Action by the San Bernardino Investment Company against Samuel Merrill to recover an assessment levied on certain stock. Plaintiff had judgment, and defendant appeals. Reversed.

Goodcell & Leonard and John W. Craig, for appellant. Rolfe & Rolfe, for respondent.

HARRISON, J. The plaintiff made an order March 11, 1892, by which it levied an assessment of $1.50 per share upon its capital stock, payable on or before the 18th of April, and providing that any stock upon which such assessment should remain unpaid on that day should be delinquent and sold at public auction May 7, 1892. Under the directions of the secretary, this notice was published in a newspaper of general circulation in the county of San Bernardino once a week for four successive weeks, commencing March 18, 1892, and on the same day a copy thereof was sent by him by mail to each stockholder. On April 25th the board of directors of the plaintiff passed a resolution by which it elected to waive further proceedings for the sale of the stock on account of any delinquency in paying the assessment, and to proceed by action to recover the amount thereof. The defendant was the owner of 1,025 shares of the capital stock of the plaintiff, standing in his name upon its books, and, the assessment upon this stock not having been paid, the plaintiff brought this action and recovered judgment for the amount of the assessment.

1. The defendant demurred to the complaint upon the ground that it does not state a cause of action against him. The complaint alleges that the amount of the capital stock of the plaintiff is $500,000, divided into $5,000 shares of the par value of $100 each, and that during all the time mentioned in the complaint the defendant was the owner of 1,025 shares of such capital stock. There is no allegation of the amount of its capital stock that had been subscribed or that had been issued, or any allegation that any of its capital stock, other than that of the defendant, had been subscribed or issued. The rule is well established that, in the absence of any provision to the contrary, a corporation cannot levy an assessment upon its capital stock until after the whole amount thereof has been subscribed. Ang. & A. Corp. § 146; Bridge Co. v. Cummings, 3 Kan. 55; Livesey v. Hotel Co., 5 Neb. 50; Railroad Co. v. Gould, 2 Gray, 277; Railroad Co. v. Barker, 32 N. H. 363. This rule has been modified in this state by section 331, Civ. Code, which provides: "The directors of any corporation formed or existing under the laws of this state, after one-fourth of its capital stock has been subscribed, may for the purpose of paying expenses, conducting business, or paying debts, levy and collect assessments upon the subscribed capital stock thereof, in the manner and form and to the extent pro

vided herein." Unless, therefore, one-fourth of its capital stock had been subscribed, the directors had no authority to levy the assessment upon which this action is brought. This was a condition precedent to the exercise of the power given by the statute, and, in order that the complaint should show a right of recovery in the plaintiff, it was necessary to allege the existence of the condition under which the power might be exercised. See Boone, Code Pl. § 203. The demurrer to the complaint should, therefore, have been sustained.

2. The plaintiff seeks to recover the amount of the assessment, not by virtue of any contract of subscription on the part of the defendant, but solely by virtue of the obligation against him which is created by the statute, and hence a strict observance of the statutory mode and provision is essential to its recovery. Section 334. Civ. Code, provides: "Every order levying an assessment must specify the amount thereof, when, to whom, and where payable; fix a day subsequent to the full term of publication of the assessment notice on which the unpaid assessments shall be delinquent, not less than thirty nor more than sixty days from the time of making the order levying the assessment; and a day for the sale of delinquent stock, not less than fifteen nor more than sixty days from the day the stock is declared delinquent." Section 337 provides that, if any portion of the assessment mentioned in the notice remains unpaid on the day specified therein for declaring the stock delinquent, the secretary must, unless otherwise ordered by the board of directors, cause to be published a notice specifying each certificate of stock upon which the assessment is delinquent, and that as many shares thereof as may be necessary to pay the delinquent assessment, with costs and expenses of sale, will be sold on the day fixed for the sale in the order levying the assessment; and section 339 declares that "the first publication of all delinquent sales must be at least fifteen days prior to the day of sale.” Section 349 provides: "On the day specified for declaring the stock delinquent, or at any time subsequent thereto, and before the sale of the delinquent stock, the board of directors may elect to waive further proceedings under this chapter for the collection of delinquent assessments, or any part or portion thereof, and may elect to proceed by action to recover the amount of the assessment, and the costs and expenses already incurred, or any part or portion thereof."

The term "waiver" or "to waive" implies the abandonment of a right which can be enforced, or of a privilege which can. be exercised; and there can be no waiver unless at the time of its exercise the right or privilege waived is in existence. There can be no waiver of a right that has been lost. "Waiver is a voluntary act, and implies an election by the party to dispense with

something of value, or to forego some advantage which he might at his option have demanded or insisted upon" (per Cooley, J., in Warren v. Crane, 50 Mich. 301, 15 N. W. 465). Bouvier defines waiver as "the relinquishment or refusal to accept of a right." See, also, Stewart v. Crosby, 50 Me. 134; Shaw v. Spencer, 100 Mass. 395; Dawson V. Shillock, 29 Minn. 191, 12 N. W. 526; Bish. Cont. § 792. If the relinquishment of some right is the consideration upon which another right is to be created, there is no consideration for the creation of such other right unless there is an existing right to be relinquished. Under a statute conferring a special remedy for enforcing a right, and providing that the party may have a different remedy upon condition that he will surrender his right to the first, such surrender must be made while he has the right to enforce the original remedy. The party cannot by his neglect or inaction suffer the special remedy to elapse, and then claim the right to resort to the other. A right of election between two remedies, which is conferred upon the condition of relinquishing one of the remedies by some positive act, must be exercised while both of the remedies are open. Unless there is a remedy to relinquish, there is no place for an election. To exercise an election of remedies implies the right to resort to either, and that both exist at the time of the election. In the present case the board of directors, in the order levying the assessment, fixed April 18th as the day on which the assessment would be delinquent, and May 7th as the day on which the sale for delinquent assessments would be made. As the secretary was not "otherwise ordered by the board of directors," it was his duty, if the board had intended to sell the stock of the defendant in order to recover the delinquent assessment thereon, to publish the notice of such sale at least 15 days prior to May 7th; that is, its first publication must have been made not later than April 22d. The directors did not make the election provided for by section 349 "on the day specified for declaring the stock delinquent," nor until after the time had elapsed within which they could take any proceedings for the sale of the stock. By the failure to make publication of the delinquent sale "at least fifteen days prior to the day they had fixed for such sale," they lost all jurisdiction to sell the stock for the delinquent assessment, unless they should begin anew all previous proceedings and publication subsequent to the levying of the assessment as authorized by section 346. As, therefore, on the 25th of April the board of directors had lost jurisdiction to take any further proceedings for the collection of the delinquent assessment, under the chapter providing for the sale of the stock, there were no "further proceedings" which it could waive, and the condition

under which the statute authorized it to elect to proceed by action to collect the same did not exist. It follows that the plaintiff had no cause of action against the defendant. The judgment and order are reversed.

We concur: VAN FLEET, J.; GAROUTTE. J.

(5 Cal. Unrep. 113)

RAFFERTY v. HIGH et al. (No. 19,469.) (Supreme Court of California. Aug. 8, 1895.)

MORTGAGES-COUNSEL FEES.

A mortgage expressly stating that it is given "as security for the payment of" the principal sum of the note, "with interest thereon according to the terms of the note," does not secure counsel fees provided by the note in case of suit being brought against the maker.

Commissioners' decision. Department 1. Appeal from superior court, San Diego county; W. L. Pierce, Judge.

Action by Mrs. E. C. Rafferty against Annie M. High and others. Judgment for plaintiff. Defendants appeal. Modified.

M. A. Luce, for appellants. E. W. Britt, for respondent.

VANCLIEF, C.

Action to foreclose two mortgages on the same lot of land, each to secure a distinct promissory note. The rate of interest on each note was 15 per cent. per annum from date of note until payment, payable and compounded semiannually, and each note contained the following: "And I further agree that, in the event of suit being brought against me, then there shall be added to any judgment against me rendered in said suit, as counsel fees, an additional sum of ten per centum upon the amount of the principal and interest hereof accrued at the time of the entry of such judgment." Each mortgage was expressly given "as security for the payment of" the principal sum of the note, "with interest thereon according to the terms of the note," and a copy of the note secured was set out in each mortgage. But neither mortgage expressly purported to secure the payment of counsel fees in any event. The trial court allowed plaintiff counsel fees amounting to $178.91, and held that the payment of them was secured by the mortgages, and ordered that they be paid from the proceeds of the foreclosure sale. Counsel for appellants contends that the court erred in holding that counsel fees were secured by the mortgages, and whether or not they were so secured is the only question presented on this appeal. Upon this question I think the case of Clemens v. Luce, 101 Cal. 432, 35 Pac. 1032, is clearly in point for appellants. In that case the note secured by mortgage provided for the payment of counsel fees in the same language and form as in this case; and the mortgages in that case stated that they were given "as

security for the payment to said mortgagee of the sum of $16,000, with interest thereon according to the terms of a certain promissory note, of date September 22, 1891,"— setting out a copy of the note,-but said nothing about securing counsel fees. In that case this court said: "As to what these mortgages were given to secure, was a matter of pure contract between the parties. They could have been given to secure the principal of the note alone, or the interest alone, or both principal and interest, as was actually done, or they could have been given to secure future advances, and attorney's fees in case of foreclosure. It follows that security for an attorney's fee is not provided for in either mortgage, and consequently such fee cannot be made a lien upon the land, and the judgment of the court in that regard is erroneous." This decision has been affirmed in at least three unreported cases. See list of unreported cases in 101 Cal. xvii. Counsel for respondent cite the case of Ogborn v. Eliason, 77 Ind. 393; but in that case it does not appear that the mortgage purported to secure only the principal and interest of the note, as in the case at bar. For aught that appears in the report of that case, the mortgage may have expressly purported to secure payment of the note according to its terms, without specifying merely the principal and interest, and omitting counsel fees, as in this case. I think the court erred in deciding that the payment of counsel fees was secured by the mortgages, and that the judgment should be modified by subtracting from the total amount adjudged to be secured by the mortgages the sum allowed for attorney's fees, to wit, $178.91; and, thus modified, the judgment should be affirmed.

Commissioners' decision. Department 1. Appeal from superior court, San Diego county; E. S. Torrance, Judge.

Action by the Savings Bank of San Diego County against John C. Fisher and others. Judgment for plaintiff. Defendants Mary C. Morse and husband appeal. Affirmed.

M. A. Luce, for appellants. McNealy & Whitehead, for respondent.

HAYNES, C. The defendant John C. Fisher on April 11, 1891, made and delivered to the defendant Mary C. Morse his promissory note payable one year after date, and on the same day executed to her a mortgage to secure the same. On July 17, 1891, said Mary C. Morse indorsed said note in blank to the plaintiff, and assigned to it said mortgage. This action was brought against Fisher and the appellants Mary C. Morse and her husband, E. W. Morse, to foreclose said mortgage, and to fix the liability of Mary C. Morse, as indorser and guarantór, in case the mortgaged property should prove insufficient to satisfy the judgment. Findings were filed, and a decree entered foreclosing the mortgage, and directing that if, upon the sale of the mortgaged property, the proceeds should be insufficient to satisfy the amount found due the plaintiff, a deficiency judg ment should be docketed against Fisher and said Mary C. Morse. Said Mary C. Morse and her husband appeal from the judgment and an order denying a new trial.

The complaint alleged that at the time Mary C. Morse indorsed said note and assigned said mortgage to the plaintiff she guarantied the payment of the note, and waived demand and notice, by signing the following words stamped upon the back of the note, to wit: "For value received, I hereby guaranty the payment of the within note, principal, interest, and attorney's fee, and waive presentation, demand, notice of nonpayment, and protest." The defendants Mary C. and E. W. Morse demurred to the complaint upon several grounds, of which the following only need be noticed: (1) That several causes of action have been improp erly united, in this: that an action for the foreclosure of a mortgage against Fisher has been united with an action against Mary C. Morse as guarantor; (2) that these separate causes of action have been united, but are not separately stated and numbered. The second alleged defect was also attacked by motion to require these causes of action to be separately stated.

The court, however, found that the guaranty was made after the note had been indorsed and delivered, and that it was without consideration. It is, therefore, not necessary to discuss or decide whether a cause of action against Mary C. Morse upon the guaranty could be joined with a cause of aetion against Fisher upon the note; for, if it be conceded that the court erred in not sus

taining the demurrer upon that ground, she was not injured, the court having found that she was not liable as guarantor. She was properly joined as a defendant as an indorser, so that the joinder as a party was proper, independently of any question of liability upon the guaranty..

The question arising upon the denial of the motion may be similarly disposed of. Counsel for appellants have not pointed out any possible theory upon which the judgment would have been more favorable to them if the court had ruled differently upon either the demurrer or the motion.

The defendants Mary C. Morse and E. W. Morse answered the complaint, and alleged: (1) That said guaranty was not made or signed at the time the note was indorsed and delivered, but long afterwards, and that it was without consideration; (2) that plaintiff is and was a banking corporation, and had not complied with the act of April 1, 1876, requiring it to publish and file for record in the recorder's office a sworn statement of the amount of its capital, the value of its assets, etc.; (3) that plaintiff had delayed bringing the action to foreclose, that the mortgaged property had greatly depreciated, and Fisher had become insolvent, whereby, etc. Plaintiff's demurrer to the first defense was overruled, and was sustained to the second and third defenses. The only question arising upon the demurrer to the second defense is whether said act of April, 1876, requiring banking corporations to publish and record said statements, was repealed by the act approved March 9, 1893. St. 1893, p. 112. That the former act was repealed by the last-mentioned act was expressly decided in Savings Bank of San Diego v. Burns, 104 Cal. 473, 38 Pac. 102, and that question need not be further considered. As to the third defense, it is not contended by appellants here that it stated facts constituting a defense. The demurrer to the second and third defenses was properly sustained.

The only remaining question is one presented by the motion for new trial, viz. whether the defendant Mary C. Morse waived presentation, demand, and notice of nonpayment of said note. Appellants contend that she did not, that she is not liable for any deficiency, and that the judgment against her should be reversed. There is no conflict of evidence. The undisputed facts are that on July 17, 1891, Mrs. Morse transferred said note to the plaintiff by writing her name thereon, without other words; that about a month afterwards, and before said note became due, the bank stamped upon the back of the note the words: "For value received, I hereby guaranty the payment of the within note, principal, interest, and attorney's fee, and waive presentation, demand, notice of nonpayment, and protest;" and Mrs. Morse signed her name thereto. No demand and notice of nonpayment is required to be given to a guarantor. His

liability attaches immediately upon the default of the principal, without demand or notice. Civ. Code, § 2807. Neither party, therefore, could have intended the waiver to aid the guaranty; but banks are not in the habit of releasing any ground of liability, and therefore desired to hold her as indorser without the necessity of a formal demand and notice of nonpayment, while she, if she were willing to guaranty payment, could reasonably have no objection to fixing her liability as indorser by making the waiver. But, however that may be, as the waiver could not relate to or affect the guaranty, and could only have effect or operation upon her liability as an indorser, the court correctly found that she waived demand and notice of nonpayment, and was liable upon her indorsement. The judgment and order appealed from should be affirmed.

We concur: SEARLS, C.; BELCHER, C.

PER CURIAM. For the reasons given in the foregoing opinion, the judgment and order appealed from are affirmed.

(108 Cal. 569)

WITMER BROS. CO. v. WEID. (No. 19,531.) (Supreme Court of California. Aug. 27, 1895.) CONTRACTS-CONDITIONS PRECEDENT-DELAY IN

COMPLETION-WAIVER-MISTAKE-
DAMAGES-PLEADING.

1. M., in consideration of the agreement of defendant, agreed to build a certain street railroad, for which defendant agreed to pay M. a certain amount, in notes of defendant, one-half, by a two-months note, when the grading was done and the iron was on the ground, the balance, by a four-months note, on completion of the road; that the road should be constructed, weather permitting, within four months; that the notes should be deposited with B. in trust till the conditions of the contract were performed by M., and the certificate of the engineer that the conditions had been performed should be served on said trustee, and on delivery to him of said certificate he should deliver to M. the twomonths note and the four-months note, respectively. The notes were deposited with B., with instructions to deliver the two-months note to M. on the certificate of the engineer that the grading was done and the iron on the ground, and the four-months note on his certificate that the road was completed. Held, that the completion of the road within four months was not a condition precedent to the right of M. to a delivery to him of the notes.

2. A condition precedent to the delivery of defendant's notes, that certain work be done at certain time, is waived by defendant's thereafter directing that the notes be delivered.

3. Evidence of mistake of defendant in directing delivery by a trustee of defendant's notes, or of fraud in their delivery, is not admissible under an answer merely denying that they were ever delivered by defendant, and alleging that they were delivered by the trustee before certain work was completed, in contravention of a certain contract.

4. M. agreed to construct a street railroad to defendant's property within a certain time, and defendant, in consideration of "the advantages to be derived" by him "from the extension and operation of said railroad." agreed to give M. a certain amount therefor, evidenced by his notes. Held, that defendant, by giving his notes to M.

after the construction of the road, was precluded from claiming a partial failure of consideration, or damages by reason of the road not being completed within the time specified; the giving of the notes being a conclusive settlement of all obligations of both parties arising from the contract.

5. An answer alleging that, if a street railroad had been completed as provided by the contract of plaintiff's assignor, defendant would have been able to sell his property for a greater price than it was "then worth without said railroad," or "is now worth with said railroad," and that defendant could, before making the contract for construction of the road, have sold his land at a greater price than he could when the road was completed, or at any time since, does not show any damages from delay in the construction of the road, it not being alleged that the decline in price was after the time the road should have been completed, or that delay in constructing the road caused the decline, or that defendant would have sold his land at any price had the road been completed within the contract period.

Commissioners' decision, Department 2. Appeal from superior court, Los Angeles county; Waldo M. York, Judge.

Action by the Witmer Bros. Co., a corporation, against Ivar A. Weid. Judgment for plaintiff. Defendant appeals. Affirmed.

H. G. Weyse, for appellant. P. W. Dooner, for respondent.

VANCLIEF, C. Action on two promissory notes made by defendant to James McLoughlin, each for $500, with interest after maturity at rate of 1 per cent. per month, and assigned by McLoughlin to plaintiff. The judgment was in favor of plaintiff for the full amount of principal and interest of both notes. Defendant appeals from the judgment, and from an order denying his motion for a new trial.

The notes were made to secure payment of defendant's subscription of $1,000, to be paid to McLoughlin in consideration of the construction of a proposed street railroad on a specified route passing through defendant's land. The following is a copy of the subscription contract: "This agreement, entered into this 27th day of December, 1887, by and between H. H. Wilcox, Frederick J. Moll, Henry Claussen, Mrs. H. Lee Noble, Manuel Andrada, Martin Labaig, Laurent Etchopero, Levi H. Dunham, Nicholas Cochems, N. L. Shaffer, M. Sanders, T. B. Rapp, Claudio Lopez, Wm. H. Avery, I. W. Lord, W. D. Wilson, Linwood Salter, S. C. Sloan, Ivar A. Weid, H. M. Russell, parties of the first part, and James McLoughlin, party of the second part, witnesseth: That whereas, it is desirable that the steam dummy railroad now running from the terminus of the Second Street Railroad, at the corner of Diamond street and Belmont avenue, westerly by various streets and ways to the southwest corner of section 12, T. 1 S., R. 14 W., S. B. M., be extended north three-fourths of a mile and west one and one-fourth miles, to the west line of east half of N. E. 4 of section 10, T. 1 S., R. 14 W., S. B. M., the parties of the first

part, in consideration of the advantages to be derived by them from the extension and operation of said railroad, agree to pay to James McLoughlin, party of the second part, the several sums set opposite our names, on the following terms and conditions, to wit: Ivar A. Weid, $1,000. [The names and sums of the other nineteen are here omitted.] That the said amounts subscribed shall be payable as follows: One-half, represented by two-months notes, when grading is done and the iron is on the ground; the balance, represented by four-months notes, on the completion of the said road, on the first day of its operation. That the dummy railroad shall be extended from its present ter minus to the west line of east 2 of N. E. 4 of section 10, T. 1 S., R. 14 W., S. B. M., by the route above designated, within four months, weather permitting. That the said dummy railroad shall be well and substantially built, and shall be operated by steam power, and shall have a speed and carrying capacity equal to all requirements of the section; that the fare upon this road shall not exceed fifteen cents for residents along the line of the road as a commutation rate: provided, always, that the right of way be secured to James McLoughlin, on demand of James McLoughlin, for said extension absolutely, and for further extension of his road, by the first parties, and each of them, over and by any route that the said McLoughlin shall adopt for the construction thereof, to the westerly line of Wilcox's land, or the northerly line of Weid's land. That the said amounts shall be evidenced by the promissory notes of the above subscribers executed to the said James McLoughlin, each subscriber executing two such notes, each reading one-half the amount of his subscription; the one payable two months after date thereof and the other four after date thereof, and each bearing interest at the rate of one per cent. per month after maturity. That said notes, when so executed, shall be deposited with Geo. H. Bonebrake, at the Los Angeles National Bank, to be held in trust until the conditions in this contract specified shall be performed by the said McLoughlin, and the certificate of Geo. E. Pillsbury, constructing engineer of said road, that said conditions have been performed, shall be served upon said trustee, and upon the delivery to him of said certificate, viz. 1st, that the grading is done and the rails on the ground; and, 2nd, that the road is completed and in running order,-he shall deliver to said James McLoughlin the two-months notes and the four-months notes, respectively, at the times of such respective presentations. In consideration of the foregoing agreement of the parties of the first part, and the guaranty of I. A. Weid, O. G. Weyse, and H. H. Wilcox, hereinafter contained, said McLoughlin promises and agrees to build and equip said railroad as hereinafter specified. And said subscribers, H. H.