Bailey v. Dobbins (Neb.) 93 N. W. 687.
Bee Bldg. Co. v. Dalton (Neb.) 93 N. W. 930.

Cahill-Swift Mfg. Co. v. Morrissey Plumbing
Co. (Neb.) 93 N. W. 204.

Carlson v. Jordan (Neb.) 93 N. W. 1130. Crawford Co. v. Hathaway (Neb.) 93 N. W. 781.

Dakota County v. Borowsky (Neb.) 93 N. W. 686.

Dawson County Nat. Bank v. Oldfather (Neb.) 93 N. W. 1127.

Dillon v. Watson (Neb.) 92 N. W. 156.

Drexel v. Perkins (Neb.) 91 N. W. 254.

Kummer v. Dubuque Turbine & Roller Mills Co. (Neb.) 93 N. W. 938.

Lansing v. Commercial Union Assur. Co. (Neb.) 93 N. W. 756.

Lansing v. Milwaukee Mechanics' Ins. Co. (Neb.) 93 N. W. 1134.

Nebraska Loan & Trust Co. v. Doman (Neb.) 93 N. W. 1022.

Nebraska Loan & Trust Co. v. Haskell (Neb.) 93 N. W. 1045.

New Omaha Thompson-Houston Electric Light Co. v. Johnson (Neb.) 93 N. W. 778.

Farmers' Mut. Ins. Co. v. Cole (Neb.) 93 N. W. 730.

Fidelity Mut. Fire Ins. Co. v. Lowe (Neb.) 93 N. W. 749.

W. 762.

Orr v. City of Omaha (Neb.) 90 N. W. 301.

Parker v. State (Neb.) 93 N. W. 1037.

Stevenson v. Morgan (Neb.) 93 N. W. 180.

Thompson v. Rush (Neb.) 92 N. W. 1060. Todd v. City of York (Neb.) 92 N. W. 1040. Triska v. Miller (Neb.) 91 N. W. 870.

Harker v. Burbank (Neb.) 93 N. W. 949.

John v. Connell (Neb.) 89 N. W. 806. Jones v. Piggott (Neb.) 93 N. W. 1000.

Kitzberger v. Chicago, R. I. & P. R. Co. (Neb.) 93 N. W. 935.

Wilson v. New (Neb.) 93 N. W. 941.

Zieman v. Scheel (Neb.) 93 N. W. 418.

HINCHMAN . KNIGHT. (Supreme Court of Michigan. March 30, 1903.)

SLANDER-WORDS ACTIONABLE PER SEQUESTIONS FOR COURT AND JURY

-INSTRUCTIONS.

1. Defendant in an action for slander could not complain that the court, while admitting certain testimony offered by him, limited it to mitigation of damages, where no exception was taken at the time, and defendant's counsel expressly stated when he offered the testimony that it was not offered to show justification.

2. Where defendant said concerning plaintiff, "You broke in there and stole some goods, the other day, out of that house," and it appeared that certain of the persons to whom the words were spoken knew the particular circumstances, which, as a matter of fact, were such that plaintiff could not have been guilty of larceny, but it did not appear that the others, including defendant himself, knew the circumstances, an instruction that the words were not actionable per se was properly refused.

3. In an action for slander, the court charged at plaintiff's request that, if the evidence "satisfies you that defendant used the language charged, your verdict must be for plaintiff." It charged at defendant's request that the words were not slanderous per se unless defendant intended to impute a crime; that the circumstances under which the words were uttered could be shown; that the action could not be maintained where the words, though imputing a crime, were accompanied by such an explanation as showed that the crime was not committed; that if the language did not charge a crime, and if none of the hearers so understood it, defendant was not guilty, etc. Held, that plaintiff's request must have been understood as qualified by the requests given for defendant, and the question whether the language was actionable per se was left to the jury.

4. Objection, in an action for slander, that if the words spoken charged only a trespass, and not a larceny, they were not actionable, in the absence of special damages, and that the court erred in saying in such a case that the jury "should not award any damages that would be excessive," was untenable, where, under the testimony, the court might have charged that the words were actionable per se.

Error to Circuit Court, Berrien County; Orville W. Coolidge, Judge.

Action by Burwell Hinchman against David Knight. Judgment for plaintiff, and defendant brings error. Affirmed.

Lawrence C. Fyfe and George W. Bridgman, for appellant. O'Hara & O'Hara, for appellee.

94 N.W.-1

HOOKER, C. J. The defendant has appealed from a judgment of $60 in a slander

case.

Defendant owned and had rented a building to Jones. In January, 1900, Jones was in Chicago; and on January 12, 1900, acting under her husband's direction, his wife locked the house, and delivered the key to the plaintiff, to whom Jones was indebted in the sum of $12, or thereabouts. About the same time plaintiff received the following letter:

"Mr. B. Hinchman-Dear sir: I came over to Chicago to close deal with Standard Oil Company to work then in Michigan, and expected to go back the same day, but was disappointed, and am obliged to wait until Monday.

"I can get no money until deal is closed or would remit in this letter.

"As you know, my wife has been sick for some two weeks past and is deemed best by all that she come to mother's and place herself under our old physician's care. I am sending for her and have instructed her to lock house and leave key with you personally. I do this as evidence of good faith, to be held on your part as security for the debt I owe you until I arrive home and pay you. Rent is paid to February 1, and I don't owe D. Knight one cent. I trust this arrangement will prove satisfactory to you, and I will be greatly obliged to you, and will certainly be back in Sawyer not later than Monday of next week prepared to pay you.

Jones' furniture was worth about $60. His wife having gone to Chicago, where her husband was, plaintiff became uneasy about his claim; and about February 10th he went to the house with McDonald, a constable, and Tatro, a teamster, with the intention of taking the furniture away, but concluded not to do so. A few days later, having given an assignment of his claim to one Snyder, the latter obtained an attachment; and on February 12th he, with the plaintiff and McDonald and McCarton, who had also assigned a claim to Snyder, went to the house for the purpose of attaching the property. The defendant was there, fixing the fence, and expostulated against their taking the goods; and he and the plaintiff got into a quarrel, in the course of which defendant is alleged to have said to the plaintiff, in the presence of the others: "God damn you! You broke in there and stole some goods, the other day, out of that house."

Counsel for the defendant claim to have of fered testimony tending to show Hinchman's possession of the property, and that, while the court admitted it, he limited it to mitigation of damages, while it was competent by way of justification. No exception appears to have been taken to this when the court so limited it, and, furthermore, counsel for defendant expressly stated when the testimony was offered that they were not showing the previous transaction in justification.

It is clearly proved that Jones left his goods in his own home, which he placed in charge of Hinchman, to secure him for the amount that Jones owed him, by giving him the key to the house. It is claimed on behalf of the defendant that this gave Hinchman the possession of the goods, and that, being in possession of the goods, he would not have stolen them, had he broken open the house and taken them away, and therefore the words of the defendant, if spoken as alleged, did not charge larceny. It is plain that the plaintiff did not steal the goods, for he did not take them; but, upon plaintiff's theory, it must be conceded that the defendant charged him not only with taking them, but stealing them. If it could be said that the proof showed that the circumstances alluded to were fully understood by the defendant and by all of the hearers of the charge, it is possible that the charge, as intended and understood, would not be a charge of crime, slanderous per se. But this cannot be said, because, so far as the record shows, neither the defendant himself, nor all of the hearers of the slanderous words, knew anything about the circumstances referred to. It is possible that McDonald did, and certainly the plaintiff did, but there is nothing tangible to indicate that Snyder or McCarton did; and the language alleged was a plain, unambiguous charge of larceny, which, under the rule of Ellis v. Whitehead, 95 Mich. 105, 54 N. W. 752, would justify, if not require, a charge that it was slanderous per se, in the absence of circumstances tending to show that it was used in a qualified sense. The testimony in the case did not warrant an instruction that these words were not actionable per se, and the court committed no error in refusing to so charge. If he left the question to the jury, this was as favorable treatment to the defendant as he had a right to expect.

It is claimed, however, that he did not leave the question to the jury. He opened the charge by reading to the jury several requests by the respective parties, as follows: For the plaintiff:

"(1) If the evidence in the case satisfies you that the defendant at the time and place

charged in the declaration used the language charged in the declaration, your verdict must be for plaintiff."

For the defendant:

"(1) The words claimed by the plaintiff to have been uttered are not actionable unless the defendant intended to impute the crime of larceny.

"(2) The circumstances surrounding the speaking of the words may be given in evidence to rebut the presumption of malice, and to show the circumstances under which the words were uttered. The defendant has always been and is permitted, in a case like this, to show the matter affecting the meaning of the alleged defamatory language. An action cannot be maintained where the words, although imputing a crime, were accompanied by such an explanation as showed that the crime was not committed. Explanatory circumstances known to all the parties-speakers and hearers-are to be taken into account then as part of the words. The test in such cases is the knowledge possessed by those to whom the language is published.

"(3) If the language of the defendant, under the circumstances, did not charge the plaintiff with larceny, and if none of the hearers understood it as charging him with larceny, then the defendant is not guilty."

"(5) If defendant's language used on the occasion complained of, taken as a whole, or all of it, did not, according to its fair meaning, under the circumstances, charge plaintiff with larceny, and if the hearers did not understand that it charged him with larceny, but that it simply charged him with doing some unfair or improper or dishonest thing, not amounting to larceny, as the hearers understood it, then defendant is not guilty."

It is urged that plaintiff's first request is diametrically opposed to the requests given for the defendant, and it is clearly inconsistent with them. But we think that the jury could not fail to understand that it was qualified by the requests given for the defendant, and we are of the opinion that the case should not be reversed upon that ground, even if defendant's counsel are right in their contention that the court could not properly charge that the words were actionable per se. Furthermore, the testimony in the case did not admit of an inference that the language, which was unequivocal, was intended and understood in a different sense than that naturally imported by the words.

Error is assigned upon the following portion of the charge, viz.:

"The defendant claims that he had good reason to believe, and did believe, that the plaintiff had entered the house of one Jones, and had unlawfully taken goods therefrom; that this was committing a trespass. His attorneys also claim that, whether he used the word 'stolen,' or not, he intended only to charge the plaintiff with a trespass, and that the hearers so understood it at the time. [Now, if this be so if the hearers understood that defendant was only charging an unlawful act, and not a theft, and he did not intend to charge theft-then the offense in such case would only be trivial. In such case you could not award any damages that would he- That is, you must avoid rendering any verdict that would be excessive. It is for you to determine whether it is the fact. If the defendant had no good reason to believe, and did not believe, that plaintiff had entered the house of Jones and taken the goods therefrom, the accusation would be reckless and malicious.]"

It is said that, if the words charged only a trespass, they were not actionable, in the absence of an allegation and showing of special damage, and that the judge erred in saying that in such a case the jury "should not award any damages that would be excessive." This point would be well taken, but for the fact that under the testimony the court might have justly said that the words were actionable per se. Youngs v. Adams, 113 Mich. 200, 71 N. W. 585; Ellis v. Whitehead, 95 Mich. 105, 54 N. W. 752.

Action by William Reid against the Detroit Ideal Paint Company. Judgment for plaintiff, and defendant brings error. Reversed.

Moore & Moore (Henry B. Shaw, of counsel), for appellant. A. G. Pitts and O. M. Leonard, for appellee.

HOOKER, C. J. On January 1, 1896, a concern going under the name of the Detroit Ideal Paint Company was doing business in Detroit. It was conducted by one Fuller. It was held out to be a corporation with $12,000 capital, of which Fuller, his wife, and brother-in-law held all of the shares of stock. It was in the habit of filing annual reports, as required by law of corporations. We discover nothing in the record to indicate that it was not a corporation legally organized. Fuller appears to have had full charge and control of its affairs, the other stockholders having nominal interests. Reid, the plaintiff, was a creditor of this company for goods sold it, and he was an indorser of its paper

1. An agreement whereby a creditor of a corporation engages to take a certain amount of new stock and apply it on his claim on condition that the stock shall be increased in a certain amount, of which increase a specified third person is to take the balance, is binding.

2. The law which requires the filing of articles of incorporation contemplates that there will be valid and binding subscriptions for stock before the filing.

3. Where the evidence on an issue is conflicting, the question is necessarily for the jury. 4. Liability of a subscriber for newly issued stock of a corporation does not depend on his knowledge of the filing of amended articles providing for the increase, and subsequent ratification of the subscription by him.

5. On an issue whether a creditor of a corporation agreed to take a certain amount of its newly issued stock, and apply it on his claim, testimony as to the embarrassed financial condition of the corporation at a time subsequent to the alleged agreement is immaterial.

6. The creditor could not testify that he would not have kept the stock if he had understood it was issued as a certain witness had testified.

7. If a creditor of a corporation takes stock issued by the corporation merely as security for the debt, the value of the stock cannot be set off by the corporation in an action on the debt.

8. The fact that the creditor of a corporation, in taking stock issued by it, "never valued it as anything, or never intended to take it as stock," would not preclude the corporation from setting off the value of the stock in an action by him on the debt.

The bookkeeper testified that the total claim exceeded $6,017 on January 1, 1896, as shown by the defendant's books. Of this $227.79 was an open account and the remainder on notes outstanding. The defendant met with a loss by fire on March 8, 1900. The plaintiff thereupon sued the defendant, and garnished the insurance money. He recovered a judgment for $2,567.75, and the defendant has appealed.

Upon the trial the defendant claimed some $2,000 and upwards by way of set-off, basing it upon the following allegations of fact, viz.: That about January 1, 1896, the company was largely indebted to Reid, and that he was urging payment; that an arrangement was made to increase its capital stock $7,000, Reid agreeing to take $2,000 of the new stock, provided that one Dr. Olin would take the other $5,000; that this was carried out, a resolution adopted by the stockholders, and entered in the minutes kept of the proceedings of the company, increasing the stock to $19,000, and certificates of stock issued to plaintiff and Dr. Olin; and that plaintiff has never paid for the stock. The plaintiff denies that he ever participated in any arrangement whereby he agreed to purchase or pay for stock in the concern, although he does not deny the receipt of a certificate for stock to the amount of $2,000. The court left the question to the jury. The errors assigned relate to the introduction of proof and the charge. The plaintiff recovered a judgment, and the defendant has appealed.

We have no doubt that, if Reid agreed with the defendant company to take $2,000 of additional stock, to be applied on his claim, upon condition that the stock should be increased $7,000, of which increase Dr.

Robert E. Frazer, Judge.

increasing the capital was duly passed by the stockholders, and the stock issued to Dr. Olin and the plaintiff, and accepted by him as a stockholder, and the concern went on doing business, he cannot now avoid his obligation, especially as the amended articles were filed before this action was begun. The law which requires the filing of articles contemplates that there will be valid and binding subscriptions of stock before filing. See Anderson v. Newcastle, 12 Ind. 376, 74 Am. Dec. 218; St. Louis v. Hennessy, 11 Mo. App. 555; Appleton v. Jesser, 5 Allen, 446; Methodist v. Pickett, 19 N. Y. 482; Tarbell v. Page, 24 Ill. 446; Chubb v. Upton, 95 U. S. 665, 24 L. Ed. 523; Pullman v. Upton, 96 U. S. 328, 24 L. Ed. 818; International, etc., v. Walker, 83 Mich. 386, 47 N. W. 338; Id., 88 Mich. 62, 49 N. W. 1086; Id., 97 Mich. 159, 56 N. W. 344; Detroit, etc., v. Fitzgerald, 109 Mich. 670, 67 N. W. 899. It was necessary to submit to the jury the question whether Reid agreed to take $2,000 of the additional stock, for while, upon the one hand, there was testimony that tended to prove it, there was also testimony that there was no such agreement.

It is claimed by defendant's counsel that the court instructed the jury that the subscription, sale, and delivery of the stock was void until the certificate of increase was filed with the Secretary of State, and that Reid would not be liable for the stock unless he knew that the certificate had been filed, and, knowing that, had thereafter agreed to take the stock. Such instructions, if given, were not accurate, as will be seen from the authorities cited, for it cannot be said that his liability depended on his knowledge of the filing and subsequent ratification of the agreement. The charge was not given exactly as claimed, but we think a necessary inference from it is that, unless the jury should find a filing of the articles and a subsequent ratification, the plaintiff cannot be held liable for the stock.

We think that the proof of an embarrassed financial condition of the corporation at a time subsequent to the alleged agreement was immaterial. It was incompetent for Mr. Reid to testify that he would not have kept the stock if he had understood that it was issued as Mr. Fuller had testified. This did not tend to strengthen his denial. It is probable that the defendant was not prejudiced by this evidence, but it is mentioned in view of a retrial.

Complaint is made of the following instructions: "But Mr. Reid claims that he did not buy this stock at all, and, if he did not, and it has been transferred to him, as I stated to you, it must be in writing to make it a lawful transaction, then this $2,000 would not be allowed, because they owe him, and he has got nothing in pay for it. If he took this stock simply as security, or never valued it as anything, or never intended to take it as stock, then he would not be chargeable with

1. The receipt of a purchase-money note by a vendor of land does not waive the vendor's lien.

2. On an issue whether a vendor of land had waived his lien, it appeared that on the day of the conveyance the vendee gave his note for the price and a sum which he owed the vendor; that the note was on demand; and the vendor testified that it was understood that the vendee was not to incumber the property, and that, if it was not paid for, it was to be deeded back. Held, that there was no waiver of the lien.

Appeal from Circuit Court, Clinton County, in Chancery; George P. Stone, Judge.

Suit by Willard C. Lyon, as trustee in bankruptcy of Frank B. Clark, against Nathaniel J. Clark and another. From a decree for complainant, defendants appeal. Reversed.

High & Everett (Norton & Dooling, of counsel), for appellants. Almond G. Shepard and Edwin H. Lyon, for appellee.

MONTGOMERY, J. Some of the facts in this case were before the court in the case of Lyon v. Clark, 129 Mich. -, 88 N. W. 1046. The present case is, however, a bill filed to set aside a transfer of other property, viz., a store building, made by Frank B. Clark, one of the bankrupts, to the defendant Nathaniel J. Clark, on September 5, 1898. Two grounds are alleged: First, that the transfer was fraudulent; and, second, that it constituted an unlawful preference in violation of the bankrupt act.

We are not able to discover any testimony in the record justifying the finding that there was any fraud in fact in the transfer of this property from the bankrupt to the defendant. That the transfer would, apart from the question of the bankrupt's lien, which is asserted by the defendant, have amounted to an unlawful preference, we think there is much testimony to show, and the finding of the circuit judge upon this point would be entirely justified. The question of importance, therefore, is whether the defendant had, as he asserts, a vendor's lien to the amount of the full value of the property transferred; for, if he had, nothing was withdrawn from the assets of the bankrupts, and the transfer could not have amounted to an unlawful pref