how far this precedent proof must go is not clear, under the authorities. In Pier v. Duff the supreme court of Pennsylvania said: "There is no doubt that if there be any, even very slight, evidence of complicity between the grantor and grantee in a design to defraud creditors, the declarations of one are admissible against the other, although made after the date of the grant." While in Boyd v. Jones the court said: "But in such case the common design and undertaking must first be proved by evidence aliunde, before his declarations are admissible." If, in these cases, the court acted upon different rules as to the quantum of precedent proof, we are not in this case required to decide between them. If O. S. Paulson, Sletto's grantee, were seeking to recover the value of the goods in question, the point presented would be very close, under the Pennsylvania authorities. But the plaintiff is the grantee of Sletto's grantee, and at the time Sletto's declarations were received in evidence there was no proof whatever tending to connect plaintiff with any fraudulent combination to defraud Sletto's creditors; hence the declarations should have been excluded. The order granting a new trial must be sustained by reason of the admission of these declarations of O. S. Sletto, but, as the same questions will necessarily arise upon another trial, It becomes necessary to notice the other points upon which the court based its order for a new rial.

Certain statements were received in evidence that were made by O. S. Sletto after he had executed a bill of sale of the goods in question to O. S. Paulson, and after O. S. Paulson had executed a bill of sale for the same goods to the O. S. Paulson Mercantile Company, the plaintiff herein. Such statements were made in the presence of O. S. Paulson, and were made to the agent of A. L. Shakeman & Co., to whom Sletto was indebted in a large amount, and the agent was seeking to ascertain the extent of Sletto's responsibility. We must treat these declarations as made in the presence of the corporation plaintiff. O. S. Paulson was at that time president and general manager of such corporation, and as such he was in possession of the stock of goods at Reynolds, and controlled the sale and disposition thereof, and the conduct of the business, as entirely as when it was conducted in the name of O. S. Paulson. Under these circumstances, and in the presence of Paulson, Sletto stated that he was the owner of the stock of goods at Reynolds. In this Paulson, by his silence, acquiesced. If it were true that the plaintiff owned the stock, the circumstances made it peculiarly incumbent upon Paulson to then and there so declare. If the plaintiff owned such stock of goods, an obligation rested upon Paulson, under the circumstances disclosed, to so declare in response to Sletto's statement, and he violated every rule of duty and courtesy by not so doing, and

the only reasonable inference to be drawn from his silence is an admission by him, for the corporation, of the truth of the statement. In Drury v. Hervey, 126 Mass. 519, it is said that the whole rule turns on the presence or absence of the conditions just enumerated. Here the conditions were all present, and, if Paulson himself were plaintiff, the application of the rule could not be questioned. But corporations, by the silence of those who should speak for them, may make admissions as well as individuals. We know of no rule of law giving corporations immunity in this direction. We do not hold that such admissions are conclusive. They do not work by way of estoppel, but they are competent evidence in the case. Such was the holding in Williams v. College, 29 Mo. 250. The statements of Sletto made in Paulson's presence were, under the circumstances of this case, properly admitted in evidence.

There remain yet the statements made by Paulson himself. They were made on the same day, to the same party. Paulson knew who the party was and what his business was. It would not be possible for a corporation to clothe an officer with more power than the record shows Paulson had in this case. He stated, according to the witness, that Sletto owned the stock at Reynolds, and that he (Paulson) was in there simply to help Sletto out. In his Commentaries on Corporations, Mr. Thompson thus states the rule at section 4914: "It is merely to state the same rule a little differently to say that declarations made by the officers or agents of corporations, while acting in the course of their official duties or of the business of their agency, with reference to the then existing state of affairs, are admissible in evidence as part of the res gestæ." He cites abundant authority for the proposition. The statements made by the president related to a business of which he then had exclusive charge, and referred to the then existing state of affairs. That they were properly received in evidence we have no doubt; but, for the reason already stated, the order of the court granting a new trial is affirmed. All

concur.

MARTIN v. LUGER et al. (Supreme Court of North Dakota. Dec. 15, 1898.)

PLEADING AMENDMENT-ABUSE OF DIscretion. 1. The authority vested in courts under the law to allow amendments to pleadings is conferred to promote the ends of justice, and should therefore be liberally exercised by the courts, and, in cases of reasonable doubt about the propriety of an amendment, the better and safer practice is to allow the amendment to be made. The controlling principle is, or should be, whether a proposed amendment, if allowed, would further the ends of justice. The discretion to allow or refuse amendments to pleadings is a legal, and not an arbitrary, discretion. To ar

bitrarily refuse to allow an amendment which should be allowed is an improper exercise of judicial discretion.

2. Upon the state of facts set out in the opinion, held, that the refusal of the trial court to allow a proposed amendment to the answer was prejudicial error.

(Syllabus by the Court.)

Appeal from district court, Cass county; Charles A. Pollock, Judge.

Action by Terence Martin against Ferdinand Luger and Peter Luger, co-partners under the firm name of Luger Furniture Company. Verdict for plaintiff. From an order denying a new trial, defendants appeal. Reversed.

W. C. Resser and John E. Greene, for appellants. Benton & Bradley, for respondent.

WALLIN, J. This case is now before this court for a second time. See Martin v. Furniture Co., 6 N. D. 351, 70 N. W. 1134. In the former case, which was reversed, the trial court directed a verdict for the defendants. At the second trial of the action, the court below directed a verdict for the plaintiff. The action is based upon a subscription contract, whereby the defendants agreed in writing with the plaintiff to pay plaintiff the sum of $200, as defendants' part of a subscription to a bonus for the refitting of a certain building to be used as an hotel in the city of Fargo. Defendants admit that they signed the subscription contract, and it is conceded that the plaintiff refitted the building, and converted the same into an hotel, in accordance with the terms of the subscription. The complaint, after setting out the subscription contract, alleged performance thereof on plaintiff's part, and demanded judgment for $200 and interest thereon. The defendants' answer to the complaint, so far as material, is as follows: "Defendants, further answering, allege that, at the time they subscribed the paper mentioned in paragraph 2 of said complaint, the said plaintiff, Terence Martin, as a part of said subscription, and cotemporaneous therewith, and in consideration of the said subscription, promised and agreed with the defendants to purchase of the defendants the furniture and furnishings for the said hotel, and signed, executed, and delivered to these defendants at the same time an instrument, which instrument is in the words and figures following, to wit: 'Fargo, N. D., January 4, 1895. This memorandum is to witness that Luger Furniture Co. has this day subscribed $200.00 towards payment of a bonus to Terence Martin, or his assigns, for changing and refitting the "Argus Building," Fargo, N. D., into an hotel, upon the following conditions: That if said Martin, or Robert O'Brien, does not furnish said hotel, and if the party that does or may furnish said hotel, other than said Martin or O'Brien, does not buy furniture or furnishings from said Luger Furniture Co. to furnish said hotel, then the subscription of $200.00 above named shall be

That,

null and void, and of no effect. But if said Martin or O'Brien does furnish said hotel, or if the person who may furnish same does buy the furniture from said Luger Furniture Co., then said subscription is to be and remain in full force and effect. Terence Martin.' relying upon the promise of the said plaintiff that he would purchase the necessary furni ture and furnishings for said hotel of defendants, the defendants were induced, by the said plaintiff, to subscribe the said sum of $200.00, and said subscription was made solely upon the said representations and promises of the said plaintiff that he, or the person who did furnish the said hotel, would buy the furniture and furnishings for the said hotel of the defendants, and not otherwise. That the said plaintiff did furnish the said hotel building, but, wholly neglecting and disregarding his said promise and agreement with the defendants, the said plaintiff bought of other dealers than the defendants herein the furniture and furnishings for the said hotel. Wherefore defendants demand that they be dismissed hence, with their costs." At the first trial, the district court ruled that the memorandum set out in the answer was a contemporaneous writing, relating to the subject-matter of the subscription contract, and as such was to be construed as part and parcel of the subscription contract, and, so construing it, the district court held that the same was a stipulation which released the defendants from their obligation to pay the subscription, in the event that plaintiff did not purchase the furniture for the hotel of the defendants, or procure some one else to do So. In construing the memorandum, the district court at the first trial held that plaintiff, who, as is conceded, had furnished the hotel himself, and had not purchased any part of the furniture of the defendants, could not recover, and accordingly directed a verdict in favor of the defendants. On appeal, this court took an opposite view of the memorandum, and ruled that the same did not, when properly construed, release the defendants from their obligation to pay the subscription upon the event of the failure of the plaintiff to purchase the hotel furniture from the defendants. After the record was transmitted to the court below, other proceedings were taken in the district court, and the same are embraced in the record now before this court. From this record it appears that the defendants made three several applications in the court below to amend their answer. These applications were all denied, and the rulings thereon are assigned as error in this court. In their first application to amend, the defendants sought to so reform said written memorandum as to make it correspond to and support the alleged agreement pleaded in the answer, to the effect that plaintiff agreed unconditionally to purchase the hotel furniture of the defendants, and that such agreement was the sole consideration of the subscription contract entered into by the defendants. This

avoid this result, defendants asked leave, by an amendment, to eliminate the memorandum from their answer, and thereby lay the foundation to prove that the memorandum In question never was intelligently and consciously assented to by them, and hence never was a contract at all. This request, as we have seen, clearly involved a radical change of front on the part of the defendants, but we are constrained to hold that this change does not necessarily involve bad faith on defendants' part. It should be remembered that not only the defendants, but their counsel as well, assumed that the memorandum signed by the plaintiff, and delivered by him to the defendants, embodied the agreement with respect to the purchase of the furniture which is pleaded elsewhere in the answer. The trial court was of the same opinion, and, acting upon that theory, at the first trial, directed a verdict in favor of the defendants. It was an excusable mistake, therefore, for the defendants to assume, as they did, that the memorandum embodied what they allege to be the true agreement between the parties, and upon this assumption to incorporate the same in their original answer, as was done. It was only when the parties learned that the memorandum, as judicially interpreted, must be construed adversely to the interests of the defendants, that it became necessary for the defendants to show that it was not their agreement. Until construed by this court, all parties were content to assume that the instrument should stand as a contract; but the defendants now insist that the true contract is not contained in the memorandum, as now construed, but is distinctly alleged in the answer by averments independent of the memorandum, and that they never assented to the memorandum as a contract, except upon the theory and supposition that the same embodied what they claim is the true contract, as alleged in the answer, by averments therein aside from the instrument itself. The defendants, in their new attitude, contend that the instrument was incorporated in the answer, and relied upon as a defense, under the mistaken idea that the same embodied the true agreement, viz. that pleaded in the answer, by allegations therein distinct from the memorandum. The memorandum is unilateral, and it is not authenticated by the signatures of the defendants. If it is their contract, it became such only by virtue of their assent to its terms, either in words or by their conduct. Whether defendants ever assented to its terms, either orally or by their conduct, is a fact which can only be established by the introduction of evidence of the circumstances and concomitant facts connected with the entire transaction, including the making and delivery of the memorandum. This question, we think, is a question to be determined by a jury, under proper instructions from the court; and, if the fact is established that

the memorandum was, without fraud on plaintiff's part, deliberately assented to by the defendants, the duty of construing its provisions will, of course, then devolve upon the court. But the preliminary and crucial question is whether the terms of the instrument were ever assented to by both parties. It should be kept in view that the action is based wholly upon the subscription contract, which is a separate writing, and that the memorandum pleaded in the answer is only important in so far as it bears upon the matter of the alleged consideration for the subscription contract. Defendants contend and allege that the sole consideration for their subscription was the alleged unconditioned agreement to purchase the hotel furniture of them. Plaintiff's position is that the agreement as to the furniture is contained in the memorandum, which it is admitted plaintiff drew up and signed, and delivered to the defendants. The real controversy, therefore, and the only question left for solution, is as to the terms of the arrangement made by the parties respecting the matter of the furniture. In our opinion, the door should be thrown open so as to allow the fullest investigation of this pivotal question. If the memorandum is a contract, made without fraud, that fact, when ascertained, will practically settle the case in plaintiff's favor. If it is not, the question will then turn upon parol testimony. See 1 Greenl. Ev. (14th Ed.) § 284. In any event, the principal question of fact is for a jury. Under all circumstances surrounding the case, we are of the opinion that it was prejudicial error to refuse to allow an amendment to the answer, by eliminating therefrom the memorandum. For this error, the verdict will be set aside, and a new trial awarded. All the judges concurring.

UNITED STATES SAVINGS & LOAN CO. v. SHAIN et al.1

(Supreme Court of North Dakota. Nov. 14, 1898.) CONSTRUCTION

CONTRACTS

PRESUMPTIONS BUILDING ASSOCIATION-ENFORCEMENT OF MORT GAGE-MONTHLY STOCK PAYMENTS-APPLICATION -USURY-ESTOPPEL

1. Where, in a money-loaning transaction, the lender and the borrower reside in different states, it is competent for them to agree that the transaction shall be governed by the laws of either state.

2. Where, under such conditions, the transaction would be valid and binding under the laws of one state, and invalid under the laws of the other, the law will presume, in the absence of stipulations, that the parties contracted with reference to the laws of that state where their contract will be upheld.

3. Where a foreign building and loan association advanced money to a member of said association resident in this state, who received the same, and executed a note for the amount. and a mortgage upon real estate to secure the

1 Rehearing denied January 12, 1899.

same, such note and mortgage can be enforced in the courts of this state, notwithstanding the fact that said association had not complied with the statutes prescribing the terms upon which foreign corporations might do business in this jurisdiction. Mill Co. v. Bartlett, 54 N. W. 544, 3 N. D. 138, followed.

4. Where a party subscribes for shares of stock in a building and loan association, and agrees to pay therefor by paying certain monthly installments upon each share of stock until the same reaches maturity or par, and where such party subsequently borrows money from such association, with the understanding that the same may be paid by a surrender and cancellation of his stock when it reaches maturity, while the stock of such party shares in the profits of the association he cannot claim to have his monthly payments upon stock applied, as made, in reduction of the amount so borrowed.

5. Courts cannot presume that a building and loan association violated its charter provisions, as well as the provisions of the statute under which it was created, by refusing to allow its members to secure its funds by competitive bidding for the same, without some competent evidence of such a course.

6. While a by-law of a building and loan association, which fixes a minimum premium below which bids will not be considered, may render a transaction usurious as to one who was forced, by reason of the by-law, to bid a larger premium than he otherwise would have been required to pay, yet, where one voluntarily bids a premium greatly in excess of that required by the by-law, he cannot be heard to complain of the obnoxious by-law.

(Syllabus by the Court.)

Appeal from district court, Stutsman county; C. J. Fisk, Judge.

Action by the United States Savings & Loan Company against Sanford A. Shain and others. Judgment for defendants. Plaintiff appeals. Reversed.

Benton & Bradley, for appellant. Ormsby McHarg, for respondents.

BARTHOLOMEW, C. J.

This is an action by the original mortgagee to foreclose a mortgage on certain real estate situate in Stutsman county. The defendants Sanford A. Shain and Julia Shain, his wife, were the original mortgagors; the defendant William Stone is the subsequent grantee of Sanford A. Shain, and took subject to the mortgage; Augusta Stone is the wife of William Stone; and S. L. Glaspell was joined as defendant as a junior lienholder. Sanford A. Shain and William Stone answer jointly, the other defendants not appearing.

The complaint alleges the incorporation of the plaintiff under the laws of the state of Minnesota, for the purpose of doing business as a building and loan association, under the name of the United States Savings, Loan & Building Company, and the subsequent change of name to the United States Savings & Loan Company. It alleges that plaintiff has fully complied with all the requirements of the laws of the territory of Dakota and the state of North Dakota for the purpose of enabling it to do business in this jurisdiction; that on February 4, 1889, the defendant Sanford A. Shain applied to plaintiff for a loan of $1,500, agreeing to take 30 shares of stock

in the plaintiff company, and continue the monthly payments thereon until said stock should mature or the loan be paid, and pay all fines and assessments against said stock, and to pay plaintiff a premium of 50 per cent. of said 30 shares, and to assign 15 shares to plaintiff as collateral to said loan; that this offer was accepted, and said Shain executed and delivered to plaintiff the following written instrument: "St. Paul, Minnesota, April 8th, 1889. For value received, after three years from date, and before nine years from date, I promise to pay to the order of the United States Savings, Loan and Building Company, at the office of its treasurer, St. Paul, or its trustee, in Minneapolis, Minn., the sum of fifteen hundred dollars, with interest at the rate of six per cent. per annum on the sum of fifteen hundred dollars, Payable monthly. It is understood that this note is given for a loan obtained on thirty shares of the stock, of the said United States Savings, Loan and Building Company; and, if the maker hereof fails to make any monthly payment on said stock or to pay any installment of interest for period of six months after the same is due, then the whole amount of these notes shall at once become due and payable, but if the maker hereof shall pay all installments of interest which become due hereon, and all monthly payments and fines which become due on said stock, until said monthly payments shall have been past due for a period of six months, then, upon the surrender of said stock to said company, this note shall be deemed to be fully paid and canceled. This note is understood to be made with reference to and under the laws of the state of Minnesota. If this note is paid before seven years from date, there shall be allowed such rebate from the premium as the board of directors of said company shall deem equitable. Premium, $1,500. Loan, $1,500." It is further alleged that, to secure compliance with said instrument in all particulars, Sanford A. Shain and wife executed and delivered to plaintiff the mortgage in question. There is a provision in the mortgage that, in case of failure to pay the monthly interest payment or the monthly payment on stock, and such default shall continue for three months, then the whole amount to become at once due and payable. These defaults are set forth, and the defendants are charged with the following amounts: Principal of loan..... Monthly interest in arrears. Monthly stock installments in arrears Fines

Making a total of.....

$1,500 00

97 50 216 00

....

48 00 $1,861 50

Defendants are then credited with what is called the "withdrawal value" of his shares of stock, amounting to $1,018.35, leaving a balance of $843.15, for which plaintiff asks judgment and decree of foreclosure.

The answer admits plaintiff's corporate organization, but denies that it was ever organized as a building and loan association, and