are of opinion that the facts are sufficient to authorize the inference that the conversation testified to by the witness E. B. McCary was the same as that testified to by G. A. Thompson. In addition to what Thompson testified, McCary testified that plaintiff replied to F. P. Thompson "to go home, and stay until he got well, and he would attend to the business while he was gone." When plaintiff was being examined in his own behalf, his counsel, referring to the conversation testified to by G. A. Thompson, asked him "to state what occurred in that conversation," to which question the court sustained an objection. The assignment of error based upon this ruling of the court presents a question not free from difficulty. Parties in civil suits are made competent witnesses, except that neither party shall be allowed to testify against the other as to any transaction with or statement by any deceased person, whose estate is interested in the result of the suit, unless called to testify thereto by the opposite party. Code, § 2765. We do not think the statute would exclude a party. against whom such evidence had been offered as that given by Thompson and McCary, from saying whether he had such a conversation, or from stating what he did say in such conversation, or explanatory of it. His evidence, however, should be limited to the credibility of the witnesses, or weight to be given to the evidence of the witnesses, testifying to the conversation, and should not be considered by the jury as establishing as true any fact testified to by the party as having been stated by him in the conversation. We think the distinction clear, and the jury should be properly instructed as to how far it was to be considered by them. We think the question, "State what occurred in that conversation," too broad. The witness might have answered in response as to some transaction with the deceased prohibited by statute, and not simply as contradictory or in qualification of the statement made by Thompson. It should have been limited strictly to the statements of the witnesses. Under this view, the court did not err in sustaining an objection to the question.

The court erred in sustaining an objection to the question propounded on cross-examination to the witness Shelton. This witness had testified on direct examination that he rented to F. P. Thompson the saloon in which the business was carried on. It was competent to show that at the time of making the rental contract F. P. Thompson stated that plaintiff was interested with him in the business. As an independent proposition, it was competent for the defendant to prove declarations of F. P. Thompson, while in possession, and carrying on the business, that it was his business, that it belonged to him, and equally competent to show by his declarations that the plaintiff was interested in the business, or that the business did not belong to him. Moreover, it was a part of the

res gestae of the renting, and admissible on this ground.

The form given in the Code for a plea of payment is very brief. It is only necessary to aver that the defendant had paid the debt for which the suit was brought before the action was commenced. All necessary facts to constitute a payment are implied in these averments. So, when a plea of pay ment avers that the debt was paid from the goods of the debtor or the assets of the estate, this averment implies that the goods were received by the creditor under an agreement that they were taken in payment. Unless the proof shows this, the plea of payment is not maintained. The court did not err in overruling a demurrer to the plea.

We find no error in the record, except the single one of excluding the question to the witness Shelton. Reversed and remanded.

-

(103 Ala. 622)

LANIER LUMBER CO. v. REES et al.1 (Supreme Court of Alabama. June 21, 1894.) POWERS OF CORPORATION PURCHASE OF STOCK IN ANOTHER COMPANY-VALIDITY OF CONTRACT. A corporation cannot enforce a lien for a debt due it by another corporation on stock purchased by an officer in the latter corporation with the funds thereof, since a corporation, unless expressly authorized, cannot purchase stock in another corporation, and the enforcement of such a lien would involve the enforcement of a void contract.

Appeal from chancery court, Talladega county; S. K. McSpadden, Chancellor.

Suit by the Lanier Lumber Company against Frank Rees and others. There was a decree for defendants, and plaintiff appeals. Affirmed.

Browne & Dryer and C. C. Whitson, for appellant. Knox & Bowie and Cooke, Frazier & Swaney, for appellees.

MCCLELLAN, J. Robert Morrison, owning 900 of the 1,000 shares of stock in, and being president of, the Morrison Lumber Company, subscribed in his own name, and had issued to him individually, 333 shares, of the aggregate face value of $33,300, of the capital stock of the Lanier Lumber Company, and paid therefor with property belonging to the Morrison Lumber Company. These shares, it is averred, he held as trustee for said Morrison Lumber Company, and all along recognized the beneficial ownership of said company; and before the filing of the present bill 320 of these shares of stock were transferred on the books of the Lanier Lumber Company, and assigned by Robert Morrison to Frank Rees in payment of a debt the Morrison Lumber Company owed him, and the certificates for the remaining shares, 113 in number, were delivered to the First National Bank of Chattanooga, and are now held by it (though no transfer of them

1 Rehearing denied February 9, 1895.

has ever been made on the books of the lumber company) presumably as security for debts of either the Morrison Lumber Company or Robert Morrison, though the bill does not disclose for what purpose, or in what supposed right, these certificates are in the hands of the bank; and it is immaterial, in the view we take of the case. While all this stock was so held by, and all of it stood in the name of, Robert Morrison, for the Morrison Lumber Company, that corporation became indebted to the Lanier Lumber Company in a large sum of money, and the present bill is filed by the latter company for the purpose of collecting its said debt. This is sought to be done by having said shares of stock declared and decreed to be the property of the Morrison Lumber Company, the transfer of a part thereof to be set aside and avoided as fraudulent, and, this being done, by a further decree declaring and enforcing by sale, etc., the lien which section 1674 of the Code gives to corporations on the interest of share holders in its capital for the security and payment of debts due from the shareholders to the corporation.

There is no averment in the bill that the Morrison Lumber Company was authorized by its charter or otherwise to subscribe for and hold or own stock in other corporations, but, to the contrary, it is virtually admitted that it had no such statutory power. And it is too well settled to require discussion that without such authority one corporation cannot subscribe for, or invest its own capital in, the shares of other corporations, either directly, as by becoming in its own name an Incorporator of a new corporation, or indirectly, by subscriptions in the names of persons acting as agents, and holding as its trustees. And it is equally clear, upon priuciple and authority, that all such attempted subscriptions or contracts of subscription are not voidable, but utterly void. 1 Mor. Corp. §§ 431, 433; 4 Am. & Eng. Enc. Law, p. 249, note 2; Freestone Co. v. Harvey (Tenn.) 20 S. W. 427; Central Railroad Co. v. Pennsylvania R. Co., 31 N. J. Eq. 475; Commercial Fire Ins. Co. v. Board of Revenue (Ala.) 14 South. 490. It is therefore obvious—indeed, counsel for appellant do not controvert-that the contract disclosed by the bill, considered as a contract by which the Morrison Lumber Company became the beneficial subscriber to the stock of the Lanier Lumber Company, was and is wholly void, and entirely inoperative to invest property in the said shares in the former company. But it is insisted that the contract was wholly executed by the payment of the subscribed value of the stock in the property of the Morrison Lumber Company, and the issuance of certificates of stock to Robert Morrison, in his individual name, but to be held by him as trustee for said company, and that on the familiar principles announced in the case of Long v. Railway Co., 91 Ala. 519, 8 South. 706, the stock should now be treated as the

That

property of the Morrison Lumber Company, and subjected to complainant's lien, as such, notwithstanding, and without at all looking to, the illegal means by which it was acquired by that company. The infirmity of this position lies in its assumption, or the proposition underlying it, that the void contract of subscription had been fully execut ed, to the investiture of the property in the shares in the Morrison Lumber Company. The averments and prayer of the bill demonstrate that this is not the case. The stock was subscribed for by Robert Morrison. The name of the Morrison Lumber Company nowhere appears in that connection. The stock was Issued to him individually, and not to his company; and it stood on the books of the Lanier Lumber Company in his name, and not in the name of the Morrison Lumber Company. As his stock, the Lanier Lumber Company has no lien on it, for he is not that company's debtor. To get the title to the stock out of him, and vest it in the debtor corporation, so that it could be subjected to the lien against the debtor, or, in other words, to show any sort of ownership, technical or beneficial, in the debtor corporation, reliance would be had upon the void contract of subscription. contract must be proved as it has been alleged, and, when proved, there must be, as prayed in this bill, a decree of the court executing and directing or adjudging performance of it, before relief could be granted, even were the contract a perfectly valid one; and relief cannot be granted at all upon the contract as it is, because courts will not intervene to the enforcement of void contracts. As is said by counsel, complainant's right to enforce a lien on this stock as the property of the Morrison Lumber Company-the legal title to the stock not being in that company, but in Robert Morrison-depends upon whether the Morrison Lumber Company has any rights it could enforce against Robert Morrison, the complainant having only a lien upon such property interest in the stock as its debtor could assert and effectuate against Robert Morrison. And it being most clear that the debtor corporation could have no standing in any court to establish and secure, by judgment or decree against said Morrison, any interest in the stock,-since, to that end, the court would have to find the existence, and decree the performance, of an illegal and utterly void contract,-it follows that the complainant is equally, and for the same reason, without right to reach and subject this stock as the property of the Morrison Lumber Company. The relief prayed cannot be granted without the estab lishment and execution of an illegal and void contract. It therefore cannot be granted at all, because no court will decree the performance or grant relief depending upon proof of such a contract.

The demurrers to the bill which were addressed to the point we have discussed were properly sustained. This destroys the sup

posed equity of the bill, and the other questions presented by other assignments of demurrer need not be considered. The decree of the chancellor is affirmed. Affirmed.

(104 Ala. 201)

McCLARIN v. ANDERSON. (Supreme Court of Alabama. June 21, 1894.) CREDITOR'S BILL FRAUDULENT CONVEYANCE BY DECEDENT-CLAIM OF HOMESTEAD EXEMPTION

-DECISION OF CONTEST-EFFECT.

1. The issue and levy of executions on defendant's homestead is sufficient to prevent the judgment from becoming dormant, though claims of exemption are successfully interposed thereto.

2. A judgment creditor of one who died insolvent, without leaving anything to be administered on, may sue to set aside a conveyance fraudulent as to his judgment, without making the administrator a party.

3. The decision on the contest of defendant's homestead claim to land as exempt from execution is conclusive, in a subsequent levy on the land, only where the conditions under which the prior levy was made have not changed.

4. In an action to set aside a voluntary conveyance by a judgment debtor as in fraud of the judgment creditor, a complaint alleging that the conveyance was without consideration, and made, with the understanding of the parties, to place the property beyond the reach of the creditors of the debtor, and particularly to prevent plaintiff from subjecting the property to the satisfaction of his judgment, is sufficient.

5. A demurrer or a motion to dismiss, extending to the whole of a bill to set aside a conveyance as in fraud of creditors, is properly overruled, where plaintiff is entitled to have the conveyance set aside as to a part of the property conveyed.

Appeal from chancery court, Mobile county; W. H. Tayloe, Chancellor.

Bill by Thomas Anderson against Mary J. McClarin. From a decree overruling demurrers to the bill and a motion to dismiss, defendant appeals. Affirmed.

The bill in this case was filed on September 9, 1893, by the appellee, Thomas Anderson, against the appellant, Mary J. McClarin, and sought to have a certain conveyance of land, executed by Robert McClarin and Mary J. McClarin to James Robertson, and a deed conveying the same lands from James Robertson and wife to Mary J. McClarin, set aside and annulled as fraudulent, and the property conveyed therein sold for the payment of a judgment recovered by Thomas Anderson against Robert McClarin. The bill and its exhibits thereto showed, that on May 13, 1875, Thomas Anderson, in an action against Robert McClarin to recover damages for malicious prosecution, recovered judgment against the latter in the sum of $500 and costs; that on June 7th, following, execution was issued on said judgment and returned, "No property found." On August 29, 1881, another execution was issued on said judgment, which was returned for an alias. On February 6, 1882, another execution was issued upon the same judgment, and was levied on that day upon certain property of the defendant, Robert

McClarin, which was described in the sheriff's return as follows: "All and singular that certain lot of land lying and being in square No. 5 and known as 'Lot No. 3' and bounded as follows, on the west by street No. four (4), on the east by property be longing to Dr. Jesse Carter, on south by property formerly belonging to Mrs. Ethridge, and on the north by property belonging to estate of Clark, having a front of fifty-three feet on street No. four (4), with a depth of seventy feet, more or less, and being in the Lyon & Gordon tract according to Dade's survey thereof. (2) Also that certain lot of land commencing at the southeast corner or intersection of Stone street, now Davis avenue, and Third street in the city of Mobile, and running thence eastwardly along the south line of Stone street thirty feet (30) to a point, thence southwardly ninety-five feet to a point, thence westwardly thirty (30) feet to the east line of Third street, and thence northwardly along the line of Third street to the place of beginning. (3) Also all and singular that certain lot of land in the city of Mobile, state of Alabama, described as follows: Said lot being situated on the southwest corner of Davis avenue (formerly Stone street) and Hospital street, running west from said corner fifty-six (56) feet front on Davis avenue, more or less, thence running south one hundred feet (100), more or less, thence running east (56) fifty-six feet, more or less, thence running north on Hospital street one hundred (100) feet, more or less, to the place of beginning."

The sheriff gave notice in writing of the levy to the defendant. On June 16, 1885, the defendant in execution made his claim of exemptions as a homestead to certain portions of the land levied upon, which were described in the claim as follows: "All those certain lots of land in square No. 4 (Dunn's purchase) described as follows, viz.: Commencing at the southeast corner or intersection of Davis avenue and street No. 3, thence southwardly along the east line of street No. 3, one hundred and five (105) feet, thence eastwardly parallel to Davis avenue, one hundred and twelve feet, six inches (112' 6"), thence southwardly and parallel to street No. 3 fifty-one feet and three inches (51′ 3′′), thence northwardly and parallel to street No. 3, one hundred and fifty-six feet, three inches (156' 3") to Davis avenue, thence westwardly along the south line of Davis avenue, one hundred and sixty-eight feet, nine inches (168' 9") to the place of beginning, bounded on the north by Davis avenue, on the west by street No. 3, on the east by lot No. 2, and on the south by lots 8, 7 and 6." This claim was filed with the sheriff on July 3, 1885, and on that day the sheriff made his return of the execution. The sheriff's return fails to show that he gave the plaintiff notice of the defendant's claim of homestead exemption. On July 31,

filed with the sheriff in May, 1885, by the said Robert McClarin were in fact exempt to him as homestead lands, and that said Robert McClarin had a right to make a voluntary conveyance of said lands to this defendant. (5) That the bill shows that said Robert McClaria filed his claim of homestead exemption to the lands described in the complaint and sought to be subjected to complainant's demands, in the office of the probate judge of Mobile county, June 16, 1885; that complainant caused a writ of execution to issue out of the city court of Mobile to be levied upon said lands May 19, 1887, without contesting the said Robert McClarin's claim of homestead exemption, but that said contest was made after the said levy, and that said contest was dismissed by said city court, and shows, therefore, that it is res adjudicata as to the complainant, that the lands claimed by said Robert McClarin as exempt to him, as a homestead, were exempt to him as a homestead at the time of making the deed to James Robertson, and at the time said Robertson and wife made the conveyance to defendant, and shows, therefore, that there was no fraud as to complainant in said conveyances at the time they were executed. (6) That the bill shows that all of the issues raised by the present bill have been raised in the city court of Mobile during the lifetime of said Robert McClarin, between said Robert McClarin, deceased, and said plaintiff, and have been decided adversely to said complainant by said court, and that no appeal was taken by said complainant from the judgment of the said city court, and that the time for appeal allowed by law has now expired, and that said issues are now res adjudicata between complainant and defendant, who is in privity with said Robert McClarin. (7) For further cause of demurrer defendant says that the bill shows that the plaintiff has been guilty of laches, and that the same is barred by laches as a stale demand."

HARALSON, J. 1. The plaintiff's judgment was rendered on the 13th May, 1875, in an action in tort, and executions were issued thereon, on the 7th June, 1875, on 6th February, 1882, on 23d May, 1885, and on the 17th April, 1887. The judgment was kept alive and is not now dormant. Two levies were made on the defendant's land, and twice he interposed his claim of exemption, which plaintiff attempted to contest, each time unsuccessfully.

2. There is nothing in the ground of demurrer, that an administrator of Robert McClarin was not made a party defendant. It is alleged he died insolvent, without leaving anything to be administered on, and for that reason no administration has ever been taken on his estate. If he had had an ad

v.16so.no.22-41

ministrator, it was optional with the complainant to make him a party or not. Coffey v. Norwood, 81 Ala. 515, 8 South. 199; Handley v. Heflin, 84 Ala. 601, 4 South. 725.

supreme

3. It will appear from the facts of this case which will be set out in the report of the cause, that the plaintiff issued an execution on his judgment on the 23d of May, 1885, which was levied on the lands described in his return on said execution; that on the 3d day of July following, the defendant in execution,-complainant's intestate, Robert J. McClarin,-filed under oath with the sheriff his claim of homestead exemption to a part of the lands so levied on, to which there was no contest filed by the plaintiff until the 7th of April, 1887. The case had, meantime, been carried to the court, and reversed and remanded, and on its return to the city court, in December, 1886, this contest, on the 7th of April following, was tendered, notice of which was given on the same day to the defendant, who, on the day following, the 8th of April, 1887, filed his demurrer to said contest, on the ground, that the plaintiff's affidavit for contesting defendant's claim of exemption had been filed more than 10 days after he had notice of the making and filing of defendant's claim. On trial of the cause on that demurrer, on the 18th of April, 1887, judgment was rendered for the defendant, the judgment entry reciting that the "parties came by their attorneys and plaintiff's motion to make up the issues in the contest of the claim of homestead exemption filed by the defendant, coming on to be heard and being heard, and argued by counsel, it is considered by the court, that said motion be refused, and the defendant's demurrers to the contest being heard, it is considered by the court that said demurrers be and they are hereby sustained."

4. The ground for contesting said claim of exemption, as shown in the affidavit for contesting the same, was that the plaintiff's judgment was rendered in an action of tort. It is well understood that when a demurrer is sustained for some defect in the pleadings, and judgment is not pronounced on the merits of the case, then there has been no judgment on the facts or merits, and consequently the demurrer, which was sustained, because of defects in the pleadings, can form no bar to a subsequent action; but a demurrer, which admits all the facts which are well pleaded, demands the judgment of law arising out of or on those facts; and when the judgment is pronounced it is as conclusive on the parties, to determine the litigation between them, as if judgment had been rendered on verdict. Perkins v. Moore, 16 Ala. 13; Hanchey v. Coskrey, 81 Ala. 150, 1 South. 259; 1 Chit. Pl. 198. It appears to us, that the demurrer filed by the defendant to plaintiff's contest of said claim of a homestead exemption, was sustained by the city court. from no defective pleading for