on any additional lot in which he may have substantial improvements, shall be entitled to prove up and purchase the same as a preemption at such minimum at any time before the day fixed for the public sale." It appears, therefore, that both the grantor and the grantee in the conveyance of the Carrol Dobbins 40 united in the intention of disposing of the lands embraced in that tract in a similar manner to those embraced in the town site of which it was to be practically a part, and adjoining, that a uniform system of disposing of these lands might prevail throughout that entire addition to the town of Deming, and also that actual settlers upon the Carrol Dobbins 40 should have the same protection as actual settlers had under the laws of the United States relating to the establishment of town sites; and the acts of the parties above referred to so thoroughly indicate this purpose as to amount to a construction of the trust clause in the deed to this effect by the parties themselves.

From what has been said, it is apparent that the decree entered in this case by the court below was correct. The court below entered a decree declaring John W. Gill to have received title to two lots, each occupied by the defendants, in trust for their use and benefit, and required him to convey to each of the said defendants the two lots respectively claimed and occupied by them, upon payment by them to him of the proportion of the expense of obtaining the lands which they were required to pay; thus declaring that the trust clause of this deed was for the protection of the defendants in their right to obtain title, to the extent of two lots each, in block 72, by reason of their being actual occupants of the land at the time the deed was executed and delivered.

Counsel for appellant and appellees, waiving all technical errors suggested by the assignments of error, have submitted the case to this court upon the legal interpretation of the trust clause in the deed, and whether or not it embraced within its terms the defendants in this case. This court being of the opinion that the court below properly construed the trust clause of said conveyance, and entered a proper decree in accordance with the terms thereof, the decree of the court below is affirmed with costs.

MILLS, C. J., and BAKER, and McMILLAN, JJ., concur. PARKER, J., having tried the case below, did not participate in the hearing.

BOOHER v. WISNER et al. (Supreme Court of Kansas. Nov. 8, 1902.)

PETITION IN ERROR-DISMISSAL.

1. Petition in error will be dismissed where parties in court below are not made parties to the proceeding.

2. A proceeding in error will be dismissed where the record does not show the value of the subject of controversy to amount to $100.

COOPER v. HAYTHORN et al. (Supreme Court of Kansas. Nov. 8, 1902.) In banc. On rehearing. Affirmed. For former opinion, see 69 Pac. 333.

PER CURIAM. The letter of defendant in error, dated September 13, 1894, was held in Haythorn v. Cooper, 65 Kan. 69 Pac. 332,

not to be sufficiently explicit to remove the bar of the statute of limitations. We perceive no error in excluding the other letters written by the husband of Mrs. Haythorn. They in no way affected any of her rights. The payments of the $5 and $7, respectively, were not shown to have been made by Mrs. Haythorn or by her direction.

The judgment of the court below will be affirmed.

DE CAMP et al. v. WARREN MORTG. CO. (Supreme Court of Kansas. Nov. 8, 1902.) FOREIGN CORPORATION-RIGHT TO SUE. 1. That a foreign mortgage company had been remiss in its duties to the state did not satisfy nor discharge a mortgage given it, and where it made reports to the secretary of state in substantial conformity with the law, before an action was brought by it to foreclose ita mortgage, it was entitled to maintain the same.

In banc. Error from district court, Lyon county; W. A. Randolph, Judge.

Action by the Warren Mortgage Company against G. W. De Camp and others. Judgment for plaintiff, and defendants bring error. Affirmed.

G. W. De Camp, for plaintiffs in error. Graves & Hamer and Kellogg & Madden, for defendant in error.

PER CURIAM. Action to recover possession of cattle under the provisions of a chattel mortgage given to secure a debt of De

¶ 1. See Corporations, vol. 12, Cent. Dig. 2540, 2542, 2544, 2545.

Rehearing denied.

Camp. Judgment was in favor of the Warren Mortgage Company. The evidence shows that the debt was bona fide, that it was unpaid and long past due, and that the conditions of the mortgage had been broken. The corporate existence of the mortgage company was shown, and no error was committed in admitting testimony of that fact. The mortgage company may have been remiss in its duties to the state in the past, but that did not satisfy nor discharge De Camp's obligations to it. It had made reports to the secretary of the state in substantial conformity with law before the action was begun, and was entitled to maintain the same.

Finding no error in the record, the judgment will be affirmed.

DOSTER, C. J. A. R. Kramer was a merchant doing business at Galena, this state, under the name of A. R. Kramer & Co. He owed the Hargadine-McKittrick Dry Goods Company, a corporation, nearly $15,000, and on March 2, 1896, executed to it an instrument more nearly in the nature of a conditional bill of sale of his stock of goods than anything else. Without containing words of sale and trasfer, it declared that the stock of goods "is the sole property of said Hargadine-McKittrick Dry Goods Company, and to remain so until the following indebtedness is paid," etc. Nothing was said in the instrument as to whether it should pass title to subsequently acquired goods added to the stock, or constitute a lien on such additions. Inferably, however, from the following provision, it was to do one or the other, per

2. See Contracts, vol. 11, Cent. Dig. § 1186.

haps the former: "It is also further agreed that the said Hargadine-McKittrick Dry Goods Company is to grant the said A. R. Kramer & Company a line of credit not to exceed $2,000.00, as follows: $1,500.00 in dry goods, and $500.00 for purchases made from other houses. No purchases are to be made or debt created without the authority of said Hargadine-McKittrick Dry Goods Company. All cash is to be remitted to the said Hargadine-McKittrick Dry Goods Company, and all bills to be paid through them." The practical construction which the parties gave to the paper by their subsequent dealings under it was that it covered after-acquired additions to the stock. Kramer was to remain in possession of the goods and conduct the business in his own name as before, and make weekly reports to the Hargadine-McKittrick Company, and out of the proceeds of sales pay the indebtedness. This arrangement continued for more than two years; but the indebtedness did not become materially reduced, and the company decided to take possession of the stock of goods and put an end to the transaction. On December 3, 1898, it wrote to Kramer announcing its intention, sending the letter by one Purdy as its agent. This letter contained the following statement: "Mr. Purdy is authorized to say to any one to whom the firm of A. R. Kramer & Company may owe money for legitimate claims against them of any kind, arising out of the mercantile business, that this company will settle them in full, and Mr. Davis will attend to the matter as soon as he is able to come down." Mr. Purdy gave Kramer the assurance he had been, as above, authorized to make. The stock of goods was surrendered to him and shipped away. Among the indebtedness of Kramer was an account for goods due the Swofford Bros. Dry Goods Company, a corporation. ing paid, suit was brought by that company against the Hargadine-McKittrick Dry Goods Company to recover on the assumption contract which Mr. Purdy had made under the authority conferred on him. The defense to the suit was that the assumption agreement was induced by the fraudulent representations and concealments of Kramer. It was averred that he had concealed from the Hargadine Company the indebtedness due the Swofford Company and many others by the making of false reports, the keeping of secret accounts, and other deceptive practices. On the trial the defendant offered evidence of the fraud practiced on it, and of the claim that it made the assumption agreement in reliance on the truth of Kramer's representations. This evidence was rejected for the reason that it was not coupled with an offer to show that the Hargadine Company on discovering the fraud practiced on it offered to rescind the contract and transaction by which it entered into possession of the stock of goods. This ruling was affirmed by the majority of the court of appeals of the North

Not be

ern department (Hargadine-McKittrick DryGoods Co. v. Swofford Bros. Dry-Goods Co., 10 Kan. App. 198, 63 Pac. 281), but it cannot be sustained. It is contrary to the principle declared by this court in Clay v. Woodrum, 45 Kan. 116, 25 Pac. 619, that, in actions on an agreement made by one person with another for the benefit of a third, the rights of the latter will be subservient to the equities growing out of the contract between the other two. Had Kramer paid the debt due the Swofford Company, and brought an action against the Hargadine Company to compel reimbursement, he could not have maintained it in the face of proof of the fraud and concealment charged against him. What Kramer could do or could not do in an action by him against the Hargadine Company is the test of what the Swofford Company can do or not do in an action by it against the same party, because the Swofford Company must claim under the same contract that Kramer would have been compelled to claim under had he brought the action. In Ellis v. Harrison, 104 Mo. 270, 16 S. W. 198, it was said: "Whatever right of action a third party to such an engagement may acquire by virtue of its terms against either of the directly contracting parties, it is clear that on principle such right cannot be broader than the party to the contract (through whom the right of action is derived) would have in event of its breach. To state this in another form: The right of action by any outside beneficiary, for whose advantage a contract is made between two other persons, is entirely subordinate to the terms of that contract as made. Such beneficiary cannot acquire a better standing to enforce the agreement than that occupied by the contracting parties themselves." Dunning v. Leavitt, 85 N. Y. 30, 39 Am. Rep. 617, cited and quoted from in Clay v. Woodrum, supra, is a pointed authority to the same effect as the above, and there are many others.

The reason given by the district court for its rejection of the offered evidence, to wit, that the Hargadine Company could not repudiate the assumption contract, into the making of which it had been fraudulently entrapped, without restoring the status quo, is not a valid one. The general rule that a person who receives something under a contract which he would not otherwise have obtained cannot rescind the transaction without making restoration does not apply. The Hargadine Company got nothing from Kramer that was not already theirs. The stock of goods belonged to them. They were entitled to its possession. They merely entered on their own. The assumption agreement, as to all indebtedness due to third persons over and beyond the $500 allowed by the express terms of the bill of sale of March 2, 1896, was gratuitous on the part of the Hargadine Company. It was not required by the terms of the agreement under which Kramer was holding the goods, and it furnished no con

sideration for his surrender of their possession. "One who attempts to rescind a contract on the ground of fraud is not required to restore that which, in any event, he will be entitled to retain, either by virtue of the contract sought to be set aside or of the original liability." Kley v. Healy, 127 N. Y. 555, 28 N. E. 593.

It is suggested that the Hargadine Company received from Kramer something additional to the stock of goods, to wit, the store furniture and fixtures. While these were not described in the bill of sale, yet the letter of the Hargadine Company of December 3, 1898, treats of them as though they were subject to the terms of that instrument. Many of them were, in fact, disposed of by Kramer himself, in the discharge of his own indebtedness, and some were left in the store building on the removal of the goods. But a sufficient answer to the claim of new consideration in this respect is that it does not appear that the transfer of any of this furniture or fixtures to the Hargadine Company was made to it to induce it to enter into the assumption agreement, and, were it otherwise, there is much doubt, indeed, whether it would constitute, under the circumstances of this case, a reason for invoking the rule of restoration before rescission.

The judgment of the court below is reversed, and a new trial ordered. All the justices concurring.

(65 Kan. 557)

DAVIS et al. v. COVENTRY et al. (Supreme Court of Kansas. Nov. 8, 1902.) CEMETERY ASSOCIATION-PUBLIC CORPORA

TION-STOCK-ELECTION OF OFFICERS.

1. An association organized and incorporated for the purpose of purchasing and holding lands, surveying, platting, and selling lots therein for sepulture, and otherwise maintaining a cemetery, is a public, and not a private, corporation.

2. Public cemeteries are not authorized to issue and sell stock. The owners of the lots are members of the corporation, and are entitled to vote in the election of its officers and upon all other matters to the same extent as stockholders in other corporations.

(Syllabus by the Court.)

In banc. Quo warranto by J. W. Davis and others against M. J. Coventry and othJudgment for plaintiffs.

ers.

W. P. Dillard, C. E. Benton, and McCleverty & Padgett, for plaintiffs. John H. Crain and W. R. Biddle, for defendants.

GREENE, J. This cause was argued and submitted in division 1 at the January sitting. On September 25th it was ordered referred to the court without reargument. This is an original proceeding in quo warranto to compel the defendants to surrender to the plaintiffs the offices of board of directors of the Ft. Scott Cemetery Association, together with all books, papers, maps, and plats and other property belonging to such

association. The material facts are undisputed, and, summarized, are: In 1869 thirty persons associated themselves together for the purpose of purchasing land upon which to plat and maintain a cemetery. Their agreement was: "Fort Scott, May 29, 1869. We whose names are hereto subscribed agree to pay our equal pro rata part of two thousand dollars, with which to purchase of W. Harris eighty acres of ground for the cemetery; one-half payable on demand, and onehalf on the first of August, 1869." The subscriptions were made, the land purchased, and a portion thereof platted into lots for the purpose of sepulture. Application was made and a charter granted to the Ft. Scott Cemetery Association. This charter provided that the capital stock should be $3,000, divided into 30 shares, of $100 each, and authorized the association to purchase, hold, plat, and convey lots for sepulture. There was no subscription to the capital stock. No stock was actually issued or sold. It was agreed between the original incorporators that, when the land was purchased and platted, each should receive free a family burying lot. This agreement was carried out, and the lots deeded to such persons in accordance therewith. Thereafter lots in the cemetery were sold by the association as occasion required, and the money used in maintaining the grounds. About 1879 H. E. Cooper began to purchase of the original incorporators what he conceived to be their stock in the corporation, and continued until he had purchased 19 of such supposed shares. This, however, did not include a sale or purchase of their lots. Some time in 1880 a stock book was procured, and stock regularly issued to Cooper for these 19 supposed shares. Afterwards M. J. Coventry, one of the defendants, purchased from Cooper these shares, and thereafter purchased from the other original incorporators until he had secured the interest of 27 of the 30, and caused the corporation to issue to him certificates representing such shares. No certificates were ever issued to purchasers of lots. All elections prior to the one set out by the plaintiffs herein seem to have been held upon the theory that the original incorporators, and those who succeeded to their interest as stockholders, as distinguished from lot owners, were the only persons who could participate in an election, or in the management of the business of the corporation. On the 14th day of September, 1900, a meeting was held for the purpose of electing a board of directors. Those owning shares issued to the original incorporators, or their assigns, were the only ones present and voting. The defendants herein were elected board of directors, M. J. Coventry was elected president and manager, and F. H. Coventry secretary and treasurer. It is by virtue of this election that the defendants are in possession of the books, records, papers, maps, and plats of said association, and are claiming to be the board of directors and

by any five of the stockholders. Five days' notice of such meeting shall be given by mail to each stockholder, so far as practicable. Such notice may be given by the secretary, or any one of those joining in the call." On the 3d day of September, 1900, J. D. McCleverty, C. A. Lakin, J. W. Davis, M. V. Barnett, and John Glunz, being at the time lot owners, but not holding any shares of stock in the association, issued a call for a meeting of the members of the cemetery association to be held at the courthouse at the city of Ft. Scott on the 18th day of September, 1900. at 3:00 o'clock p. m., for the purpose of electing a board of directors and transacting other business. This notice was published for 10 days prior to the date of such meeting in the only daily paper published in Ft. Scott, and 305 of these notices, inclosed in envelopes and properly stamped, were deposited in the post office of Ft. Scott, Kan., addressed to as many different lot owners, who at the time received their mail at said post office. On the 18th day of September, 1900, at the hour designated in such notice for the convening of the meeting, there were present 51 lot owners, and 72 other lot owners represented by proxies. At this meeting the plaintiffs herein, J. D. McCleverty, J. W. Davis, C. A. Lakin, Jas. A. Moulton, and M. V. Barnett, were elected directors of such corporation. On the same day said persons qualified, and then organized by electing from the members of the board proper offcers. A formal demand was thereafter made upon the defendants for all books, papers, maps, and plats belonging or pertaining to said association then in the possession of the defendants. This demand was refused. It is by virtue of this election, and the demand thus made, that plaintiffs ask possession of these offices, the property of the association, and that the defendants be ousted therefrom.

It is contended by defendants that this is a private corporation for profit, and that the original incorporators, and those to whom their interest as stockholders have been assigned, constitute the corporation, and the only persons who are entitled to vote in the election of its directors, or take part in the management of its business. If this is true, defendants are properly in office, and should not be disturbed. If, however, this association is not a private corporation for profit, and there are no stockholders, but the business is conducted by a board of directors elected by the lot owners, they are holding without authority, and the plaintiffs have been legally elected, and are entitled to the relief prayed for. As this association was incorporated in 1869, we must look to the law in force at that time to determine the rights of the parties. Subdivision 7, § 5, c. 23, Gen. St. 1868, in enumerating the pur

poses for which private corporations may be formed, provides that corporations may be formed for the maintenance of a public or private cemetery. Article 15, c. 23, Gen. St. 1868, with reference to cemeteries, reads:

"Sec. 124. Cemetery corporations shall have power to divide the land of the cemetery into lots and subdivisions, for the purposes of the cemetery, and to tax the property for the purpose of its general improvement.

"Sec. 125. Such corporation shall have power to convey, by deed or otherwise, any lot or lots of the cemetery for purposes of sepulture. When such lot shall have been surveyed and platted, the survey and plat shall be recorded in the office of the register of deeds of the county wherein the same are situated, and shall not be afterwards changed or altered. No lots shall be sold or disposed of, until such plat shall have been recorded. All the ground held by such corporation for burial purposes, while so held, shall be exempt from public taxation. Every lot sold and conveyed in such cemetery shall be held by the proprietor, for the purposes of sepulture only, and shall not be subject to attachment or execution.

"Sec. 126. All owners of lots, purchased of any such corporation, shall become members thereof, and be entitled to vote in the election of its officers, and upon any other matters, to the same extent as stockholders in other corporations."

We may remark that these sections are unchanged, and are now sections 1381, 1382, and 1383 of the General Statutes of 1901. It appears from section 1383 it was not intended that stock should be issued in a cemetery corporation, else it would not have used this language: "All owners of lots * shall become members thereof * and be entitled to vote in the election of its officers and upon any other matters to the same extent as stockholders in other corporations." Under the general provisions of the corporation law, all owners of stock are members of the corporation, and are entitled to vote in the election of its officers. In the light of this general statutory provision, the language of section 1383 would have no meaning. It was intended that, instead of the corporation being controlled by stockholders, it should be controlled by the lot owners. There seems to be much reason for this, outside the statatory provisions. A stockholder, if there could be one, need not own a lot, or have a relative interred therein. The only incentive he would have in maintaining the ground would be to induce persons to purchase lots, and when the lots were disposed of his interest would cease, while a lot owner has a continuing and increasing interest in the property of the cemetery, in its decoration and improvement, and making it a place where his dead are to be buried, and where he expects to finally rest. It is his constant desire to have such place ornamented, and the entire ground well preserved and made

inviting as a place of interment, as well as a place to which his friends may resort. This idea is well expressed in Close v. Glenwood Cemetery, 107 U. S. 466, 478, 2 Sup. Ct. 267, 276, 27 L. Ed. 408: "This was not to be a mere graveyard in which each lot holder acquired a piece of ground in which to bury his dead, and at the same time become chargeable with the sole care of his particular lot; but the lot holders themselves became subject to by-laws and regulations having reference to the institution as an entirety, and the perpetual preservation of the cemetery as an ornamental and convenient place for interment, and for resort by the relatives of the dead." If the lot owners may not participate in the election of its officers and the management of the affairs of the corporation, and it is purely a private corporation, owned and managed by stockholders for profit, the idea of perpetuity at once vanishes. Having sold all the lots, the profits end, and their interests cease. There is no further inducement to stockholders to maintain the organization or keep up its grounds. Is this corporation public, or for profit? Many reasons may be found in the law for concluding that it is public, and none supporting the contrary idea. For instance, the property so platted and held is exempt from taxation. It has not been the policy of the state, even if it were constitutional, to exempt private property from taxation. No reason can be suggested why a private cemetery corporation, operated for profit, should receive any more grace at the hands of the legislature than a private corporation organized for any other purpose. Another instance indicating that it is a public corporation is the limitation placed upon the corporation in its disposition of the property. It can sell "by lot or lots," and for the purpose of "sepulture" only, and the plat, when recorded in the office of the register of deeds, "shall not be afterwards changed or altered." Similar limitations are not found in the law governing other private corporations. Private corporations are left to manage their property with as much independence and freedom as natural persons. In construing a statute precisely like ours, in Oakland Cemetery Co. v. People's Cemetery Ass'n, 57 S. W. 27, 55 L. R. A. 503, the supreme court of Texas said: "When the Oakland Cemetery Corporation laid out its lands into lots and subdivisions, and caused a plat of the land to be made and recorded in the office of the county clerk of Dallas county, the land so laid out was irrevocably dedicated to use as a place of burial for the dead,just as effectually as if the statute had stated that it should be so dedicated. The use prescribed is public in its nature, and of a character that necessarily excludes any concurrent use of the same property. Consequently the use is exclusively for purposes of sepulture. After the dedication of the land, the legal title remains in the corporation only for the purpose of conveying the lots to those who