2. SAME-ESTOPPEL-PROVINCE OF JURY.

Where there is evidence that at the time of the agreement the matter of filing reports was discussed, and all agreed that it was not necessary; that the company stopped business shortly afterwards, and never resumed; and nothing on the subject is shown to have occurred afterwards between the parties,-it is error to direct a verdict for plaintiff on the ground of defendants' subsequent failure to file the statutory reports, as, if this failure was caused by an understanding with plaintiff, he is estopped, and whether there was such an understanding is a question for the jury.

3. PROVINCE OF JURY-EXCEPTIONS.

An objection to the court's directing a verdict is available under a general exception, and a particular request to send the case to the jury is not necessary.

Appeal from circuit court, Oneida county.

Action by Patrick Carraher against Miles Mulligan, James Merriman, and Patrick H. Carney, to enforce the liability of defendants, as trustees of a manufacturing corporation, for the payment of its debts, by reason of their failure to file and publish the annual report required by the statute,--section 12, c. 40, of 1848, as amended by chapter 510 of 1875, (3 Rev. St., 8th Ed., p. 1957, § 12,)-which imposes a liability on the trustees for the corporation's debts, on their failure to file and publish such report. In the complaint it is alleged that on September 6, 1881, defendants duly executed and acknowledged a certificate for the formation of a corporation, under the act of February 17, 1848, (chapter 40 of 1848,) and the acts amendatory thereof, for the purpose of carrying on and conducting at Utica, N. Y., the manufacture of buttons. the name of the company to be, "Globe Button Company, of Utica, N. Y.," the capital stock to be $8,000, divided into shares of $50 each, the number of trustees to be three, and to be for the first year the defendants; that such certificate was duly filed September 10, 1881, and thereby defendants and their successors became, and ever since have been and still are, a corporation by the name stated, and defendants all the time have been such trustees, and have conducted the affairs of the corporation; that in March, 1882, the capital stock was increased to $16,000; that the company did not, within 20 days from the 1st day of January, in either of the years 1884, 1885, or 1886, or at any time since it was organized, make or publish a report as required by section 12 of the said act; that on January 15, 1883, plaintiff lent to the corporation $2,000, taking therefor its two promissory notes of that date of $1,000 each, payable three years after date to plaintiff or order, with interest; that no part of said notes has been paid, and defendants are liable therefor. Defendants admitted the execution and delivery of the notes, but denied their indebtedness to plaintiff. They made no other specific denials, but alleged as a defense that prior to the date of the notes the company was largely in debt; that plaintiff had subscribed largely for the stock of the company, was informed of its condition, advised as to its management, and was deeply interested in its future; that he and defendants, being desirous to relieve the company from its financial difficulties, agreed between themselves, shortly prior to the date of the notes, to advance certain moneys to the corporation, to be applied to the payment of its debts, on the condition and agreement that the moneys so advanced should only be paid ba k to the person so advancing the same in the event that the company should thereafter have money or profits arising from its business or property sufficient to pay such advances; that in pursuance of such agreement plaintiff advanced $2,000, defendant Merriman the same amount, and defendants Mulligan and Carney, each $1,000, and notes for the amount so advanced were issued to each, the notes set forth in the complaint being the ones so issued to plaintiff, and being made on the condition and agreement stated; that since the making of such agreement the company has made no profits, and has had no money or property applicable to the payment of the notes, and it is utterly insolvent. As a further defense, it was alleged that plaintiff was one of the originators of the corporation, and agreed to and did take 40 shares of the original stock; that after the incorporation he was

constantly advising with the defendants, who were the only trustees, as to the management of its affairs, and was thoroughly acquainted with its financial condition; that at or about the date of the notes referred to, and while in consultation with defendants about the management, plaintiff well knew the financial condition of the company, and was opposed to the publication or making by the trustees of the reports required by the statute, and referred to in the complaint, and advised and urged them not to publish said reports, representing that it would be injurious to the company and its stockholders; that defendants thereupon, influenced by such advice, opposition, and representation, were deterred from making or publishing said reports as they otherwise would have done, and the plaintiff, by reason thereof, should be estopped from maintaining this action. At the trial, evidence was taken upon the issues, and at its close counsel for plaintiff asked the court to direct a verdict for plaintiff for the amount of the notes and interest, upon the ground that the evidence did not establish a defense in law; that there was no question of fact for the jury to pass upon; that the evidence given as to the terms of payment of the notes was in violation of the principle that contemporaneous parol stipulations, contradicting or varying the effect of a written instrument, cannot be received in evidence. Counsel for defendants objected to such direction. The court ordered a verdict for plaintiff for the amount of the notes and interest, and defendants excepted. From a judgment entered on the verdict defendants appeal.

Argued before HARDIN, P. J., and MARTIN and MERWIN, JJ.

Beardsley & Beardsley, for appellants. S. J. Barrows, for respondent.

MERWIN, J. No request was made by defendants to submit the case to the jury; and it is now claimed that by reason thereof the objection cannot now be taken that there were questions of fact that should have been submitted. The cases cited on the part of plaintiff to this point do not apply to this case. On the other hand, the case of Trustees v. Kirk, 68 N. Y. 464, is authority for the proposition, as applicable to this case, that if it was error to take the case from the jury the objection is available under the general exception, and a particular request to the court to send the case to the jury was not necessary. The defendants had done nothing to waive their right, if they had one, to go to the jury. The same rule was substantially held in Bank v. Dana, 79 N. Y. 108.

The question, then, is, was the verdict properly directed for the plaintiff? The evidence tended to show an agreement between the plaintiff and the defendants, substantially as alleged in the first portion of the answer. The plaintiff was a subscriber to the original articles to the amount of $2,000 of the stock. The scrip was issued to other parties; but he was interested and active in the management, advising and assisting the defendants, who in name were the trustees. The business was not prosperous. The company was in debt, and apparently could not borrow on the credit of the company. The defendants and the plaintiff owned or controlled the whole stock. The proposition was then made for each to advance to the amount of stock they held or represented, and wait until the profits from the sales of the product of the factory would pay it back. This they all assented to. The giving of notes was discussed. The plaintiff said he wanted something to show how much money he put in. This idea was adopted, and notes of the company, in the ordinary form, were thereupon given to each for their respective advances. There was no writing, except the notes. It is urged by the plaintiff that the parol arrangement as to the manner or condition of payment varies the legal effect of the notes, and is therefore not available to the defendants. It may be that as against the corporation the condition as to the manner of payment would not be admissible. That, however, is not exactly the question here. It is competent to prove by parol the relation of the parties, and any extrinsic

facts affecting the equities. Wells v. Miller, 66 N. Y. 255. If the original agreement was verbal and entire, and only part reduced to writing, the whole may be shown. Chapin v. Dobson, 78 N. Y. 74. And in Juilliard v. Chaffee, 92 N. Y. 535, it is said, generally, that any agreement may be shown that makes the enforcement of the instrument inequitable. The point here is whether there was any arrangement, not between the plaintiff and the corporation, but between the plaintiff and these defendants, that should preclude the plaintiff from taking the benefit of the statutory provision in favor of creditors. The giving of the notes to plaintiff was but one part of the transaction. The defendants also advanced money and received similar notes, none of which have been paid. Both parties advanced their money and received notes in pursuance of an agreement, verbal it is true, by which each agreed with the other, upon certain limitation, as to the enforcement against the corporation. It was competent for these parties to make such an arrangement; and, it having been executed, the defendants presumptively having advanced their money in consideration and upon the faith of such arrangement, the plaintiff cannot now repudiate it, though it was verbal. His debt or claim, as between him and defendants, is impressed with the character he agreed it should have. Its enforcement here would not be equitable. Juilliard v. Chaffee, 92 N. Y. 529, 535. There is room for saying upon the evidence that the advances were to be treated as so much additional capital,—an informal increase of stock.

But it may be said that plaintiff's cause of action is based on something that afterwards occurred, to-wit, the default of the defendants in regard to their report. The moneys raised through the advances of the several parties at the time of the giving of the notes were designed to be, and apparently were, sufficient to pay all the debts. The company, however, stopped business in April, 1883, and never resumed. It has been held that when the condition of a company is such that the end and object for which it was formed are destroyed, and there is neither an ability nor an intention on its part at any time to further prosecute its business, it is no longer required to make the report called for by the statute. Kirkland v. Kille, 99 N. Y. 395. If, as it may from the evidence be found, the defendants, knowing that the debts were provided for, and that the claim of plaintiff, as well as their own, was not, under the arrangement, a debt of the corporation, and, in reliance on this agreement, concluded there was no necessity for making the statutory report, such default would be one that the plaintiff could not equitably take advantage of. Besides, the matter of filing reports seems to have been discussed at the time of the arrangement about advances, and, as it might be found, it was concluded by all that it was not necessary, and that it need not be done. There is evidence that all understood the requirements of the law; that defendants were ready to perform them; that plaintiff discountenanced it, upon the idea that, as all the debts were to be paid by the money they were raising, it was not important, and there was no need to publish a report. One witness testifies that plaintiff said: "No reports are needed to be published; no need to publish a report." Another witness testifies that the plaintiff, speaking of a report then present, said: "What is the use of having this published? It would be of no use to anybody. We are going to raise money to pay our debts, and it would not make a very good appearance for the company, "and the witness added that what plaintiff said was the rule. The secretary of the company testified that it was stated there, and agreed, that he was not to publish a notice. These conversations or understanding had more particular reference, no doubt, to what should be then done in January, 1883. Still, they were to some extent of a general character, and might well be deemed to have an important bearing on the future action of the trustees. It is not shown that anything afterwards occurred between the parties on this subject. If the defendants omitted in 1883 and the subsequent years to publish the

statutory report by reason of the understanding between the plaintiff and the defendants that it should not be done, then the plaintiff would be estopped from taking advantage of such omission. He cannot claim what is deemed a penalty against the defendants for their not doing what he agreed expressly or by implication that they need not do. Whether upon the evidence there was such an understanding or agreement was a question of fact, for the jury. The foregoing considerations lead to the conclusion that judgment should not have been directed for plaintiff. Judgment reversed on the exceptions, and a new trial ordered; costs to abide the event. All concur.

IVES et al. v. SMITH et al.1

(Supreme Court, General Term, First Department. December 2, 1889.)

1. FOREIGN CORPORATIONS-ACTIONS AGAINST INJUNCTION.

Under Code Civil Proc. N. Y. § 1780, providing that a resident of the state or a domestic corporation may sue a foreign corporation for any cause of action, resident stockholders of a foreign corporation may sue to enjoin it and its directors from constructing branch lines of railroad, and from expending funds therefor, which are within the state, to the irreparable injury of the stockholders.

2. CORPORATIONS-JOINT LEASE-SUITS BY STOCKHOLDERS.

Where a proposed "joint lease" between four railroad companies is executed by three, and the fourth company refuses to execute it, whereupon two of the others retract, equity will not compel the fourth company, at the suit of its stockholders, to execute the lease.

8. SAME-MORTGAGE BONDS-USE OF PROCEEDS.

Knowledge on the part of an executive committee of the directors of a corporation that a purchaser of its mortgage bonds made the purchase under a belief that the proceeds were to be used for particular purposes is not sufficient to bind the corporation to a trust limiting the use of such proceeds.

4. SAME RAILROAD COMPANIES-COMPETING LINES-CONTRACTS-PUBLIC POLICY.

A contract between two railroad companies, whose lines of road are parallel, by which certain naturally tributary territory is preserved to each, within which it shall prosecute the work of extending its branch lines, etc., without interference with or from the other, designed to prevent an unprofitable war of construction, is not contrary to public policy.

5. SAME-INTERSTATE COMMERCE ACT-POOLING.

Section 5 of the interstate commerce act, (Act. Cong. Feb. 4, 1887,) prohibiting railroad companies from entering into agreements for rooling freights or dividing their earnings, does not invalidate such contract, though it may prevent certain pooling provisions therein from being operative.

6. SAME RATIFICATION BY STOCKHOLDERS-ESTOPPEL.

After the directors of one of the contracting companies had passed resolutions to construct branch lines in violation of the contract, a meeting of the stockholders passed a resolution, ratifying all the acts of the directors during a period covering the dates of the resolutions referred to, but it did not appear that those resolutions were read at the meeting, or the attention of the stockholders called to them, and there was evidence that some of the assenting stockholders were misled. Held, that there was no such ratification of the directors' resolutions as would preclude the stockholders from insisting that the contract be performed. 7. SAME-GROUNDS.

Where it appears that the cost of building branch lines and bridges, as proposed by defendants, in violation of the contract, would amount to millions of dollars, and no immediate or prospective advantage is shown, but it appears that serious injury would result to the company, a case is made out justifying injunction.

Appeal from special term, New York county.

Application to continue a temporary injunction, granted in an action brought by Brayton Ives and others against Elijah Smith and others. The application was granted, and defendants appeal. For report of the opinion of the special term, see 3 N. Y. Supp. 645.

Argued before VAN BRUNT, P. J., and BARTLETT, J.

Edgar M. Johnson, for appellants. Chas. W. Wetmore, for respondents.

'Affirming 3 N. Y. Supp. 645.

PER CURIAM. As the parties have had ample opportunity to try the questions involved upon the motion for an injunction before the special term, where the issues might have been disposed of upon testimony given in open court, and not upon affidavits, it does not seem to be necessary that the court should enter upon an extended discussion of the questions presented upon this appeal, and the order appealed from should be affirmed, with $10 costs, and the disbursements, upon the opinion of the court below.

STEVENS . STEVENS.

(Supreme Court, General Term, Fourth Department. November, 1889.)

1. DIVORCE-EVIDENCE-ADMISSIBILITY-ADULTERY.

In an action for divorce on the ground of adultery, evidence of indiscretions of defendant with other men than those with whom adultery is charged in the com. plaint is inadmissible. Following Beadleston v. Beadleston, 2 N. Y. Supp. 809. 2. WITNESS-COMPETENCY-HUSBAND AND WIFE.

Code Civil Proc. N. Y. § 831, as amended by Laws N. Y. 1887, c. 103, permitting a husband or wife, on the trial of an action founded on an allegation of adultery, to testify against the other "to disprove the allegation of adultery," does not limit defendant's testimony to denials simply, but she may testify to any fact or circumstance, within her knowledge, competent and material on the question whether the act charged was committed.

Appeal from judgment on report of referee.

Action by Charles F. Stevens against Carrie T. Stevens for a divorce on the ground of adultery. From a judgment entered in Chemung county granting plaintiff an absolute divorce, defendant appeals. Code Civil Proc. N. Y. § 831, as amended by Laws N. Y. 1887, c. 103, provides: "A husband or wife is not competent to testify against the other upon the trial of an action * * * founded upon an allegation of adultery, except * prove the allegation of adultery.

Argued before HARDIN, P. J., and MARTIN and MERWIN, JJ.
G. L. Smith, for appellant. H. H. Rockwell, for respondent.

* to dis

MERWIN, J. Upon the trial evidence was admitted, over the objection and exception of defendant, showing indiscretions of defendant with other men than those with whom adultery was charged in the complaint. The appellant claims that this ruling was erroneous. This claim is supported by the case of Beadleston v. Beadleston, 2 N. Y. Supp. 809, where it was held that such evidence was inadmissible; it being said by Justice DANIELS that evidence as to other specific misconduct, not relating to the particular charges in the complaint, was not proper, and had no tendency whatever to establish those charges. A like view was entertained by the court in McDermott v. State, 13 Ohio St. 334, where it is said: "It by no means follows that a desire to have sexual intercourse with one person tends, legitimately, to prove a willingness to have like intercourse with another and different person. Indeed, the reverse is much the most probable. But, however this may be, the introduction of such proof is opposed to the well-settled rules of evidence." So in Washburn v. Washburn, 5 N. H. 195, it was held that evidence as to the unchaste character of the defendant was inadmissible, and that evidence showing improper conduct with other men not named in the complaint did not corroborate the confessions of defendant that she had committed adultery with the person charged. The defendant's character is said not to be in issue. Humphrey v. Humphrey, 7 Conn. 117; Lockyer v. Lockyer, 1 Edm. Sel. Cas. 107. It is, however, claimed by plaintiff that the evidence of acts of defendant with other parties is competent, with a view of showing a Justful disposition. Upon this theory, apparently, it was received, following the views of Mr. Bishop in his work on Marriage and Divorce, (volume 2, § 625.) That was said to be the doctrine of the English ecclesiastical court,