note to them. The fourth paragraph, in addition to the fraudulent acts and representations charged in the third paragraph in the procuring of the note, alleges that said Mattox and Cross were the agents of appellees, with whom they conspired to cheat and defraud defendant and others. Appellees replied to these paragraphs: (1) By general denial; (2) that the note sued on was bought by them for value, before maturity, and without notice of any defense or equity existing against the same in favor of appellant, and was transferred to appellees in the usual course of commercial business, and that they were the owners by purchase and assignment for value, without notice, before maturity. Subsequently, appellant filed a fifth paragraph of answer, to the effect that plaintiffs were not the real parties in interest; that the note was, at the commencement of the action, and at all times since had been, the property of the Keeley Cure Institute of Indiana, a corporation organized under the laws of the state of Indiana. For reply to this paragraph of answer, plaintiffs alleged that they had succeeded the corporation referred to in its rights and liabilities, and had become the owners and entitled to the possession of all property formerly owned by said corporation, and that they were at the time of bringing of the action, and still are, the sole joint owners of the note. The trial resulted in a verdict and judgment in favor of appellees for $711.61. The action of the court in overruling appellant's motion for a new trial is the only error assigned.

It appears from the evidence that in November, 1892, the Keeley Institute of Indiana, composed of Rufus H. Syfers, Frank A. McBride, and George C. Webster, of Indiana, having the sole and exclusive right to establish and manage Keeley institutes for the treatment and cure of the drink, opium, and other drug habits, and to sell and administer Keeley remedies used for such purposes in the state of Indiana, derived from the Lester E. Keeley Company, of Dwight, Ill., by written bill of sale sold to A. H. Mattox and F. G. Cross, of Cincinnati, Ohio, all said exclusive rights and all interests in all Keeley institutes theretofore organized in Indiana. The consideration for said sale was $36,250. They paid $7,500 on the day of sale, and executed their notes for the balance as follows: $5,000, due in 4 months; $5,000, due in 7 months; $5,000, due in 10 months; $5,000, due in 13 months; $6,250, due in 15 months. It was a part of the contract of sale that all cash and good bankable notes accruing from the sale of institute rights to establish Keeley institutes in the state of Indiana should be paid by Mattox and Cross to Syfers, McBride, and Webster, and be credited on the notes and indebtedness of said Mattox and Cross. Institutes were established in several places in Indiana,-one at Evansville. Stock was subscribed for, among other residents of that city, by appellant, for which he executed the

note in suit. This note was made by appellant payable at the Bank of Commerce of Evansville six months after date, to the order of himself, and indorsed by him, and delivered to Mattox and Cross, who indorsed it to appellees before its maturity. It was credited upon one of the notes held by appellees to Mattox and Cross.

The first reason set out in the motion for a new trial, viz. that the verdict of the jury is contrary to the law, and not sustained by the evidence, is first discussed in appellant's brief. It is insisted that the verdict is contrary to law, and not sustained by the evidence, for the reason that the note in suit was the property of the Keeley Institute, a corporation of Indiana; that the suit was not brought by the real parties in interest. the real parties in interest. The second paragraph of appellees' reply to the fifth paragraph of answer avers that they had succeeded the corporation referred to in its rights and liabilities, and that they were at the time of the bringing of this suit, and still are, the joint owners of the note. An examination of the record discloses that there was evidence fairly tending to support this paragraph, as well as all the material facts necessary for a recovery; and, under the wellsettled rule of practice of appellate tribunals in this state, this is sufficient to uphold the Judgment.

Appellant objects to the second instruction given to the jury, "because it fails to state the important rule of law that the plaintiffs must appear to be bona fide purchasers acting in good faith." The same objection is made to the third instruction. The two instructions in question are as follows: “(2) The court instructs the jury that if you find, from all the evidence, that the plaintiffs are the owners of the note described in the complaint, that the same is a negotiable note, and that the plaintiffs took it before maturity, in the usual course of business, without notice of facts which impeached its validity between the original parties to the note, or of such facts as should have put them upon inquiry, then the plaintiffs hold the same by a good title free from all defenses that might have been made by the defendant if it had been sued on by Mattox and Cross. And the court further instructs the jury that, unless there are circumstances which excite suspicion, the purchaser is not bound to make inquiry at the time of purchase. (3) Inland bills of exchange and promissory notes payable in a bank in this state are governed by what is called the 'law merchant'; that is to say, as applicable to the issues raised in this cause, if you believe from all the evidence in the case that the plaintiffs, in the usual course of business, purchased from Mattox and Cross the note sued on for a valuable consideration, before the maturity of said note, without any notice of any defense or equity existing against the same, and that at the time of their purchase they had no knowledge of such facts as put them upon inquiry,

then they are entitled to recover, even though, as between the defendant and the original payees of the note, there existed equities in favor of the defendant." They are not open to the objection stated.

The fourth instruction is objected to because it uses the expression, "without knowledge of defenses," instead of "without knowledge of facts" which constituted the defense. The following extract from this instruction: "Without knowledge of any defense existing against the same, and without knowledge of such facts as put them upon inquiry, and in the usual course of business,”-shows the objection not to be well taken.

The objection to the sixth instruction is that it ignores the question as to whether appellees acted in good faith in the transaction. It is further objected that this instruction states the law to be that one who takes a promissory note upon an antecedent debt, or as collateral security, is protected as one who buys a note for a new consideration; and appellant insists that one who takes a negotiable note upon an antecedent debt is not a bona fide holder for value, and is entitled to none of the rights of such holder. Appellant cites Petry v. Ambrosher, 100 Ind. 510. The court held in that case that a wife who secures a conveyance of land from her husband in payment of an antecedent debt, and does not change her condition on account of the conveyance, is not a bona fide purchaser for valuable consideration in such a sense as to be entitled to defeat the vendor's lien of her husband's grantor for the purchase money of the land; the court stating that the vendor's was the stronger equity, and prior in point of time; that it would be gross injustice to permit a man to get another's land without paying for it, and, after having gotten it, turn it over to his wife in payment of a precedent debt. The instruction is in the following language: "The court instructs the jury that if you believe, from all the evidence given in the case, that the plaintiffs in this action bought this note in the usual course of business, before its maturity, from Mattox and Cross, and that at the time they purchased the same they had no knowledge of such facts as put them on inquiry, and that they gave or parted with a valuable consideration for said note, then the plaintiffs are entitled to recover the amount of said note, with interest thereon according to its tenor and reasonable attorney's fees." It correctly states the law. Straughan v. Fairchild, 80 Ind. 598; Spencer v. Sloan, 108 Ind. 183, 9 N. E. 150; Bark v. Berry, 21 Ind. App. 261, 52 N. E. 104. No authority is cited to sustain appellant's objection to either of the instructions but Fetry v. Ambrosher, supra, which is not applicable to the facts in the case at bar.

Without unduly extending this opinion by reciting the objections to each of the other instructions excepted to, we deem it sufficient to say that, considered together, the instructions fairly state the law, except the follow

ing, being No. 1 of the instructions given by the court of its own motion: "Unless the defendant has established by a fair preponderance of the evidence one or more of the defenses set out in his answer, the plaintiffs are entitled to recover upon the note set out in the complaint. Unless the defendant has thus established one or more of the defenses aforesaid, there is now due on the note for principal, interest, and attorney's fees the sum of $711.61." We think in this instruction the court erred ir. fixing the amount for which the verdict should be returned, and in including in that amount an attorney's fee. It is evident that the jury included in the sum awarded appellees more than the principal and interest due on the note. While the note provided for attorney's fees, there was no evidence fixing the value of the fee. Counsel for appellees offered, after the introduction of the note in evidence, to prove a reasonable attorney's fee, and counsel for appellant stated, "The usual attorney's fee under the rule is admitted by the defendant." No further reference was made to the subject.

It is claimed that the court erred to the prejudice of appellant in repeatedly instructing the jury in substance that, "if a bankable note was given, and it passed into the hands of appellees, they must find for plaintiffs." As said by Robinsor, J., speaking for the court in Mullen v. Bower (Ind. App.) 53 N. E. 791: "It is no doubt the correct practice that, when a court has once stated to a jury a legal proposition clearly and fully, it should not repeat it." The law governing the transfer of commercial paper for value, before maturity, to an innocent purchaser, has been expressed in various forms in the instructions given to the jury, with the evident purpose of assisting them in the application of the evidence, but we cannot say that this was done to the prejudice of either party to the sult in the case before us.

The last reason in the motion for a new trial discussed by appellant's counsel is that the court erred in allowing appellees to put in evidence articles of association of the Keeley Institute of Evansville, Ind. These articles were signed and acknowledged before a notary public. Their introduction in evidence was objected to because they had nev er been recorded in the recorder's office of Vanderburg county, as required by statute. Counsel for appellees, in offering this evidence, stated that appellant had sworn that no corporation had teen organized, to make the impression that the failure to organize was the fault of Mattox and Cross; that they offered the evidence to show that it was not the fault of the parties in Evansville having the matter in charge. They claimed that it was admissible to rebut the charge of bad faith. We think it was competent for that purpose. The judgment of the court is af firmed upon the condition that appellees within 30 days remit the difference between the

principal and interest of the note in suit and the amount of the judgment; otherwise, the trial court is directed to sustain appellant's motion for a new trial.

(23 Ind. App. 187)

STEPHENSON v. GILLASPIE. (Appellate Court of Indiana. Oct. 31, 1899.)

APPEAL TRANSCRIPT-JUDGMENT. Where the transcript does not set forth a final judgment, or show that one was rendered, questions raised in brief cannot be considered.

Appeal from circuit court, Monroe county; William H. Martin, Judge.

Action between Francis M. Stephenson and Lydia Gillaspie. Appeal by the former. Dismissed.

Henley & Wilson, for appellant. Clarence E. Weir, for appellee.

BLACK, J. The appellant has assigned here that the court erred in overruling his demurrer to the second paragraph of the appellee's reply, and that the court erred in its conclusions of law upon the findings of fact in a special finding. The transcript of the record before us does not set forth a final judgment in the cause, or show that one was rendered. Therefore the questions discussed in the briefs of counsel cannot be decided by us in this case. Appeal dismissed.

(23 Ind. App. 175)

HUNTINGTON COUNTY LOAN & SAVINGS ASS'N v. EMERICK. (Appellate Court of Indiana. Oct. 31, 1899.) LOAN ASSOCIATIONS WITHDRAWAL OF MEM

BERS-DEMAND-NOTICE-PLEADING.

1. Horner's Rev. St. 1897, § 3410, provides that any stockholder of a building association wishing to withdraw may do so on three months' notice to the directors, provided that at no time shall more than one-half of the funds in the treasury be applicable to such demands, and that no stock held in pledge shall be withdrawn. It also provides that stock shall be subject to a lien for unpaid installments and other charges incurred under the constitution and by-laws. Held, that a complaint for refusal to pay a withdrawing member need not show his stock was not subject to a lien, this being a matter of defense.

2. The complaint need not show that the stock was not held in pledge.

3. The complaint need not show that there were funds in the treasury applicable to the payment of his demand.

4. The constitution and by-laws need not be attached as an exhibit to the complaint, these not being the foundation of the action.

5. Notice of withdrawal to the secretary of the association was not sufficient notice to the directors, though he promised to bring the matter before the directors, but did not do so until long after the stock was forfeited under the by-laws. Appeal from circuit court, Huntington county; C. W. Watkins, Judge.

Action by George W. Emerick against the Huntington County Loan & Savings Association. There was a judgment for plaintiff, and defendant appeals. Reversed.

J. B. Kenner and W. S. Lesh, for appellant. J. M. Hatfield, for appellee.

WILEY, J. Appellee was plaintiff below, and by his complaint it appears that he subscribed for five shares of the capital stock of appellant association, which shares were $100 each; that the dues upon such stock were $3.50 per month; that he paid all of his dues each month, beginning such payments in September, 1891, and continued to and including the month of April, 1894; that he paid in all for dues on said stock $112; that when he made his last payment, in April, 1894, he notified the board of directors of appellant association that he wished to withdraw therefrom, and asked that he receive the amount paid in on his stock, less all fines and other charges thereon, with 6 per cent. interest; that he has "waited more than three months, but that no part of said money has been paid or tendered to him by the officers of said corporation." A demurrer for want of facts was overruled, and appellant excepted.

Appel

lant answered in two paragraphs: (1) A general denial; and (2) that by the by-laws of the association, which is the contract between appellant and appellee, the appellee agreed to pay 70 cents monthly on each share of his stock, and in default thereof for more than four months such stock shall lapse, and the amount paid in shall be transferred to the funds of the association. The answer further avers that in April, 1894, appellee defaulted in the payment of his monthly installments, since which time he has never made any payments thereon, and that by reason of such failure said stock lapsed, and had been transferred to the other funds of the association more than a year previous to the beginning of the suit. A copy of the by-laws accompanies this paragraph of answer as an exhibit. Appellee replied by general denial. There was a trial by jury, resulting in a general verdict for appellee. With the general verdict the jury answered and returned certain interrogatories submitted to them upon special questions of fact. Over appellant's motion for a new trial, judgment was rendered on the verdict.

The appellant has assigned errors as follows: (1) That the court erred in overruling the demurrer to the complaint; (2) that the complaint does not state facts sufficient to constitute a cause of action; and (3) that the court erred in overruling the motion for a new trial. The first and second specifications of the assignment of errors may be considered together. The complaint proceeds upon the theory that appellee was entitled to recover of appellant the amount paid into its treasury upon his stock, less any and all fines and other charges thereon, upon his withdrawal. The right of a member of a building and loan association to withdraw from it upon certain conditions is a statutory right, and the manner of his withdrawal, and the terms thereof, are likewise fixed by statute. Section 3410,

Horner's Rev. St. 1897. The language of the statute is: "Any stockholder wishing to withdraw from such corporation may do so upon three months' notice given to the board of directors, when such withdrawing stockholder shall be entitled to receive the amount paid in on the stock to be withdrawn, less all fines and other charges thereon: provided, that when the withdrawal occurs after the expiration of one year from the beginning of the series in which the stock to be withdrawn was issued, he shall receive in addition to the amount paid in, less fines and other charges as aforesaid, at least legal interest on each installment paid from the date at which the same was payable: provided, that at no time shall more than one-half of the funds in the treasury be applicable to demands of withdrawing stockholders, unless the board of directors in its discretion shall order otherwise, and the board may in its discretion waive the notice herein before required as to any withdrawal; no stock shall be withdrawn which is at the time held in pledge for security." The section of the statute from which the above quotation is taken also provides that "any share of stock shall be subject to a lien for the payment of unpaid installments and other charges incurred thereon under the provisions of the constitution and bylaws."

Appellant's learned counsel urge that the averments of the complaint do not show that the conditions prescribed by statute by which appellee might withdraw his stock existed when he attempted to withdraw, and hence, for a failure to show such conditions, the complaint is bad. It is first claimed that it is not averred that his shares of stock were not held "subject to a lien for the payment of unpaid installments or other charges." The complaint shows that appellee became the owner of his shares of stock in September, 1891; that he made his monthly payments beginning with September, 1891, and continuing to and including the month of April, 1894, and that he paid each month the sum of $3.50. It seems plain that under these allegations there could have been no lien in favor of the association for unpaid install ments, for it clearly appears that appellee had paid all installments upon his stock as they became due. It is further charged that when he paid his last installment he notified the board of directors that he wished to withdraw, and asked that he receive back the amount paid in upon his stock, less all fines and other charges, together with interest, etc. If appellee paid the installments on his stock as they became due, we are unable to see what lien the association would have upon his stock for unpaid installments and "other charges." In any event, if the association had any such lien, it was unnecessary for appellee to aver the same, but it was a matter of defense to be set up by way of answer. If appellee had not forfeited his stock.-and the complaint shows that he had not, he had

a right to withdraw, and upon notice of his intention to withdraw it was the daty of the appellant, after the lapse of the time fixed by statute, to pay to him the sum paid in by him, and, if more than a year had elapsed after he became the owner of the stock, as is shown by the complaint in this case, to pay, in addition thereto, at least legal interest on each installment paid from date at which the same was payable, "less fines and other charges as aforesaid." It is plain from both the spirit and the letter of the statute that the appellant association was required to pay to appellee the amount paid in on his stock, with legal interest, less fines and other charges. If the association had any lien upon appellee's shares of stock for unpaid installments, fines, or other charges, it was its duty to discharge such liens from the amount in its hands, and pay him the residue. provided he had complied with all requirements on his part. Another provision of the statute is that "no stock shall be withdrawn which is at the time held in pledge for security." Appellant insists that the complaint is bad for a fail. ure to aver that appellee's stock was not at the time "held in pledge" for security. It is urged that appellee may have become a borrower, and his shares of stock held in pledge for security. Where a stockholder in a building and loan association has borrowed money on his stock, it is rot a debatable question but what such association would hold such stock "in pledge for security." It is equally clear that under such facts the stockholder would not be entitled to withdraw from the association, nor entitled to any of the rights of a withdrawing stockholder, until he should redeem his stock from such pledge. These questions were settled in the case of Association v. Thompson, 88 Ind. 405. These objections which appellant urges to the complaint do not seem to us to be well taken. These objections thus urged are exceptions to the statutory right of the stockholder to withdraw, and, while the exceptions are also statutory, we do not think, under the code practice of pleading, that it was necessary to negative them. The rule of pleading in such cases is that, when the exception is embraced in the clause, he who pleads the clause should also plead the exception; but where there is a clause for the benefit of the pleader, and there follows a proviso which is against him, he may plead such clause, and it then becomes the duty of his adversary to plead the proviso or exception. Bliss, Code. Pl. 202. Mr. Works, in his Pleading & Practice (at section 365), says: "It was a rule of pleading at common law that, if an exception in a statute appeared in the enacting clause, the declaration must show that the plaintiff, on the action brought, was not within the exception; but, where the exception appeared in the proviso, it was unnecessary to notice it in the complaint. The rule is thus stated: The rule usually laid down upon this subject is that, where matter is introduced by

way of exception into a general clause, the pleader must show that the particular case does not fall within the exception; whereas a proviso need not be noticed by him, but must be pleaded by the opposite party. The difference is, where an exception is incorporated in the body of the clause, he who pleads the clause must also plead the exception; but when there is a clause for the benefit of the pleader, and afterwards follows a proviso, which is against him, he should plead the clause, and leave it to the adversary to show the proviso. * The test is whether the exception is necessary to be alleged to constitute a cause of action. If so, it must be averred, no matter in what part of the statute it occurs." See, also, Steph. Pl. 443. The right of a stockholder to withdraw from a corporation is a statutory right, at least in cases of this character. Here the statute confers upon him that right, and specifies what he shall receive in return. After granting to him this right, and placing upon him the necessity of giving the corporation a threemonths notice, the statute contains certain provisions. Measured by the rule we have just cited, it was not necessary for appellee to make the averments contended for by appellant, and which we have had under discussion.

In

Another objection urged to the complaint is that there is no averment that there were funds in appellant's treasury which could be applied to the payment of appellee's demand for withdrawal. Upon this question the authorities are not in accord. Our own courts have not had the question before them in any reported case we have been able to find. Heinbokel v. Association, 58 Minn. 340, 59 N. W. 1050, the exact question here presented was raised, and decided in harmony with appellant's contention. The Minnesota statute, under which that case arose, was very similar to our statute, and the provisions relating to a stockholder's right to withdraw were, in all essential particulars, like ours. The Minnesota statute provided that not more than one-half the amount received on stock should be used to pay withdrawals, without the consent of the board of directors. A by-law of the association contained a similar provision. In the course of the opinion the court said: "Can a nonborrowing member of a mutual building association, who has brought himself within the rules by notice of withdrawal, be permitted to bring an action and take judgment against the association when, by reason of the statute and the by-laws, there is no money in the treasury legally applicable to the payment of his claim?" This inquiry the court answered in the negative, and its conclusion was, to use its own language: "It follows that there must be proper allegations in the complaint and proof upon the trial as to the existence of funds out of which payment can be properly made." In Maloney v. Association, 57 Mo. App. 384, the same conclusion was reached. These are the only the only

cases we have been able to find which hold squarely to the above rule. The supreme court of Pennsylvania, in a well-considered case (Association v. Silverman, 85 Pa. St. 394), declared a contrary doctrine. The Pennsylvania statute there under consideration was almost identical in language to the Minnesota statute, and so similar to our own that we deem it important to quote it here, as follows: "Every share of stock shall be subject to a lien for the payment of unpaid installments and other charges incurred thereon, under the provisions of the charter and by-laws. * Any stockholder wishing to withdraw from the said corporation, shall have power to do so, by giving thirty days' notice of his or her intention to withdraw, when he or she shall be entitled to receive the amount paid in by him or her, and such proportions of the profits as the by-laws may determine, less all fines and other charges. Provided, that at no time shall more than one-half of the funds in the treasury of the corporation be applied to the demands of the withdrawing stockholders, without the consent of the board of directors." In the Silverman Case the question we are now considering arose by way of answer, wherein it was alleged that there were no funds in the treasury with which to pay the amount of plaintiff's claim on his withdrawal, and that 50 per cent. had then been applied to the demands of withdrawing stockholders, and that the consent of the directors to pay in excess of that amount had not been obtained. After quoting the statute above set out, the court, by Mr. Justice Gordon, in discussing the question, said: "It will be seen from the above that after 30 days' notice the membership of the stockholder is determined, and he becomes a creditor of the corporation to the amount he has paid, less fines and charges. That he may, upon the refusal of the company to pay him, sue it, and recover judgment, as any other creditor, is not doubtful. It is urged, however, that he is estopped, by the proviso, from legal process for the recovery of the money, until the treasury has funds to meet his claim. If this be the true interpretation of the statute, then is the creditor in the most unfortunate position; for the corporation may never choose to make the necessary provisions for such purpose, and therefore he can never have process to compel it to do so. * * Looking at the statute as a whole, we are not prepared to adopt an interpretation so contrary to its spirit and the plain dictates of justice. Whilst it is certainly intended that the operations of the corporation shall not be embarrassed by having the whole amount of its cash assets taken in order at once to pay withdrawing stockholders, yet it as certainly does not intend that no provision shall be made for their payment, and that they be indefinitely postponed, even from judgment, by a plea of quasi insolvency." In harmony with the Silverman Case are the following: End. Bldg. Ass'ns, §§ 111114; Association v. Hubley, 34 Leg. Int. 6,