*1 1916. SPRING O.] Stags Land Co.
J. E. STAGGv. WATER SPRAY AND LAND POWER COMPANY.
(Filed May, 1916.) Corporations Dividends—Guaranty. 1. — preferred corporation An indorsement on a certificate of stock in a guaranteeing payment part, stated dividend whole fairly reasonably interpreted should he the to effectuate the intention of objects regard purposes gathered with to their as from its language. Interpretation—Bona Fides. Same — guaranty, preferred corporation, A written on shares of in a stock pay any deficiency the indorser dividend, binds himself to in the stated him, guaranty certain notice a will be construed as fidelity corporation pay of the officers of the the dividends stock, by it, they paid, not, if earned or that bewill whether earned guaranty pay any part but as a that he will dividends thereof to may earn, declare, pay the extent that the have failed to n them. Corporate Existence. Same — preferred corpora- one a Where has indorsed on certificate stock in a deficiency payment by tion his the holder dividends, arising corpora- of the stated from the failure of the pay, parties, nothing appearing, tion to the intention of the else will be contemplating corporation as construed a the continued existence as going agreement guarantee; concern as the basis their and the may corporation holder not recover the dividends which the has failed to pay by having adjudged bankrupt by reason of its become insolvent and a proper court. Corporate Suspension. 4. Same — guaranty corporation preferred A that a will dividends interpreta- stock will not be to be value construed without because of the tion will cease should the thereafter become going legally suspended insolvent and its existence as concern be terminated. Bankruptcy. 5. Same — adjudication bankruptcy necessarily legal is not While termi- adjudication corporation, suspend it, nation of a the effect least, concern; going guaranteed being, the time at and where one has part, payment, pay, or in of such whole dividends fail to evidencing company period that the the intention was for such as the recovery lawfully pay them, during could no therefor can be had brought suspension adjudication period of in an action this before the since the discharge bankruptcy. Law. 6. Same —Statutes—Constitutional Legislative Constitution, VIII, are under our Art. charters sec. sub- repeal; ject legislative statute, Revisal, alteration or our sec. judgment court, prescribed, under as therein a dissolution n IN THE SUPREME COURT.
Stagg v. Land Co. *2 suspends corporation valid, among things, insolvent or if the become insolvency, danger ordinary funds, of of or be in want business retrospective provisions rights. Laws The of its charter or has forfeited validity, J. discussed toas their Walker, Corporation. Corporation Dividends—Corporation of Guarantor —Life 7. — guaranteed by preferred principle indorsement on dividends that The may upon corporation con- in a be construed as stock of certificates going corporation concern not affected remains a that the dition agreed corporation guarantor that only be is a and has should fact binding during life; period indicated is the extreme for the its own may enforced, guaranty, in be con- of the duration long. contemplated As to whether the in continues dition querré. invalid, vires, or otherwise ultra case dissenting. J., J., and Brown, C. Clark, Justice, J., Term, at June from. defendant
Appeal ROCKINGHAM. due $1,080, under alleged recover brought This action each three certificates defendant indorsed guaranties stock which was issued preferred cumulative shares twenty be- value each share par Company, The American Warehouse form: following is in the The ing $100. certificate Company. AmericaN 'Warehouse The $1,000,000. Capital, Authorized twenty E. owner Stagg registered that J. This certifies in cap- $100 value of shares, par preferred each, cumulative transferable on the Company, American Warehouse ital on of this by attorney in surrender person books of the holder of this registered will to the pay certificate. in of 6 on the Wednesday July cent third per certificate dividend on the or can be declared each before dividend shall year any iiaid in which com- thereto, year stock; any comon addition of 6 common stock cent pay per shall earn and dividend pany among shall be distributed paid equally balance dividends holder thereof shall stock, and common preferred holders any such If in year entitled to his share of extra dividend. the en- the amount re- preferred tire dividend on the stock shall not be paid, charge against earnings shall be remain maining unpaid such until all such have been and until years paid; pay- future arrears paid full no dividend or shall be on the common stock. ment can O., January, Executed at Spray, Company, The American Warehouse L‘ ^ler, President. BV Countersigned: E. M. Secretary. Jr., Ellett,
Shares, $100 each. SPRING- N. 0.]
Stagg V. LAND Co. is as follows: therein indorsement Tbe No.
[Copy l&L] of Certificate —Bach should date, and after this year consecutive In each and every the face thereof called for the dividends any received for value date, on its due within certificate not be paid itself and binds Company guarantees Power and Land Spray Water to the holder of the default, after notice such days cash ten arise the dividend certificate, deficiency within any its an- Company from the failure The American Warehouse is binding agreement nual dividend as stated said certificate. This un- It is Company. the life of Water Power and Land during Spray in lieu certificate or certificates issued agreed derstood *3 this cer- surrender and cancellation of proper this certificate so canceled. as that certificate tificate is to have the same of its signature president Witness the seal of and the company and this 5 1905. secretary, January, Spray Company, Power AND Land Water President. By Mebane, B. Frank Secretary.
W. R. Walker, (Corporate seal.) to following complaint: The case was heard a demurrer defendant, alleges: The plaintiff, complaining Power and Land Company 1. That the defendant Water Spray duly which February, 1891, since 14 at time it and has been now, North Carolina Assembly an act General incorporated by with its years, principal place period ninety-nine of said business Carolina; principal North Spray, of business at to sell its and water develop power to and corporation being lands or could B. F. W. R. Walker promoted which Mebane and corporations that The American Carolina; North and induce to at Spray, locate laws of North Caro- under the incorporated Company Warehouse year in the lina among was, said corporation of its charter 2. That the terms as follows: authorized things, other to make ad- said shall have the company power 3. The “SectioN in like man- to aid credit to other and and of money
vances guarantee payment to indorse and others; and ner manufacturers of other obligations companies, of and the performance of bonds exe- assume, responsible for, to become and and-parties, corporations, or made contracts, leases, subleases out any and carry cute individuals, companies, other with to or firms whatsoever.” IN THE SUPREME COURT.
Stags Land Co. F. Mebane was that B. alleged belief, and information 3. Upon its textile and Spray community of tbe and promoter founder tbe com- bis to make that plan as a part and factories, and industries of acquir- tbe idea be conceived center, manufacturing large munity bouses usu- and for tbe sucb establishments controlling sites ing power of supplying means as well as tbe thereto, appertaining ally factories and said protection further, and establishments; said valuable of tbe large of a control tbe acquire establishments, out bis plan and to carry Spray; in and around lands desirable and incorporated, to be or caused be aforesaid, incorporated and purpose tbe de- tbe stock of acquired organization, and incorporation after or, thereof, or a majority Company, Power Water Spray fendant and bis business asso- him bis wife associated with movement being said Walker, R.W. close personal friend, and ciate and ideas tbe said out tbe carrying plans and means tbe source electing put and its industries, respect Spray bad with Mebane medium of this through corpo- tbe plans bis ideas and into execution other two stockhold- otherwise; tbe individually rather than ration for no request, bis instance and special at becoming sucb ers stockholders, three requiring with tbe law comply than purpose Mebane was said those stockholders tbe well understood the de- of tbe movement controlling spirit tbe dominant with bis being acquainted pur- said stockholders corporation, fendant therein. acquiescing plans pose said Power and Land is now and Spray Company Water tbe That *4 at all thereto, and and has been times between those 1905, prior
inwas tracts of land in and large owner of and valuable situated dates, tbe Carolina, and a valuable water on Smith power around North Spray, or a through lands, thereof, which said afore- River, flows tbe x>ortion said so situated with and its textile indus- being respect Spray land tries as to afford tbe owner thereof tbe and means of ex- opportunity and in- controlling dominant influence all ercising upon any at Spray. dustries that were or be established alleged 5. information and it is Upon among other in- belief, organized dustries and as aforesaid were Mills promoted tbe Nantucket lands and Tbe American Warehouse tbe Company Company, ujion which last named erected tbe plant being purchased tbe defendant. 5 1905, That tbe prior January, plaintiff was tbe owner of in corporations
shares stock one or more tbe promoted organ- and B. F. Mebane, ized said on by and.carrying business in tbe town of in said which Spray Rockingham County, said corporations were by owned or controlled tbe defendant Spray Water Power and Land being at said time tbe owner of Company, sixty shares of stock of said 587 SPRING N. O.] Stagg V. LAND Co. of Nan- some of the stockholders share; that per $100 value of tbe par and organ- promoted one of the corporations Company, tucket Mills of which the stock majority B. F. and the Mebane, the said ized by in- herein, defendant by directly indirectly controlled either in holdings with their became dissatisfied herein, cluding plaintiff thereto; with litigation respect and were threatening said company litigation, proposed desiring avoid Mebane, the said whereupon negotiations as result of an exchange plaintiff stock, to this The American Ware- said Mebane caused following proposal shares of sixty deliver to the plaintiff issue and house Company in said The American Ware- stock preferred cent cumulative per form certificates in the of three being said stock Company, house in 125, 123, 124, Nos. said certificates twenty each, shares at corporations Spray, he owned the stock which exchange for Water Power and Spi;ay the defendant and caused Carolina, North certificates of The Ameri- an indorsement Company, Land agree to the aforesaid, issued as Company can Warehouse cent on the third Wednes- a dividend of per said certificates holder of on the annual dividend regular in case the year, each day July was not paid Warehouse Company The American stock of preferred 123, 124, Nos. said. certificates Copies company. the indorsement with together said plaintiff aforesaid, issued to asked to be taken as which are exhibits, are hereto annexed as thereon, as herein set out. fully of this paragraph that said alleges believes, and, therefore, is informed and 7. That he on the certificates indorsement exchange appearing and said stock with were made Warehouse Company stock of said The American of said defendant. of all the stockholders and consent acquiescence that said and, therefore, alleges believes, 8. That he informed and organized Land Company Water Power and Spray defendant is still owned was and Mebane, B. P. and that the stock the said turn, both before him, and that said defendant controlled stock capital owned a amount controlling since January, American Warehouse said Company, of said The or other- stock turn, by ownership either of all the other and acts controlled dictated the business wise, Rock- town said doing Spray corporations textile business and ex- organized, of which were promoted, and all ingham County, *5 said defendant B. F. who was Mebane, president the said ploited Company by said The American Warehouse aforesaid; as other to manufacture textile among things, prod- charter had power, business, real es- general develop and to conduct a ucts and wares, merchandise, deal in and goods, tate and water power, in also to own and hold stock empowered choses and was action, IN THE SUPREME COURT. Stagg Land Co. with the other other textile corporations; corpora- doing tions located and business at and Spray, promoted organized by aforesaid, said B. E. Mebane said The American Warehouse Com- as did and warehousing finishing of said other pany products the result that said Water and Land companies, being Spray Power virtue of its or control of a Company, by ownership majority stock said The American Warehouse controlled and domi- Company, and all the company, corporations nated said hereinbefore re- and in a to, they operated ferred were and their business conducted beneficial to said and whatever was for bene- way defendant, fit of said resulted in benefit Corporations to said defendant.
9. That as an inducement and for to effect plaintiff consideration and in- exchange stock as the defendant executed aforesaid, the reasons out, and under the herein set dorsed, circumstances said on certificates the indorsement appears copies said attached, certificates hereto said stock of said acquiring The American in- Warehouse relied Company plaintiff upon said dorsement of said defendant, and but such indorsement would not exchange. consented to said
10. That F. R. .B. Mebane and W. Walker were stockholders, believes, is informed and in The plaintiff American Warehouse Company during year 1905, thereto, and both prior subsequent and were active in organizing promoting said and were both The American Warehouse pecuniarily Oonupany interested Water Power and Land the last Spray Company, named company exchange at the time of the of the stock as aforesaid, as this plaintiff believes, informed and the owner of a large portion of of The American stock Warehouse Company, constituted at a majority least thereof.
11. From 5 January, up including the dividend on due the third Wednesday July, 1911, The American Warehouse Company paid to this plaintiff the dividends called for the said cer- tificates its stock hereinbefore to, referred but defaulted in the payment of the dividend due thereon on the third Wednesday July, 1911, however, which dividend, to the paid plaintiff one Malcolm R. Harris, who took from the plaintiff an assignment of said dividend claim, who, plaintiff informed and believes and, therefore, alleges, to him said paid dividend with money furnished the said B. F. Mebane, and said dividend claim so assigned to the said Malcolm R. Harris was himby assigned the said B. F. Mebane.
12. That said The American Warehouse Company failed, neglected, and refused plaintiff the dividends on due said sixty shares of its stock held and due and by him, payable the third Wednesday *6 1916. TEEM, SPEING 0.]
Stagg v. Land Co. for in cer- 1912, 1913, 1914, in as said July years provided amounting $1,080. said to the sum of dividends tificates, 13. said default The American plaintiff, by That after said in of said notified dividends, duly Warehouse Company payment for the defendant of such and made written demand defaults, of said due as payment dividends, aforesaid, the amount indorse- demand in with the terms aforesaid being conformity ment of said The American Warehouse Com- upon said certificates ' pany.
14. That on said The American Warehouse December, 1911, in the District Court Company adjudicated bankrupt for United States the Western District North Carolina. things
15. the matters and defendant, notwithstanding That above still refuses to alleged, pay and refused and neglected, failed, has plaintiff according the dividends due him as above alleged, judg- the terms of its said Wherefore, plaintiff prays indorsement. to the against ment for the defendant, liability payment fixing its indorsement, said plaintiff dividends, by as provided the sum of on from the third $360 with interest thereof $1,080, Wednesday 1912, $360 on thereof from the third Wednesday July, July, and on from third July, Wednesday $360 thereof and for for such other further relief- as the the costs and plaintiff be entitled to.
n as fol- substance, The defendant grounds, demurred several : lows its
1. authorized That The American Company Warehouse charter and undertook its certificates of stock to dividends pay from earnings, State, and that under the law this them could, it earned way, no other and the defendants guaranteed distributed they honestly and declared dividends would be paid “called and that as the refers to dividends shareholders, solely accrued, and as such dividends stock,” the certificates of no guaran- due under the nothing there no it follows earnings, declared on. ties no for the contract of guaranty, That there was consideration the-de-
but, on the it was into certain officers of contrary, entered no make the its fendant, having behalf, authority defendant, this was well known under knew plaintiff, they its had no such charter, power itself. divi- That The American Warehouse could not Company
dends earn- stock, common, except preferred shares ings, and, if it undertook to do its contract would not be so, enforcible, of such a defendant would consequently, any guaranty be void and of no effect. IN THE SUPREME COURT.
Stagg Land Co. *7 could not issue 4. certificates of That said of any a kind therein containing promise pay stock dividends be- and it company, being alleged life the the corporate the yond adjudicated has been a bank- duly said complaint its business, corporate and has ceased to do in the court rupt proper and of its to earn and power course thereby suspended, activity out arising of the defendant therefore, any obligation dividends, and, and can- also valid, suspended, if latter is has been of its guaranty, its has and resumes discharged not be revived until the defendant been a concern. functions as corporate going its
5. without operates defendant, That guaranty limit, unless it is restricted to the life charter, perpetual corporation, Company. American Warehouse as The could dividends Company That American Warehouse and as it -has been declared to be a bank- earnings, judicially dividends, and, therefore, there can be no under the rupt, terms no for breach of plaintiff any there can be guaranty, liability if in itself. guaranty, it is valid to pay 7. That a contract of The American Warehouse Company any earnings, illegal not out of its would be dividends, void, do so would be contract defendant it would guaranteeing law. illegal and both under charter and the general its void, is not authorized alleged 8. That contract of guaranty vires, ultra defendant, thereby charter of the but is forbidden void and of effect. and, therefore, no a recent act the General objected
9. It was also ore tenus or has if a been Public Laws ch. Assembly, charter States, laws of the United under the adjudicated bankrupt shall, unless its stockholders action, forfeited without further becomes them, adopted by resolution days March, 1915, by within after 8 ninety Secretary State, filed with the which shall be duly copy certified and that is not al- existence, corporate determine to continue its has been taken such action leged complaint of The American in view of the dissolution and that stockholders, under said stat- charter, the forfeiture Company by Warehouse it.s has if under its defendant, any, liability ute, continued existence of as was with reference to the. ceased, made a corporation. Company The American Warehouse appealed. and defendant demurrer, court overruled Womble, plaintiff. Fuller & Beade & Hendren Manly, Q. Jr., Brooks, Parker, & McMichael, Ivie, Sapp E. 8. '0. A. D. Williams, & Kimball King defendant. SPRING 0.]
Stags Land Co. Waiter, J., after stating tbe case: This case, witb involv- others, ing substantially tbe same questions, exhaustively discussed and well counsel briefs prepared filed presenting numerous points; we do not deem it to consider necessary more than two or three them. The defendant contends that there has been no breach of the guar as it anty, only extends to the of such payment dividends as are earned and declared by the warehouse company, is, therefore, merely contract to the effect that if such dividends are not paid, guarantor will pay the same, which would amount to no more than a the honesty and fidelity officersto pay dividends earned and declared. This, we think, would be a narroAV very construction guaranty, and is one which we could not adopt. The prin *8 in ciple regard to the of interpretation such instruments the one we are now considering may, as from gathered authorities, be thus stated: it is said that a is guarantor When entitled to stand upon the strict of terms his guaranty, nothing more is intended than that he is not to be held for liable that is not within the anything express terms of in the instrument which his guaranty contained; is that his liability is not to be extended by these implication beyond limits, to other subjects than expressed those of guaranty. instrument But for purpose of of ascertaining meaning language he and thus has his used, determining extent of the same guaranty, rules of construction are to be of applied as the construction written instruments. His is not to be extended liability by implica tion beyond the terms guaranty of his as thus ascertained. The lan guage used himby is, however, to receive a fair and reasonable interpre tation for the purpose for which in effecting objects he made strument, and the purpose to which it If applied. was to be this lan is guage fairly of two either of which is susceptible interpretations, within the spirit the guaranty, per he is not at to that the liberty say son whom to it is given was acting upon either, not that justified London, etc., he should have acted one rather than the other. upon Parrot, Bank v. 125 1 E. C. Cal., 472; 103; Brandt S. and sec. G., Co., v. Ry. Maryland Co. 20 Casualty C., 114; 145 N. Cyc., means what terms that if the guaranty This its express, fails, one the continuance of con any year during company “the tract, dividends, any part thereof, called the face certificate,” agrees the defendant and all pay any deficiency the dividend arise from such failure. It may is not the warehouse will promise company pay illegal dividends, events, that the latter will at all pay, money, it does not so much require that it will pay any but in the event the ware deficiency only company house fails declare and its stock dividends from IN n THE SUPREME COURT.
Stags v. Land Co. If com the warehouse clearly what it means. and earnings, its dividend, of its and earn, declare, pay any fails to pany the-par stock, cent on value per would be amount to be paid difference but a then the be declares, and earns, pays part, 6of would be per the full dividend cent so paid tween the amount Y., 142 N. Clyde, Lorillard guaranty. amount due under the in no that the ware sense a 113). L. R. It was (24 A., declaring a illegal would dividend, house do the act company from assets. but its other earnings thereto, payable applicable will, discussing when again touch this incidentally question We guaranty. this contract of company the relation the warehouse defendant decline to We, therefore, hold contends, performance as defendant calls for illegal, because, company. an unlawful act the warehouse by contract of guaranty It is contended the defendant that the next as con- is not the defendant corporate powers within the contract. which fixes the limit of its charter, authority ferred ' doubt, very grave This is a involved question serious very a full dis- indispensable we do that a decision it is not consider well omit discussion therefore, we position appeal, and, we to decide it. required our until are it, and withhold views renders of the doctrine uWra vires unnecessary any consideration have now counsel in their briefs. We fully so treated estoppel, in the case. regard come to we as one of the decisive questions what demurrer, It in the course admitted alleged complaint, to be adjudged bankrupt that the warehouse has been *9 it has ceased to do case, of the and having jurisdiction Federal court man- affairs and assets now under the control and business, being its accord- agement of that court the of administered purpose for to and It ing provided. not, statute in such cases made the Federal as a at therefore, corporation being, its functions going concern; of its least, adjudication bankruptcy, viz., and since the suspended, day Legislature ratified on that public statute March, the of declared charter be forfeited had corporations they the all to more spe- been will these matters adjudicated We refer to bankrupts. cifically hereafter. bankruptcy
In effect inquire of the we must what case, state the guaranty the of its had the contract of sued and forfeiture charter obliga- the change on. The have no effect says they that to plaintiff the liability upon guaranty, tion to terminate its the defendant have ceased and obligation liability while insists that its and defendant made in contemplation been determined as the contract was thereby, as a company corporation, the continued existence of the and and reason its was charter-by bankruptcy, when it forfeited its N. TEEM, SPUING 0.]
Stagg Land Co. it dissolved, ceased to exist as a corporation, and there was left nothing to done Avith to to respect up it but Avind and settle its affairs; it ceased to have earning so as to make and capacity, declare divi- and its dends, stock held its shareholders, including plaintiff, the for adjustment the a final affairs the purpose its distri- bution assets among thereto, those entitled whether creditors stockholders.
We will first consider whether the contract of was made guaranty Avith reference to the continued whose corporation existence the stock is plaintiff. held While the warehouse not company party to the nor thereto, law, guaranty, privy that, sense is at all liable thereon either to the or to plaintiff defendant, to they it, yet the continued con thing existence of was templated by both parties when made the contract, perform they ance was impliedly depend made to it. that as They understood the basis the contract there should be a corporation capable of earning dividends —not it should but actually them, earn should be able do potentially so; to this could not be said of a Avhich corporation had lost its charter and had ceased to do business. original This not an Avas to each independent promise pay year, at all events, of a full or equivalent partial without re dividend, to gard the earning capacity corporation, existence of the but imposed a one to so much secondary liability, is, provided that the warehouse failed earn pay. was,
promise therefore, but conditional. failure absolute, the other was on the precede any liability part and this defendant, could not be so unless the former continued to haAre was, earn and Its continued existence capacity pay. therefore, presupposed by question parties. substantially Clyde, Lorillard involved in The contract of Y., guar in that case was to anty years, last seven guaranteed of whose
payment dividends was dissolved before the of,that expiration said: time, and the Court “The whether question defendants their under continued force as unexpired the seven at time of the dis years solution in the absence corporation, any responsible agency dissolution, either the causes led must be de party termined the intention of as ascertained from the language *10 if from such sur contract, ambiguous, language the and, contains no rounding circumstances. The contract statement explicit on the subject. It assumed that the would be existence corporation The during guar the whole over which extended. period guaranty the on was not for sum to 7 cent anty yearly payment equal the per 38—171 COURT. THE SUPREME
594 .IN Stagg v. Land Co. or on the nominal amount in the corporation, plaintiff tbe the capital should an dividends of the corporation was that the his stock. It The under the plaintiff for that sum. would seven years equal nually divi be entitled to right as a stockholder contract and virtue his should more or less they the whether company, dends declared by less than that amount dividends per annum, than 7 cent per their would guaranty of the defendants on should be the made, liability In divi the case the up be limited to sufficient to make deficit. a sum liability; no exceeded there would be per dends or 7 equaled cent, no the would declared, guaranty dividends were then stand case same And said with reference to the again lieu of dividends.” it was right the busi manage “It is incontrovertible that question: the and to commissions the and to earn receive the corporation ness rested. The upon were considerations the freight plaintiff equivalent. these to the for this rights Clydes conceded in case the receive the benefits of defendants could guar during running continue should corporation their management, would terminate anty. death would commissions; end, the business earning their prevent would to each his court, administering assets, party return for The death or capital distribution. proportion remaining would withdraw all the invested capital dissolution so for the remained, far and take future the whole consid away which the was based. There would thereafter eration of earning be no and noth corporation earning capable or dividends, them ing left which the could predicated: when general voluntarily “The doctrine undertakes to party not thing, qualification, performance do a without excused because, becomes, contingency inevitable accident foreseen, for thing do, him to do act or which he impossible agreed well and one of protects integrity settled. doctrine contracts, case assigned the reasons in its Paradina v. support early Jane, is that Aleyn, 26, against contingencies party could his 12 Harmony Bingham, Y., contract. See v. N. provided by Cotesworth, Q. 142; 62 Am. v. L. 4 v. B., 134; Ford Jones Dec., R., States, 24 L. U. it is now well settled S., Ed., United 96 But on the continued existence performance given that when depends of. and such existence was assumed as the basis person continued thing, agreement, the death the destruction person for obligation. personal an end to the contracts thing puts Executory chattels, use of a building the sale of are services, specific Norton, v. N. Y., 62; fall Dexter principle. held to within Co., Caldwell, Taylor Y., 174; Mut. Ins. v. Globe People L. the rule that con- S., exceptions Best and 826. These are not cases *11 N. SPRING O.] 595
Stags v. Land Co. tracts made are to voluntarily but the enforced, courts, accord- ance with the manifest intention, construe the subject contract as an condition that implied the person thing shall existence when the time of performance arrives. ifSo after a is contract made the law interferes and subsequent performance makes the impossible, Judd, held to party be excused. Jones v. 4 Y.,N. It must be conceded that it is difficult to draw the line and to determine the exact limitations When principle. the the executory contract relates to specific chattels, the subject-matter destroyed without fault the the party, condition implied arises and excuses performance. But where the contract is based on the assumed existence and continu- ance of a certain condition, the continuance of a subject-mat- ter which, the direct however, object contract, is the prin- in such cases ciple excluded? The case present illustrates what we have in mind.
“The was not with question the whose life was extinguished the judgment of dissolution. But the guaranty assumed the corporation during would continue in existence seven years period. The assumed liability the defendants in consideration of the benefits which accrue to might them management business transportation corporation during that period.
“Upon assumption brought the death about without their were fault, thereafter bound? Is the doc- they trine of condition less implied than it would be the con- applicable tract had been between the defendants If in and the corporation?
one so far it was contract, terminated, ease would be unexecuted, did not the of the same terminate happening engagement event these based on the continuance parties, assumed of the corporation life?” Moshier,
A similar contract was construed in Columbus Trust Co. v. 100 Y. 1066, N. and the Court held: “There is an Suppl., express agreement referred to which makes provision the continuance life corporate precedent right condition general to enforce the thereof. As a provisions rule, unqualified, of a an act is not to be excused undertaking party perform because existing the situation when the contract was made did not continue to stipulated performance. exist at the time Labaree v. Cross Co. man, 100 92 N. Y. Div., 565; Clyde, Lorillard v. App. Suppl., 142 24 L. Y., A., N. 37 N. R. 113. This E., 489, rule, however, not without and where on the con exceptions; performance depends given tinued existence of a and such continued exist person thing, agreement, ence was assumed as the basis of the death of the per thing an end puts son the destruction to the obligation. IN THE SUPREME COURT.
Stagg Land Co. Gibbs, Y., 281-286, v. Babbitt Clyde, supra; Lorillard *12 Mullen, 28, 44; E., N. 53 N. 44 Y., 159 700, Herter v. E., 952; N. 68 Div., 58 703, St., Daly, App. 49, Am. Matter A., 517; R. 60 L. a implied courts bave condition 596. In such eases tbe N. Y. Suppl., from wben its per- a is relieved terms party in tbe contract Mullen, Herter v. become fault, impossible. without bis lias, formance contempla- it was witbin tbe . . it clear tbat . “I'think supra." to exist dur- should continue tbat tbe parties corporation tion of both and an condition implied tbe contract of tbat guaranty, tbe life of ing was not agreement Tbe to tbat effect. read into tbe contract should be whether declared dividend, a a sum to tbe amount pay equal to Tbe paid. payment tbat should be guaranty but was dividends not, Tbe of a corporation. existence of a tbe necessarily implies dividend means stock, with corporate in connection wben used ‘dividend,’ word corporation which bave arisen from profits of tbe proportionate part Priv. Taylor alone. out They payable profits are transactions. 453. Purdy’s 2 Priv. secs. Corp., Reach 565; secs. Corp., stock in of tbe capital to sale tbe bad reference tbe Again, agreement tbe members of is tbe interest which stock company. Capital tbe cor- tbe property bave tbe stockholders (tbe thereof) 184. When tbe corpora- Priv. sec. Corp., 1 Beach Purdy’s poration. longer there was no distributed property exist and its was tion ceased to out, of neces- wiped tbe stock corporate stock. When capital any nor any transactions, pos- no from corporate there sity profits could of profits corporate tbe possibility thereof. Without sibility Tbe contract guaranty could be no dividends. transactions, there It Mr. Harrison was to receive. fix a amount which specific did not 3 But so at cent dividends. per tbat be should receive least provided if be stock, transferee, owner tbe be or bis as he remained tbe long all of tbe divi- be entitled to receive same, bad tbe would transferred amounted on such stock. If such dividends dends earned and declared would be entitled 10 bolder of tbe stock per cent tbe semiannually, semiannually, 2 cent tbe If it amounted to only per receive tbat. from tbe company stock receive tbat amount holder tbe would ' 2 tbe cent per then bold for tbe difference between guarantor could tbe being- 3 dividends guaranteed. and tbe cent per dividends received read into tbe con- to must be condition above referred so, tbe implied contracted with reference and it must be tbat tract, presumed tbe this was tbe basis corporation. to tbe continued existence tbe Since obli- destruction of terminated tbe agreement, tbe authority. both upon principle to me to be true This seems gation. Co., D. 83 N. Y. Div., 521; Mason v. Standard Distilling App. 843; Lorillard v. Tbat case affirmed Suppl., Clyde, supra." Y., N. at p. SPRING- 0.] Stagg Land Go. therefore,
Tbe is whether the becomes in- question, wholly something' want which it is operative applicable, whether, hand, binding on the it can be understood as defendant to of the dividend in deficiency any contingency respond to an amount in damages equivalent case failure. The latter is the one not theory plaintiff, reading dependent least corporate capacity earn and dividends and as operative regard without to its continued existence. We cannot corporate to this view. It assent not what the language of the contract imports, what evidently the parties intended. The condition precedent liability on the was the existence of corporation having capable stock and of earning and thereon, but not able to paying necessarily dividends *13 do so. an guaranty. made essential element of the It re- ferred a live necessarily to and not a dead corporation. We would not or properly refer to a defunct dissolved corporation as one which could or annual dividends. It would to earn be refer to the pay proper or share in the of to received final division its assets its dividend, or creditors as a is shareholders not but that the kind of divi- dend which was parties intended the to this guaranty they when used that but is word; clear, it on perfectly they the contrary, an meant annual dividend, and else. The nothing the language is to pay fails annual dividend. contract must have a natural and construction. Gooley reasonable Justice of said this in question Lockhart v. 31 Alstyne, Van at “A Mich., p. 79: dividend to of the stockholders when of corporation, spoken refer- in ence an existing organization to in engaged business, the transaction of and not one being up closed is dissolved, always, so far as we are understood as a aware, fund which the corporation sets from its apart profits to be divided its members. ... A among among dividend preference to stockholders’exclusively is understood sum that the imply divided has been realized as profits, though the do earnings yield not a dividend to the in general. stockholders We hazard nothing say- ing that this is the of a primary and universal dividend understanding stock, when made of in except respect use to final closing up and of assets on distribution the occurrence of a insolvency or view read dissolution.” No one can well this without con- vinced that the parties contemplated intended the continuance the life the whose default company, paying annual dividends should raise the to liability upon pay liquidated the dam- As a ages. dead could not the it was not in dividends, the minds of their parties they the when drew contract. Reports
We have a case our own which affirms clearly validity the Co., herein Steamboat Co. v. applied. Transportation the principle COURT. IN THE SUPREME
Stags Laud Co. was frus of the contract the object at There 166 N. C., related, it mainly which property the destruction tbe trated within held it fell and this Court hold, seem to nearly all courts imperative, a contract obligation to the rule that exception which generally, subject qualification which applies to ex relates ceases which the contract subject when the principal p. end, citing approving Cyc., is at an ist, contract 631: from the nature of the p. et said at “Where seq., being of the continued on the basis it is evident that the contracted per relates, subsequent to which it thing or person existence of the where Thus, will excuse the ishing thing performance. the person specific with any dealing possession the contract relates the use on the existence performance necessarily depends in which the things the im condition is the law that thing, implied particular thing, from the destruction with arising perishing possibility because, excuse from performance, out default in the shall party, the parties it is contracted on contract, apparent the nature of the contract.” subject the basis of the continued existence which therefore, ground promisor ex It appears, from nature contract is that there performance cused will thing an con implied depends condition that Taylor v. tinue to We as declared in exist. take the rule Q. Caldwell, B. 824: L., 3 Best and E. C. Ed. Smith, (113 1867), thing, is a do a un- positive 1. Where there itself it or lawful, damages doing it, must for not perform the contractor although consequence performance of unforeseen accidents his *14 contract has become burdensome even unexpectedly impossible. 2. But rule when the only applicable positive contract is and absolute, subject any express implied. and not to condition either
3. from the nature of contract it appears parties Where the that the known not beginning must from have that it could fulfilled the be unless the for the contract when time fulfillment of the arrived some particu- specified thing exist, that, lar continued to so when entering into the contract, must they contemplated continuing as existence the done; what in the foundation of was to be there, absence ex- exist, shall press implied warranty thing the contract is not as a positive contract, subject construed but as implied an con- dition shall be excused in .parties case, before breach, perform- from impossible perishing ance becomes the thing without default the contractor. recognized as a rule itself in Blackburn Sales, on p. implied There are instances where the condition is of the life of a human but there are others which the being, implication .same thing, made the continued existence an equity having SPRING N. 0.]
Stagg
v.
Land
Co.
both
life,
from natural
distinguished
artificial,
corporate,
though
ancient
but
an
quite
a new doctrine,
It is not
perish.
being liable
du Contractde
(Traite
Sale
Contract of
treatise on the
in his
one, for Pothier
4,
art.
1,
1,
ch.
sec.
seq.,
2,
and part
sec. 307 et
part 4,
Cen
te),
his
from
should be freed
rule: “The vendor
states
sec.
thus
the .same
is a con
fault,
his
without
has perished
sold
obligation
thing
when
corpore
de certo
obligation
that every
another-principle,
sequence
Obligations,
Traite des
thing
exist,
ceases to
when the
destroyed
due
thing
things,
nature of
6. This
is founded
principle
ch.
ceases
thing
follows that when the
obligation,
of the
being
subject
existing
capable
longer exist,
can
obligation
no
exist the
.
173
Sales, marg. p.
on
See Blackburn
subject.”
without a
Schoonmaker,
somewhat
425, is
App.,
12 Mo.
Atkinson v.
The case of
consideration. There the performance
under
like
one
com
a gaslight
of a corporation,
the continued existence
depended
receiver,
hands of a
order of a court
which was
pany,
placed by
suspended,
life or
corporate
activity
and it was held that
declared
who had assumed
of the third parties,
the contract
inAnd
receivership.
during
period
enforced
on, could not be
that when
substance,
said,
Blackburn
Myers, infra,
v.
Justice
Appleby
fault
destroyed
without
to which the contract related
subject
the kind
impossible
is,
so that
becomes
.side,
performance
either
—that
affecting
is a
misfortune
contemplated by
parties
performance
—it
of the con
from further
excusing
performance
them
parties,
both
could be
Many
to neither.
cases
a cause
action
giving
tract,
variously
how
showing
of the principle
in illustration
gathered here
of them.
will
cite
few
the courts.
"We
it has been applied
Co.,
Malcolmson v.
291;
Wapoo
54 Pa. St.,
v. B. M. Coal
Lovering
Graves,
478;
32 Mo.
Mills,
County
App.,
v.
Livingston
Fed., 680;
Vance,
499;
Tucker,
93 Pa. St.,
Ward v.
527;
v.
70 Ill.,
Walker
v.
650, citing Taylor
(Exch.
R. C. P.
Myers,
Ch.),
L.
Appleby
Caldwell,
to an extract
therefrom
referring especially
supra,
also,
very clearly. See,
doctrine
Blackburn states the
which Justice
Tornado,
said that there was a con
where it was
S., 342,
108 U.
a certain
would
ship
nature of
contract that
from the
implied
dition
dis
had
freight, but
become
earning
capable
remain seaworthy
held
ground
voyage.
her
court
she had broken
abled before
In that
case
performance.
were excused
“any express
that without
stipula
rule was said
for the
reason
*15
thing
or
excuse the per
the person
destruction of
shall
the
tion
from the
implied,
is
law
because
nature
by
“that excuse
formance,”
on the
contracted
basis
parties
it is
the
apparent
the contract
person
chattel.” The case
particular
the
existence
the continued
Caldwell,
v. Myers, supra.
In
supra,
Appleby
v.
Taylor
cites
IN THE SUPEEME COURT.
Stagg Land Co.
Tucker,
543:
is
supra,
p.
elementary
the Court said at
“It
Walker v.
thing
itself,
to do a
possible
law that when the contract
thereof, notwithstanding
a
it was
liable for
breach
the
bewill
promisor
his
it was
own fault
run the
perform it,
his
for
beyond
power
perform
might
an
when he
undertaking
impossibility,
risk
his
Am.
provided against
Chitty
(11
Ed.),
contract.
Conts.
covenant,
1074. But
from the nature of the
it is
the
where,
apparent
on the basis of
given
contracted
the continued existence of
if
that,
became
person
implied
performance
a condition
the
thing,
of the
excuse
impossible
person
thing,
the
shall
perishing
Ib.,
performance.
Several cases show that
the doctrine
where
has
applies
performance
become
act
impossible
law,
of the
as in the case
where a receiver
appointed
charge
a corporation;
take
of the affairs of
bank
is within
ruptcy,
course,
the same
and so
category;
said,
it was
sub
Mills,
v.
stantially,
Wappoo
supra:
Malcolmson
It is a well settled
rule of law that
if
his
party, by
contract, charge
with an
himself
to be
he
possible
performed,
good
must make
its per
unless
law,
impossible
formance be rendered
act
God,
the
other party. Unforeseen difficulties will not excuse him. Dermott v.
Jones, 2
But,
Wall.,
appears,
complete
fulfillment of the con
tract
prevented by
the order of this Court
appointment
of the
A delivery
receiver.
of the rock
company after that was
impossible.
It will be noticed, also, that
the completion
con
of the
tract on the
Mitsui &
part of
Co. was by the same action
Court
made
If the
impossible.
tendered
company had
delivery
rock, the
of this
injunction
Court
them to
forbade
In like
accept it.
manner they could not have
paid
price of the rock.
But when the contract cannot be specifically performed,
and the
remedy is by
way
damages, the.
will not
damages
court
inflict such
on the
corporation
the breach
for
which damages
contract
are
sought has been occasioned
law,
performance
of the contract
having been
impossible,
made
citing People
Globe
Ins.
Mutual Life
Co.,
Stags v. Land Co. of application this established doctrine is that contract would of no in such a case; misapprehension value but this a total of the of the contract and the If scope nature principle. had continued to exist an concern, capable active of earn-
ing dividends, the contract have full would remained in force and effect its during corporate and the was made life, that upon basis, to be its governed by terms. So it is seen that the clearly we.are contract of value and too. great value, said in of cases, As was one it is the misfortune the plaintiffs something that which happened does not been seem have anticipated, and, therefore, against provided the contract. There ais promise guarantee payment, substantial to which the law annexes the condition that it shall last during the life the warehouse company, becau.se, the absence a negative it will read provision, term such a into the contract one from naturally arising what is This expressed. discussion, course, assumes (without deciding) in other validity respects. conclude, We both reason therefore, that a authority, guar- as we anty this ease at an end when the whose .such stock is to has dividend been dissolved. brings us to a which consideration methods dissolved. Constitution this State sec. 1: “Cor- provides, VIII, Art. porations may general be formed under created laws, but shall not be special act, except municipal purposes and in cases in the where, judgment Legislature, object corporations cannot under All general general attained laws. special laws and acts passed pursuant this section be altered time, from time to repealed.” A well known says: “Although text-writer been said frequently has but in which there are four ways corporations may dissolved, he yet on a little reflection it there are five appears ways: By (1) granted by the term existence expiration Legislature, organized either in its charter special charter, where it under a where it is governing general law; under its statutes under a organized an Legislature, act where has been (2) power reserved either .in its charter where it is char- purpose special created ter, or in a constitutional or a provision general operative statute by a surrender which is it; (3) franchises, and a volun- accepted, dissolution; a loss all its or of tary (4) by members, integral an corporate so the exercise of functions cannot be part, restored; a judicial forfeiture of its franchises proceeding, usually (5) by wa-rranto, an information in of a writ of quo sometimes, the nature in a court of operation statutes, proceeding under equity, winds and distributes its at time assets.” up same is said in 1270. And at 1272: again Cyc., p. “Charters are Cyc., THE SUPREME COURT. IN
Stags Land Co. alteration or unless tbe alter legislative repeal power protected *17 of grant in tbe by Legislature making or bas been reserved tbe repeal em- grant act in which tbe franchises, either tbe particular tbe In tbe latter subject. law to tbe general applicable bodied some or its charter annulling a a dissolving corporation case statute a cor- made, bas been unconstitutional. Where this reservation not its of Legislature repealing dissolved an act tbe poration may by (cid:127) to re- power reserved to itself tbe Legislature charter. tbe bas Where bas power tbe courts will tbe presume and exercises not peal, it, in tbe or exercised.” improperly unconscionably provided been It corporation may voluntarily by proceedings Revisal that a be dissolved dissolution 1195, and, 1196, set forth in section under section taken as of a having jurisdiction further take under court may place judgment authority or a or brought creditor, by in a civil action stockholder by State for causes therein Attorney-General of the name of tbe tbe tbe “if in- tbe shall become enumerated, and, among them, corporation for want of funds to ordinary or shall business solvent, suspend of bas danger insolvency, on tbe or be in imminent or carry same, shown, Legislature as tbe corporate rights.” But, already forfeited its to be forfeited, charter of a corporation bad to declare tbe tbe power to dissolve it. thereby tbe 1913 can be question
We need not discuss whether tbe law of ad operate retrospectively, opinion made to as we are of tbe tbe bad tbe judication bankruptcy substantially pro same effect tempore as a dissolution of tbe It be conceded that corporation. may bankruptcy not, itself, corporation, does work dissolution tbe language Heyman, as in tbe sententious Bolland v. Judge Bleckley 60 181: “It is not tbe of tbe law to dissolve Ga., purpose bankrupt Tbe assets are but tbe franchise' is ‘Your corporations. seized, spared. tbe demand made tbe money/ not,‘your bankruptcy act.” life/ But for tbe of its bas ceased do period bankruptcy tbe lost its business, completely capacity and as to earn dividends if its life bad become extinct. Where there is tbe same corporate reason law. there must be tbe same it is not essential to a disposition appeal
While of this that we should commit ourselves to view tbe any special regarding power tbe Legislature pass tbe retroactive clause law of we tbe may will do well to here so, reproduce exposition tbe clear law Harlan in to tbe respect scope tbe Justice of tbe effect or reservation constitutions statutes to amend or repeal charters which we find in Hamilton & granted corporations, G. G. Co. v. Hamilton, 146 City S., (L. Ed., 963), U. 258 as follows: “This grant' reservation alter revoke power special privileges of tbe charter necessarily every became formed corporation SPRING N. O.]
Stagg Land Co. formation of corporations. for the providing statute general under if not for of special privileges, to a legislative grant A one of the but where contract; be a Constitution, may bidden or revoke it, alter Legislature may is that the grant conditions revoke, to alter or which hais the effect altering revoking, a law as one regarded cannot be privileges, of such the exclusive character motive whatever be the contract, impairing legislation may operate, harshly or however Legislature, it. affected particular case, so legislative grant subject power accepting corporation, by to such must be held to assented Constitution, reserved Court. These views are decisions supported by reservation. Co., Freight S., 13, (26: In v. Union R. U. Greenwood of a clause in a scope to the and effect question 963), *18 of incorpora of Massachusetts that act general providing every statute alter amendment, after a named ‘shall passed day subject tion be or the of re ation, repeal pleasure Legislature.’ Court, at the amended; is, to that said: ‘Such an act be that it ferring clause, may its of changed be additions to terms the may by by qualifications It be the same and be may by power, may repealed. same. altered it of is it ? It is the act It this may repealed incorporation. "What which the existence of the organic corporate company depends law on Legis which it shall cease be a or the repealed, law; so that may milder adopt amending lature the course of the law matters may altering which need it when it needs amendment, change. .substantial Legislature. body All be done at the of the That may pleasure this for no reason its action in the matter. The of such give validity need not the it on depend necessity action does for the soundness of the words the pleasure Legis reasons which it. The ‘at of the prompted lature’ are not the clauses Constitution of Ohio or in the the which we have referred. But the general statutes to reservation repeal grant a power alter, revoke, necessa special privileges that the implies power may pleasure Legis be exerted at the rily lature.”
The that a clause plaintiff has been inserted in guar contends the which fixes its duration and anty specially shall con provides during tinue the life the defendant company; but this was also true of Lorillard v. Clyde, supra, in the ease as the time was there seven the date the and the years guaranty, corporation was dissolved The clause in period. within that the guaranty upon which plaintiff application does not the prevent relied the we dis principle It limits the extreme duration of merely cussed. the It guaranty. Andrews, and opinion held the able exhaustive of Justice speaking for unanimous Court Lorillard v. Clyde, supra, that this did not IN THE SUPREME COURT.
Stagg
LAND
Co.
V.
prevent
full
application
guar-
tbe
the
that the
principle;
was made with strict
anty
reference to
continuance of
the
defend-
the
ant’s
life and
corporate
its
to earn
capacity
dividends,
the
condition
which the
indispensable
upon
should
continue to be
which
very
upon
basis
it rested.
effective,
The bankruptcy,
did
while it
not
life
destroy
company, suspended
of the defendant
its
corporate capacity and
exercise of
corporate functions,
altogether
to be going concern,
ceased
capable
earning dividends.
dead,
It was
if not
for
dormant,
practical purposes.
all
Our view is
greatly strengthened
position
taken
plaintiff,
guaranty is
one conditioned
payment
dividend
whether earned or
company,
not,
payment
of the dividend “called
which
certificate,”
an earned
i.s
promise
dividend,
pay any deficiency
therein which
occur in
years” succeeding
“the consecutive
one
date
guaranty.
there
at
parties contemplated
should,
least,
be a
chance for the
to make
dividends.
profits
case Kernochan v.
L. R. A.
Murray,
(N.
183, is not
Y.),
as there the
who was
point,
guarantor,
individual,
an
and not a cor
poration,
This,
died.
did not
In orn-
course,
affect the guaranty.
ease, the warehouse
guarantor,
not the
nor
it even party
to the
an
contract, but
with reference to whose continued
outsider,
life,
aas
corporation,
made,
very
contract was
a case
presents
Dodd,
different from Kernochan v.
Nor is Cownie v.
Murray, supra.
As the warehouse was a bankrupt when this action was commenced, its business so suspended, could not earn our plaintiff conclusion is had no dividends, cause of action on at that time. Whether has ceased all time to be because it operative has reached the limit of its duration by the dissolution we are not corporation, required to declare.
We have for the reasons not, already stated, considered the reason- SPRING 0.]
Stagg Laxd Co. ableness of which the contract if it bears the construction guaranty, insists nor plaintiff should the other to have, objections which validity the defendant has discussed in its brief.
There error in the It will reversed and judgment the court. the demurrer sustained.
Reversed. ' defendant, J., dissenting: C. The guarantee given by Clark, “In and every action is as follows: each upon brought, this or any the dividends year date, consecutive from and after this should certificate not be thereof called for the face of the within Power and received, on its due value Water paid date, Spray after cash, days Land ten Company and binds itself guarantees pay default, certificate, any notice of such to the holder of the within of the Ameri- in the dividend as arise from the failure deficiency in said cer- can dividend as stated Warehouse its annual Company life of the Water during Spray tificate. This agreement binding Power and Land Company.” guarantee.
The sole of the above question meaning is ‘the presented a guarantee there is other in the books which Probably presents no case if aid consider words, any, and it would be exactly small, same more or less guarantees the construction other courts placed by dissimilar. in these guarantee
Even there had courts presented been other words, identical there been none in our court. The construction of has should the view taken of more guarantee complicated by not be less dissimilar courts. The sole is the con- guarantees question words, struction of the as derived from the four corners and their intent meaning itself. It is a of these guarantee question plain the. words. English A be- guarantor note, bond, obligation or other is not released His obligor insolvent, cause the becomes or dies. promisor bankrupt, risk of guarantee against very contingencies. provide those It and the guar- can make no difference that promisor, obligor, antor are corporations. original of the American Warehouse Company accumulative, dividends on its certificates dur- cent per preferred, which was chartered for obligor thirty the life of the
ing company, years. fails to whether because it does not pay, When the, earn dissolution or by legal bankruptcy, guarantor dividends or dies *20 and for which very contingency provided by guarantee, faces the was exacted. authorized guarantor its charter to specially by The “is guarantee that it dur- specifies binding make this guarantee. and Land Power This Spray Company.” the life of the Water ing guarantee. the duration of the leaves no doubt as to IN THE SUPREME COURT. Wilson Soarboeo. this duration would char- thirty years Whether be restricted to the life of the not be tered American Warehouse should its life Company a not by extended renewal of the charter of that is a question in any cannot be for less than presented. guarantee thirty years and it event, given per to secure the of the accumulative payment cent fail dividends should the American Warehouse Company dividends, regardless of the cause such de- default—whether fault is caused failure to earn legal dividends or dissolution the' other bankruptcy cause. guarantee. If it was plain language given guarantor absolved either failure to earn purpose, dividends or by legal dissolution or of the Warehouse bankruptcy it is difficult to Company, guarantee conceive for what thé purpose It was intended to add required. something security afforded by insuring against the original obligor, contingencies reason of which company might said fail be unable to its divi- dends as stipulated.
BbowN, J., concurs in this opinion.
W. S. WILSON S. H. SCARBORO and Wife.
(Filed May, 1916.) Conveyances Deeds Interests —Divested Interests. —Timber—Vested conveyance growing upon lands, A o£ timber to be cut and removed period, subject timber, within stated vests title to the divested grantee. if not so cut and removed — — Conveyances Damages 2. Deeds and Evi- —Timber—Breach—Conversion dence—Diminution. grantor provision deed, conveying Where the breaches a his timber standing by entering lands, thereupon preventing his grantee removing, etc., period, the de- timber within the stated is, effect, use, act fendant’s reconversion of the timber and he his damages thereby; solely is liable for the caused evidence introduced purpose showing grantor purchased for the could have locality timber in the same from other in lieu of the timber him, damages, defendant had sold and thus have minimized his is incom- petent, though testimony plaintiff’s admissible rebuttal of the phase case, purpose. had it been offered for different Breach—Damages—Diminution—Evidence—Knowledge—Deeds 3. Contracts — Conveyances. permitted party, contract, prove who has Where it breached his party damages by thereto the other could have minimized the ac-