BVABODA 'V. CHENEY.
DAMON 'V. CHENEY.
«(Jircuit Court, D. Nebraska. August 27, 1886.)
SPECI1I'IO PERFORMANCE - FOIl,FEITURE OF REAL-EsTATE CONTRACT PAYMENT-PROMISSORY NOTES. PROMPT
Where it was stipulated in a contract for the conveyance of real estate that annual payments were to be made by certain promissory notes at a given time and place, and, in case the payment was not made punctually. the contract should be void, and all rights previously acquired cease, held, in an action to compel the specific performance of the contract, that where one of the said notes was not paid on the exact day due, it would not work a forfeiture of the contract; the evidence showing that the maker of the note had previously called at the place agreed upon for the purpose of paying, but had not found the notes there, and that former payment of other notes had been accepted a few days after they became due, and also that the payee retained possess!on for nearly a year after the alleged forfeiture of all the negotiable notes gIven for future payments.
In Equity. T. Appelgate it Son, for complainant. J. L. Webster, for defendant. BREWER, J. This is an action by plaintiff to compel the specific performance of a contract for the conveyance of real estate. The material parts of the contract are as follows:
"The sum agreed upon for the possession, use, occupancy, and control of said land is $73.60 yearly, which is represented and included in the notes executed by said second party, described herein, and also the whole amount of taxes that are or may be assessed against said land. The purchase price of said land is five hundred and sixty dollars, of which payment has b!len made of one hundred dollars at the execution of this contract. The balance is to be paid without notice or demand therefor, in ten annual payments, at times specified in twenty certain promissory notes of even date herewith, signed by Augusta A. McKee, payable to the order of P. O. Cheney: one note being for forty-six dollars, due one year after date; one note being for fortysix dollars, due two years after date; one note being for forty-six dollars, due three years after date: and seven other notes for forty-six dollars each, due in four, five, six, seven, eight, nine, and ten years after date,-which ten are the principal notes; the other ten being the yearly interest, viz.: first note, $27.60: second note, $24.84: third note, $22.08; fourth note, $19.32: fifth note, $16.56; sixth note, $13.80; seventh note, $11.04; eighth note, $8.28; ninth note, $5.52: tenth note, $2.76,-due consecutively in one, two, three, four, five, six, seven, eight, nine, and ten years after date: all payable at the office of Hussell & Holmes, Tecumseh, without interest before due, and with ten per cent. per annum after maturity. And the said second party, in consideration of the premises, hereby agrees to make punctual payment of the above sums of principal and interest, as each of the same respectively becomes due, and will also seasonably and regularly pay all the taxes and assessments against said land. In case the second party, her legal representatives or assigns. shall pay the several sums of money aforesaid, punctually and at times above limited, and shall strictly perform all and singular the agreements and aforesaid, after their true tenor and intent, then the said first party covenant and agree to make and execute unto the said second party,
SVABODA V. CHENEY.
heirs or assigns, upon request and the surrender of this contract, a deed conveying said land in fee-simple, with the ordinary covenants of warranty; reserving and excepting the right of way that may be demanded for public use for railways or comrnonroads. And it is hereby agreed and covenanted by the parties hereto that time and lJlln:ltuality are material and essential ingredients in this contract. And in ca:le the second party shall fail to pay the taxes, or if the land shall be sold for taxes, or if said second party shall fail to make the payments of money for principal or interest, or to make improvements as herein agreed, upon the terms and at the times herein limited, and to perform and complete all and each of the payments, agreements, and stipulations herein mentioned, strictly and literally, without any failure or default, then this contract, so far as it may bind said first party, shall become null and void, and all the rights and interests hereby created or then existing in favor of the said second party or derived from her shall utterly cease and determine, and the right of possession and all equitable and legal interests in the premises hereby contracted shall revert to and revest in said first party without any declaration of forfeiture or any act of re-entry or any other act of said party to be performed, and without any right of said second party of reclamation or compensation for moneys paid Or services performed. And in case of the forfeiture or annulling of this contract, the said second party shall still be bound and liable to pay all taxes then due or assessed against said land, also all installments of principal or interest that may then be due on this contract, to be regarded and considered as rent for the use of said land. Also no fixture or improvements, temporary or permanent, shall be removed from said land. And the said first party shall have the right, immediately upon faHurA of the second party to comply with the stipulation herein, to enter upon the land aforesaid, and take immediate possession thereof, together with all the fixtures, priVileges, and appurtenances thereon or in anywise thereunto belonging or appertaining. And the said second party hereby covenants and agrees to surrender unto the said first party, or his order, or his assigns, the said land and appurtenances without delay or hinderance. And no court shall relieve the said second party from a failllre to comply strictly and literally with this contract. "It is further agreed and understood that whenever one-half of the purchase price mentioned shall be paid, with all accrued interest and taxes, the said first party shall execute the deed as herein· contracted for, and take notes nnd a mortgage for the remaining payments, which shall run the unexpired ti.me as herein fixed. No modification or change of this contract can be made except by entry hereon in writing, signed by both parties. An oversight or omission of the first party to take notice of any default of the second party shall not be deemed a waiver of their right sO to do at any time, and it is further stipulated that no assignment of the premises or of this contract shall be valid, unless with the written consent of said first party, and by indorsement of the assignment hereon. Time is hereby declared by the parties hereto to be the essence of this contract, and a failure on the part of the second party to make the payments mentioned, to do and perform all the covenants, to comply with all the agreements herein expressed and by him agreed to be performed strictly according to the terms, boundaries, and limits of time herein mentioned, or either or any of them, fully and completely, shall immediately work a forfeiture of all the rights and interests and claims of the said party of the second part. in and to the lands herein mentioned, and every part thereof, together w:\th all the crops thereon. And in case of forfeiture, the said second party bInds himself and representatives to give up immediate possession of all said tract of land, whenever a demand is made therefor by the said party of the first part, or their legal representatives. And upon the p''ltl-performance of the covenants herein mentioned, or a failure to make the payments as herein specified, or any of them, at the time
promised, all the rights and privileges provided in this contract, given to sald second party the right to purchase the land mentioned, shall immediately terminate; and hereafter his rights thereunder shall be the rights of a tenant, and he shall hold the land under this contract as a lease, and he shall be liable and subject as a tenant under the statute regulating the relations between landlord and tenant, and the first party may enforce the provisions of this contract, and also recover possession of the land, with all tbe fixtures, privileges, crops, and appurtenances thereon, as if the same was held by forcible detainer."
The defense is that by its terms time is made of the essence of the contract, and that complainant did not payor offer to pay on the very day the note due in 1883 became due. The facts are these:
The contract was made on August 24, IS80. The four notes for principal and interest due in 1881 and 1882 were left at the bank of Russell & Holmes, the place of payment named in them; were paid, though not for a few days after they became due; and the money thus paid thereon was accepted by the de· fendant without objection or comment. The complainant testifies that about the time the IS83 notes became due he went two or three times to the bank with the money to pay them, but the notes were not there, and he did not leave the money with the bank. William Merril, a clerk of defendant, testifies that he came from Illinois with these notes, and on August 24th called at the bank for the money, and was told by the party in attendance that there was no money there with which to pay them, and thereupon he returned the notes to the defendant. The defendant testifies that immediately on the return of these notes, and on the twenty-seventh day of August, 1883, he wrote to the complainant notifying him that by reason of his default in payment the contract of sale was at an end, and that he held the purchase notes subject to complainant's order, and was I·eady to return them whenever he asked for them. The complainant testifies that he never received any such letter. On June 17. 1884, defendant wrote a letter to complainant inclosing the 16 nnpaid purchase notes. In it he uses this language: "As you know. the contract of sale became null and void, was terminated and ended, by your failure to comply with its terms." On December 15,1883, the complainant deposited in the bank the money for the notes due in 1883, notice of which was immediately given to the defendant, and also on August 12, 1884, he made a like deposit for the 1884 notes, and on August 15, 1885, for the 1885 notes. He also paid the taxes f01 1881,1882, 1883, and 1884. He has made about $400 worth of improvements on the land. a part though not a large part of which was made between August. 1883. and June, 1884.
Now, as I said, the defendant pleads that time is of the essence of contract, and that complainant did not payor offer to pay the 1883 notes on the day they became dne, whereby he lost all rights of purchase. His counsel have filed an elaborate brief, citing and quoting from many authorities to show that courts both of equity and law respect and enforce those stipulations of a contract making time a matter of substance equally with other stipulations, and do not disregard or ignore them because of their severity and harshness. Courts do not make contracts for parties, but enforce the contracts as they make them. I agree with this as a statement of the general rule of law, and I had occasion in the case of Railroad Co. v. Brickley, 21 Kan. 275, to express at some length my own views, as well as those of that entire court, upon this question. But the question that
SVABODA. tI. CHENEY.
arises in this as in most cases of a kindred nature is whether the defendant has so conducted himself as to be entitled to insist on the enforcement of such a stringent stipulation. Sometimes it is equitable to enforce these stringent provisions as to time, and sometimell it is very inequitable; and it must be borne in mind .that this action is pending in a court of equity. It was equitable in the case of Railroad Co. v. Brickley, supra, and in many of the cases cited by counsel, but it would be grossly inequitable in the case at bar. The defendant has already received nearly two-fifths of the purchase price of the land, and now, without offering to return a dollar, seeks to avoid the contract of sale, and recover the land, nearly doubled in value by the labor and money of the complainant. Four cases, in which this same defendant was party defendant, and in which was precisely the same kind of contract, and a similar effort on the part of the defendant, have been presented to the supreme coort of this state, and in each of them by that ableoourt the plaintiff was adjudged entitled to a decree. Wagner v. Cheney, 16 Neb. 202; S. C. 20 N. W. Rep. 222; Robinson v. Cheney, 17 Neb. 673; S. C. 24 N. W. Rep. 378; Paulman v. Cheney, 18 Neb. 392; S. O. 25 N. W. Rep. 495; Ballard v. Cheney, 26 N. W. Rep. 587. This case and another between Damon and the same defen.dant were originally commenced in the state court, and by the defendant removed to this. And counsel, in their brief, advise me, by way of apology for its length and the number of citations, th.at they have several more cases pending in this court in which a .similar question is presented and which may be affected by this decision. . Of course these facts compel a careiul examination. If there are many cases and many parties to be affected, it is specially important that the decision be in harmony with law and justice. And when a party, after repeated adverse decisions in the state tribunals, removes sub-" sequent cases to the federal courts, there is at least an implied assertion that he, a non-resident, has not received a due consideration of his claims in the local forum. This is a court of equity. Equity takes no delight in a forfeiture. The claim of defendant is, as I have said, grossly inequitable; and if, in .removing from a state to a federal court, he supposes he has come to a tribunal less keenly alive to the demands of equity and good conscience, he is greatly mistaken. Where a contract is wholly executory there is little inequity in refusing specific performance to him who has either forgotten·or neglected the exact hoor. By his own laches he has simply lost the benefit of a good bargain. But where there has been, as in this case, part performance;and a.forfeiture of all that has been paid and done is insisted upon, a court of equity instinctively turns to the part.v insjsting upon the forfeiture, and inquires whether his conduct,fails in the slightest degree. And in this it is not limited to the mere letter of the. contract. There are often unwritten obligations which if disregarded justify a refusal of the claim of fo:rfeiture. the mpre in-
equitable the demand, the grosser the wrong in insisting upon a forfeiture; the more closely will a court scrutinize the conduct, and the smaller the departure from written or unwritten obligations which will be deemed sufficient to justify a refusal of the forfeiture. Now, the defendant left the first four notes with the bank, and accepted without objection or comment payment made a few days late. Such conduct would naturally lead the complainant to suppose that subsequently the bank would receive the notes, it being named as the place of payment, and that a few days' delay wonld not be seized upon as the basis of a claim of forfeiture. He might well be lured into the beliefthat he was dealing with an honorable man. Payment of the premium on the day is made a condition of keeping insurance policies alive. But not a few cases have arisen -in which the conrts have held that a habit of receiving payments a few days thereafter, or of giving notice to the insured in ample time, was sufficient to justify a refusal to enforce a forfeitme. I am aware that defendant claims thlit he has guarded against this by the clause he had put in the contract that a failure to insist upon forfeiture after one default should not prevent him from like insistence upon subsequent default. Perhaps this is technically true; at least I do not rest my judgment upon this alone, and yet it is worthy of notice. After the default had occrtrred, if defendant intended to insist upon a forfeiture, it was his imperative duty to return at once the unpaid purchase notes to complainant. Yet he held them for nearly a year. These were negotiable promissory notes, not yet due. Transferred to a bona fide holder, they became obligations which the maker could not avoid or defeat by evidence that the contract had been set aside even by mutual consent. It is true, as counsel for defendant claim in their brief, that nothing is said in the contract about returning the unpaid notes, and it is true that defendant testifies that he wrote to complainant that he could have them if he wanted. But the obligation to ask was not upon complainant; the duty to return was upon defendant. If he was not going to comply with his contract of sale, he had no right to retain that which was given for the purchase. He could not occupy a double a,nd conflicting attitude. If he was going to be no longer a vendor, he must place the complainant beyond exposure to the obligations of a purchaser. When he fails to do this, and before return of the notes the money therefor is deposited in the place riam\'ld for their payment, he has waived his right of forfeiture. It is true this is a mere technicality, and that often equity will consider that as done which ought to be done and which is in fact done before any injury has resulted. But it is no more a technicality than that which defendant is insisting upon, and it is a technicality in the interests of equity and fair dealing. It gives to the defendant the money which he contracted to sell his land for, principal and interest, and it secures to complainant the land which he has partially paid for and largely improved. '
OREGON RY. CO· .". OREGON RY. &; NAV. CO.
I hold, therefore, that defendant is estopped by his conduct from insisting upon a forfeiture, and that complainant is entitled to a deoree as prayed for.
The case of Damon v. Same Defendant is substantially like this, and the same decree will be entered in it.
By. Co., Limited, v.
OREGON By. & NAV. Co. Nos. 1,120, 1,143, 1,178, 1,179.)
(Circuit Court. D. Oregon. September 13, 1886.)
BURDEN OF PROOF.
The complaint stated that a lease was executed by the officers of the defendant corporation in pursuance of a resolution duly passed by its board of directors. The answer admitted the execution of the lease under the corporate seal, but alleged that the meeting at which the resolution was passed authorizing such execution was held without a quorum. The reply denied knowledge or information concerning the want of a quorum sufficient to form a belief. Held, that the burden of proof is on the defendant.
RATIFICATION OF LEASE.
A corporation, like a natural person, may ratify any act which it can perform; and the entry into the possession of a leased road in pursuance of a lease executed by its officers without due authority. and operating the same and paying the rent therefor, as reserved in said lease, is ample evidence of the ratification thereof.
ESTOPPEL-JUDGMENT BY DEFAULT.
A judgment for want of an answer to a complaint is a conclusive determi· nation between the parties to the action of every matter well pleaded therein, and necessary to such judgment. A claim for a semi-annual installment of rent, arising on a covenant in a lease of a railway for 96 years, is a separate and distinct demand from a claim for a semi-annual installment of money, due under another covenant in said lease, and appropriated thereby to the payment of the expense of maintaining the corporate organization of the lessor.
Actions to Recover Installments of Expense Money and Rents. Earl O. Bronaugh and John W. Whalley, for plaintiff. Oharles B. Bellinger, for defendant.
DEADY, J. These cases were before this court on April 16th, on (1) motions to strike out portions of the answers; (2) demurrers to 80 much of the answers as controverted or denied the corporate existence of the plaintiff, and its right to have and exercise the powers and privileges claimed by it, and'the power of the defendant to take and have a lease of the plaintiff's road; and (3) demurrers to the second and third replies to the special defense in the answers of the illegality of the meeting of the directors, at which the resolution authorizing the execution of the·lease was passed,-when the demurrers to tho re-
plies were overruled, and the motion and demurrers to the answers were 80 far allowed (27 Fed. Rep. 277) as left the cases for trial on the issues of fact arising on the several replies to the special defense: (1) denying any knowledge or information thereof sufficient to form a belief; (2) 8i ratification 'of the lease by the defendant; and (8) two prior adjudications of the question of the validity and binding force and effect of the lease; and the issues made by the replies in Nos. 1,120 and 1,143 to the special defense of a recovery in a former action on the same cause of action, denying the same. On May 17th the cases were heard by the court without a jury, and submitted for decision. Briefly stated, the first special defense is as follows: The alleged lease was not executed by the authority of the defendant's board of directors, for that, at and before the date thereof,-August 1, 1881,said board consisted of eleven persons, four of whom "assumed to hold a special meeting of said board," whereat the resolution authoriZIng the execution of said lease was passed; that thereafter the president of the defendant's board of directors signed its name to said thereof affixed its corporate seal lease, and the assistant thereto; and that none of the members of said board had notice of such meeting, which was not a regular or stated one. It is not alleged, in terms, in this defense, that this meeting was illegal 01' unauthorized, or that it was without the power to pass the resolution in question. But on the argument it was assumed that such was the case without question, under the corporation act of the state. This act provides (Laws Or. 526, 527, §§ 9,11) that the powers of a corporation "are exercised" by the directors, and that "the powers vested in the directors may be exercised by a majority of them; and any less number may constitute a quorum at all regular or stated meetings authorized by the by·laws of the corporation, in all cases when either the directors or incorporators shall have filed with the secretary of state and county clerk a written statement designating such less number sufficient to form a quorum." The facts alleged in this defense are controverted by the denial, of the plaintiff. No evidence was offered on the matter by either, party. eMh contending that the burden of proof is on the other. In my judgment, the burden of proof in this respect is on the defendant. It affirms a particular state of facts, which, if true, overcome the prima facie case made by the admission of the execution of the writing by its president and secretary, under its corporate seal. The issue is found for the plaintiff. The evidence in support of the reply of ratification is full and convincing, and leaves no room for doubt. Among other things, it' appears that on October 3, 1881, the manager of the defendant issued and circulated the following printed circular:
"Therailroad and fixtures of the Oregonian Railway Company, Limited, having been turned over to the Oregon Railway & Navigation Company,
OBEGON BY. CO. t7. OREGON BY. " NAV. CO.
under the lease, J. M. Fillmore, superintendent, and officers and subordinate to him, will retain their present positions until further and report to the undersigned. C. H. PRESCOTT, Manager." On October 1, 1882, the president of the defendant's board of di.
rectors made his third annual report to the stockholders of the corporation for the year ending June 30, 1882. This report was published in pamphlet form, together with an appendix, signed by the vice-president and secretary of the board, and generally circulated among the stockholders; and on October 1, 1883, a similar report and appendix for the year ending June 30, 1883, was made, published, and circulated in like manner. In both these reports the mileage operated by the defendant during the year by rail and water is given, and the road of the plaintiff is mentioned under the head of "leased lines," In the accounts given of the receipts and disbursements of the defendant in the appendices, the earnings and expenses of this road are stated, and the rent paid for the same, the amount being $112,760.40 in 1882, and $145,429.28 in 1883. Annexed to the report of 1883 is a map of the defendant's "system, its branches, and allied lilles," on which the plaintiff's road is represented in blue, as a part of the "Oregon Railway & Navigation Company's lines." On May 1, 1882, at a regular meeting of the defendant's board of directors, the purchase of the warehouses on the line of the plaintiff's road, from the Oregonian Warehouse Company, was authorized, and the leasing of the same to James Steele & Co. provided for. A corporation, like a natural person, may ratify any act of its agent, or anyone professing to act by its authority, which it has the power to perform. Eureka 00. v. Bailey 00., 11 Wall. 491; Gold Min. 00. v. National Bank, 96 U. S. 644; Witt v. Mayor, 5 Rob. (N. Y.) 259; Episcopal O. Soc. v. Episcopal Ohurch, 1 Pick. 375; Pacific Rolling-mill 00. v. Dayton, S. & G. R. Ry. 00., 7 Sawy. 67; S. C. 5 Fed. Rep. 852. Ratification takes place when one person adopts a contract made for him, or in his name, which is not binding on him because the one who made it was not duly authorized to do so. Ratification is a question of fact; and, in the great majority of instances, turns on the conduct of the principal in relation to the alleged contract or the subject of it, from which his purpose and intention thereabout may be reasonably inferred. Story, Ag. §§ 253-260. And, generally, deliberate and repeated acts of the principal, with a knowledge of the facts, that are consistent with an intention to adopt the contract, or inconsistent with a contrary intention, are sufficient evidence of ratification. In this case anyone of the several acts of the defendant is sufficient evidence of ratification. In the two years next succeeding the lease there were two annual meetings of the stockholders, at each of which a boarq of directors was elected, to whom the fact and results of operating this road as a leased one were fully repol"ted, without, so
far as appears, a question or objection from anyone. Indeed, no one seems to have thought that there was anything that needed ratio fying; and, on the whole case, it does not even now appear that there was. The entry into possession of the road, and the payment of rent in pursuance of the terms of the lease by the directors, who are the corporation, is of itself plenary evidence of ratification of the lease by the defendant. Thh'l issue must be found for the plaintiff. The facts contained in the other two replies to this defense are stated fully in 27 Fed. Rep. supra, 281,282. The records of the prior actions have been introduced in evidence by the plaintiff; and I think they sustain the conclusion of the replies, that the defendant is, on account of judgments therein, estopped to allege this defense in this action. The judgment set up in the first of these replies was given in this court in an action between these parties commenced on June 28, 1884, for an installment of rent alleged to be due under the lease of May 15, 1884. 22 Fed. Rep. 245. In the amended complaint therein it is alleged that the defendant was duly authorized by its "articles of incorporation, and by the resolution of its board of directors," to execute said lease. In the third amended auswer the defendant denies "that it ever had or has the power or right or franchise to purchase or lease any railroad in the state of Oregon," and denies the demise of the road to it by the plaintiff; but admits that its president and assistant secretary signed the writing in question, and affixed thereto its corporate seal; and alleges that neither of said officers had authority to execute such writing on behalf of the defendant; and that the state of Oregon did not consent to such or any lease of said road. 'fo this defense the plaintiff demurred, and on consideration thereof the court gave judgment for the plaintiff. If the plaintiff had gone to trial on this defense, evidence might have been given on the trial on the question of whether the officers of the defendant were authorized by a resolution of the directors to execute the lease; and if it appeared that the question was submitted to the jury, the finding and judgment would be conclusive on the point in any subsequent action between the parties. But the order or judgment sustaining the demurrer to this defense determines nothing but what is necessary thereto, (Code Civil Proc. Or. § 726,) namely, that under the statute, and its articles of incorporation, the defendant had power to take the lease. Add to this the admission in the defense that the lease was executed by the president and secretary of the corporation under its corporate seal, and, nothing appearing or being alleged to the contrary, presumably it was lawfully. done by the authority of the directors. Bank v. Da.ndridge, 12 Wheat. 70; Jl:lcKeon v. Citizens' By. Co., 42 Mo. 79. And as a matter of fact that was the only question considered by the court. This defense, that the resolution was not passed at a legal meeting, had not then been mooted. But the final judgment in the case was given on the complaint for want of an answer as by default.
OREGON BY. CO. V. OREGON RY. & NAV. CO.
By this judgment every fact well pleaded in the complaint, and necessary to sustain it, was determined according to the statement thereof in the complaint. The rule is laid down in Bigelow on Estoppel, 27, as follows: "Judgment by default, like judgment on contest, is conclusive of all that it actually professes to decide, as determined from the pleadings." In the case in question, it was alleged in the complaint that the officers of the defendant who executed this lease were duly authorized to do so by a resolution of its board of directors. This was a -material allegation, and an element of the plaintiff's right to recover. And I think it is not open to further controversy between these parties, and that the defendant cannot now be heard to gainsay it. I do not question but that the defendant in this or any action subsequent to the first one on this lease may controvert this allegation by matter in confession and avoidance thereof. But, in my judgment, it is estopped to do so by a direct denial, or any averment inconsistent with the fact that such a resolution was formally passed by defendant's board of directors. The judgment set up in the third reply was given in this court in an action commenced on June 25, 1885, forthree several installments of expense money, which the defendant, in and by said lease, covenanted to pay the plaintiff, in addition to the rental, on May 15 and November 11, 1884, and May 15, 1885, for the purpose of enabling it "to keep up its corporate organization, and to pay its officers and office expenses." On July 21st, the defendant answered the complaint, alleging that on March 18th the plaintiff had commenced two actions, and on June 11,1885, a third one, for the three semi-annual installments of rent falling due under said lease at corresponding pee riods with the installments of expense money sued for in the action. and that said actions were still pending. To this answer there was a demurrer. which. being overruled, judgment was given for the plaintiff, for the sum sued for, as by default. 23 Fed. Rep. 232. The only question determined on the demurrer is that the pendency of the prior actions for rent was not a bar to the one for the expense money; but the final judgment for want of an answer determined whatever was necessary to sustain the same, including, in my judgment, the allegation that the lease was executed by the defendant's president and secretary in pursuance of a resolution duly passed by its board of directors. The case of Cromwell v. County of Sac. 94 U. S. 351, is cited by counsel for defendant in support of the proposition that a judgment by default is only an admission for the purposes of the case, and is not conclusive of any matter in another action on a different claim or demand between the same parties. The point decided in that case had no relation to a judgment by default. Briefly it was this: A party is not estopped, in an action on interest coupons attached to bonds issued by the defendant county, to prove. if necessary, that he
acquired the Bame for value before maturity, because in a former action against said county, on other coupons attached to bonds of the same series, he failed to make such proof, and therefore bad judgment against him. The opinion of the court, by Mr. Justice FIELD, is learned and instructive, and considers the doctrine of estoppel by adjudication in various phases, and at Bome length. But the reason of this particular ruling must be that iu the nature of things, and of the case, there was no ground for presuming or inferring that the plaintiff acquired the coupons sued on in each action at the same time and under the same circumstances. But a judgment in the first action that the bonds were absolutely valid or invalid would have been conclusive in any subsequent action between the same parties on any bond, or its coupons of the same series or transaction. Beloit v. Morgan, 7 Wall. 619. In my judgment, the issues arising on these two replies must be found for the plaintiff. I admit the questions involved are not free from difficulty, and what I have heretofore characterized as the "conglomerate" style of the answer has not made them any less so. And if the binding force of the lease was not so clearly established by the evidence on the issue of ratification, and rested on the force and effect of these adjudications alone, I confess I would give judgment for the plaintiff with some hesitation. For it may be that an admission, or determination, on judgment by default, that the lease was executed in pursuance of a resolution passed at a meeting of the defendant's board of directors, ought not, and does not, conclude the defendant on the question of whether such meeting was a legal one generally, and, if 80, whether it was qualified, under the circumstances, to pass this particular resolution; but thinking that everything requisite to the legality of the meeting, and its power to pass the resolution, is fairly implied and included in the admission or determination that the officers of the defendant were duly authorized to execute the lease by a resolution of its board of directors, I have concluded otherwise. In the second special defense contained in the answers in the actions numbered 1,120 and 1,143 it is alleged that on July 29, 1885, in an action then pending in this court between the parties hereto "for the same cause of action as that set forth in the complaint herein," judgment was duly given against the defendant herein for the sum of $4,028.32, with costs and disbursements amounting to $27; which judgment was, in August following, fully satisfied by the defendant herein. In the reply thereto the plaintiff denies that in any action whatever between the parties hereto, for the same cause of action, any judgment was given against the defendant for $4,028.32, or any other sum; and denies that the plaintiff ever commenced any other action than this against the defendant for the cause of action set forth in the complaint herein. The evidence shows that the judgment mentioned in the defense is the one given in the action already l'eferred to, which was commenced on June 25, 1885, to recover the
OREGON BY. 00. tI. OREGON BY. &: NAV. CO.
several installments of expense money falling due under the lease on Yay 15 and November 11, 1884, and May 15, 1885. The action numbered 1,120 was commenced on March 18. 1885, for an installment of rent falling due on November 11, 1884, and the one numbered 1.143 on June 11, 1885, for an installment of rent falling dne on May 15, 1885. From this statement it appears, in short. that on July 29, 1885, when the judgment was obtained in the action for the installments of expense money. these two actions for installments of rent were and that they were also pending when the former action was commenced. If the action in which the judgment was given was for the same cause of action as that on which the pending actions are brought, such judgment is a bar thereto. In Hughes v. Dundee Trust Investment 00., 26 Fed. Rep. 831, this court held that a claim by an attorney for services to a loan company, as its attorney during a period of years, constituted but one cause of action, and that a recovery in an action for part of the claim was a bar to an action for the remainder. In the course of the opinion of the court (26 Fed. Rep. 833) it was said:
"The defense is not an estoppel. but a bar, founded on a rule of public policy as just and expedient as the statute of limitations. This rule declares· that no one ought to be twice vexed for the same cause,-nemo debet bis vexari pro eadem causa. It assumes that it is better that a plaintiff who wantonly or negligently splits a claim into parts for the purpose of suit should lose one of them, than that the adverse party should be needlessly harassed by litigating, in detail, matters that could and should have been determined in one action."
But it is not always ea,sy to decide whether two or more items or claims constitute one or more demands or causes of action; and the decisions of the courts, as might be expected, are not harmonious on the subject. In some cases the courts have undertaken to prescribe a test of indivisibility; as that two or more items constitute but one demand. if the same evidence is applicable in whole or in part to both, or if they all arise out of one contract or transaction. Taylor v. Castle, 42 Cal. 372; Secor v. Sturgis, 16 N. Y. 558. But these tests have not been found satisfactory, an'd each case must be decided largely on its own circumstances. Dulaney v. Payne. 101 Ill. 332. On this point counsel for the defendant cites Ref01'med P. D. Church v. Brown, 54 Barb. 191. This is an extremE! case, and the ruling in it that where several claims, payable at different times, arise out of the same contract or transaction, all that are due must be included in the same action, and a recovery in an action on anyone will bar a recovery in a subsequent action on the others, or any of them, has been practically reversed in the court of appeals, in Perry v. Dickerson, 85 N. Y. 345;\in which it was held that, after a recovery in an action for a wrongful dismissal of the plaintiff from the defendant's employ, the plaintiff might still maintain an action to recover the wages earned by him, and due and payable before such wrongful dismissal.
In Dulaney v. Payne, 101 325, it was held that a recovery in an action on a stipulation in a promissory note for the payment of interest on the principal sum therein one year after the note became due, was not a bar to a subsequent action for said sum. The interest and the principal were considered distinct demands, arising on distinct contracts, and constituting distinct causes of action, which the plaintiff might unite in one action or not at his pleasure. In Sparhawk v. Wills, 6 Gray, 163, it was held on a bill to redeem certain premises mortgaged to secure the payment of a promissory note payable "in one year, with interest annually," that the principal debt was not merged in a judgment obtained for one year of such interest, after the note became due. And in Andover Sav. Bank v. Adams, 1 Allen 28, it was held that a judgment for installments of interest on a note, after the same became due, did not bar a subsequent action for the principal. In Merchants' Ins. Co. v. Algeo. 31 Pa. St. 446, it was held that a recovery in an action on a breach of a covenant in a written instrument is no bar to recovery in another action on the same instrument for another breach; and although it is not stated in the report, in so many words, that the breach sued .on in the subsequent action had occurred before judgment was obtained in the first one, it is plainly so implied from the circumstances. In McIntosh v. Lawn, 49 Barb. 550, it was held that where a lease contained several distinct covenants, and, during the term, there was a breach of two of them,-namely, to keep the buildings in repair, and to build 125 rods of fence,-that such breaches constituted distinct causes of action, and Ii. recovery in an action on one of them, after the expiration of the lease, was no bar to a subsequent action on the other. In the course of the opinion it is said that these two covenants "are as entirely distinct as if they were contained in separate written contracts." The lease in this case is a voluminous document, with many distinct stipulations and provisions. The first clause contains the grant of the road to the defendant for the term of 96 years, it "yielding and paying therefor during the said term the yearly rent of £28,000," to be paid in equal half-yearly installments, on May 15 and November 11 in each year, in advance. By clause 5 the defendants covenant to pay "the yearly rent ,hereinbefore reserved" in the manner specified; and by clause 22 the defendants covenant to pay the plaintiff "every year during the term, at the same time and place as the rental herein specified, the sum of £600 sterling money, for the purpose of enabling the lessors to keep up their corporate organization, and to pay their officers and office expenses." In my judgment, on both principle and authority, the rent and expense money provided for in this lease are distinct demands arising on distinct contracts; and the mere fact that they are included in the Rame instrument, and are a part of the same transaction, and made
OREGON RY."CO · .". OREGON RY. & NAV. CO.
payable at the same time and place, does not make them otherwise. And, primarily, they are distinct demands, because it appears to have been the will and pleasure of the parties to the transaction that they should be so. It was easy enough to have added the £600 to the £28,000, and make it all rent, and payable as such; but the parties who arranged the lease, for reasons best known to themselves, saw proper to provide otherwise. The defendant is, or was at the date of the lease, equally interested with the plaintiff in keeping up the latter's corporate organization, and thereby maintaining the existence of its lessor. Otherwise the plaintiff's organization might lapse, and the road be taken possession of by the mortgagees or the state. And it is not difficult to imagine, in view of what might happen in this connection during a period of 96 years, that it was thought best to provide in the lease for the payment of a specific sum for this very purpose, so that the defendant might compel its application thereto for its own protection. The parties to this transaction have, ex industria, distinguished these payments in name and purpose, and the law is not so arbitrary or unjust as to make them one indivisible demand, and compel the plaintiff to sue for them in one action. For the convenience of the plaintiff, the law will allow it to unite a claim for rent and expense money in one action, (Code Civil .Proc. § 91;) but the parties, for their own purposes and convenience, made them distinct demands, and therefore the law will not compel it to so unite them. This issue must also be found for the plaintiff. And the conclusion of law from the premises is that the plaintiff is entitled to recover of and from the defendant the sum demanded in each action, namely, in No. 1,120, $68,131, with legal interest from November 11, 1884; in No. 1,143, $68,131, with interest from May 15,1885; in No. 1,178, $68,131, with interest from November 11, 1885; and in No. 1,179, $1,459.95, with interest from November 11 f 1885,-together with costs and di"sbursements. Evidence was also introduced on the trial by the plaintiff to prove the organization and corporate existence and power of the plaintiff. The evidence consists of the depositions of Thomas Thornton, and David Ferguson, of Dundee, Scotland,-the former being a solicitor in that country of 33 years' standing, and the latter an accountant and secretary of the plaintiff since May 17, 1880; and John Reid, of Edinburgh, a Scottish advocate, and the registrar of joint.stock companies in Scotland, under the British statute, tbe "Companies' Act of 1862," and the amendments of 1867 and 1877, and the exhibits thereto annexed. The depositions were taken under a commission of this court dated October 8, 1884, in the action numbered 1,035, and then pending in this court between the same parties. Code Civil Proc. § 819. From this evidence it satisfactorily appears that the plaintiff was duly organized under said companies' act on April 30, 1880, with power to oonstru'.Jt, own, operate, lease, or otherwise disv.28F.no.9-33
pose of, the road in question; and that a certificate to that effect was duly made and issued to itby the registrar of joint stock companies, under said act, on May 4, 1880. Dundee Mortgage d; Trust Investment 00. v. Oooper, 26 Fed. Rep. 665. But I am not advised that there is any issue in the pleadings on this point since the allowance of the demurrers to the answers. However, if the plaintiff's counsel think they are entitled to a finding in this matter, they can have it.
«(JVrcuit Oourt, No D. Ohio,
June Term, 1886.)
BALE-AcTION FOR PRICE-DEFENSE-QUANTlTy-CUSTOM.
In an action for "three car-loads of brewers' rice," where it does not appear that the contracting parties agreed as to the quantity to make a car-load, the custom of the trade will fix the quantity.
Where there is no such custom, the quantity will be fixed by the capacity of a car used for such freight. S, CuSTOM AND USAGE-MEANING OF WolU> IN CoNTRACT. Where it does not appear that the parties to a contract upon the meaning of a particular word in it, the custom of the trade Will determine it.
The plaintiffs, Bullock & Co., were dealers in produce in the city of New York, and, among other things, were selling brewers' rice; and the defendant was the owner of a large brewery establishment in the city of Toledo, Ohio, and was using, to some extent, broken rice in the manufacture of beer and ale. The plaintiffs claim that the defendant, in December, 1882, purchased from their agent ten car·loads of rice, at the price of three and a half cents per pound, to be delivered to the defendant at Toledo, Ohio, as wanted by the defendant, and all to be delivered before October, 1883. The plaintiffs alleged that they had delivered to the defendant seven car-loads, which had been received and paid for by the defendant at contract price, but that the last three carloads delivered to defendant at Toledo were refused by the defend· ant, and the suit was brought to recover the contract price for the three car.loads. The defendant denies that he had made any contract to purchase 10 car-loads of rice, but that he only agreed to purchase such carloads as he wanted, and had paid for all he so pnrchased and received. The defendant also claimed that, if he had agreed for 10 car-loads, they were only to contain 12 tons each, and he had received and paid for more than 10 car-loads of 12 tons each, the 8 car-loads received and paid for containing some 20 tons each; and was' not" t.herefore, bound to receive the last 3 car-loads.'