YORK COURT OF APPEALS ABSTRACT. any profit that is their unquestionable right

with the exercise of which others are not conASSOCIATIONS-STOCK EXCHANGES-FORFEITURE OF cerned. They may do with their own as they like. SEAT-DISTRIBUTION OF PROCEEDS.- Where the con The right is given to a member in good standing to stitution of a stock exchange, under which each mem propose for admission in his stead some one acceptber binds himself in respect to the manner of his trans able to the committee on admissions, and any profit action of business, and of his right to continue in mem he derives from his negotiations with the candidate is bership, provides that when one has lost his member- | his. So if a member becomes honestly insolvent, and ship or seat, the proceeds of the sale of such seat may, fails to qualify under the rules for readmission, or if by force of constitutional provision, be appropriated he dies after the claims of the association are disto his creditors in the exchange, or to any of the cor

charged, the proceeds may be paid to him or his legal porate objects of the association, a member, who by representatives, as the case may be. But in the case offeuding against the laws of the exchange, may have of a member, who by misconduct cognizable by the forfeited his seat, has no further interest or title in it laws of the association, forfeits his right to coutinue or its proceeds; and the privilege of membership hav. to remain a member, there is reserved by the constiing only been conferred upon him ou condition that tution the right to dispose of his membership. These all the rights should revert to the exchange on the rules are reasonable, and do not contravene any rule happening of certain events, he having assented to the of public policy, and having been consented to by the rules of the association, cannot be heard to complain plaintiff's assignor, deprived bim of any interest or of them as being against public policy, nor can his as

rights in the association, of which he has ceased to be signee. When membership and the rights belonging

a member. June 5, 1888. Belton v. Hatch. Opinion to that status were conferred upon him, the gift was by Gray, J. accompanied by a condition that the rights, of what BANKS--DRAFTS-BILLS OF LADING.- Defendants ever nature, should revert to the association upon the

authorized plaintiff, a foreign bank, to allow a foreign happening of certain events; and he cannot be heard

firm to draw for defendants' account against a certo complain, nor can third persons claiming to derive

tain number of bales of Manilla hemp, to be purchased under him. He should be held to his contract, which

and shipped by a certain vessel, advice to be given was reasonable, and when entered into, prejudiced no

plaintiff, accompanied by a bill of lading, with abrights of others, or copflicted with no statutory or stract of invoice indorsed thereon for the property common-law right. A person acquires by his admis shipped. Plaintiff accepted, and cashed drafts against sion to membership only such rights as the constitu

“bales of hemp." An abstract of invoice for “bales tion and by-laws of the association give him, and upon of Manilla hemp" was indorsed on each bill by the censing to be a member, by the competent judgment |

consignor after it had been signed by the captain, but of the governing committee, he ceases to have any without his knowledge. A letter of advice described further concern or interest in the association, except

the shipment as “bales of hemp." The foreign firm it is given by its laws. The New York Stock Ex

failed and absconded, and most of the shipment change, by the accumulation of a great fund from a

proved to be matting only, the rest being Manilla large membersbip, by the wise and successful manage

hemp. Held, that plaintiff caunot recover of defendment of the members, and by the acquistion of valu

ants the amount paid on the drafts accepted against able facilities for the transaction of business, has given the matting. Letters of credit are governed by tbe to membership an important pecuniary value. It is

| same general legal principles as are all contracts. In fair to presume that this prosperity and success were

| Orr v. Bank, 1 Macq. H. L. Cas. 513, Lord Brougham in an important degree due to the regulations adopted

said of them: “I am inclined to think tbat there is looking to the conduct by a member of his business, I no very great novelty or peculiarity in letters of credit and the restraints imposed upon reckless or dishonest to take them out of the general law applicable to manmethods. Membership may be property, but it is not

dates. I am not aware that there is any thing in the property in every sense. If it is property, it is in

mercantile law, or the custom of merchants, to distii!cumbered with conditions, when purchased, without

guish letters of credit from any other authority to pay which it could not be obtained. Hyde v. Woods, 94 money." In this case the peculiarity of the credit exU. S. 5:23. By the constitution of this association the

tended by the plaintiff to Vogel & Co., at the defendpowers of government are vested in a governing com

ants' request, is that besides being special, in that it mittee, whose decision, after the trial of a member

was addressed to a particular banking agency, was for offenses under its laws, is final. Standing commit

confined to it, and gave no other party a right to act tees are appointed by them, and that on insolvencies

upon it, it restricted the drafts drawn under it to a is charged with the duty of immediately in vestigating

particular purpose, which should be vouched for in a every case of insolvency, and to report whether the certaiu manner to authorize acceptauce and payment.

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Under the agreements effected between the plaintiff more than one fair interpretation, and we do not aud the defendants for the extension of the credit to | think that is the case here. We do not see the force Vogel & Co., the defendants only became liable to I in the argument that no other bill of lading could be plaintiff to provide for drafts accepted by its London demanded than was given here. The master of a ship agents within the precise terms upon which the credit is the general agent of the owners to perform all things was opened. The credit was authorized upon certain relating to the usual employment of his ship, and conditions prescribed by the parties to be ultimately among other things, to sign bills of lading for goods bound, which they not only had the right to make, put on board, and acknowledge the nature, quality and but which were assented to by the plaintiff. It is dif condition of the goods. 1 Pars. Cont. (5th ed.) 45. ficult to see how parties could more particularly de That was possible to be done in this case; for a bale of fine the terms of their engagements than was done in Manilla hemp is not covered, as the trial court found this case. By the proper construction of the agree on the evidence, and the shipper might have procured ment between them, the plaintiff was uot bound to a bill of lading which would have indicated the kind accept any drafts unless they were against Manilla of hemp put on board the ship. But whether the mashemp shipped by Vogel & ('o. to defendants by the ter could be compelled or not to identify in the bill of ship Robinson, vouched for as to each of those facts, lading the mercbandise shipped as Manilla hemp, tbat and the stipulated costs, etc., by documents consisting fact cannot control the disposition of this case. The of a letter of advice and a bill of lading; and the de agreement of the parties called for a particular statefendants were not bound to provide for or to take upment in the bill of lading to accompany the drafts; any other kind of drafts. Each party was held to either and that statement, or the existence of facts which accept or to provide for drafts, as the case might be, would have authorized it, is a condition precedent to if they were accompanied by those mercautile docu- | defendants' responsibility to respond to plaintiff's dements evidencing the consignment of Manilla hemp in mand. June 5, 1888. Bank of Montreal v. Recknagel. the particular manner, and at the rates of cost and Opinion by Gray, J. freight specified. In making their arrangements with CORPORATIONS_STOCK — SUBSCRIPTION – CONTRACT the plaintiff, the defendants had the right to surround TO PURCHASE-FRAUD.--Where a company issues a themselves as to their advances through the piaintiff's prospectus reciting that certain of the principal stockagency, with all the safeguards which the nature of holders bave deposited a number of shares of stock the case admitted. The effect of their stipulating in with a trustee, the proceeds of which, except $50,000, respect of acceptances by plaintiff of Vogel & Co.'s were to be used as working capital, and that a portion drafts was to protect themselves, as far as was possi of said shares have been ordered to be sold for that ble, against any unauthorized acts of Vogel & Co. | purpose and to pay a prior lien, and the subscription Every lawful provision or condition in the contract of paper attached stipulates that the subscriptions for parties should control, and should not be disregarded said stock shall not be binding until the whole number in the determination of their rights, if it can be of sbares are “reliably subscribed," an agreement by deemed to have entered into the contract with any some of said principal stockholders that if plaintiff will definite or perceptible purpose. In interpreting their subscribe for said stock they will, if he wishes, buy it agreements, and in determining their respective obli from him after a year at the cost price, is no fraud on gations based upon their writings, courts should look the co-subscribers. The cases mainly relied upon to at the surrounding circumstances, the situation and support the claim that the contract was illegal and relations of the parties, and the subject-matter of fraudulent are of two classes; cases of stock subtheir negotiations. In that way the intention, where scriptions to the stock of corporations, accompanied by there is any uncertainty, is better given effect, and a secret agreement between the company and the subtheir undertaking is more certain to receive a reason scriber that the latter should not be bound by his subable and fair interpretation. But when the agree scription, or changing, in some other respect, its os. ment is determined into which the parties have en tensible terms; and cases of composition between a tered, it is but just and fair that they should be held debtor and his creditors, where & creditor, joining in strictly to it, and all their stipulations we should as- | the composition by a secret arrangement with the sume to have been made, for a purpose, and to have debtor, secures an advantage over other creditors, iu been considered important by them, and therefore violation of the understanding implied in all cases of cannot be dispensed with. Hill v. Blake, 97 N. Y. 216. compositions that the settlement with the creditors In Bank v. Taaks, 101 N. Y. 442, Andrews, J., speak joining in the composition proceeds exclusively ing of the effect of a letter of the defendants, under upon the terms of the common agreement. In both taking to accept the drafts of certain parties, said classes of cases mentioned, the collateral agreement is (page 449): "Assuming that it was a general letter of held to be void. In the first, the courts hold the subcredit, * * * it nevertheless amounted simply to a scriber to the ostensible contract, and permit it to be contract on the part of Taaks & Lichtenstein to pay euforced in an action by the company, as the only advances made in conformity therewith. They had a means of preventing the consummation of the frauduright to stand upon the very terms of their contract, lent scheme, and protecting the other subscriber. aud they were not bound unless the conditiou upon Railroad Co. v. Eastman, 34 N. H. 124. In the other which their obligation depended was fulfilled." In class the court refuses to enforce the secret bargain, Bank v. Griswold, 72 N. Y. 472, Church, C. J., said and confines the creditor, who is a party to the fraud, (page 479): “It is doubtless true that when the right to a remedy to recover the sum which, by the terms to draw is limited in amount, or is dependent upou of the composition, he agreed to accept White v. the condition of the performance of some act, or that Kuntz, 107 N. Y. 518. The case of Railroad Co. v. Oertain faots exist, it must appear that the draft was Eastman, supra, is a leading case, illustrating the class within the limit, or that the act constituting the colla of cases first mentioned. The doctrine that an agreedition has been performed, or the facts exist." The ment between one subscriber to the stock of a corpoprinciple is urged by the appellants that all commer ration and the company, made concurrently with the cial instruments are to be liberally interpreted, so as | making of the subecription, which purports to annul to protect persons who give credit on the faith of its obligation, or materially limit and change the linthem. Lawrence v. McCalmont, 2 How. 449; Gates v. bility of the subscriber, to the detriment of the comMcKee, 13 N. Y. 235; Bank v. Myles, 73 id. 341. But pany, is invalid and void, is founded upon tbe conthat principle only applies where the prorision of anstruction that a subscription to the stock of a corporaagreement are ambiguous, lose, or susceprible of tion wbose stuck is open for general subscription is

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