But all parties concerned in the promotion of the corporation as equivalent in value to the amount of its capital stock, could not be rendered individually liable to creditors from the fact that by subsequent depreciation in values the property applied in payment of the capital stock became greatly impaired in value. one of the prominent features of that case was the fact that the claimants were present at the meeting of stockholders at the time the stock was received, that the question of the liabilities under the circumstances was discussed, and that the claimants had actual notice of the value of the stock. The record in the case at bar shows that Holbrook, who was a disinterested witness, not having been made a party to the action, was on friendly terms with the Adamant Manufacturing Company of America, the plaintiff; that he purchased the patent right of the plaintiff; that the members of plaintiff corporation advised him to form this corporation, rather than to sell the patent; that they proposed that they deed the patent directly to the defendant corporation, the right having been retransferred by Holbrook to the plaintiff corporation for that purpose; that they advised him to have the controlling interest; that he afterwards informed them that he was not able to obtain the controlling interest, but informed them what interest he did obtain; that they figured with him about what the building and factory would cost, and gave him their estimate of the amount necessary to establish the plant, and suggested that it would be a good plan to have about $5,000 besides for working capital. He testified that he had made a statement to the company of its financial condition, which statement is set forth in the record, showing the assets and liabilities of the company exclusively. This statement was called for by the plaintiff, evidently for the purpose of relying upon it in negotiating sales to the defendant. The witness testified that the members of the plaintiff corporation frequently asked him for the condition of the affairs, and that he gave it to them; that he gave them full facts and figures in connection with it. In answer to the following question by the court, "Right in that connection, did they know this stock was paid up in this way?" witness said, "Oh, yes." "They knew of that?" "Oh, yes." The testimony shows that the letters which the witness Holbrook, while he was manager of the corporation, wrote to the plaintiff in relation to the business standing of the defendant corporation, and in relation to the manner in which it was organized, had been received by the plaintiff corporation or its officers, for letters were received in reply acknowledging their receipt. It is impossible to set out this testimony in detail, but we think the record fairly shows that this information was conveyed to the plaintiff; that it was aware of the conditions and terms upon which this stock was issued. In fact, there is no testimony to the contrary. And, being so aware of the terms upon which the stock was issued, the law will not impute to the defendants any fraud, so far as this plaintiff is concerned. Consequently, no trust will be impressed upon the subscription for its benefit. The judgment will be affirmed. SCOTT, C. J., and ANDERS, REAVIS, and GORDON, JJ., concur. (30 Or. 577) J. D. SPRECKELS & BROS. CO. v. BENDER. - (Supreme Court of Oregon. April 5, 1897.) NOTES ACTION BY INDORSER SUBSEQUENT INDORSEMENTS- ERASURE - PRESUMPTION — E71DENCE-CONSIDERATION-APPEAL-WAIVER. 1. In an action on notes which have been specially indorsed, where plaintiff holder is an intermediate indorser, he may strike out his own name and subsequent indorsements, so as to invest himself with the legal title. 2. In an action on notes, a letter written by plaintiff to his attorney after the delivery of the notes for collection is not admissible to show why the notes had been specially indorsed to another by plaintiff. 3. Where the presumption of ownership raised by plaintiff's possession has not been rebutted, error in the admission of evidence to establish plaintiff's title is without prejudice to defendant. 4. Certain persons agreed to pay to a railroad company certain amounts, in installments, provided the road was completed to a certain point by a day named. The company failed to perform the condition. The subscribers thereupon entered into another agreement with the company, whereby they made their notes for the unpaid subscriptions, and deposited them in escrow, to be delivered to the company if the road were completed by a new date agreed on. Held, that the failure of the railroad company to comply with the conditions of the first agreement was taken out of the case by the subsequent contract. 5. Where a note is introduced in evidence, indorsed by "G., Manager," proof that such indorsement was made by the manager is waived by failing to object on that ground to the introduction of the note. Appeal from circuit court, Coos county; J. C. Fullerton, Judge. Action by J. D. Spreckels & Bros. Company against Edward Bender. From a judgment in favor of plaintiff, defendant appeals. Affirmed. This is an action to recover on three promissory notes executed by the defendant, and made payable to the Coos Bay, Roseburg & Eastern Railroad & Navigation Company or order. The circumstances attending and which induced their execution are as follows: In May, 1890, the defendant, with others, executed a certain subsidy agreement, whereby he agreed to pay the said railroad company $1,250, in installments, as certain definite portions of a railroad were constructed eastward from Marshfield; the last payment to be made when it was completed to Myrtle Point. There was a stipulation that the road should be completed to Myrtle Point May 1, 1891, and to Roseburg December 31, 1891, and that the company should maintain a depot within the corporate limits of the former place. The road not having been completed as required by the subsidy agreement, the subscribers thereto, including the defendant, on March 21, 1893, entered into another agreement with the company, whereby, after reciting that the subscribers had given their notes for their respective unpaid subscriptions, although the notes in question were not in fact signed until April 27, 1893, it was agreed that the company and the makers of such notes should elect a trustee, with whom the notes should be deposited, and delivered by him to the company when it completed its road to Myrtle Point, established depot grounds, and had cars running thereto, provided these conditions were performed by the company on or before September 15, 1893; otherwise to be returned to the makers. The notes in question were delivered to one Dodge, who had been elected the trustee in pursuance of the agreement. After the completion of the road to Myrtle Point, and the establishment of a depot at that place, prior to September 15, 1893, the notes sued on were, with the consent of the defendant, delivered to the railroad company, and were introduced in evidence at the trial, indorsed as follows: "Pay to the order of J. D. Spreckels Bros. Co. The Coos Bay, Roseburg and Eastern Railroad and Navigation Company, R. A. Graham, General Manager." "Pay to the order of the Coos Bay, Roseburg and Eastern Railroad and Navigation Company. J. D. Spreckels & Bros. Company, W. W. R. Gibson, Treasurer." John A. Gray, the attorney for plaintiff, while a witness in its behalf, testified that he had received the notes sued on from plaintiff for collection, and identified a letter written by plaintiff to him from San Francisco, which was offered in evidence with a view of showing for what purpose the notes were sent by plaintiff to its attorney, and was admitted over the objections of defendant. The following is a copy of the letter, viz.: "We have your letter of April 26th, stating that you have commenced action against W. A. Borden and E. Bender on the notes. Mr. Graham was carrying out our instructions in giving you the notes. We wish you to push the collection of the notes in our name. We had indorsed the notes to the railroad company for collection, they having declined to accept them at their face value as a full transfer in the account for the amounts of the notes." Error is predicated of the introduction of this letter, and of certain instructions of the court, the purport of which appear in the opinion. Judgment was for plaintiff, and defendant appeals. A. M. Crawford and W. R. Willis, for appellant. J. W. Hamilton, for respondent. WOLVERTON, J. (after stating the facts). The defendant, by his denials, has put in issue plaintiff's allegation of ownership of these notes, and contends that its indorsement thereon to the railroad company shows prima facie that it is not the owner, but that the railroad company is, and that the letter from plaintiff to its attorney was inadmissible, because written by the party in whose behalf it was offered. The defendant's objection to the letter was evidently well taken. It contains matter not germane to the purpose for which the notes were delivered to the attorney, and, not being sent with them, it cannot be considered as a declaration accompanying the act of such delivery. Proof of plaintiff's declarations as to why and for what purpose it indorsed the notes to the railroad company was undoubtedly inadmissible in its own behalf over the objection of the defendant, but we are of the opinion that the letter did him no harm. It is laid down in Dugan v. U. S., 3 Wheat. 172, 181, as a rule of law, "that if any person who indorses a bill of exchange to another, whether for value or for the purpose of collection, shall come to the possession thereof again, he shall be regarded, unless the contrary appear in evidence, as the bona fide holder and proprietor of such bill, and shall be entitled to recover, notwithstanding there may be on it one or more indorsements in full, subsequent to the one to him, without producing any receipt or indorsement back from either of such indorsees, whose names he may strike from the bill, or not, as he may think proper." The reason of the rule may be found in the presumption which accompanies the possession of commercial paper. Where a payee or indorsee of such paper has put it in circulation by an indorsement in blank, the law will presume that whoever is found in possession holds it rightfully, and he may bring an action upon it, and at the trial fill up the blank indorsement with his own name, and thus show a technical legal title in himself. So, also, where commercial paper has been specially indorsed, and is found in the hands of a payee or an intermediate indorser, the law presumes that he has paid the amount of the note to the special indorsee, as it was his duty to do in case of nonpayment by the maker or prior indorser at maturity, and by reason thereof has become repossessed of the paper as rightful holder, and he will be permitted at the trial to strike out his own name and all subsequent indorsements, so as to invest himself with the legal title to the paper. Porter v. Cushman, 19 Ill. 572; Bond v. Storrs, 13 Conn. 411. In Pilmer v. Bank, 19 Iowa, 112, a draft was introduced with unerased indorsements similar to those on the notes in suit. The plaintiff was al lowed to testify that he had, on the draft be ing protested, taken it up, and was now the owner of it, of which the appellant complained. Dillon, J., speaking for the court, said: "Being in possession of the draft, the plaintiff, prima facie, had the right to erase the prior indorsement, and recover as payes, That without the evidence now objected to. the plaintiff produced more evidence than he was bound to do is a matter for which the defendant cannot claim a reversal." There are numerous authorities supporting the rule as laid down in 3 Wheat., and, although there are some to the contrary, we believe that case enunciates the better doctrine. See, also, Reading v. Beardsley, 41 Mich. 123, 1 N. W. 965; Witherell v. Ela, 42 N. H. 295; Nevins v. De Grand, 15 Mass. 435; Dollefus v. Frosch, 1 Denio, 367. In the case at bar, plaintiff's possession cast a presumption which established prima facie its legal title to the notes, although its indorsement to the railroad company appeared thereon. It had a perfect right to strike out this indorsement, so as to show a technical title;' and the jury might have been instructed to find for plaintiff upon this prima facie title, there being no evidence to rebut it. The letter tended to show only what the possession of the notes proved prima facie, and hence its admission was harmless, as the verdict would have been the same in either event. Now, as it regards the instructions to the jury: The theory of the defense is that the notes sued on were given in consideration of the contract of May, 1890, and that, the plaintiff having failed to comply with the terms and conditions thereof, the consideration failed; it being contended that the contract of March 21, 1893, did not absolve the plaintiff from performance under that of 1890. A proper interpretation of the later contract, however, supports neither the theory nor the contention. The existence of the contract of May, 1890, and the fact that certain conditions thereof remained unfulfilled to the letter, undoubtedly constituted the inducement for the later agreement and the execution of the notes. The new contract provides for a deposit of the notes in escrow with a trustee, which were to become absolute upon its performing certain conditions imposed thereby, and to be delivered to plaintiff upon such performance. The conditions were complied with,-that is to say, the road was completed to Myrtle Point, depot grounds were laid out, and cars were running to that place, prior to September 15, 1893; and the trustee, as he was in duty bound to do, delivered the notes to plaintiff, so that the obligation to pay in accordance with their terms became absolute and unconditional. The notes and the later contract completely supplanted the prior subsidy agreement. They left nothing to be performed of its conditions by either party, and it does not now constitute a factor in the present contention, except in so far as it constitutes a consideration for their support. It was therefore not error for the court to tell the jury that the question as to whether there was a failure on the part of the railroad company to comply with the conditions of the subsidy agreement was taken out of the case by the subsequent contract. In support of these views, see 1 Ror. R. R. 114; Henderson Railroad Co. v. Moss, 2 Duv. 242; O'Donald v. Railroad Co., 14 Ind. 259. There is another objection to the court's statement to the jury "that the notes themselves had been introduced in evidence, and show that there was an indorsement to J. D. Spreckels & Bros. Co. at one time by Mr. Graham, manager," and the alleged reason for the objection is that there was no proof that such indorsement had been made by the manager of the railroad company. The record does not show whether this was the case or not, but it does show that the notes and indorsements were introduced in evidence without objection by the defendant upon that ground, and there was no general objection covering it; and, this being so, such proof must be deemed to have been waived. Affirmed. (30 Or. 564) NESSLEY et al. v. LADD. (Supreme Court of Oregon. April 5, 1897.) APPEAL-REHEARING. A motion will not lie in the supreme court to grant a rehearing and open a decree below which has been affirmed, in order that newlydiscovered evidence may be heard; the remedy being by original suit to vacate the decree. On motion for rehearing. Denied. For former opinion, see 45 Pac. 904. Baker & Baker and Cox, Cotton, Teal & Minor, for the motion. T. H. Crawford, opposed. WOLVERTON, J. On the appeal in this case there was an affirmance; and the appellants now move for a rehearing, and that the decree of the court below be set aside, and the cause reopened for the consideration of newly-discovered evidence. The motion is supported by affidavits showing in purport the evidence relied upon, which it is alleged has been discovered since the decree was affirmed. Prior to the appeal there was a motion filed in the circuit court by the same parties for a new trial, based upon alleged newly-discovered evidence, but the evidence here relied upon is not the same as there presented. The purpose of the motion, as stated by counsel, is to have this court reopen the case, and remand it to the lower court, with directions to take this new evidence into consideration with that original ly submitted, and from the whole to determine the cause ab initio. This is, in effect, what was accomplished under the old equity practice by a bill in the nature of a bill of review, accompanied by a petition to rehear the original cause; and its purpose was to impeach a decree which had not been enrolled, and was always preferved upon leave of the court first had and obtained: Gib. Suit in Ch. § 1063. The form of such a bill resembled very nearly that of a bill of review, except as to the relief demanded, which was that the cause be heard touching the new matter at the rehearing on the original bill. It stated the former bill and proceedings thereon, the decrce, and the point in which the complainant conceived himself to be aggrieved by it, and the new matter discovered upon which he sought to impeach it. There was a plea or traverse, and a trial proceeded regularly upon the issues thus joined. 2 Daniell, Ch. Pl. & Prac. *15791583. A strong current of authorities hold to the doctrine that where there has been an appeal, and a decree by the appellate court, leave must be obtained in that court, or the right to file the bill reserved in its decree. The reasoning upon which the doctrine is maintained is that an inferior court ought not to be permitted to review or revise a decree of a superior court without permission of the latter. U. S. v. Knight's Adm'r, 1 Black, 488; Southard v. Russell, 16 How. 547; Stafford v. Bryan, 2 Paige, 46; Kimberly v. Arms, 40 Fed. 548; Watson v. Stevens, 3 C. C. A. 411, 53 Fed. 31; Bank v. Taylor, 4 C. C. A. 55, 53 Fed. 855; In re Gamewell Fire-Alarm Tel. Co., 20 C. C. A. 111, 73 Fed. 908; Ryerson v. Eldred, 18 Mich. 490; Gale v. Nickerson, 144 Mass. 415, 11 N. E. 714. The authorities, however, are not all agreed, and it is maintained by some that the court of chancery has inherent power, without consent of the appellate tribunal, to review its decree on the ground of newly-discovered evidence, although passed upon on appeal. See Putnam v. Clark, 35 N. J. Eq. 150, and authorities there cited. But, whatever may be the true rule with regard to the forum wherein application therefor should be made, it is always necessary that leave should be first obtained from a tribunal competent to grant it, before a bill of review or a bill in the nature of a review, based upon newlydiscovered evidence, can or will be entertained. Flower v. Lloyd, 6 Ch. Div. 297. Thereafter the bill or supplemental bill-its nature depending upon whether the decree has been enrolled or not-is filed as an original proceeding in the court wherein the decree complained of was announced, and is there prosecuted. Gib. Suit in Ch. § 1060; Beach, Mod. Eq. Prac. § 863; Dodge v. Northrop (Mich.) 48 N. W. 505. A case is cited from Michigan holding the proper practice to be, where a case is made out for a rehearing upon newly-discovered evidence, by petition filed in the supreme court, to remand the cause to the court below, with appropriate directions for a rehearing there. Adams v. Field, 25 Mich. 18. But we have been unable to find a precedent elsewhere for such practice. In Russell v. Southard, 12 How. 158, under conditions very similar to the case at bar, Chief Justice Taney refused a like motion for rehearing. In deciding the motion he said: "It is very clear that affidavits of newly-discovered testimony cannot be received for such a purpose. This court must affirm or reverse upon the case as it appears in the record. We cannot look out of it for testimony to influence the judgment of this court sitting as an appellate tribunal. And according to the practice of the court of chancery from its earliest history to the present time no paper not before the court below 'can be read on the hearing of an appeal." These are the only cases we find coming near the present question. Both these jurisdictions seem to have retained the commonlaw chancery practice, and the constant exercise of their judicial powers and functions is in accord therewith. The bill of review and the supplementary bill in the nature of review are recognized in both as appropriate and legitimate instrumentalities by which to obtain a modification or impeachment of a decree of the court, and in each the trial in the appellate court is anew, and is confined strictly to the testimony offered in the court below. So it would seem there is no sufficient reason for the divergence in the practice attending a petition for rehearing in the supreme court made in the Michigan case unless it may be accounted for by some chancery rule or statute peculiar to that state. The decisions of this court are instructive in this connection. In Day v. Holland, 15 Or. 464, 15 Pac. 855, it was held that the jurisdiction of this court is appellate and revisory only, and it can exercise no original jurisdiction; that an appeal from a decree does not break it up, and until annulled or reversed it is binding upon the parties as to every question directly decided, and that the distinctions which had formerly existed between the effect to be given to an appeal and the suing out of a writ of error has been swept away by the enactments of the code. Under the former chancery practice the appeal suspended the decree of the court below, so that it could not be carried into execution until after the appeal had been disposed of, while a writ of error left the judgment in full force, although, if bail was put in, it operated as a supersedeas; but since the adoption of the code procedure it would seem that a judgment and decree are alike operative, and stand upon the same footing, until reviewed and revised upon the appeal; and a stay must be obtained, if at all, by the statutory mode. So that while, under the code procedure in equity, the appeal brings the case here to be tried anew upon the transcript and evidence, the decree of the court below remains in full force and effect, and may be carried into execution unless stayed in the manner provided therefor; thus the appeal is more nearly assimilated to the writ of error than under the old practice. Again, it has been decided in Crews v. Richards, 14 Or. 442, 13 Pac. 67, that under the Code (section 381, Hill's Ann. Laws Or.) an original suit, based upon similar grounds to those which were formerly sufficient to found proceedings by a bill of review or a bill of that nature, may now be maintained in equity to impeach, set aside, suspend, or avoid a decree. So that the old procedure by such bills is entirely eliminated from our equity practice, and an original suit substituted by which to accomplish the same purpose. Such a suit may be instituted as a matter of right, and without leave, and there appears now no reason why the decree of this court may not be the subject of such attack, as well as that of the court below. It is clear that we ought not to adopt a practice so nearly analogous to that which has been specially abolished by statute. A motion for rehearing, based upon newly-discovered evidence, might very properly have been entertained by the court below, if filed in season; and, acting by authority of its original jurisdiction, it could have set aside its decree, and ordered a new trial; but this court, in the exercise of its appellate jurisdiction, acts only upon the transcript and the evidence, and it cannot permit its action to be governed or controlled by affidavits touching testimony aliunde. It cannot set aside a decree but by the record. The situation is this: we have affirmed the decree of the court below upon the transcript and evidence, and this determination remains unquestioned by the motion, but we are asked, in consideration of newly-discovered evidence, to vacate the decree of the court below, and direct a rehearing there. It must be conceded that an allowance of the motion would not be in the exercise of strictly revisory powers. But, notwithstanding, if it was necessary, to prevent a failure of justice, to establish such a rule, we would hesitate long before refusing to adopt it, or some rule suitable to the purpose; but the plaintiff has an adequate remedy by original suit, and it is wholly unnecessary to provide another. For an analogous holding, see Flower v. Lloyd, 6 Ch. Div. 299, where it was held that leave would not be granted for a rehearing of the appeal before the court of appeal on the ground of the subsequent discovery of facts tending to show that the decree was obtained by fraud practiced upon the court below, for the reason that in such a case the decree could be Impeached by original bill. Let an order be entered overruling the motion. (30 Or. 385) DUNHAM v. HYDE. (Supreme Court of Oregon. April 12, 1897.) TOWNS-ELECTIONS-TIE VOTES-DUTY OF RECORDER. A town charter providing that all laws regulating general elections shall govern elections under the charter does not impose on the town recorder the duty of determining tie votes by lot in town elections, which is imposed on the county clerk in county and precinct elections by Hill's Ann. Laws, § 2539, since the charter provides neither that the town recorder shall be substituted for the county clerk in the application of the statute to the town, nor that the method of determining ties in county elections shall be adopted, instead of the different method prescribed in legislative elections. Appeal from circuit court, Coos county; J. C. Fullerton, Judge. Petition by H. W. Dunham against W. H. S. Hyde, recorder of the town of Marshfield, Coos County, Or., for a writ of mandamus. The writ issued, and defendant appeals. Reversed. D. L. Watson and E. B. Watson, for appellant. P. H. D'Arcy, J. W. Bennett, and John F. Hall, for respondent. BEAN, J. This is a mandamus proceeding to compel the defendant, as recorder of the town of Marshfield, to give notice to the petitioner and one Elrod, each of whom received an equal and the highest number of votes for the office of town marshal at the annual election held in December, 1896, requiring them to attend at his office, at a time to be appointed by him, for the purpose of having their right to the office determined by lot. Upon the filing of the petition, a peremptory writ was issued, and defendant appeals. It is not claimed by the petitioner that it is made the duty of the defendant, by any particular provision of the charter of Marshfield, to take the proceedings demanded, but the contention is that it is imposed upon him by section 2539 of Hill's Annotated Laws, providing the procedure in the case of a tie in an election of county or precinct officers. Section 21 of the town charter provides that "all the laws of this state regulating and governing general elections and proceedings and matters incident thereto shall apply and govern elections under this act, except as herein otherwise provided"; and the argument is that, by this provision, section 2539 of the Code is incorporated into the charter as though recited in full. But the section referred to is a part of the general laws of the state providing the time and manner of canvassing the returns, and declaring the result of an election for state and county officers; and, since the manner of canvassing the returns and declaring the result of a town election is fully provided for in the charter, it may be well doubted whether the section in question is among the provisions of the general law regulating and governing elections intended to be made a part of the charter by section 21. But, however this may be, the incorporation of the section in the charter would not, it seems to us, extend its scope or operation so as to make it the duty of the recorder, in case of a tie in a city election, to take the same procedure required to be taken by the county clerk in case of a tie in the election of county or precinct officers. To do so would be enlarging, by construction, the powers and duty of the recorder much beyond the scope of the charter. If section 2539 is to be read into the charter, it would seemingly make the county clerk, and not the city recorder, the proper officer to preside over the decision by lot, and declare the result in case of a tie in a town election, if it can be said that a town officer is to be deemed a precinct or county officer, within the meaning of that sec |