have had a standing in court to apply for such relief." But plaintiff was not confined to this remedy: "The equitable remedy to restrain by injunction a sale which is unwarranted and inequitable is well established, and is clearly contemplated by Gen. St. 1878, c. 66, §§ 200-204 (Gen. St. 1894, §§ 5344-5348). The entry of judgment after the claim was settled was in violation of the rights of the plaintiff, and a fraud upon him. These allegations afford ample justification for the injunction, and the inquiry into the validity of the judgment and lien properly falls within the jurisdiction of the court in the injunction action." We perceive no distinction between a proceeding to enjoin the fraudulent use of a judgment itself obtained by fraud and the right of the plaintiff in this case by a proceeding in equity to bar the defendant from using his fraudulent decree and judgment obtained by fraud. Fraud is a matter of equity jurisdiction, and in the case cited, as well as in the case at bar, equitable relief was and is sought against a fraud not denied, or at least directly found in favor of the plaintiff. Order affirmed.

MILLER v. CITY OF MINNEAPOLIS. (Supreme Court of Minnesota. Dec. 27, 1898.) LIABILITY OF CITY-NEGLIGENCE OF OFFICERS.

Held, so far as the city of Minneapolis maintains its water plant for use by its fire department in extinguishing fires, it is performing a public or governmental function, and is not liable for the negligence of its officers and servants in permitting the pipes and hydrants to become clogged and choked with sand, bark, and other refuse.

(Syllabus by the Court.)

Appeal from district court, Hennepin county; Edward M. Johnson, Judge.

Action by Janet R. Miller against the city of Minneapolis. Demurrer to complaint sustained, and plaintiff appeals. Affirmed.

Welch, Hayne & Hubachek and P. M. Babcock, for appellant. Frank Healy, for respondent.

CANTY, J. The complaint alleges that, while plaintiff's goods were stored in a certain building in Minneapolis, the building took fire, and the fire department responded promptly, and connected their hose and fire engines to the street hydrants in the vicinity, and would have extinguished the fire before any damage occurred to plaintiff's goods, were it not that said hydrants, and the water pipes connecting with the same, were choked and clogged with mud, sand, stones, pieces of bark, and other ingredients, and by reason thereof no water did or could come through the hydrants for nearly an hour after said connection had been made by the fire department, and the mud, sand, bark, and other ingredients choked the engines, and by reason thereof the fire department were powerless and unable to get any supply of water to extinguish the fire, or prevent the spread of

it, until plaintiff's goods were burned and destroyed. It is further alleged that the city erected and maintained the water plant, pipes, hydrants, and water service, and charged a compensation to private customers for the use of the same, but it is admitted that the city furnished the same for fire service without compensation, except such as is paid by general taxation. It is further alleged that the city was negligent in permitting the pipes and hydrants to be so choked and clogged, that plaintiff's goods were destroyed as aforesaid by reason of such negligence, and this action is brought to recover damages for the same. The city demurred, on the ground that the complaint does not state a cause of action, and, in our opinion, the demurrer was properly sustained. The city charter permits and authorizes, but does not compel, the city to maintain such a water plant and service. In maintaining the same for the use of its fire department, the city is performing a public or governmental function, and is not liable for the negligence of its officers or servants in permitting the plant to be out of repair or out of condition for service. Mendel v. City of Wheeling, 28 W. Va. 233, and cases cited; Springfield Fire & Marine Ins. Co. v. Village of Keeseville, 148 N. Y. 46, 42 N. E. 405. The city is not liable for the negligence of members of the fire department, acting within the scope of their duty (Grube v. City of St. Paul, 34 Minn. 402, 26 N. W. 228); and, for the purposes of protection from fire, the water plant and service must be regarded as a part of the fire department. Order affirmed.

MARKELL v. RAY et al. (Supreme Court of Minnesota. Dec. 27, 1898.) CORPORATIONS-STOCKHOLDERS-TENANTS IN COMMON-EXECUTORS - SET-OFF - PLEADING — HARMLESS ERROR-INFANTS-PARTIES.

1. If it was error to amend the complaint by an ex parte order, held, it became error without prejudice, because the same amendment was subsequently allowed on a motion made on due notice.

2. It cannot be held that by section 5927, Gen. St. 1894, an action to charge the distributees of the estate of a deceased stockholder with his stockholder's liability, to the extent of the estate received by them, is barred in one year after the corporation goes into insolvency. 3. Held, a minor, as well as a person sui juris, may be brought into an action, as an additional party defendant, by the service on him of an order reciting the summons, as provided by section 5178, Gen. St. 1894.

4. It appeared by the books of the corporation that a certain number of shares of its stock were held by two certain persons. It did not appear by the books or otherwise that they were partners, or held the stock as such. Held, they were tenants in common, each of an undivided one-half interest in the stock, and neither can be held for more than one-half of the stockholder's superadded liability.

5. The executor, pursuant to the provisions of the will, procured stock, which stood in his own name on the books of the corporation, to be transferred to him as executor. Thereafter the corporation went into insolvency. Held, the es

tate thereby became primarily liable, and he became secondarily liable, on such stock. Held, under section 3419, Gen. St. 1894, whether the stock stood in the name of the testator or not, the executor does not make himself personally liable thereon by having the same transferred to himself as executor, when the will authorizes such transfer.

6. Five years before this action was commenced, or the corporation went into insolvency, one of its stockholders, who was also one of its creditors, made an assignment under the insolvency law; and his stock, and the debt due to him from the corporation, passed to his assignee. Such debt has not been paid, and his estate has not been settled. Held, the liability on his stock is not, at law, a claim against the assets in the hands of his assignee, but equity will set off one claim against the other. However, under the circumstances, the stockholder's liability should be set off, not merely against the dividend coming to the assignee as creditor, but against the whole claim held by him.

(Syllabus by the Court.)

Appeal from district court, St. Louis county; S. H. Moer, Judge.

Action by Clinton Markell, as assignee of Henry H. Bell, insolvent, against Robert C. Ray and others. From a judgment for plaintiff, certain defendants appeal. Modified.

Billson, Congdon & Dickinson, for appellants. Abbott & Crosby (Walter Ayers, of counsel), for respondent. Schmidt, Reynolds & Mitchell, Walter Ayers, Howard T. Abbott, and Victor Stearns, for various interveners.

CANTY, J. This is an action under chapter 76, Gen. St. 1894, brought on behalf of the plaintiff and all other creditors of the Masonic Temple Association of Duluth, an insolvent corporation, to enforce the double or superadded liability of its stockholders.

1. The action was commenced October 31, 1895. Only a few of the alleged stockholders were then made parties to the action, and among those were Robert C. Ray and Caroline E. Ray. October 23, 1896, the complaint was, on the application of plaintiff, amended by an ex parte order of the court so as to set up a new cause of action against Robert C. Ray and Caroline E. Ray. They moved to set aside the order allowing the amended complaint, and their motion was denied. This they assign as error. Whether or not the court erred in amending the complaint by the ex parte order, and in denying the motion to set the amendment aside, and whether or not these acts of the court were error without prejudice, it is not necessary to decide, for the reason that on June 26, 1897, the complaint was again amended, on motion made on notice, and, as so amended, contained the amendment allowed ex parte as aforesaid, superseded it, and cured the alleged error. we will now proceed to show, the statute of limitations had not, on June 26, 1897, run against said new cause of action.

As

2. In the original complaint Robert C. Ray and Caroline E. Ray were charged only as stockholders. The amended complaint alleged: That they and Marion Ray are the devisees

of James D. Ray, who at the time of his death, on April 27, 1894, was the owner and holder of 1,400 shares of the capital stock of said temple association, of the face value of $25 each. That the debt due from the temple association to plaintiff was incurred prior to that time. That James D. Ray left at his death real and personal property of the value of more than $500,000, which by his last will he devised as follows: Onethird to his widow, said Caroline E. Ray; onehalf to his son, said Robert C. Ray; and the remaining one-sixth to his daughter, Marion Ray. That the will was duly probated, the estate administered, and on May 1, 1895, all the estate remaining was distributed to said devisees in said proportions,-the value of the estate so distributed being $350,000,-and the executor was then discharged. On these facts the amended complaint sought to charge the three devisees, under sections 5918-5929, Gen. St. 1894, for the stockholder's liability of said James D. Ray. The temple association made a general assignment for the benefit of its creditors, under the insolvency law, on October 31, 1895,-the day that this action was commenced. Appellant contends that under section 5927, Gen. St. 1894, the statute of limitations would have run against this claim in one year from that date, were it not for the fact that the complaint was amended ex parte, within the year, so as to set up the cause of action against the devisees as such, and that, therefore, appellant is prejudiced by this amendment. Section 5927 provides: "No action shall be maintained [against heirs or devisees on such a claim] unless commenced within one year from the time the claim is allowed or established." We cannot hold that, as appellants contend, the commencement of this action on October 31, 1895, is equivalent or analogous to the allowing or establishing of this claim against these devisees, within the meaning of this section, so as to start the statute of limitations running. In what court or in what manner this section contemplates that the claim shall be "allowed or established," we need not consider, but we are strongly of the opinion that appellants' contention cannot be sustained.

3. At the time said amended complaint was allowed, said Marion Ray, a minor, was brought in as an additional party defendant, by an order reciting the summons, and requiring her to answer the complaint, as provided in section 5178, Gen. St. 1894. There is nothing in the claim that a minor cannot be made a defendant in this manner, and can only be made a defendant in such a case by amending the summons, and serving the same as amended. We see no reason why section 5178 does not apply to minors as well as to persons sui juris. 4. On October 31, 1895, the day of the commencement of this action, and the day the corporation made the assignment and ceased to be a going concern, 774 shares of its capital stock were registered on its books as being held and owned by "James D. Ray and Robert C.

Ray." The trial court held the latter liable for the face value of all of this stock, and held the devisees of the former liable for the same amount. It did not appear that James D. and Robert C. were partners, or that they held the stock as partners, and nothing of the kind appeared by the books of the corporation. Under these circumstances, they appeared to be tenants in common, each appearing to be a holder of an undivided half interest in the stock; and we are of the opinion that Robert C. should not be held for more than one-half of the face value of the stock, and the devisees for the other one-half.

5. On October 24, 1889, James D. Ray became the registered holder of 100 shares of said stock, and Robert C. Ray of 40 shares. A part of said 774 shares was issued by the corporation to James D. and Robert C. on the same day, and the other part was transferred to them by a prior holder on June 17, 1890. These parties appeared on the books of the company to be the respective owners of this stock until June 20, 1894. James D., during all of said time up to the time of his death, was in fact the owner of all this stock, but had permitted some of it to be entered on the books as the stock of Robert C. James D. died on April 27, 1894. Robert C. was appointed his executor under his will. On said June 20, 1894, Robert C., with the consent of Caroline E. and Marion, pursuant to an agreement with them, and pursuant to the provisions of the will, caused all of said 914 shares of stock to be transferred on the books of said corporation to himself, as executor of said estate. Thereafter, on May 1, 1895, the estate was settled, and a decree of distribution was entered, assigning all of the remaining property of said estate, including said 914 shares of stock, to the three devisees, and discharging the executor. On the same day the three devisees filed in the probate court a refusal to receive the stock, or any part of it. On these facts the court held Robert C. primarily liable for the 774 shares as aforesaid, and also held him liable for said 40 shares so standing in his name at the time of the death of James D. Counsel contends that Robert C. was only secondarily liable for this stock, and that the estate of James D. is primarily liable, for the reason that all of this stock was transferred to the executor, and stood in his name as executor on the books when the corporation ceased to be a going concern. We agree with appellants that Robert C. is not primarily liable as stockholder on any of this stock, and is only secondarily liable as stockholder on such portion of this stock as stood in his name at the time of the death of James D. It may be a question whether, on common-law principles, an executor who procures stock to be transferred to himself as executor would not thereby make himself personally liable, especially if before the transfer the stock stood in the name of some one other than the testator. See In re Leed

Banking Co., 1 Ch. App. 231; Spence's Case, 17 Beav. 203; Jackson v. Turquand, L R. 4 H. L. 305; Schoul. Ex'rs, § 380. But section 3419, Gen. St. 1894, provides: "Persons holding stock in a corporation as executors, administrators, guardians or trustees shall not be personally subject to any liabilities as stockholders; but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward or person interested in the trust fund would be, if they were respectively living and competent to act, and held the stock in their own names." We are of the opinion that where the executor had authority, under the will, to take stock in his name as executor, this section exempts him from personal liability. It therefore follows that Robert C. was personally liable as stockholder only to this extent: He was secondarily liable on the 40 shares, and on his one-half interest in the 774 shares, and the court erred in holding otherwise. The estate alone was primarily liable on the whole 914 shares, and the three distributees must, to the extent of the assets received by them, answer for this primary liability. If they fail to do so, then Robert C. must respond to such secondary liability.

6. One Bell made an assignment, under the insolvency law of this state, to plaintiff, November 25, 1890,-nearly five years before the commencement of this action. A part of the assets so assigned by Bell was a promissory note held by him against the temple association for the sum of $16,000. Bell at the same time held stock of the association amounting to $10,500, which was also assigned to the plaintiff as a part of such assets. Bell was not made a party to this action, and the court finds that he is a nonresident, so that service could not be had upon him. The court ordered judgment in favor of plaintiff, as assignee of Bell, and against the other stockholders, for the amount of said note, without offsetting against the same the liability on Bell's stock. This is assigned as error. The liability on Bell's stock was contingent. The contingency did not happen, and the liability become absolute, until after Bell made the assignment for the benefit of his creditors. This contingent claim is not provable against the insolvent estate of Bell, even though it has become absolute when the attempt is made to prove it. See 3 Am. & Eng. Enc. Law (2d Ed.) 139; Wilder v. Peabody, 37 Minn. 248, 33 N. W. 852, and cases cited. But it does not follow from this that equity will not set off one of these claims against the other. Insolvency has long been recognized as a distinct ground on which a court of equity will compel a set-off in many cases where there is no remedy at law, or where the party seeking set-off could not maintain an independent action against the party against whom set-off is sought. See Wat. Set-Off, §§ 431-441. See, also, Cosgrove v.

McKasy, 65 Minn. 426, 68 N. W. 76; Richardson v. Merritt (filed this term) 77 N. W. 234, and cases therein cited. No general rule can be laid down, by which to determine when this equitable right of set-off exists, that will cover all cases. We are of the opinion that it exists in the present case. Again, if this stockholder's liability of Bell was, at law, a claim against the assets in the hands of his assignee, then the latter could only recoup against such liability the dividends which would come to him as a creditor in the action, to wit, the dividends to be paid by the receiver herein on said $16,000 note. Harper v. Carroll, 66 Minn. 487, 69 N. W. 610, 1069. But, as this stockholder's liability is a claim against the assets in the hands of the assignee only by reason of the doctrine of equitable set-off, the set-off herein must be governed wholly by the rules which a court of equity would apply in the particular case; and, as Bell and the temple association are both insolvent, there is no reason why a court of equity should favor or prefer the creditors of the one to the injury of the creditors of the other. The doctrine that equity is equality should be applied when no other rule intervenes to prevent the application of that doctrine. Therefore the set-off should be of the stockholder's liability, not against the dividends coming to the creditor, but against the whole claim held by him. The court should set off claim against claim, dollar for dollar. Of course, the claim on the stockholder's liability may not be $10,500, the face of the stock. Such claim will be the sum of the amounts or assessments for which the court would order execution to issue, as laid down in Harper v. Carroll, supra.

This disposes of all the questions raised having any merit, and the case is remanded to the court below, with directions to modify the judgment in conformity with this opinion.

While the written contract in question purports to be a consignment of goods to defendant's assignors for sale as the agents of plaintiff, yet it appears on its face that its real purpose is to cover up a conditional sale; that it was made in such form in order that plaintiff might give said assignors a false credit, by keeping the contract off record, and still be protected. As to the assignors' creditors, it must be regarded as a conditional sale; and, as it was never filed of record, the condition is void as to them.

(Syllabus by the Court.)

Appeal from district court, Ramsey county; Olin B. Lewis, Judge.

Action of replevin by the H. H. Babcock Company against W. H. Williams, assignee of Crisham & Winch. Verdict for plaintiff for part of the property, and for defendant for the balance. Judgment for plaintiff ren

dered notwithstanding the verdict, and defendant appeals. Reversed.

B. H. Schriber, for appellant. J. F. Hilscher, for respondent.

CANTY, J. The plaintiff delivered a number of carriages and buggies to Crisham & Winch under the contract hereinafter mentioned. They sold several of the articles so delivered, and thereafter made an assignment for the benefit of their creditors, under the insolvency law of this state. At the time of making the assignment they had in their custody several of the carriages and buggies remaining unsold, which they turned over to their assignee. This is an action of replevin for the possession of the same, brought against the assignee. The theory of the plaintiff is that the goods were merely delivered to Crisham & Winch to sell the same as the agents of plaintiff. The theory of defendant is that the goods were sold to Crisham & Winch under a contract of conditional sale, and that as the contract was not filed as provided by sections 4148-4150, Gen. St. 1894, the condition is void as against their creditors. At the close of the evidence each party moved the court to order a verdict in his favor, and thereupon the court ordered a verdict for plaintiff for all of the vehicles in question, except two, and ordered a verdict for defendant for these two, as to which it was claimed that the original contract had been modified. Thereafter, in a motion for a new trial, plaintiff moved, under chapter 320, Laws 1895, for judgment notwithstanding the verdict, which was granted, and defendant appeals.

The original contract consists of two parts. Crisham & Winch signed an order, directed to plaintiff, which, so far as here material, reads as follows:

"Please ship to us, via R. R., on or before soon as possible, or as soon thereafter as practicable, the following goods, hereinafter described, which we hereby agree to receive and pay for at prices named below; also, to pay all freight or express charges on same, and settle for according to terms given. "Terms, as per contract on back of this order, per cent. for cash within days from date of shipment.

"Failing to make settlement promptly according to above terms, the whole amount for goods shipped by you to become due at once, and payable in cash upon demand, without discount.

"All repairs or parts of vehicles, the terms upon same are 'net cash.' [Then follows description of property, and price to Crisham & Winch of each article.]

"When orders for special jobs are given, such orders cannot be canceled after the job has commenced. * No understanding

*

*

or agreement with salesmen will be recognized, unless stated in this order. This order will be filled as near date stated as possible, and will be understood to hold good until

goods are shipped, and not subject to countermand. Our responsibility ceases when we take the bill of lading as per your instructions. Your recourse for losses, damages, and delays in delivery is upon the carrier. We do not guaranty rates of freight, unless so specified in order, but will always get the cheapest we can on day of shipment. All orders taken subject to the approval of H. H. Babcock Company, and all claims for damages must be made within five days after receipt of goods. Title to the goods shipped on this order is to remain in H. H. Babcock Company until paid for in money, and should anything occur to affect my commercial standing, or should I become insolvent, any amount still unpaid, either in account or in note or notes, shall immediately become due, and it is agreed and understood that H. H. Babcock Company shall have the right to take possession of the goods. * After

acceptance of order, H. H. Babcock Company agree to ship all goods they may be able to supply, but are not to be held liable for damages for orders not filled."

On the reverse side of the paper on which the above is found, Crisham & Winch signed the other part of the contract, which, so far as here material, reads as follows:

"Referring to the order given you for goods as listed on the other side of this agreement, we would say that we propose to handle your work exclusively for what vehicles we may require of yours, or similar grade, during the year 1897. We will receive, pay freight, and carefully store all goods that you send us upon our order, and be responsible for any and all damages that may occur to them. Said work so furnished is to be held as a consignment. We will remit to you cash on the first of each mo. for all goods sold previous mo., less 3 per cent., or 4 mos. note; holding such cash, less our commission, in a fiduciary capacity until remitted. We also send you a written statement at the end of each month of all goods remaining unsold.

"All goods on hand December 1st, 1897, that are unsold or unsettled for, we (Crisham & Winch) will purchase and pay you (H. H. Babcock Co.) for in cash at that date, less 3 per cent., or 5 mos. note (i. e. December 1st, or any time thereafter you may designate), at the invoice price, if you request us to do so; it being understood that you (H. H. Babcock Co.) have the entire option of requiring us to purchase them at that date, or later, either in whole or in part, as you may elect. The intent and meaning of this provision is that we leave with you a proposition to purchase the goods of you (H. H. Babcock Co.) for cash, less 3 per cent., or 5 mos. note, December 1st, 1897, or at any date following you (H. H. Babcock Co.) may elect, at the price stated, which you can accept or reject as you may choose. In case there are any goods not so purchased and paid for on or after December 1st, 1897, we will, if you say so, at any date after December 1st you may

name, carefully crate them and place aboard cars, and ship them where you may direct, all without any refunds to us or charge to you whatsoever.

"Our compensation for the foregoing shall be the difference between your prices to us and what we receive in excess for the goods. In case of financial distress on our part, we agree to deliver the goods to you, as hereinbefore provided for (paragraph 2nd), at any other date than that above named as you may designate. If we delay longer than 30 days in paying for all work sold as above agreed, or fail to make report monthly, as provided for above, then this agency is to cease, and any and all goods remaining unsold are to be subject to the order of the H. H. Babcock Co., if they choose, free of any and all refunds to us and charges to them whatsoever. Any work damaged by neglect or ill usage to be paid for the same as if sold.

"We also agree to insure the goods at our own expense, at full value as represented by invoices, in good, solvent insurance companies, as soon as received by us; said insurance to be made payable to the H. H. Babcock Co. as their interest may appear; policy or policies to be forwarded to said H. H. Babcock Co., at Watertown, N. Y."

It is immaterial what the parties pretended to call this contract. In determining its nature, we must look to its substance, and not its form. If it is sufficiently plain that the parties have used words to conceal their thoughts and intentions, we have a right to look beyond such words; and, if their real intent appears on the face of the contract, it will control. In ascertaining this intent, we must look to all of the different provisions of the contract, and see whether there are sufficient earmarks in it to show that the parties really intended the transaction as a conditional sale, but that in order that plaintiff might give Crisham & Winch a false credit by keeping the contract off record, and still be protected, the parties inserted certain provisions by which they pretended to make a contract by which the goods were to be consigned to Crisham & Winch to sell as plaintiff's agents. It is our opinion that, at least as between plaintiff and the creditors of Crisham & Winch, the contract is one of conditional sale. It provides that the title to the property shall remain in plaintiff until the goods are paid for in money, and that, if Crisham & Winch shall become insolvent, any amount "still unpaid, either in note or notes, shall immediately become due," and plaintiff may retake the goods. It further provides that, if Crisham & Winch fail to make settlement promptly, the whole amount for goods shipped shall become due at once, and be payable in cash upon demand. It also provides that Crisham & Winch shall remit each month for all goods sold the previous month "less 3 per cent., or 4 mos. note; holding such cash, less our commission, in a fiduciary capacity." For what purpose were they to give their note, if they held the cash in a fiduciary capacity?