who has conveyed with warranty of title, the mortgagor is not a necessary party to the foreclosure of a prior mortgage on the building and the land against the mortgagee and his assignee, so as to invalidate the foreclosure judgment, and so relieve the mortgagee from liability on his warranty.

2. By statute, a sheriff's deed, made in pursuance of a certificate of sale on mortgage foreclosure, need not be by an order of court approving the sale.

· Appeal from district court, Arapahoe county.

Action by John T. Johnson against De Cunto, Barra & Co. From a judgment for plaintiff, defendants appeal. Affirmed.

Ward & Ward, for appellants. Henry Howard, Jr., for appellee.

GUNTER, J. Action upon warranty of title in bill of sale. Trial to the court. Judgment for plaintiff. Defendants appeal.

June 27, 1896, the Metzner Liquor Company was in possession of a lot, a part of the public domain, and owned the frame building situate thereon. To secure an indebtedness to the Milwaukee Brewery Company, it gave a trust deed on its possessory interest in the lot and upon the building. August 31, 1896, the Metzner Liquor Company gave a chattel mortgage upon the frame building to secure an indebtedness to appellants. Being unable to meet this indebtedness, the mortgagor delivered possession of the building so mortgaged to appellants, who, by bill of sale containing warranty of title, sold the same to appellee. The Milwaukee Brewery Company instituted an action to foreclose the above trust deed, and to have its interest in the building covered thereby declared superior to the interest of appellants and to the interest of appellee therein. Appellants and appellee were made parties to this action, and appeared therein. A decree was entered ordering sale of the property covered by the trust deed, and adjudging the lien of the Milwaukee Brewery Company thereon superior to the chattel mortgage to appellants and the bill of sale to appellee. A sale was made by the sheriff under the decree so rendered, a certificate of sale issued. and later, in pursuance thereof, a sheriff's deed. The holder of such deed took possession of the building embraced therein. Johnson, the purchaser under the bill of sale, having thus lost the property covered thereby, brought the present action to recover damages for a breach of the warranty of title contained therein. As stated, he had judgment below.

Appellants contend that this apparently righteous judgment should be set aside. They contend that the above decree foreclosing the trust deed, and adjudging the lien thereof superior to the interest of appellants acquired under the chattel mortgage, and the interest of appellee acquired under the bill of sale, was void, because the grantor in the trust deed was not made defendant to such foreclosure proceeding. The Metzner Liquor Company,

the trustor in the trust deed foreclosed, had parted with all interest held by it in the property covered by the trust deed, by a sale of such property to appellants. It was not sought in the foreclosure proceeding to recover a personal judgment against the Metzner Liquor Company. The relief sought was to sell the property covered by the trust deed, and apply the proceeds of such sale upon the indebtedness secured thereby, and to have the lien evidenced by such trust deed declared superior to the claims of appellants and the claim of appellee. The Metzner Liquor Company had no interest in the proceeding. The only parties interested therein, other than plaintiff, were the defendants, the present appellants, and appellee. They had the opportunity, by being made defendants to such proceeding, to contest the validity of plaintiff's lien under the alleged trust deed, and its alleged superiority to their respective claims. We can see no reason why the Metzner Liquor Company was a necessary party to such proceeding.

It is further contended that the property covered by the trust deed was not the same property as that advertised for sale, and was not the same property as that contained in the bill of sale. By parol testimony, it appears that it was.

It was further contended that the sheriff's deed made in pursuance of the certificate of sale was void because an order of court approving the sale was not made previous to the execution of this deed. This, under our statute, was not necessary.

The judgment below should be affirmed. Affirmed.

(18 Colo. App. 246)

LE MOND v. HARRISON et al. (Court of Appeals of Colorado. Dec. 8, 1902.) INSURANCE POLICY-FAILURE TO READFRAUD ESTOPPEL - APPEAL GROUNDS OF DECISION.

1. Where insurance agents contracted to furnish defendant a policy containing certain provisions, and, on tendering the policy, one of the agents pretended to read that part of the policy containing the stipulated provisions, and falsely stated to defendant that the policy contained such stipulations, and, relying on this, defendant executed notes for the premium, and filed the policy away without reading it, such agents were not entitled to contend, in an action to recover on one of the notes so given, that defendant was estopped to repudiate the contract for fraud by his failure to ascertain the provisions of the policy until nine months from its delivery.

2. Where a judgment is correct on other grounds than those on which it was based by the trial court, it will not be reversed on appeal. Appeal from district court, Arapahoe county.

Action by R. F. Le Mond against Joseph H. Harrison and another. From a judgment in favor of defendants, plaintiff appeals. Reversed.

1. See Estoppel, vol. 19, Cent. Dig. § 146.

Patterson, Richardson & Hawkins, for appellant. Goudy & Twitchell and C. H. Redmond, for appellees.

WILSON, P. J. Plaintiffs, as agents for the Penn Mutual Life Insurance Company, contracted with the defendant to have issued to him by that company a certain specified kind of policy of insurance upon his life; and he agreed to accept it, and to pay therefor a certain stipulated annual premium for the period of 20 years. To cover the payment of premium for the first year, defendant executed and delivered his two several promissory notes, each for one-half of the premium, both payable to plaintiffs, and maturing at different dates during the year. Shortly subsequent, Mr. Harrison, of the firm,-one of plaintiffs,-delivered a policy to defendant, and, at the time of doing so, read to him, or pretended to read to him, a part of it, which indicated that it was in accordance with their agreements, and also told him that such was the case. Relying upon this, defendant laid the policy away without reading it. The first premium note becoming due was promptly paid by the defendant. Before maturity of the second note, defendant discovered that the policy was different in material respects from that for which he had contracted, and from that it was represented to be at the time of its delivery. Thereupon, taking the policy, he went to see the plaintiffs, and insisted that the matter should be fixed up, and a policy issued to him in accordance with the agreement. Plaintiffs assured him that it would be all right, at various interviews had between the parties during several weeks after the discovery. It was finally agreed that the matter should be adjusted by the issuance to defendant of another policy for a similar amount, in lieu of the one received, and the premium on which would be less, but this was never issued. The second note maturing pending these negotiations, payment was demanded through a bank, and, being refused, plaintiffs instituted this suit. Defendant, in answer, pleaded the fraud which had been practiced upon him by the plaintiffs. He also set up a counterclaim, asking for the recovery of the sum paid by him in liquidation of the first note. The execution and delivery of the note being admitted, the defendant, on trial, was allowed the opening and closing. At the conclusion of the testimony offered in his behalf, the court, on motion of plaintiffs, granted a nonsuit as to the counterclaim of defendant, and, as to the suit upon the note, directed the jury to return a verdict in favor of plaintiffs for the full amount thereof. The facts which we have stated we gather from the evidence on behalf of the defendant, which, of course, for the purposes of plaintiffs' motion, was admitted to be true. action of the court was specifically based upon the ground that defendant was estopped from setting up the defense attempted, be cause of his negligence for an unreasonable

The

length of time-nine months--in objecting to the policy. It held, in effect, that it was the duty of the defendant-the contract having been reduced to writing-to have read it at the time of its delivery, or to have been reasonably diligent in doing so, and making his objections thereto, if any existed. Whilst, as a general proposition of law, the court was correct, it seems equally clear to us that, under the circumstances of this case, it was in error. We think that it does not lie within the mouths of plaintiffs to set up this defense to their own wrong. It was, according to the evidence, their wrongful reading of the policy and misrepresentations at the time of delivery which induced the defendant not to read it.' Brocks v. Matthews (Ga.) 3 S. E. 627; Barnes V. Insurance Co., 75 Iowa, 12, 39 N. W. 122, 9 Am. St. Rep. 450. If this suit were between the insurance company and the defendant, the case might present a different phase. Plaintiffs, however, being the agents who effected the insurance, and the parties who, it is alleged, perpetrated the fraud, cannot thus be allowed, we think, beyond question, to defend against their own wrong.

Counsel for plaintiffs practically conceded in argument that the learned trial judge stated the law too broadly, as applicable to the circumstances of this case, but urges that the judgment is correct on other grounds, and therefore should be maintained, although the reasoning of the court in support of it may have been wrong. It is true that it is within the province of appellate courts to so act in such cases. Home Ins. Co. v. Atchison, T. & S. F. R. Co., 19 Colo. 48, 34 Pac. 281. It by no means so clearly appears in this case, if at all, that the judgment ought to be sustained upon any of the grounds covered by the motion of plaintiffs, as to justify this court in the exercise of this discretionary power. It rather appears to us, from the record here presented, that the cause of justice would be better subserved by reversing the judgment, and remanding the cause to the district court for a new trial, when these questions can be specifically raised and argued by counsel, and passed upon by the trial court.

The judgment will be reversed. Reversed.

(18 Colo. App. 239) JOHNSTON-WOODBURY HAT CO. v.

LIGHTBODY.

(Court of Appeals of Colorado. Dec. 8, 1902.) MASTER AND SERVANT-EMPLOYMENT-CON

TRACT-CONSTRUCTION-EVIDENCE- USAGES -APPEAL-REVIEW-CONFLICTING EVIDENCE -HARMLESS ERROR.

1. A finding of the trial court on conflicting evidence will not be reversed on appeal where it is not manifestly against the weight of evidence.

2. Where plaintiff alleged breach of an oral contract to hire him "for a period of one year, for the season commencing December 1, 1897," the words "for the season" qualified the preceding words, "for a period of one year," and hence testimony was admissible to show what constituted the "season."

3. Where plaintiff was employed by defendant as a traveling salesman for the season commencing December 1, 1897, evidence of a known usage and custom in the trade as to what coustituted a season's employment was admissible. Appeal from district court, Las Animas county.

Action by J. W. Lightbody against the Johnston-Woodbury Hat Company. From a judgment in favor of plaintiff, defendant appeals. Affirmed.

John J. Herring, for appellant. A. C. McChesney, A. J. Abbott, and John A. Gordon, for appellee.

WILSON, P. J. Plaintiff was employed by defendant, a wholesale mercantile company, as a traveling salesman, under a verbal contract, "for a period of one year, for the season commencing December 1st, 1897." He brings this suit to recover a balance alleged to be due him on his salary. The defense is that plaintiff abandoned the contract, without cause, about the 22d day of October, 1898, and thereafter failed, neglected, and refused to render any services for or on behalf of deThe fendant as required by the contract. controlling question involved is one of fact, exclusively. This having been found against the defendant by the trial court, upon conflicting testimony, and the finding not being manifestly against the weight of the evidence, and there being sufficient to support it, this court, under the usual rule, must be concluded by it.

About the only question of law which it would appear could be raised by the defendant is with reference to the admission of evidence on the part of the plaintiff to show when the season for the discharge of duties by the plaintiff as traveling salesman, under the contract, ended. Upon the ruling of the 'court in this respect the defendant predicates error, but we think its position cannot be maintained. In the first place, plaintiff alleged in his complaint that the contract of his employment was for a period of one year, for the season commencing December 1, 1897, and this allegation is expressly admitted by the defendant in its answer. It would seem that the words "for the season" were used, qualifying the words preceding it, "for a period of one year," and hence the testimony was admissible to explain what the words meant, --what constituted a season. Such evidence would be explanatory only, and not contradictory of the terms of an express contract. Even if the words "for the season" should have been omitted from the contract, the testimony as to what constituted the season, under the known usage and custom of the trade, might have been admissible under a general rule of evidence, well established, and specially recognized by this court. Bradbury v. Butler, 1 Colo. App. 435, 20 Pac. 463. In that case it was said, "Parties who contract on a subject-matter concerning which known usa

§ 32.

3. See Customs and Usages, vol. 15, Cent. Dig.

Be

ges prevail, incorporate such usages, by implication, into their agreements, if nothing is said to the contrary. Hostetter v. Park, 137 U. S. 30, 11 Sup. Ct. 1, 34 L. Ed. 568." sides, all testimony in regard to the custom or usage of the trade, and explanatory of what was meant by the "season," could be eliminated, and still the finding of the court should be sustained. Even if the admission of such testimony was error, it was error without prejudice, because there was some evidence showing that plaintiff actually did perform services in the line of his employment by the defendant during the month of November, 1898, which was the month in dispute.

For the reasons given, the judgment must be affirmed. Affirmed.

GUNTER, J., not sitting.

(18 Colo. App. 227)

SMITH v. BULKLEY et al. (Court of Appeals of Colorado. Dec. 8, 1902.) CORPORATIONS-OFFICERS-ULTRA VIRES-IN

JUNCTION-SUIT BY STOCKHOLDERS.

1. A stockholder may not sue to enjoin a sale under a mortgage on corporate property given by an officer of the corporation for his own benefit, without showing that every reasonable effort has been made through the proper channels to induce corporate action.

2. Where a corporation had been enjoined from bringing any action to prevent a sale under a trust deed given by the corporation, such fact did not authorize a suit by a stockholder, enjoining the sale on the ground that the mortgage was ultra vires, in that it was given by the president of the corporation for his own benefit, in the absence of any showing of collusion between the directors and the plaintiff in the suit against the corporation, or refusal of the directors to take steps to dissolve the injunction.

Error to district court, Pitkin county.

Suit by Byron J. Smith against Frederick G. Bulkley and others. From a judgment sustaining a demurrer to the complaint and dismissing the suit, plaintiff brings error. Affirmed.

A. S. Blake, L. J. Stark, T. J. O'Donnell, and J. Warner Mills, for plaintiff in error. Thomas, Bryant & Lee, for defendants in

error.

GUNTER, J. A general demurrer to the complaint was sustained, and a judgment of dismissal entered. Plaintiff appealed. The allegations of the complaint pertinent to this ruling are: Plaintiff is, and was at all times mentioned therein, a stockholder of the Tabor Mines & Mills Company, a corporation, and sues for himself and others similarly situated. June 12, 1893, the president and secretary of the corporation gave a note and trust deed-the latter on corporate real estate-with the purpose of borrowing funds for the individual use of said president, obtained the same thereby, and the money so obtained was so used; all of which facts

The act complained of-the giving of the note and trust deed-was an alleged attempt to misappropriate assets of the Tabor Mines & Mills Company. It was, therefore, a wrong attempted against the corporation, a direct wrong to it, and only an indirect wrong to the stockholder, the plaintiff herein. The right to bring an action to redress this wrong was in the corporation, which sustained it. The wrong was committed June 12, 1893. The present action for relief was instituted by plaintiff June 8, 1896. As to when he first ascertained that the wrong had been committed the complaint is silent. It does not appear that he or any other person at any time, although three years elapsed between the giving of this note and trust deed and the institution of this action, requested the board of directors of defendant corporation to institute this suit, nor is any explanation offered as to why he made no effort to induce action by the proper corporate officers for relief from the alleged wrong. No allegation is made of any effort to have the stockholders take steps, by removal of the board of directors or otherwise, for righting this alleged wrong. So far as we are advised by the complaint, the stockholder instituted this action to redress the alleged corporate wrong without ever having made any effort, through the officers or stockholders of the corporation, to have such action brought, and without offering any explanation why such application was not made by him before institution of this action. The authorities are at one that under such circumstances an action by the stockholder will not lie. The powers of a corporation are exercised by the stockholders in legal session, the board of directors, and other agencies. It is necessary for the economic and efficient management of a corporation that its powers be exercised by the proper agencies. To permit any stockholder to institute an action in the corporate name to redress an alleged corporate wrong, without a showing on his part that every reasonable effort had been made through the proper channels to induce corporate action, and that unredressed wrong would result to

sue, would be to tolerate a practice prejudicial to corporations and other stockholders, and one violating all established precedents. In Miller v. Murray, 17 Colo. 408, 30 Pac. 46. a stockholder sued in behalf of himself and other stockholders similarly situated to redress a wrong sustained through an alleged misappropriation of corporate assets. Relief was denied, the ground therefor being that he had made no effort through the stockholders of the corporation to have a suit to redress the wrong brought by the corporation. In the course of the opinion it is said: "The vast and increasing importance of the business transacted by corporations and the immense number of stockholders in many of these companies require that the courts should closely scrutinize actions brought by stockholders where the cause of action is primarily one belonging to the company. If it be once conceded that such companies may be embarrassed and subjected to cost and expense by every stockholder who thinks he has a grievance, the usefulness of corporations would be seriously crippled." Therein it is further said: "Among other requisites of a bill of this nature, in addition to the grievances which would warrant this kind of relief to the company, it was held that, before the shareholder could be allowed to conduct a litigation, he should satisfactorily show that he had exhausted all the means within his reach to obtain within the corporation itself redress of his grievances. In addition to making an earnest effort to induce the managing body of the corporation to seek relief, he must further show, if he fails with the directors, that he has made an honest effort to obtain relief through the stockholders as a body, if time permits or has permitted him. to do so. And, if this be not done, he must show cause why it could not be done, or that it would be unreasonable to require it." See, also, Hawes v. Oakland, 104 U. S. 450, 26 L. Ed. 827; Jones v. Mining Co., 20 Colo. 421, 38 Pac. 700; Beshoar v. Chappell, 6 Colo. App. 323, 332, 40 Pae. 244; People's Sav. Bank v. Colorado Min. Exch. Bldg. Co., 8 Colo. App. 354, 356, 46 Pac. 620; Hutton v. Joseph Bancroft & Sons Co. (C. C.) 83 Fed. 17. The plaintiff alleges as a reason for the violation of the above rule the following: That on May 29, 1896, a suit was instituted in the district court of Arapahoe county, Colo., by the above Fred G. Bulkley and the trustee in the above trust deed, Frank Bulkley, against the Tabor Mines & Mills Company and the directors thereof, praying an order enjoining the defendants therein from bringing any action against Fred G. Bulkley or Frank Bulkley to prevent a sale under said trust deed, and that a temporary writ of injunction was issued by the last-named court in accordance with said prayer, and "that, owing to such injunction,

board of directors can prosecute any suit to prevent the sale of this property, which is advertised for the 15th inst." The pendency of such suit in the district court of Arapahoe county, and the issuance of the injunction therein, is no reason for permitting the stockholder plaintiff to maintain the present action, but is a further reason why the present action should be dismissed. It is not alleged that any collusion existed between the directors and the plaintiffs in the injunction suit. It is not alleged that the directors have not taken or will not take steps to obtain a dissolution of the injunction therein. So far as we are advised by the pleadings, no reason existed why the directors would not contest such writ of injunction. We cannot presume that the directors in such suit would not attempt to obtain a dissolution of the injunction, and either in such action, or some other appropriate action, attempt to secure the relief here sought by plaintiff. Further, the writ of injunction issued by the district court of Arapahoe county was as effective against this plaintiff as a stockholder as it was against the corporation. "Whilst, as hereafter seen, the stockholder is denied the privilege of appearing and contesting the merits of a suit against the corporation, although he may be ultimately liable in respect of the judgment therein rendered, yet when a judgment is rendered against the corporation it establishes, as conclusively as any judgment can establish, the matter in litigation,-the liability of the corporation to pay the debt. Like any other judgment, it may be impeached for fraud, or for want of jurisdiction, by a party entitled to question it; but it cannot be assailed collaterally by a stockholder for any other cause, when sought to be charged in respect of it. It is valid until reversed in a direct proceeding, and concludes the stockholder, who is in privity with the corporation." 3 Thomp. Corp. 3392. "When subscribing for his shares and entering into the organization, he undertakes the responsibility for the result of litigation in which the corporation becomes involved to which he is not a party and has not been given an opportunity to defend personally. He is then represented by officers who are not only authorized to take charge of all litigation, but whose duty it is so to do; and why should not those whom the officers represent be held privies in interest, and concluded by the result in the absence of fraud and collusion? There would seem to be no middle ground on which to place a judgment against a corporation; and, if the stockholders are bound under any circumstances, they must be under all. This is the common conclusion of nearly all of the courts, although their reasons are not always the same." Holland v. Development Co., 65 Minn. 324, 68 N. W. 50, 60 Am. St. Rep. 480. "Where a valid judgment is rendered against a corporation, the stockholders are bound thereby in respect to corporate matters, and

such judgment is not open to collateral attack." Hawkins v. Glenn, 131 U. S. 319, 329, 9 Sup. Ct. 739, 33 L. Ed. 184. "A stockholder is so far an integral part of the eorporation that, in view of the law, he is a privy to the proceedings touching the body of which he is a member." Id. "Where the company itself has already brought suit on a cause of action, and has been defeated, a stockholder cannot bring suit on the same cause of action on behalf of the corporation, even though the former case was decided in another state." 2 Cook, Corp. § 784. The issuance and service of the writ of injunction in the suit pending in the district court of Arapahoe county enjoining any procedure to question the trust deed involved herein bound the corporation, and prevented it from bringing the present action, and just as effectively so operated upon this plaintiff. To entertain the present suit would be to permit the district court of Pitkin county to violate, through its procedure, an injunction issued out of the district court of Arapahoe county in a matter wherein the last-mentioned court had jurisdiction of the subject-matter and the parties.

For reasons above stated, we think the complaint herein failed to state a cause of action, and that the lower court was right in so holding. Its judgment should be affirmed. Affirmed.

(30 Wash. 346) LAMBERT v. I.A CONNER TRADING & TRANSP CO.* (Supreme Court of Washington. Dec. 2, 1902.)

MASTER AND SERVANT-INJURY TO THIRD PERSON-EVIDENCE-STATEMENT OF

SERVANT-RES GESTE.

1. In an action against a shipowner for injuries to a servant, a statement of the master of the ship at the time or immediately after the injury is admissible as res gestæ.

Appeal from superior court, King county; W. R. Bell, Judge.

Action by Joseph P. Lambert against La Conner Trading & Transportation Company. From a judgment in favor of defendant, plaintiff appeals. Reversed.

A. W. Buddress, for appellant. Ira Brońson, for respondent.

DUNBAR, J. The appellant (plaintiff) brought this action against the respondent to recover damages for personal injuries received by him while in the employ of the company, caused by the alleged negligence of the company in running its steamer into a drawbridge. The case was tried by a jury, and, upon the conclusion of plaintiff's testimony, the court, on motion of the defendant, granted a nonsuit on the ground that the testimony introduced by the plaintiff did not show negligence on the part of the defend

1. See Evidence, vol. 20, Cent. Dig. §§ 331, 365. *Rehearing denied January 12, 1903.