poration's books, and no notice of any sort was given regarding the hypothecation of the shares. In May, 1912, an assessment of one cent a share was levied upon the capital stock of the corporation, and the shares owned by Sward were sold to John Salsberry, appellant herein, on August 6, 1912, at a delinquent sale for nonpayment of this assessment.

It appears that Sward, absent from the state of California, learning of the assessment, sent to Salsberry the following telegram:

"Chicago, Ill. Aug. 5th-12. John Salsberry, care Hotel Sacramento, Sacramento, Calif. Oakes stock has assessment one cent share payable tomorrow. Go fifty cents. Will you pay James Warrack secretary hundred ninety dollars assessment stock my name and Geo. Albert will send check full amount. Please wire today. John W. Sward. 4 p. m."

lant's counsel that respondent's title to the stock is not good because of his failure to give notice of its transfer to him, but undoubtedly it is the rule that such a transfer as was here made of stock of a corporation is good as against all subsequent claimants except purchasers in good faith for value and without notice of the equities. For the operation of this rule it is not necessary that an entry of the transaction be made on the books of the corporation. Brown v. San Francisco Gaslight Company, 58 Cal. 426. The case of National Bank of the Pacific v. Western Pacific Railway Co., 157 Cal. 573, 108 Pac. 676, 27 L. R. A. (N. S.) 987, 21 Ann. Cas. 1391, is authority also for this rule as applicable to pledges. It follows as a logical consequence of this rule that, the transaction having effected a valid pledge as between the parties, the pledgee may claim the property Salsberry did not reply to this communiso pledged from third persons by suit, if neccation, but he went to Sacramento admitted-essary, unless they have a higher equity or ly for the purpose of buying certain shares known as the "Oakes Stock," and also with the intention of paying the assessment on the stock, owned by Sward; but on August 6, 1912, at a delinquent sale, he purchased Sward's stock which was accordingly trans-54 Am. St. Rep. 348, by Mr. Justice Henshaw, ferred to him on the books of the corporation. It is admitted by the appellant that at the time of said sale there was a friendly understanding amongst the bidders present that Salsberry would bid in the Sward stock and the others would bid in the rest of the stock sold. But appellant's counsel say that no binding agreement was entered into having this effect, and none of the parties was bound by any such agreement. The following year another assessment was levied on the 10,000 shares, amounting to $125, and was paid by

Salsberry.

On May 13, 1914, plaintiff tendered to Salsberry the aggregate of the amount paid at the delinquent sale and upon the subsequent

other superior right to his own. Herbert Kraft Co. Bank v. Bank of Orland, 133 Cal. 64, 65 Pac. 143, 31 Cyc. 842. As was said in Spreckels v. Nevada Bank of San Francisco, 113 Cal. 272, 45 Pac. 329, 33 L. R. A. 459,

who delivered the opinion of the court, in commenting upon the effect of section 324 of the Civil Code with reference to the necessity for an entry of a transfer of stock upon the books of a corporation:

"Even without entry upon the books of the corporation, such a transfer is valid as against all but innocent purchasers, and transferees in good faith, for value, and without notice."

And in the same opinion he used the following language:

law generally, that a transfer upon the books

"It is not the law of this state, nor is it the

of the corporation is essential to the creation of a valid pledge. Civ. Code, § 324; Graves v. Mono Lake, etc., Min. Co., 81 Cal. 303, 325 [22 Bank, 105 'U. S. 217 [26 L. Ed. 1039]; Cook Pac. 665]; National Bank v. Watsontown on Stocks and Stockholders, § 465."

Therefore, if respondent proved a superior equity in the stock to that possessed by appellant, the judgment must stand.

[3] Turning now to the first finding attacked, we are of the opinion that it is amply supported by the evidence adduced at the trial.

assessment and also a sum asserted to be the equivalent for interests and costs, and demanded that Salsberry transfer the stock to him. Compliance with this demand being refused, plaintiff sued to compel such delivery and to require the corporation to reissue the stock to said plaintiff in his own name. The findings and judgment were in favor of the plaintiff. Appellant contends that the evidence is insufficient to justify the court's From the testimony of appellant himself it determination that the defendant Sward di- appears that he met Sward in the fall or rected or employed him to pay the delin-winter of 1911 and 1912, and that they were quent assessment upon the stock, and that appellant promised to do so; that an agreement was made between the bidders at the delinquent sale to depress the price paid for the stock, and that such agreement amounted to fraudulent conduct which would vitiate the sale; and that Salsberry had notice, implied or otherwise, of Seymour's interest in the stock and of the invalidity of the sale under the assessment.

[1, 2] Preliminary to these objections, however, is the suggestion on the part of appel

very friendly toward the latter part of their association. Sward proposed to Salsberry that the latter should furnish the money to purchase certain interests in the International Eucalyptus Association, which Sward believed he could get for a very small price. Speaking of their relations with reference to this matter the appellant, when on the witness stand, said:

"He had to make a trip East, and on his return, why, I was going to take this proposition up with him of buying the stock, putting up the money, and we were to share alike in the profits

he sent me these wires. So I went over to Sacramento and purchased the Oak stock."

after I had received my interest and principal | things justified the court in holding that a back. But somehow or another he was a little constructive trust was created in favor of longer in the East than he had anticipated, and the sender of the telegram. True, there was no formal consent on Salsberry's part to act But this was a case where two h'omely maxfor Sward in compliance with the telegram. ims may be justly applied, namely, “Actions

One of the telegrams to which appellant referred was the one from Sward quoted

above. It also appears from Salsberry's testimony that the telegram was the first intima-speak louder than words," and, "Silence gives tion which he had of the contemplated sale consent." Salsberry's agreement to pay the of Sward's stock for the delinquent assessment. The telegram, he said, was the induce ment which caused him to stay over in Sac-ted facts of the case. ramento, where he had gone to buy shares at the sale of Oakes' property on August 5, 1912. He remained there until the following day in order to pay Sward's assessment or bid at the sale. Regarding his attendance at the sale on the 6th, he said:

"I went over to pay, as you call it, the assessment on the Sward stock, but, in the meantime, I had found I was in bad with Sward. So in place of leaving the stock stand in Sward's name, I bought it outright."

assessment for the man with whom he had been negotiating was implied from the admitUpon receipt of Sward's telegram it was his duty either to pay the assessment or to notify Sward that he declined to do so. Section 2224, Civ. Code; Frost v. Perfield, 44 Wash. 185, 87 Pac. 117; Samonset v. Mesnager, 108 Cal. 354, 41 Pac. 337. In Frost v. Perfield the essential facts were as follows: One of the plaintiffs had written from Alaska to the defendant in Washington to look up and pay her taxes upon certain property in Pierce county. The defendant went to Tacoma, and Mr. Ennis, who was present at the sale, was informed that the property had been testified that Mr. Salsberry said he was sold to the county for delinquent taxes. He in Sacramento "to act for Mr. Sward." To did not answer plaintiff's letter; she again another witness appellant said, according to wrote to him the following year, making the the testimony, that he originally intended to same request, whereupon he again made inpay the assessment when he received the quiry and learned that the property would message from Sward. be sold by the county soon after. He then Appellant's counsel contend that this evi-wrote to Mrs. Frost, telling her that he indence falls far short of proving that Sals-tended bidding in the property if it did not berry in purchasing the stock constituted sell too high. He did bid in the property, himself a trustee for Sward. Regarding the taking it in his own name. Upon being tentelegram they assert that it was "a mere re-dered the amount which he had laid out, he quest from Sward, not accepted by Salsberry." We cannot assent to this view. That there had been negotiations between Sward and Salsberry regarding the purchase of stock of this very corporation was the statement of appellant himself. True, there was no written agreement between them, but there was an understanding. Asked to ex-at bar: plain this understanding, Mr. Salsberry said:

"The idea was for me to give the money; that I was to purchase the stock and get my money at plus 6 per cent., and half of the profits. That was all that was said outside of an alluring proposition to me."

It is argued by appellant's counsel that the mere receipt of the telegram by their client and his action upon it did not create an agency. But there was here present more than a mere request from a stranger for a favor. It related to the very stock about which there was an agreement that Salsberry would "take up the proposition of buying" it for their common benefit. Coupled with this request was another with reference to the payment of the assessment on Sward's shares. Under the circumstances, considering the relations between the parties, the prompt compliance with the part of the request which related to paying the indebtedness, coupled with the fact that there was no refusal to assent to the other part of the importunity, namely, that the payment

claimed to hold the property in his own right. The court held, however, that by acting upon the information which he received from the plaintiff the defendant constituted himself her agent, and could not acquire interest in the land adverse to her. The language of the court is peculiarly applicable to the case

"When he received that letter, it was optional with him whether he would comply with their request or not. He could have declined to do anything in the matter, or he could have written and told them to secure the services of some other person. Instead of doing this, he complied with the request to the extent of going to Tacoma and making inquiries at the county treasurer's office relative to these taxes. When he did this, he constituted himself the agent of apagain visited the treasurer's office and ascertainpellants. Upon receiving the second letter, he ed the condition of the property with relation to the taxes. When he wrote to Mrs. Frost and told her the condition, in which he found the Property, it was in answer to her letter, requesting him to investigate the matter, and she had a right to suppose that he was acting, not only at her request, but in her behalf. In view of the relationship existing between the parties, and of all the circumstances, we think that he was not justified in buying in the property for himself without plainly informing the appellants of that intention.'

The relationship referred to in the above quotation was that of landlord and tenant, but it does not appear that it was any closer than the relationship existing between Sward

Cal.)

[4] As Sward's agent Salsberry could ac-There was a conflict of testimony regarding quire no superior right to that of Sward. the value of the stock, but sufficient basis Sward could not have acquired any interest appears in the evidence for the finding that in the property adverse to Seymour, and the price paid by Salsberry was grossly inSalsberry, having accepted the duty of act- adequate to the real value. ing for Sward, could not obtain any such right. Smith v. Goethe, 147 Cal. 725, 82 Pac. 384.

The finding that Salsberry was charged with knowledge of respondent's title to the stock standing in Sward's name is not essential to the judgment, and therefore need not Since appellant was not a be discussed. purchaser of the stock in good faith and for value, he may not retain it as against respondent.

The judgment and order are affirmed.

We concur: WILBUR, J.; VICTOR E. SHAW, Judge pro tem.

(Sac. 2789.)

(177 Cal. 742)

(Supreme Court of California. March 19, 1918.)
1. NUISANCE 87
-SUPERSEDEAS-STATUTES.

ABATEMENT

[5] Our conclusion on this branch of the case makes it unnecessary to indulge in any extended discussion of the other two objections made by appellant to the sufficiency of the evidence. Indeed, as Salsberry purchased and held the stock here involved as trustee for Sward, it makes no real difference whether or not there was an agreement by the people present at the sale not to bid one against another. However, there was abundant evidence of such an understanding. Mr. Henderson, one of the witnesses, testified that he told Mr. Salsberry that people PEOPLE ex rel. BRADFORD v. LAINE et al. had come to the sale prepared to bid on the stock. Mr. Salsberry said that he would get the stock even if he had to take a mere hunAPPEAL dred shares for the hundred dollar assessRed Light Abatement Law (St. 1913, p. 22) ment, and that he would rather have the stock remain in Mr. Sward's hands than al-§ 9, providing that if the owner of the building being free from contempt appears and pays low some of the others interested in it to costs, fees, and allowances, which are a lien on purchase the stock. After some further talk, it, and files bond to immediately abate any in which Mr. Salsberry said that he merely such nuisance that may exist there, the court wanted to protect himself in view of the may order the premises, closed under the order of abatement, delivered to him, and the order of fact that he had already bought the stock abatement canceled, so far as it may relate to formerly owned by Oakes, Mr. Henderson said said property, but that such release of the propthat by suggesting that purpose to the people erty shall not release it from any judgment, lien, penalty, or liability to which it may be subject present, he thought he could prevent them by law, applies only to one who concedes the from bidding on Sward's stock. "He finally regularity of the judgment, and pays the costs, decided that was pretty fair," said the wit- and has nothing to do with a defendant appealness. And, describing the result of the un- ing from a judgment of abatement, contending. of course, that he had been improperly found derstanding established among the people guilty of maintaining a nuisance, and so does not furnish a process by which he may secure a present at the sale he said: supersedeas from the trial court.

"I bid on the parcels other than the Sward stock, and the stock was sold to me for the amount of the assessment, plus the accrued costs."

2. APPEAL AND ERROR 488(2)-SUPERSEDEAS-ABATEMENT OF NUISANCE-MANDATORY PROVISIONS.

While the part of the judgment enjoining

And speaking of appellant's benefit by the use of the premises for purposes of lewdness arrangement, he also testified:

"When the 10,000 shares of stock belonging to Mr. J. W. Sward were put up for sale, Mr. Salsberry bid them in at the cost of the assessment, plus the accrued costs."

amounts to a prohibitory injunction, which is
not stayed by appeal, the part directing removal
of the tenants and property and sale of the chat-
tels is mandatory, and stayed by appeal.
3. APPEAL AND ERROR 488(2)—SUPERSEDE-
AS-ABATEMENT OF NUISANCE-BOND.

Under Code Civ. Proc. §§ 941c, 949, right Appellant's story of the sale corroborates to stay of the mandatory part of the judgment that of Henderson. He tells of mutual of one appealing, by the new method, from a threats to engage in competitive bidding, but, judgment enjoining the use of premises for purfinally, to use his own language, "We got poses of lewdness, and directing removal of tentogether and compromised." There was al-ants and chattels and sale of chattels, is statu

so testimony to the effect that some one other than Henderson or appellant bid on some of the stock offered, but withdrew his bid "after everything was arranged." We are of the opinion that the evidence justified the court's conclusion that the arrangement to refrain from competitive bidding was collusive and inequitable. Equity will not permit parties to such a transaction to retain the fruits thereof. 2 Perry on Trusts, § 828; Scott v. Sierra Lumber Co., 67 Cal. 71, 7 Pac. 131.

tory, and no bond is required.

In Bank. Original application for supersedeas by Charles F. Gibney, the appealing defendant in a proceeding by the People, on the relation of Hugh B. Bradford, against Laura E. Laine and another. petition overruled, and writ granted.

Demurrer to

Butler & Van Dyke, of Sacramento, for petitioner. J. R. Hughes and H. B. Bradford, both of Sacramento, for relator and respondent.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

MELVIN, J. Petitioner was one of two | the demurring party refers is section 9, defendants in an action brought by the peo- which is as follows: ple of the state of California upon the relation of the district attorney of the county of Sacramento, which resulted in a judgment perpetually enjoining the defendants from conducting or maintaining or using for purposes of lewdness certain described real property. By the judgment the sheriff of Sacramento county was directed forthwith to remove all occupants from the prop erty, to keep the building closed for the period of one year, and immediately upon the entry of judgment to remove all furniture, fixtures, musical instruments, and other movable property situate in said building from the premises, and to sell the same in the manner provided for the sale of chattels under execution.

the decree which directs the removal of ten- | B. Clark, Pioneer Trust Company, a corporaants and property and the sale of chattels tion, John Doe Company, a corporation, John is mandatory, and is stayed by operation of Doe, Richard Roe, Mary Grab, Susan Keep, the appeal. Dewey v. Superior Court, 81 and Minna Brenner. From certain judgCal. 64, 22 Pac. 333; Dulin v. Pacific W. & ments, defendants appeal. Judgment affirmC. Co., 98 Cal. 304, 33 Pac. 123; Stewart v. ed on each appeal. Superior Court, 100 Cal. 543, 35 Pac. 156, 563; Schwarz v. Superior Court, 111 Cal. 106. 43 Pac. 580; United Railroads of San Francisco v. Superior Court, 172 Cal. 80, 155 Pac. 463.

er.

A. J. Morganstern and C. A. A. McGee, both of San Diego, for appellants. Sam Ferry Smith, of San Diego, for respondent.

MELVIN, J. The appeals of F. G. Investment Company, a corporation, and of Rex B. Clark are based upon records which are identical, and may therefore be considered in a single opinion. The action was one to foreclose two mortgages and to enforce the liability of Rex B. Clark as a guarantor on two notes. The corporation, defendant, appeals from the judgment against it, which resulted in a decree of foreclosure, and defend

If the sheriff should be permitted to sell the personal property, and if on appeal the judgment should be reversed, that result would be an ineffectual victory for petitionIt is only just and proper that in such a case the personal property should be preserved to petitioner pending his appeal. To hold otherwise would work irreparable injury in those cases where the judgment of the lower court should be reversed on ap-ant Clark takes an appeal from a personal peal.

BLOCHMAN COMMERCIAL & SAVINGS
BANK v. F. G. INVESTMENT CO.

et al. (L. A. 4149, 4150.)
(Supreme Court of California. March 19, 1918.)
1. BANKS AND BANKING 176 - EXCESSIVE
LOAN.

St. 1911, p. 1014, § 13, amending Act March 1, 1909 (St. 1909, p. 87), regulating the business of banking, so that section 80 provides that no commercial bank shall make any loans to any person, company, corporation, or firm to an amount exceeding one-tenth part of the capital stock of such bank actually paid in and surplus, etc., does not render void and unenforceable a loan by a commercial bank in excess of the permitted amount.

2. MORTGAGES

judgment against him.

On October 10, 1912, the F. G. Investment Company made and executed two certain promissory notes, each secured by a mortgage on real property in San Diego county. One note was payable to Rex B. Clark, who immediately indorsed it to the Blochman Banking Company, and guaranteed the payment thereof, and one direct to the Blochman Banking Company. This was also guaranteed by Rex B. Clark, so that the F. G. Investment Company was the maker and Rex B. Clark was the guarantor of both notes. The aggregate amount of the two notes is $17,500 and the money was paid by the bank to the F. G. Investment Company with the knowledge and consent of the defendant Clark. At that time the Blochman Banking Company was a banking copartnership with a capital of not exceeding $50,000 and a surSubsequently the plus not to exceed $7,000. Blochman Commercial & Savings Bank, a corporation, plaintiff in this action, acquired the notes and mortgages in question. This action was brought to foreclose both mortgages, and to enforce the defendant Clark's liability. The banking act in force at the time of this transaction (Stats. 1911, p. 1014,

486-GUARANTOR-PERSON-813) provides:

AI JUDGMENT EXHAUSTION OF SECURITY. Decree foreclosing mortgages directing entry of judgment for any deficiency which might exist after the sale of the mortgaged premises against the mortgagor company, and separately stating there was a personal judgment for the full amount of the two notes, with interest and costs against the individual guarantor of the notes, was not erroneous as permitting the collection of the whole amount of the two notes, interest, and costs from the individual guarantor without resort to the security.

Department 2. Appeals from Superior Court, San Diego County; T. J. Lewis, Judge.

Action by the Blochman Commercial & Savings Bank, a corporation, against the F. G. Investment Company, a corporation, Rex

"No commercial bank shall make any loans to any person, company, corporation or firm to an amount exceeding one tenth part of the capital stock of such bank actually paid in and surplus, excepting that no commercial bank shall be prohibited by this act from loaning to any person, company, corporation or firm any sum not exceeding five thousand dollars without security: Provided, however, that a bank may loan to any person, company, corporation or firm a sum not exceeding twenty-five per centum of its capital stock actually paid in and surplus upon security worth at least fifteen per centum more than the amount of its loans."

[1] Appellants contend that the loan being in excess of the amount permitted by law, the obligation based thereon is void and may not be enforced. They cite sections 1667 and 1607 of the Civil Code and authorities, of

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes