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affirmative defenses failed to state a fense, for the reasons we have given. The judgment is affirmed.

(209 P.)

de- | 6. Set-off and counterclaim 44(1)-Claim of
either defendant proper subject of counter-
claim in action on joint and several note.
A valid claim of either defendant is prop-

FULLERTON, MITCHELL, and TOL- er subject of counterclaim in action on joint or MAN. JJ., concur.

WHITTIER v. VISSCHER et al. (L. A. 7117.)

(Supreme Court of California. Aug. 18, 1922.)

1. Judgment

714(1)-Conclusive in subsequent action involving same question, though different subject-matter.

several liability of makers of a note.

In Bank.

Appeal from Superior Court, Los Angeles County; L. H. Valentine, Judge.

Action by Henry F. Whittier against Mrs. W. E. Visscher and others. Judgment for plaintiff, and defendants, other than Mrs. E. M. Dixon, appeal. Reversed.

C. E. McDowell and Frederick Gros, both of Los Angeles, for appellants.

Bicksler, Smith & Parker and Arthur G. Baker, all of Los Angeles, for respondent.

Though action by the makers of a nonnegotiable note against D., the payee, and W., assignee, thereof, to avoid it on the ground of SLOANE, J. This action was originally fraud, was begun after W. had assigned the begun by one Eva B. Clark, as plaintiff, to note to C., so that the judgment for defendants recover on a promissory note. The note, therein would not be available as res judicata of the issue of fraud in a subsequent action on conceded to be nonnegotiable, was for the the note by C. against the makers, yet, the sum of $4,750, and was executed by appeloriginal action having been also to re-establish lants and defendants Mrs. W. E. Visscher W.'s liability as indorser on another note re- and Hugo Kraght Visscher to defendant leased as part of the same transaction and de- Mrs. E. M. Dixon. Before suit was instipendent on the same issue of fraud, W., sub-tuted, the note had been indorsed by the sequently taking a reassignment of the note giv-payee, Mrs. Dixon, to Henry F. Whittier, en to D. and suing the makers thereon, could the present plaintiff and respondent, and by reason of his own privity with the original judgment plead it as res judicata of the defense by him indorsed without recourse to the of fraud; a former judgment between the same original plaintiff, Eva B. Clark, who thereparties being conclusive, not only as to the sub- after brought this action to recover from the ject-matter in controversy in the action on Visschers, the makers of the note, and from which it is based, but also in other actions in- Mrs. Dixon, the first indorser. Mrs. Dixon volving the same question. having failed to appear and answer, her default was regularly entered.

2. Parties 59 (2)—No abuse of discretion to allow subsequent assignee of note sued on to be substituted as plaintiff.

Where, after action is begun on a note, it is assigned, it is not an abuse of discretion to allow the assignee to be substituted as plaintiff in the action.

3. Corporations

247-Stockholder's liability on corporate note held not affected by sale of her stock to payee.

A stockholder's liability on a corporation's note was not affected by a sale of her stock to the payee, who as part consideration released her from liability as indorser, but did not otherwise release the corporation or its prior stockholders from liability thereon. 4. Set-off and counterclaim 34(1) - Stockholder's liability arises on contract.

Relative to right of counterclaim under Code Civ. Proc. § 438, subd. 2, a stockholder's liability on account of note of the corporation is one arising on contract.

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The Visschers answered, and by way of defense set up fraud, misrepresentation, and failure of consideration in the procurement The undisputed facts of the note sued on. show that the note was given as part of the consideration for 924 shares of the capital stock of a corporation existing under the name of Brinks Express Company. The

defendant Mrs. E. M. Dixon owned 921 of the

924 shares, and the remaining 3 belonged to other directors of the corporation. The total corporate stock consisted of 1,392 shares. The corporation was at the time indebted to defendant Mrs. W. E. Visscher in the sum of $5,000, evidenced by a promissory note for that amount executed by the corporation, upon which note the respondent Whittier was liable as an indorser. The entire consideration for the 924 shares of stock received by the Visschers was the note sued on and the release of respondent Whittier from liability as indorser on the $5,000 note of the corporation. The liability upon the $5,000 note itself does not seem to have been released as to the corporation or any of its stockholders, other than the respondent.

The fraud alleged in the transaction need not be set out in detail. It is sufficient to

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took the assignment before the commencement of the suit. Had Eva B. Clark remained the plaintiff in the present suit and the owner of the note, this earlier judgment could not be pleaded as an estoppel to a retrial of the issue of fraud as against her. Does the fact that respondent, Whittier, took a reassignment of the note and was substituted as plaintiff in this case pending trial, give any greater vitality to the earlier judgment than it would have had for or against his assignor?

say that it consisted of alleged representa- | note owned by a stranger to the record, who tions by the owners of the stock with re- gard to the value, character, and extent of the business of the corporation, which, if shown to be false and fraudulent, and if available to the appellant defendants under their answer, would constitute a sufficient defense to recovery in this action. The appellant defendants also set up by supplemental answer as a cross-demand their claim against Mrs. E. M. Dixon, the original payee of the note in suit, for her stockholder's liability on the indebtedness of the corporation evidenced by the $5,000 note held by Mrs. Visscher. These defenses were denied and excluded from the evidence by the trial court, and the judgment appealed from, for the full amount of the note sued on, was given for the respondent, who, pending the trial, had procured a reassignment of the note to himself, and was substituted as plaintiff in place of his former assignee, Eva B. Clark, the original plaintiff. It is upon the rulings of the trial court, defeating the special defense and the counterclaim of appellants, that the controversy arises on this appeal.

Assuming that this might not be the case, if the only interest of the respondent in the former action had been in connection with the ownership of the note, it must be borne in mind that such action involved the rescission of the entire contract for the purchase and sale of the corporation stock, for which the note was only part of the consideration. The release of respondent from his liability as indorser of the $5,000 note of the corporation held by Mrs. Visscher was also one of the considerations for the shares of stock, and the action for rescission had for one of its purposes the restoration of respondent's liability as such indorser. was therefore a proper and necessary party to the action for rescission for that reason, quite independently of any interest in the note sought to be cancelled, and the judg ment was conclusive as to this defense of fraud upon respondent's liability as indorser of the corporation note.

He

[1] The respondent plaintiff interposed as a plea in bar to the defense of fraud in procurement of the note a judgment in another action in which the same issue of fraud had been tried and determined adversely to the same averments contained in their answer in this action. It was stipulated between the parties on the trial that the plaintiffs in the former action were the same persons Conceding, then, that respondent could not as the defendants prosecuting this appeal, be brought into privity with the former judgand that the defendants in the former action ment by a reassignment from Eva B. Clark, were the respondent Whittier and the de- who was not a party to the first suit, we are fendant Mrs. E. M. Dixon in this case. The of the opinion that, when his right to enforce cause of action was for rescission of the payment on the reassigned note was quescontract under which the corporate stock | tioned on the ground of this alleged fraud in was obtained, and to cancel the note in suit, its procurement, he could plead a former and re-establish the liability of the respond- | adjudication of that issue by virtue of his ent as indorser of the corporation note. The own relation to the suit in which the adjudiallegations of fraud, misrepresentation, and failure of consideration were identical with the averments of the answer before us. Judgment was for the defendants, negativing the allegations of fraud, and upholding the validity of the note. On appeal the judgment was affirmed by the District Court of Appeal, and a rehearing in this court was denied. Visscher v. Whittier, 188 Pac. 1029. It is the contention of appellants, however, that the bar of the judgment is defeated by reason of the fact, which is disclosed by the record here, that the action in which the judgment was obtained was begun some 10 days after the note sought to be avoided had been assigned to Eva B. Clark, and Eva B. Clark was never made a party to the action. The court at no time acquired jurisdiction of the real party in interest in the note, and was clearly without power to give a judgment which would affect the status of the

cation was made. The relief sought against respondent to re-establish his liability as indorser of the corporation note depended upon precisely the same state of facts as to the alleged fraud as would the cancellation of the note, the fraud in the transfer of the stock, which transfer was the consideration for both the note in suit and the release of respondent's liability on the other note. A former "judgment between the same parties is conclusive, not only as to the subject-matter in controversy in the action upon which it is based, but also in all other actions involving the same question." Bingham v. Kearney, 136 Cal. 177, 68 Pac. 597; Southern Pac. Co. v. Edmunds, 168 Cal. 418, 143 Pac. 597; Curtis v. Upton, 175 Cal. 331, 165 Pac. 935; Koehler v. Holt Manfg. Co., 146 Cal. 337, 80 Pac. 73; Kinderman v. Shipley (Cal. App.) 190 Pac. 472. It follows, then, that the operation of the judgment pleaded in

(209 P.)

bar in favor of respondent does not rise up- | liability or in its enforcement, where it arises on any privity in such action, dependent on a contract of the corporation, to differenupon the reassignment of the note. While such assignment may not invest respondent with any right to plead the former adjudication which Eva B. Clark, his assignor, did not possess, it did not deprive him, of the right to rely upon his own privity with the judgment pleaded.

[2] We do not think there was any abuse of discretion in the permission of the court for a substitution of respondent as plaintiff in this action upon his becoming owner of the note in suit. When the substitution was made, there was some suggestion in the discussion between court and counsel to the effect that the change in parties plaintiff would not affect appellants' defenses; but this conversation seems to have been on the theory that respondent had no privity in the litigation pleaded, other than through ownership of the assigned note.

tiate it from a direct contract by the individual so far as concerns the remedy of the parties. The following decisions in situations analogous to that presented here have held the stockholder's liability to be contractual in its nature: Dennis v. Superior Court, 91 Cal. 548, 27 Pac. 1031; Kennedy v. Calif. Sav. Bank, 97 Cal. 93, 31 Pac. 846, 33 Am. St. Rep. 163; Royal Trust Co. v. MacBean, 168 Cal. 642, 144 Pac. 139; Lininger v. Botsford, 32 Cal. App. 386, 163 Pac. 63; Miller & Lux v. Katz, 10 Cal. App. 576, 102 Pac. 946; Platt v. Wilmot, 193 U. S. 603, 24 Sup. Ct. 542, 48 L. Ed. 809; Bank v. Farnum, 176 U. S. 640, 20 Sup. Ct. 506, 44 L. Ed. 619; Whitman v. Oxford, 176 U. S. 559, 20 Sup. Ct. 477, 44 L. Ed. 587. We are therefore of the opinion that such an existing liability of a plaintiff to the defendant may be pleaded by way of counterclaim.

[5] It is next contended that the claim in this case is barred by the statute of limitations. It is conceded that it was not so barred when the original action was begun, and the authorities in this state seem to be agreed that, if the right of action relied on was alive at the commencement of the suit, the statute does not run against it, when, as in this case, the full statutory period has expired thereafter during the pendency of the action and before the claim is pleaded as a cross-complaint. Lyon v. Petty, 65 Cal. 322, 4 Pac. 103; Perkins v. West Coast Lumber Co., 120 Cal. 27, 52 Pac. 118; Mc

Bliss v. Sneath, 103 Cal. 43, 36 Pac. 1029;
Id., 119 Cal. 526, 51 Pac. 848; Maryland
Casualty Co. v. Shafer et al. (Cal. App.) 208
Pac. 197. The same rule is stated in 24 R.
C. L. § 43, as declarative of the common law,
as follows:

[3] We will consider next the cross-complaint set up in appellants' supplemental answer. As already pointed out, when appellants became the owners of the 924 shares of the stock of the corporation, there was no release or extinguishment of the liability of the corporation or of its prior stockholders on the indebtedness evidenced by the corporate note for $5,000 already held by Mrs. Visscher. We do not think that there is any merit in the contention of the respondent that the transactions under which the Visschers purchased this stock in any way affected liability under the $5,000 note, other than as to respondent's liability as an in-Dougald v. Hulet, 132 Cal. 154, 64 Pac. 278; dorser. Mrs. Visscher, then, at the time of the commencement of this suit to recover against her and Hugo K. Visscher, had a valid cause of action against Mrs. Dixon, the original payee of this nonnegotiable note sued on, for her stockholder's liability on the corporation note upon which a separate judgment might have been obtained by her. [4] Respondent further objects, however, that a stockholder's liability, which, as in this case, does not arise out of the transaction, and in pleading the statute of limitations tion sued upon, is not a proper matter of cross-complaint or counterclaim; that it is not a cause of action "arising on contract" as specified in subdivision 2 of section 438 of the Code of Civil Precedure, but is purely a liability imposed by statute. While it is true that it is the authority of the statute which creates the general liability of the stockholder on the corporation indebtedness, in a case like this, it is the contract of the corporation which creates the indebtedness. In assuming the status of a stockholder, each owner of shares of stock in effect empowers the corporation by its act to bind him by its obligations. It is a separate independent liability, but it is created by and arises on the contract. There is nothing that we can discover in the creation of the stockholder's

"If, however, a counterclaim or set-off is not

barred at the commencement of the action in which it is pleaded, it does not become so barred afterward during the pendency of that ac

to a counterclaim it must be shown that the bar of the statute had matured when the original action was commenced, and it is not sufficient to aver a bar when the counterclaim was filed."

[6] Respondents' remaining objection to this cross-complaint, that it cannot be maintained in this action because it only runs as a set-off in favor of one of the defendants is not tenable. This is an action on a joint and several liability of the makers of a promissory note. Payment by either would extinguish the right of action of the plaintiff against both. It naturally follows that the set-off of a valid claim of either may be interposed with the same result. Miller v. Murphy, 186 Cal. 344, 199 Pac. 525; Austin

v. Feland, 8 Mo. 309; Ruby v. Baker, 106 | the result to insured and the means by which Kan, 859, 190 Pac. 6, 10 A. L. R. 1247. that result was brought about. By reason of error in the exclusion of evi- 6. Insurance dence of appellants' counterclaim, the judgment is reversed.

We concur: SHAW, C. J.; LENNON, J.; WASTE, J.; RICHARDS, Justice pro tem.; MYERS, Justice pro tem.

OGILVIE v. ETNA LIFE INS. CO. OF
HARTFORD, CONN. (L. A. 6502.)
(Supreme Court of California. Aug. 14, 1922.
Rehearing Denied Sept. 11, 1922.)

669(11)

Defendant insurer entitled, under policy against death by accidental means, to instruction on ordinary incidents of plowing, whereby deceased met accident.

In such action, where there was evidence that insured's death was caused by lurching of a plow he was using in hard ground, insurer was entitled to an instruction that, if there was no more lurch to the plow than was ordinarily incident to the plowing which insured was doing, it was not an accident for which insured could recover.

7. Trial 235 (2) Instruction that theory - cannot be established, where facts are consistent with contrary theory, properly refused. An instruction that a theory cannot be essur-tablished in a civil case, where facts consistent with it are also consistent with a contrary theory, was properly refused, since the theory the jury deemed most probable would be established by a preponderance of evidence. 8. Insurance

1. Evidence 318(4), 333(1)-County geon's unsworn report of autopsy findings hearsay, and not admissible as a public record.

In action by beneficiary on an insurance policy, an unsworn written report of autopsy findings, made by the county surgeon to the coroner on insured's death, was hearsay, and not receivable as a public record.

2. Appeal and error 1050(1)—Error in admitting unsworn report of autopsy findings held not cured by subsequent testimony.

In an action on an insurance policy, error in admitting, for plaintiff, surgeon's unsworn written report of autopsy findings held not cured by his testifying as to the report at the instance of defendant, where plaintiff by another witness made use of the report to the detriment of defendant.

646(6)—Trial

296(7)—Er

ror to instruct that defendant must prove that disease was proximate cause of death, in suit on policy against death by accidental means.

In an action on a policy against death by accidental means, it was error to instruct that defendant must prove by a preponderance of evidence that disease was the proximate cause of death, and to refuse insurer's requested specific instructions to the contrary; nor was this error cured by conflicting instructions that plaintiff must prove that death resulted from injuries effected solely through external and accidental means.

3. Evidence 220(1) Lack of denial does 9. Insurance 669 (11) not show an admission.

Where persons not under duty to speak are merely shown to have made no denials, an admission is not thereby shown, especially where the authority of such persons to make admissions is doubtful.

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Instruction as to disease being proximate cause of death, in action on policy insuring against death by accidental means, held error.

In an action on a policy against death by accidental means, it was error to instruct that the presence of disease as a proximate contrib

4. Insurance 449-"Accidental death" and uting cause of insured's death would be imma"death by accidental means" defined.

Where death results from an act, but was not designed and not anticipated by deceased, though it be in consequence of some act voluntarily done by him, it is "accidental death"; where death is caused by some act of deceased not designed or intentionally done by him, it is "death by accidental means."

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Accident -Accidental.]

5. Insurance

terial, unless it was also found that the disease itself would have caused death at approximately the same time without the accident having occurred.

10. Evidence 20(1)-Court could judicially notice that plowing was not incident to occupation of real estate and investments.

The court should judicially notice that plowing was not incident to the occupation of "real estate and investments," notwithstanding that men in this business have been known to plow. 11. Insurance 531—Proviso reducing amount, if injury received while doing act pertaining to more hazardous occupation, covers isolated and casual acts, where occupation is not actually changed.

669(11)—Instruction improper, under policy against death by accidental means, which failed to distinguish accidental result to insured and means producing result. In an action on a policy against "death by accidental means," as distinguished from Under a policy insuring against death by "accidental death," an instruction was improper accidental means, which provides that the which told the jury that, if death of insured amount recoverable shall be reduced if insured was due to a rupture caused by a strain, but is injured doing acts pertaining to an occupawas an unexpected result thereof, plaintiff could tion more hazardous than that for which insurrecover, since this fails to distinguish betweened, it is not necessary, in order for the proviso

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(209 P.)

alleged that his death was caused and was contributed to by disease.

to become operative, to show that insured had actually changed his occupation; that is, that the act in which he was engaged when injured The issues, so far as the right of recovery was “habitual,” as distinguished from "casual." is concerned, may be stated as follows: (1) 12. Insurance 646(8) Insurer has bur- Did Mr. Ogilvie sustain an injury through den of proving accident occurred in more haz-accidental means? (2) If so, did such injury ardous occupation than that for which in- solely cause his death, or was his death consured. tributed to by a pre-existing condition of disease? The evidence was amply sufficient to. support a finding in favor of the defendant upon each of these issues, and as such a finding, upon either issue, would have precluded recovery, it becomes important to consider the claimed errors.

Where insurer seeks to reduce amount recoverable, because insured met accident in an occupation more hazardous than that against which insured, the burden is on insurer to show certain occupations are in fact more dangerous than others, and not merely that he so classifies them.

13. Trial

37—Omission to assume burden of proof waived by proceeding as if issues were properly presented.

Right to object to omission to assume den of proof may be waived by proceeding throughout trial as if the particular issue had been properly presented.

In Bank.

Appeal from Superior Court, Los Angeles County; Paul J. McCormick, Judge.

Action by Hattie L. Ogilvie against the Ætna Life Insurance Company of Hartford, From a judgment for plaintiff, defend

Conn.

ant appeals. Reversed.

[1] Upon the trial the plaintiff offered in evidence the written report of his findings made by Dr. Wagner, the county autopsy bur-surgeon, to the coroner, and filed with the county clerk. It was received in evidence over the objection of the defendant on the ground that it was hearsay and incompetent, and that Dr. Wagner was then present in court and available as a witness. Counsel for defendant stipulated that Dr. Wagner was the duly qualified and acting autopsy surgeon, and that the examination and the report were regularly made by him in the performance of his official duties. This is the only basis suggested to us for its admissibility in evidence, and it should have been excluded as hearsay. It was an unsworn statement, not subject to cross-examination, made by a stranger to this action, and made in the course of a proceeding to which this defendant was neither party nor privy. Various sorts of public records are made receivable as prima facie evidence by virtue of express provision of statute, but we have been cited to no such statute as applicable to this report.

Gibson, Dunn & Crutcher and Norman S. Sterry, all of Los Angeles (Henry F. Prince, of Los Angeles, of counsel), for appellant. Meserve & Meserve, of Los Angeles, for respondent.

MYERS, Justice pro tem. Plaintiff brought this action as beneficiary under a policy issued by the defendant insuring plaintiff's husband "against disability or death resulting directly and independently of all other causes from bodily injuries effected solely through external, violent, and accidental means." Defendant appeals from the judgment on verdict in favor of the plaintiff for the full amount of the policy. It is conceded that the evidence is legally sufficient to support the verdict, and the appeal is predicated solely upon claimed errors of law in the admission and rejection of evidence and the giving and refusal of instructions.

[2] It is claimed that this error was rendered harmless by the fact that the defendant afterward called Dr. Wagner as its witness, and proved by him the same facts embodied in his report, as to the physical findings. We would be inclined to adopt this view, if the use made by the plaintiff of this report had gone no further. But the plaintiff then called Dr. Pallette as her witness, and, after defining and explaining to the jury the meaning of certain technical words The allegation of the complaint was to the found in the report, he testified that the exeffect that the assured, while assisting a pression, "moderate degree of senile changes," Japanese in doing some plowing, met with an as used in the report, had no definite and accident, "in substance, that the said plow fixed meaning in the medical profession. He which the said James G. Ogilvie was using was then asked "whether or not that report at said time, came in contact with a root or shows any disease or diseased condition of other obstruction unforeseen, causing said the heart"? This question was objected to plow and its plow handle to be given a severe upon the grounds, among others, "that the wrench, thereby causing the said James G. statement itself is not admissible"; "that it Ogilvie to be given a severe wrench and is not permissible for this witness to explain strain," as a result of which his heart was what is meant by another surgeon in making ruptured, and he died therefrom five days the report"; and that "it is not shown that later. 'Defendant denied that assured sus- this witness was present at the examination, tained any injury from accidental means, and or has any knowledge or means of knowing

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