Of

The

set aside the entire judgment, and give parties another opportunity to retry a question which has been fairly investigated and fairly determined. We conclude that, as between the plaintiff and the owner and all parties in interest save the cestui que trust, the matter of the terms of the contract and its performance and the sum due have been entirely and Under correctly settled by the trial court. such circumstances those parties should not be permitted to relitigate these questions. course the decree cannot be taken to conclude the present holders of the note. It stands, however, as a cloud upon the title, and those parties should have their day in court. judgment must therefore be reversed as to so much of it as adjudges the mechanic's lien to be prior in right and time to the lien of the trust deed, and valid as against the holders of the note. To this extent, therefore, the judgment will be reversed, and remanded to the court below, with directions either to modify the decree, or, if the parties are so advised, the plaintiff should be permitted to amend his complaint, and make the holders of the note parties to the suit. They will then be permitted to file such answer and cross bill for the maintenance and protection of their rights as they may be advised. To this extent the judgment below will be set aside, and opened for further proceedings in conformity with these conclusions. If the plaintiff should conclude not to take this course, the decree will simply be amended by the court below, and the judgment establishing the priority of the lien over the trust deed eliminated from the entry. This proceeding seems to be in accord with the general rule which prevails in such cases. Elliott, App. Proc. § 580. This course has been recently pursued by the supreme court under somewhat analogous circumstances, though no opinion was delivered on the subject. It accords, however, with what ought to be the law. Where a record involves several matters, and a part has been rightfully adjudicated, the reversal should only extend to what will include the error committed, if it be remediable either by amendment of the decree or by subsequent proceedings in the case. The course suggested will protect the rights of all the parties, and leave the unaffected portion of the judgment to stand. The judgment of the court below will therefore be reversed, and the case sent back for further proceedings in conformity with this opinion. Reversed.

(6 Colo. App. 465)

KELLY v. CANON. (Court of Appeals of Colorado. Sept. 9, 1895.) NOTE OF MARRIED MAN-EXPENSES OF FAMILYLIABILITY OF WIFE-EFFECT OF STATUTE.

1. Sess. Laws 1891, p. 238, making the expenses of the family chargeable on both husband and wife, is not retroactive, and does not affect liability for such expenses contracted before its enactment.

v.41P.no.7-53

2. Though husband and wife are made liable by Sess. Laws 1891, p. 238, for expenses of the family, the acceptance of the husband's note therefor merges the original cause of action, and the wife is not liable on the note.

Error to Mesa county court.

Action by Benton Canon against W. S. Kelly and Jennie Kelly, his wife. Judgment for plaintiff. Defendant Jennie Kelly brings error. Reversed.

Frank De Lamar, for plaintiff in error. Bucklin, Staley & Safely, for defendant in

error.

REED, P. J. Benton Canon, as plaintiff, on the 27th day of April, 1893, brought suit against W. S. and Jennie Kelly to collect the amount of two promissory notes made by W. S. Kelly alone,-one bearing date February 23, 1889, for $318.05, with interest at 12 per cent. per month, and 10 per cent. attorney's fees, upon which, the 15th day of May, 1889, a payment was made of $33.50; the second note, for $33.48, bearing date February 1, 1890, interest and attorney's fees same as in the former. Both notes were long overdue. In regard to each note the following allegation is made in the complaint: "That the indebtedness for which said note was made and delivered was for the expenses of the family of said defendants, who were then, and now are, husband and wife." Service was had upon the defendants, who did not appear and defend. A default was taken against both, and judgment entered against both for the sum of $625, which included interest at 11⁄2 per cent. Jennie Kelper month, and attorney's fees. ly brings the case here for review by writ of error.

The judgment against plaintiff in error must be reversed. She was not a party to the notes upon which the suit was brought, and the allegation in the complaint that the notes were given for goods for the family states no legal liability. The statute making the expenses of the family and education of children chargeable to both husband and wife, or either of them, did not become a law until the summer of 1891. See Sess. Laws 1891, p. 238. At the time the indebtedness was contracted, and of the making of the notes, there was no such statute. retroactive effect can be given to the statute, to cover contracts made before its passage, hence the allegation in the complaint was of no importance.

No

Had there been such a statute, the original causes of action were merged in the individual notes of W. S. Kelly, upon which the action was brought, and upon which judgment for 11⁄2 per cent. and attorney's fees was given. The wife, under the statute, could only be held for the original consideration on proof that the goods were furnished for the family. Reversed.

(6 Colo. App. 511) COLORADO FUEL & IRON CO. v. LENHART et al.

(Court of Appeals of Colorado. Sept. 9, 1895.) CORPORATIONS-DIRECTORS' LIABILITY - FAILURE

TO FILE STATEMENTS-ESTOPPEL-LIMITATIONS.

1. A corporate creditor cannot, to avoid the running of limitations against his claim, waive a default by the directors to file the statement required by Gen. St. § 252, and avail himself of a similar default in the following year.

2. In the absence of facts showing that the creditor has been led to take steps altering his legal rights in consequence of the filing of an insufficient statement as in compliance with Gen. St. § 252, requiring an annual statement of the condition of a corporation, the directors, in an action against them to enforce the penalty therein provided for, are not estopped to question the validity of such statement.

3. Gen. St. § 252, requiring that a corporation shall annually file a report of its condition with the recorder of deeds of the county where its business is carried on, and providing that if it fails to do so all its directors shall be liable for the debts contracted by it during the year preceding, and subsequently, unless its capital stock has been fully paid in, is penal in its nature, and is therefore to be strictly construed.

Error to district court, Arapahoe county. Action by the Colorado Fuel & Iron Company against Michael Lenhart and others, as directors of the Trinidad Rolling-Mills & Iron Company, a corporation, to recover an indebtedness owing to it by the corporation. From a judgment for defendants, plaintiff appeals. Affirmed.

D. C. Beaman, for plaintiff in error. R. D. Thompson and Ben B. Lindsey, for defendants in error.

THOMSON, J. On the 21st day of June, 1889, the Trinidad Rolling-Mills & Iron Company became indebted to the Colorado Fuel & Iron Company, for coal sold and delivered, in the sum of $623.75. The latter company brought this suit to recover the amount against the defendants in error, alleging that they were directors of the rolling-mills company from the 20th day of May, 1889, to the 1st day of May, 1890; that the capital stock of the company had not been fully paid in, and that it did not within 60 days from the 1st day of January, 1890, or at any time since the 20th day of May, 1889, make, and file in the office of the recorder of the county where the business of the company was carried on, any report, as required by section 252 of the General Statutes of Colorado; and that by reason of its failure in that respect the defendants became liable jointly and severally to the plaintiff for the amount of the indebtedness to it of the

rolling-mills company. The complaint was filed August 7, 1890. The defendants answered, averring that they were directors of the rolling-mills company from the 1st day of April, 1888, to the 1st day of May, 1890; that the company filed no report within 60 days from the 1st day of January, 1889, as required by section 252; and that this ac

tion was not brought within one year after June 21, 1889. The replication denied that the defendants were directors prior to May 20, 1889, and denied that the required report was not filed within 60 days from January 1, 1889. The evidence was that the defendants were directors from April 10, 1888, to May 1, 1890. The plaintiff offered in evidence the following paper, filed on the 23d day of February, 1889, as being the report of the company for that year, which, upon objection by the defendants, the court excluded:

"Annual statement of the Trinidad RollingMills and Iron Company, January 1, 1889: Amount paid in on stock... Donations Indebtedness

.$14,465 10 1,500 00

250 00

$64,841 00 5,000 00

333 33 16,548 43

$86,389 43

"I hereby certify the above statement to be correct, to the best of my knowledge and belief. M. Lenhart, President. [Corporate Seal.] Attest: E. J. Adams, Secretary."

The following is section 252 of the General Statutes: "Every such corporation shall annually, within sixty days from the first day of January, make a report, which shall state the amount of its capital and the proportion actually paid in, and the amount of existing debts; which report shall be signed by the president, and shall be verified by the oath of the president or secretary of said company, under its corporate seal, and filed in the office of the recorder of deeds of the county where the business of the company shall be carried on. And if any such corporation shall fail so to do, unless the capital stock of such corporation has been fully paid in and a certificate made and filed as provided in section twelve (12) of this act, all the directors or trustees of the company shall be jointly and severally liable for all the debts of the company that shall be contracted during the year next preceding the time when such report should by this section have been made and filed, and until such report shall be made." This section is mandatory. A corporation must file its reports, executed and verified as required, and the liability of the directors for the company's debts is in the nature of a penalty for a neglect to comply with the law. The liability covers all debts contracted by the company during the year preceding the time when the report should be made, and all debts contracted afterwards, until the making of the proper report. Suit for the recovery of a penalty must be commenced within one year after the cause of action accrues. Section 2170, Gen. St.; Larsen v. James, 1 Colo. App. 313, 29 Pac. 183. If the report due within 60 days from January 1, 1889, was not made when this debt was contracted, the liability of the directors attached at the instant it was contracted, and the statute

then commenced to run. The document which was filed as a report did not comply with the law. The lack of verification invalidated it, and it was not a report.

It is contended, however, that because of the failure of the directors in office during the first 60 days of 1890 to make the statutory report, a cause of action then arose against them for the debt, it having been contracted during the year preceding the time when that report should have been made, and that, therefore, this action, having been commenced within one year from that time, was not barred. If this reasoning is sound, the logical conclusion is that it is at the option of a creditor of a corporation to determine when the statute shall commence to run against the penalty recoverable from the directors. If plaintiff could waive the default in 1889, and avail itself of the default in 1890, as the commencement of the directors' liability, it might in like manner waive the latter default, and consider the liability as commencing with a failure to report the following year; and its waiver of defaults might continue indefinitely, as long as the corporation had an existence. This is not the law. The statute determines how and when the liability arises. Directors in default are liable, not only for corporate debts made during the preceding year, but for those made afterwards, during the continuance of the default. The ground of their liability for prior debts is the failure to comply with the law, and the ground of their liability for subsequent debts is the act of contracting them after neglect of the statutory duty. When the liability to the penalty is incurred, the creditor's cause of action for its recovery accrues, and the statute is set in motion, and does not stop until the action is commenced or barred. Rector v. Vanderbilt, 98 N. Y. 175; Larsen v. James, supra. In this case the liability was incurred, and the cause of action accrued, on June 21, 1889; and this action, not having been commenced until August, 1890, must fail, unless the circumstances require us to hold that the defendants are bound by the report of February 23, 1889, and cannot be heard to deny that it fulfilled the requirements of the law. If, as is contended by the plaintiff, they are estopped to question the validity of that report, judgment must go against them; for their only defense is the failure of the plaintiff to commence this action in time, and the action was commenced in time, if that was a good report. The effect of the argument is that, having made a which binds them, as being sufficient, then, if the plaintiff so elected, there was no liability against them on account of the debt until their failure to report in 1890. Counsel does not set forth very clearly the grounds of the estoppel claimed. It is simply assert

report

ed, as a legal proposition, that the defendants cannot take advantage of their own dereliction of official duty. But a general statement of this kind throws no light upon the question. If there is an estoppel here at all, it is an estoppel by conduct. But conduct alone does not create an estoppel. If no rights have been affected by the conduct, there is no one in whose behalf the doctrine of estoppel can be invoked. To create the estoppel, some other person must have changed his position on the faith of the conduct. The foundation upon which the doctrine rests is that it would be a fraud for one who, by his conduct, has induced others to accept something as a fact, to deny that such was the fact, after they had acted upon their belief. But there can be no estoppel in favor of one who has not been misled, or to whom the assertion of the truth would do no injury. There is not here the slightest pretense that by any act of the defendants the plaintiff was induced to believe that the rolling-mills company had filed the report required by the statute, or that its transaction with the latter company was in any degree influenced by belief or disbelief upon the subject. So far as appears, it was not spoken or thought of, or deemed of any importance, by either side; and if the plaintiff did not have actual, it had constructive, notice of what had in fact been done in that regard. The record discloses no reason why the defendant should not be permitted to say that what was attempted to be done was an utter failure of compliance with the law; that, therefore, the moment the indebtedness was contracted, they became individually liable. for the amount; and that the statutory bar had interposed in their favor.

But there is another light in which the question may be considered. The statute which is invoked is penal in its character. The debt was owing by the rolling-mills company, and not by the defendants. Its amount was recoverable from them as a penalty, and not as an indebtedness. They are therefore entitled to a strict construction of the statute. There are no equities in the plaintiff's favor, as against them. It is entitled to what the letter of the law gives it, and no more. On account of the failure to make the required report, the defendants' liability attached, and was absolute, immediately upon the contraction of the debt. The records were open to the plaintiff's inspection, and, if it was without knowledge of what had been done, its ignorance is chargeable to its own negligence. To enable it to recover, it must bring itself strictly within the law, and for its failure to do so it alone is responsible. Larsen v. James, supra. We find nothing in the record to authorize a reversal of the judgment, and it will therefore be affirmed. Affirmed.

(6 Colo. A. 461)

MCPHEE et al. v. GOMER. (Court of Appeals of Colorado. Sept. 9, 1895.) GARNISHMENT-PAYMENT OF JUDGMENT AGAINST GARNISHEE.

Under Civ. Code, § 118, declaring that garnishment is for the security of any judgment plaintiff may recover against defendant, and section 132, providing that the judgment against a garnishee shall acquit him from all demands by the defendant for anything paid by the garnishee by force of such judgment, the garnishee, notwithstanding payment under a judgment against him, is liable to defendant, jurisdiction of him not having been obtained, and judgment not having been rendered against him.

Appeal from Arapahoe county court.

Action by P. P. Gomer against Charles D. McPhee and others. Judgment for plaintiff. Defendants appeal. Affirmed.

Thomas, Hartzell, Bryant & Lee, for appellants. J. W. Horner, for appellee.

REED, P. J. On the 11th day of November, 1887, appellants were indebted for lumber to M. C. Jackson in the sum of $955. One Samuel J. Levy brought suit by attachment against Jackson before a justice of the peace, and garnished appellants, who answered they were not indebted. The answer was traversed, and it would seem that a trial was had, resulting in a judgment for the garnishees. An appeal was taken to the county court, and a trial had as to the liability of the garnishees; a finding against them, and judgment for the sum of $192.40, which, together with the costs, amounted to $215.65, was fully paid by appellants March . 14, 1888. Jackson assigned his claim of $955 against appellants to appellee, who, on May 9, 1888, brought suit for the same against the appellants, who upon the trial made proof of the judgment and the payment of the same as garnishees in the case of Levy v. Jackson. By the record of the last-named case it was shown that Jackson was never served with process, and that no judgment was obtained or entered against him. The court in the present case held, in effect, that, no judgment having been obtained against Jackson, no valid judgment could have been had against appellants as garnishees; that the payment of the judgment by them was voluntary; and refused to allow the sum as a set-off against the claim of appellee, and gave him judgment for the entire sum found to have been due from appellants to Jackson. The regularity of that judgment is unquestioned, except in so far as the court refused to allow the set-off. The only question presented upon this appeal is whether the judgment of the court in refusing the set-off was erroneous. The only authority cited by counsel for appellants in support of their contention is section 132, Civ. Code, which is, "The judgment against a garnishee shall acquit him from all demands by the defendant for all goods, effects, and credits paid, delivered or accounted for by

the garnishee by force of such judgment"; and it is regarded as conclusive. If we could so regard it, and thus summarily dispose of the case, it would save some labor. By section 118, Id., providing for the proceedings by garnishment, it is said that such proceeding is "for the security of any judgment the plaintiff may recover in such action against the defendant." It is a self-evident proposition that there can be no security without a principal, and no second judgment as security for the payment of a judgment that has no existence. Consequently, giving both sections of the Code full consideration, the second and only question is whether it was the duty of the garnishee to ascertain whether or not there was a judgment against the defendant before submitting to judgment and paying the money, and in this solution we are not aided by counsel for appellee, who contents himself with citing only the opinion of the court in support of itself when it is said "that, until a judgment was rendered against the defendant, none could be rendered against the garnishee, when the judgment against the garnishee and its satisfaction was of record in the same court." As there was no judgment against the defendant, the money could not have been paid over, and must have remained in the court. What garnishees required was a credit of the amount paid on the judgment obtained by appellee. The same court could not consistently say it had entered up and collected a void judgment, but, it having been void, the court would retain the money, and require garnishee to pay it the second time. Section 132 of the Civil Code, taken in connection with section 118, can only be construed as an acquittance to the garnishee when the judgment against him is valid. The proceeding by garnishment, though an independent suit, is auxiliary to the main suit, and the judgment hypothetical when taken in advance of a judgment in the main suit. It is dependent upon a judgment subsequently obtained; and, when the principal judgment has been obtained, the validity of the judgment against the garnishee depends upon the validity of the judgment against the defendant. In the language of section 118, Civ. Code, the judgment against the garnishee is only "security of any judgment the plaintiff may recover in such action against the defendant." "As the whole object of garnishment is to reach effects or credits in the garnishee's hands, so as to subject them to the payment of such judgment as the plaintiff may recover against the defendant, it results necessarily that there can be no judgment against the garnishee until judgment against the defendant shall have been recovered." Drake, Attachm. § 460; Washburn v. Mining Co., 41 Vt. 50; Withers v. Fuller, 30 Grat. 547; Railroad Co. v. Todd, 11 Heisk. 549. "He [the garnishee] is held chargeable if the plaintiff should make out his main case. The decree, though literally

positive, and free from all contingency, is qualified by law so as to render it dependent upon the principal judgment." "The plaintiff's right of action, the effectiveness of the judgment, and the protection of the garnishee from subsequent attack after payment under judgment, depend upon the principal action; its rightful institution, rightful judgment thereon, and rightful execution of the judgment." Wap. Attachm. 344-347; Lovejoy v. Albee, 33 Me. 414; Greene v. Tripp, 11 R. I. 424; Pierce v. Carleton, 12 Ill. 358. See, also, Wap. Attachm. 382. "The judgment against the defendant must be a lawful and valid one. If it be void, the judgment against the garnishee is also void." Drake, Attachm. §§ 450, 696; Railroad Co. v. Todd, supra; Woodfolk v. Whitworth, 5 Cold. 561; Melloy v. Burtis, 124 Pa. St. 161, 16 Atl. 747. "It is of the first importance, therefore, for the garnishee to see that the judgment against defendant was not only by a court with jurisdiction of the subject-matter, but that jurisdiction of the defendant, or of the property or credit, was obtained in the manner pointed out by the statute. Against a judgment sought against himself, which is based upon a void judgment against the defendant, he must defend to the last, and is ordinarily compelled to defend alone." Wade, Attachm. § 399; Laidlaw v. Morrow, 44 Mich. 547, 7 N. W. 191; Noble v. Oil Co., 79 Pa. St. 354. "When the garnishee pays a judgment against himself, which is based upon a judgment against defendant, rendered without jurisdiction, he is not protected by such payment against a subsequent action brought by the principal defendant or other creditor." Wade, Attachm. 399; Laidlaw v. Morrow, supra. When there is no judgment against the defendant, or a judgment that is void for want of jurisdiction, and the court erroneously render judgment against the garnishee, it will not be binding on the defendant, who was not a party to the proceedings. Wade, Attachm. § 399; Roy v. Baucus, 43 Barb. 310; Shaver v. Brainard, 29 Barb. 25.

After a careful review of the authorities, it seems clear that the law casts upon the garnishee the duty of knowing or ascertaining that there is a valid judgment against the defendants; not that he can intervene and defend in the principal suit, but so far as is necessary to protect himself in the auxiliary suit in which he is defendant. It follows that, without jurisdiction of the defendant and a judgment against him, the judgment against the garnishees was void, and that its payment would not protect them against the assignee of Jackson. A court that would enter such a judgment and collect and retain the money and compel a litigation in regard to it cannot be too severely criticised. The amount paid was not technically and legally a set-off against the claim of appellee, as the court correctly held, and the judgment must be affirmed. Affirmed.

(6 Colo. App. 491) . MAJESTIC MANUF'G CO. v. PUEBLO HARDWARE CO.

(Court of Appeals of Colorado. Sept. 9, 1895.) REVIEW-SUFFICIENCY OF Evidence.

A verdict dependent on the existence of a contract cannot be sustained, though a witness testifies that there was such a contract, where he also details all the conversation claimed to constitute the contract, and it does not justify his inference that there was a contract. Appeal from district court, Pueblo county. Action by the Majestic Manufacturing Company against the Pueblo Hardware Company. Judgment for defendant. Plaintiff appeals. Reversed.

D. McCaskill, for appellant. E. E. Hubbell, for appellee.

THOMSON, J. Action by the Majestic Manufacturing Company against the Pueblo Hardware Company to recover $173.50, the value of goods, wares, and merchandise sold by the plaintiff to the defendant. Defense,

a contract between plaintiff and defendant that the defendant should have the exclusive building and sale in the city of Pueblo, Colo., of the plaintiff's stoves and ranges for one year, and that plaintiff would not sell stoves and ranges to any other dealer in Pueblo during that time,-which contract the plaintiff violated by selling and delivering, within the year, large numbers of stoves and ranges to other dealers in Pueblo, so that defendant's trade was injured, and its business damaged, in the sum of $150; also a sale by plaintiff to defendant of a range warranted to be perfect, but which was imperfect and useless, to the defendant's further damage in the sum of $60; also a sale to defendant of a defective water front, to its damage $10. There was a replication, denying the averments of the answer. The cause was submitted to a jury. It was admitted that the plaintiff had sold the defendant goods and ranges of the value of $173.50, which had not been paid for. The defendant made some proof of the damage sustained on account of the defective range and water front. There was also evidence concerning the loss of trade sustained by the defendant on account of sales. by the plaintiff to other dealers. The jury returned a verdict for the defendant of $192. The plaintiff moved for a new trial, on the ground, among others, of the insufficiency of the evidence to justify a verdict. The motion was overruled, and the court proceeded to render judgment as follows: It computed interest on the ver dict from November 11, 1892, at 8 per cent. per annum, making the amount $213.69. It also added interest at the same rate, for the same period, to the $173.50, admitted to be due the plaintiff, making the total $193.03. It then deducted the latter amount from the former, and gave the defendant judgment for $20.66, the difference. The case is here on appeal from this judgment.

The singular action of the court in construct