transfer to the company of property of less real value than that at which it is taken, the transaction is fraudulent in law as to the corporation. The rule adopted by the court is based on the so-called "trust fund" doctrine, in accordance with which a stockholder, seeking to escape personal liability to creditors on the ground that his stock has been fully paid for, must show that he has in good faith invested in the enterprise the value of the stock received by him, either in money or its equivalent. But this doctrine has no application as between the corporation itself and the stockholder, who has received his stock in exchange for property surrendered at an agreed valuation. State Trust Co. v. Turner, 111 Iowa, 664, 82 N. W. 1029, 53 L. R. A. 136; Esgen v. Smith, 113 Iowa, 25, 84 N. W. 954. In the transaction between the corporation and the stockholder the latter does not occupy any position of trust or confidence, although he may be a promoter or officer of the company, and in the absence of actual fraud the transaction is to be upheld, although it may subsequently prove to have been disadvantageous to the corporation. Scovill v. Thayer, 105 U. S. 143, 26 L. Ed. 968; Bank of Ft. Madison v. Alden, 129 U. S. 372, 9 Sup. Ct. 332, 32 L. Ed. 725.

The cases relied upon by the trial judge in reaching his conclusion, and now insisted upon for appellee as supporting such conclusion, are not in point. In Hallam v. Indianola Hotel Co., 56 Iowa, 178, 9 N. W. 111, it was held that a director owed to the corporation the duty of dealing in good faith with reference to the corporate property in the enforcement of a claim by him as creditor against the corporation, and for his bad faith in buying the corporate property at much less than its real value, the sale to him was set aside. In Hinkley v. Sac Oil & Pipe Line Co., 132 Iowa, 396, 107 N. W. 629, it was held that a stockholder was allowed to have his stock canceled on account of fraudulent representations of the promoters as to the value of the business in which he had been induced to invest. Other cases relied on for appellee are equally inapplicable. In Camden v. Stuart, 144 U. S. 104, 12 Sup. Ct. 585, 36 L. Ed. 363, Coit v. Gold Amalgamating Co., 119 U. S. 343, 7 Sup. Ct. 231, 30 L. Ed. 420, and Coleman v. Howe, 154 Ill. 458, 39 N. E. 725, 45 Am. St. Rep. 133, the controversy was between creditors and stockholders, and the holdings simply were that, as against creditors, the stockholder cannot escape liability by showing payment for his stock in property grossly overvalued. This is not a controversy between creditors of the plaintiff corporation and defendant as a stockholder, nor between stockholders, who have been induced to purchase in the belief that the stock of the company had been fully paid for in cash, and the corporation itself, with a view of the cancellation of the stock thus purchased. If the stockholders who became such after the transaction between the

plaintiff and defendant was consummated desire to have their stock in the plaintiff company canceled, and the consideration paid therefor returned, their grievances should be made the basis of an independent action by them against the corporation, or perhaps against the promoters or officers of the company who, by fraudulent misrepresentations, have induced such stockholders to invest their money. The plaintiff is not insolvent, and is a going concern, and, as a corporation competent to make contracts for the issuance of stock and to act through a duly selected board of directors, it cannot complain of a transaction entered into in good faith, although, as the result of such transaction, it has not received full value in money for stock lawfully issued. Counsel for appellee insists that the action is for the benefit of the stockholders of the plaintiff company, but this is true only in the sense that any action of the corporation is presumably for the benefit of its stockholders. The stockholders themselves are not parties to the suit, and as such they make no complaint, nor is the action one in which any relief to the stockholders, as distinct in interest from the corporation, is asked.

The trial court erred in decreeing a cancellation of any portion of the stock of defendant, and on defendant's appeal the decree is reversed. It follows that there was no error of which the plaintiff can complain. The result is that the decree is affirmed on plaintiff's appeal, and on defendant's appeal it is reversed.

BISHOP, J., takes no part.

STEBER et al. v. CHICAGO & G. W. RY. CO. et al.

(Supreme Court of Iowa. July 9, 1908.)

1. PLEADING MISJOINDER OF PARTIES AND CAUSES OF ACTION-MODE OF MAKING OBJECTION.

Misjoinder of parties or of causes of action can be raised only by motion, and not by demurrer or answer.

MISJOINDER

2. PARTIES - AMENDMENT-ASSIGNMENT OF INTEREST-EFFECT.

Where S., a landowner, and his tenant sued for damages for flooding land and grops, to enjoin the maintenance of the nuisance causing it, and for an underground passage under defendant's tracks, but before trial the tenant assigned his claim to S., and this fact was pleaded by an amendment and proved on the trial, the trial court might well treat S. as the sole plaintiff, though allowing the action to proceed under the original title, and a judgment for plaintiff under such conditions will not be reversed for misjoinder of parties.

3. PLEADING-WAIVER OF OBJECTIONS-MISJOINDER OF CAUSES OF ACTION.

Where, in such case, the claim to an underground tunnel was dismissed, and by stipulation filed by the parties the claim of misjoinder was withdrawn from the case, both in the trial court and appellate court, the question of misjoinder of causes could be of no avail on appeal.

[Ed. Note. For cases in point, see Cent. Dig. vol. 39, Pleading, § 1355.]

4. WATERS AND WATER COURSES-FLOWAGEREMEDIES JUNCTION.

INCONSISTENCY-DAMAGES-IN

In an action for damages for the flooding of land and crops in certain years because of a railway embankment, and to enjoin the maintenance of the embankment as a nuisance, the remedies were not inconsistent, and a judgment for relief in both respects might properly be granted.

5. SAME MEASURE OF DAMAGES.

The measure of damages to land from flooding in certain years, as the result of an embankment, is the difference in the value of the premises immediately before the flooding and the value of the same immediately after.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 48, Waters and Water Courses, § 255.] 6. SAME-DAMAGES FROM NUISANCE- CON

TRIBUTORY NEGLIGENCE.

The doctrine of contributory negligence does not apply to actions for damages from a ruisance, and while one suing for damages for the flooding of land by a railway embankment cannot recover damages which he himself caused, by the construction of drains from other ponds and low places, a showing of damages from such causes would, at most. merely reduce the amount of damages recoverable, and would Lot constitute a complete defense.

7. SAME-REDUCTION OF DAMAGES-DRAINAGE BY OWNER.

1 In an action for damages from flooding land, caused by an embankment, the fact that plaintiff had drained certain ponds and low places by tiling into the place where the flooding occurred, will not entitle defendant to a reduction of damages, where there is no showing that the course of flow has been changed, or that the flood has been augmented thereby.

Appeal from District Court, Calhoun County; Z. A. Church, Judge.

Suit in equity to enjoin a nuisance caused, as is alleged, by the negligent construction of a railway embankment, whereby plaintiff's land was flooded. Damages were also claimed for injuries done the land. By an amendment to the petition plaintiffs sought to have their right to an under crossing through defendants' right of way adjudicated. The damages originally claimed were for the years 1903, 1904, and 1905, and by supplemental petition damages for the year 1906 were also asked. Defendants answered by general denial, and also pleaded misjoinder of parties and causes of action, and some other matters to be hereafter noted. The case was tried to the court, resulting in a judg ment for plaintiff Steber in the sum of $500, and a decree of permanent injunction against the continuance of the nuisance. The matters of the underground crossing were dismissed. Defendants appeal. Affirmed.

E. C. Stevenson and Healy & Healy, for appellants. M. W. Frick, for appellees.

DEEMER, J. Plaintiff Steber is the owner of 170 acres of land in Calhoun county, Iowa, through which runs defendants' railway. Warbis was Steber's tenant, occupying the lands from March 1, 1903, to March 1, 1907. It is claimed that defendants so negligently constructed their roadbed over and through plaintiff's land and along its 117 N.W.-20

right of way as to dam the water which naturally flowed from one side of the right of way to the other, and to constitute a nuisance; that both Steber and Warbis were damaged by the overflow of the lands, and

that they will continue to suffer in the fu

ture unless the nuisance be abated. Warbis assigned his claim for damages and other rights to Steber, although the action seems to have been brought in the names of both. In constructing its roadbed defendant built a culvert through its right of way to carry water from one part of the farm across the right of way and to the other, but it is claimed that this culvert was and is inadequate in size, and insufficient to carry the water, and that even were the culvert sufficient, defendants failed to properly ditch so as to take the water to the culvert. The damages asked are for the years 1903, 1904, 1905, and 1906, and are claimed as resulting both to the land and to the crops growing thereon. The claim for an under crossing over the right of way mentioned in the preceding statement is out of the case, because dismissed by the trial court, unless it be proper to be now considered upon the question of misjoinder of causes of action. There is little doubt under the testimony but that the railway embankment, culvert, and ditches were so constructed as to amount to a nuisance, and that both the owner and the tenant suffered damages from the overflow of water, indeed appellants' counsel practically concede it. They rely for a reversal chiefly upon some technical objections. They say in their brief that there was a misjoinder of parties and of causes of action; that plaintiffs, through the construction of tile drains, caused or contributed to the injuries of which they complain, and that plaintiffs are not entitled to both damages and a permanent injunction; that plaintiffs must elect as to their remedies, and, in effect, that the damages allowed are excessive. Warbis, the tenant, is Steber's brother-in-law, and when the action was brought these parties were joined as plaintiffs. During the trial Steber introduced in evidence assignments from Warbis of all claims he held against the defendants. The title of the case was not changed, although it was alleged in an amendment to the petition filed prior to the trial, that Warbis had assigned all his claims to Steber. Defendants, among other things, pleaded in answer that plaintiffs had no right to maintain this action jointly, in that they were not entitled to the same relief, or to any relief whatever. Defendants sought to raise the issue of misjoinder of parties and causes of action by answer, in which they pleaded these matters as conclusions of law. The rule is that the only way to reach a misjoinder is by motion, and not by demurrer or by answer. Citizens' Bank v. Jess, 127 Iowa, 450, 103 N. W. 471; Mitchell v. McLeod, 127 Iowa, 733, 104 N. W. 349. Aside from this, however, in view of

the assignments by Warbis, the tenant, of all his claims against the defendants to the plaintiff Steber, the trial court may well have treated Steber as the sole plaintiff, although allowing the action to proceed in the name of both. . In that event there was no misjoinder of parties. As to causes of action: The claim to an underground crossing was dismissed, and the judgment was in favor of plaintiff Steber alone for the damages sustained, to wit, $500, and an order for a permanent injunction, or rather for an abatement of the nuisance, in his favor. Moreover, there was a stipulation filed by the parties May 9, 1908, whereby the claim of misjoinder was withdrawn from the case, both in the lower court and here.

2. Next it is argued that plaintiff cannot have judgment for a permanent nuisance and an order for the abatement of the same in the same action. This contention seems to be settled adversely to appellants' contention in at least two cases: Downing v. Oskaloosa, 86 Iowa, 352, 53 N. W. 256; Harvey v. R. R., 129 Iowa, 465, 105 N. W. 958, 3 L. R. A. (N. S.) 973, 113 Am. St. Rep. 483. Aside from this, however, and without at this time doing more than cite these cases, it will be observed that plaintiff's cause of action was for damages done his land during certain specific years, and for an abatement of the nuisance in the future. He was not asking for damages on the theory that the nuisance was of such a permanent nature as that it could not be abated. But, on the contrary, he took an exactly opposite position. He claimed that it could be abated, and the court so ordered. Not only did plaintiff ask damages for injury done the land, but he held an assignment of his tenant's claim for damages for these specific years, for which he was also allowed damages. We are not to be understood as saying now that one may have full damages for a permanent structure constituting a nuisance, past, present, and prospective and also an order for an abatement of the nuisance. Upon that proposition we make no pronouncement at this time. The case was not tried on that theory, and there is no occasion to decide the matter now. As the case is in equity, rulings on evidence are not to be considered, and the only questions to be determined on this appeal in this connection are, did defendants build their railway enbankment in such a negligent and unskillful manner as to damage plaintiff's land? and is there competent proof of such damages? That the culvert through the enbankment and the construction of ditches leading thereto were inadequate we have no doubt, and the only other matter for determination is, is there proper proof of plaintiff's damage? Plaintiff under his assignment is entitled to the damages suffered by his tenant as well as his own damages during the years in question. As to the land, the measure is the

difference in the value of the premises immediately before the flooding and the value of the same immediately after. Harvey v. R. R. Co., supra; Drake v. R. R., 63 Iowa, 302, 19 N. W. 215, 50 Am. Rep. 746; Blunck v. R. R. (Iowa) 115 N. W. 1013. Some of the damage witnesses based their opinions upon the destruction of the crops by the flooding of the land. There was also testimony as to the depreciation in the rental value of the farm, during the years in controversy, of from 75 cents to $1 per acre. This was intro

duced to show the damages suffered by the tenant. These damages did not equal the amount allowed by the trial court, but, added to the amount of damages suffered by the fee owner, the amount allowed by the trial court was, under all circumstances, very moderate. Indeed the testimony shows damages to the land alone amount to considerably more than $500.

Next it is contended that plaintiff Steber, by the construction of tile drains from ponds and low places, contributed to his own injury, and therefore cannot recover. The doctrine of contributory negligence does not apply to such cases as this. Bowman v. Humphrey, 132 Iowa, 234, 109 N. W. 714, 6 L. R. A. (N. S.) 1111; R. R. Co. v. Smith, 64 Fed. 679, 12 C. C. A. 384, 27 L. R. A. 131. Of course, plaintiff cannot recover damages which he himself caused. But it is no defense for defendants to show that plaintiff contributed to his own injuries. At most such showing would go in reduction of damages, and not as a complete defense. The testimony does not show that plaintiff did anything with reference to these tile drains which he was not authorized to do. He did not change the flow of the water, and did nothing to augment the floods of which he complains. That defendants are entitled to no reduction of damages on such showing, see Dorr v. Simmerson, 127 Iowa, 551, 103 N. W. 806; Hull v. Harker, 130 Iowa, 190, 106 N. W. 629; Harvey v. R. R. Co., supra. Even were there an appreciable increase in the natural flow of water by the acts of plaintiff, it is not shown that such increase was sufficient to affect the allowance made by the trial court of damages for the years in question. There was no error in the decree ordering the abatement of the nuisance. This may easily be done by the enlargement of the culvert and the construction of proper ditches. The case, as we have said, was not tried on the theory of allowing damages for a permanent improvement which could not be altered or changed, but distinctly upon the theory that plaintiff was damaged so much each year. Plaintiff does not complain of the order dismissing that part of his petition for an under crossing, hence that matter is out of the case.

The decree seems to be correct, and it is affirmed.

CONE v. CENTURY FIRE INS. CO. (Supreme Court of Iowa. July 9, 1908.) 1. INSURANCE FORFEITURE OF POLICY "CHANGE OF TITLE OR INTEREST."

Certain buildings and the furniture and fixtures in one of them were insured by plaintiff in defendant company. Plaintiff executed a mortgage on the insured property to a bank in another state purporting to secure a certain note, and on the same day executed a warranty deed to his sister, conveying the real estate on which the buildings stood for an expressed consideration, subject to the mortgage mentioned. The deed and mortgage were recorded, but in fact no consideration passed for either, and neither was ever in the possession of those in whose favor they were executed. A deed to the property was executed by plaintiff's sister on the same day and delivered to him; the object of the transactions being to avoid trouble relative to taxes on merchandise. Held, that there was no "change or diminution in the interest, title, or possession" of the property insured, within the meaning of a forfeiture clause in the policy, since no interest passed and no possession or right of possession was given, and the parties did not intend any such change.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 28, Insurance, §§ 795-800.]

2. SAME-QUESTIONS FOR JURY.

Where the evidence showed that there was no consideration for the deed or mortgage, the presumption arising from the recitals of consideration was not sufficient to raise such a substantial conflict in the testimony as to take the case to the jury on the question of consideration.

3. SAME-CHANGE OF USE AND OCCUPANCY

CUPANCY."

In an action on an insurance policy providing that it was to become void if the buildings became vacant or unoccupied, the answer alleged that the possession and occupancy of the buildings described and of the insured premises was changed, and said premises ceased to be occupied as provided in the policy. Held, that the answer was sufficient to raise the question of a vacancy, for the terms "vacancy" and "nonoccupancy" are used interchangeably and are equivalent in meaning.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 28, Insurance, §§ 1618, 1636.

For other definitions, see Words and Phrases, vol. 8, pp. 7254-7263, 7826.]

5. SAME QUESTIONS FOR JURY-VACANCY.

Whether certain premises were vacant within the meaning of an insurance policy held under the evidence for the jury.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 28, Insurance, § 1740.]

6. SAME EFFECT OF VACANCY - STATUTORY PROVISIONS-BURDEN OF PROOF.

Under the express provisions of Code 1897, 1743, providing that stipulations referring to vacancy of insured premises shall not be changed or affected by the provision that conditions or stipulations in the application or contract of insurance making the policy void before loss shall not prevent recovery by the insured if it be shown by plaintiff that failure to observe such provision or the violation thereof did not contribute to the loss, an insurance company is under no obligation to prove that a change of occupancy or use in violation of the policy made the risk more hazardous.

Appeal from District Court, Benton County; G. W. Burnham, Judge.

Suit on a fire insurance policy. There was a directed verdict for the plaintiff, and from a judgment thereon the defendant appeals. Reversed.

Read & Read, for appellant. Wade, Dutcher & Davis, for appellee.

SHERWIN, J. The policy in suit was issued on the 15th day of September, 1904, for a period of five years, and covered certain buildings and the furniture and fixtures in one of said buildings. It contained the proviso: "This entire policy shall be void if there be any contract of sale or to sell the subject of insurance or any part thereof * * * or if the subject of insurance or any part thereof be or become incumbered by mortgage, * * or if any change or diminution, other than by the death of the insured, take place in the interest, title or possession of the subject of insurance, * * * or if any other person than the insured now have or shall thereafter acquire any interest in or lien on the property hereby insured or any part thereof." Subsequent to the issuance of the policy, and before the fire, the plaintiff executed a warranty deed to his sister, Mrs. E. F. Gates, conveying the real estate on which the insured buildings stood, and for an expressed consideration of $3,000. This deed was recorded, and the record title remained in Mrs. Gates until a short time before the fire. On the same day that the plaintiff conveyed the land to Mrs. Gates, he executed to the First National Bank of Windom, Minn., a mortgage on the insured property, purporting to secure a note of $2,000, and the deed to Mrs. Gates was made subject to this mortgage. This mortgage was also recorded. At the time the deed to Mrs. Gates was prepared for the signature of the plaintiff, a deed from her to the plaintiff reconveying to him the land was also prepared. Mrs. Gates was not present when these deeds were drawn, but the plaintiff had told her that he wished to place the title in her name for the purpose of avoiding trouble relative to taxes on merchandise and to take a deed back from her, and she had consented to the arrangement. The deed to Mrs. Gates was first executed and was then delivered by the plaintiff to his brother with instructions to have it recorded. It was recorded and was never in the physical possession of Mrs. Gates. The deed from Mrs. Gates to the plaintiff was then taken to her home, where it was executed and delivered to the plaintiff. The bank knew nothing about the execution of the mortgage until after it was made, when the plaintiff disclosed the fact to one of its officers and asked him to answer any inquiry about it by saying that it belonged to a client. The plaintiff did not owe the bank, and it never had possession of the mortgage. These facts were testified to positively by uncontradicted witnesses, and, aside from the pre

sumption arising from the recitals of the instruments themselves, there is nothing in the record indicating different conditions. Three defenses to recovery were interposed, as follows: (1) A change in the title and ownership of the insured buildings; (2) the buildings were incumbered by the mortgage made by the plaintiff to the bank; and (3) the premises were not at the time of the fire occupied and used as stated and warranted in the application and in the policy.

It was clearly the intention of the plaintiff and Mrs. Gates that the latter should take and hold the record title for the purpose of assisting the plaintiff to escape a possible lien on the property for taxes, and it was just as clearly their intention that no real change in interest or in title should take place by virtue of the transaction. There was therefore no actual diminution of interest or title because the parties did not so intend. Title to real estate may, of course, be acquired and lost by several methods; but, however acquired, one of the essentials ordinarily requisite to a good and perfect title is the right of possession, and a change for diminution "in the interest, title, or possession" must of necessity confer on the grantee something more than a mere paper title. In other words, to work such a change or diminution some right must in fact be conveyed. There was nothing of the kind here. No interest was in fact transferred, and no possession or right of possession was in fact given. It is generally held that the object of the provision against a change in the title or ownership of the insured property is that the insured shall have no greater motive to destroy the property or less interest in protecting it. In Ayers v. Insurance Co., 17 Iowa, 176, 85 Am. Dec. 553, it is said: "The object of the insurance company by this clause is that the interest shall not change so that the assured shall have a greater temptation or motive to burn the property, or less interest or watchfulness in guarding and preserving it from destruction by fire. Any change in or transfer of the interest of the assured in the property of a nature calculated to have this effect is in violation of the policy. But if the real ownership remains the same, if there is no change in the fact of title, but only in the evidence of it, and if the latter change is merely nominal, and not of a nature calculated to increase the motive to burn, or diminish the motive to guard the property from loss by fire, the policy is not violated." See, also, Ayers v. Insurance Co., 21 Iowa, 185; Weigen v. Insurance Co., 104 Iowa, 410, 73 N. W. 862. In the latter case a mortgage on the property had been given, but it was afterwards, and before the fire, satisfied of record and returned to the mortgagor. It was held that it did not invalidate the policy, which contained a provision against incumbrance. It was said: "The mortgage did not affect any interest the plaintiff had in the property, and could not have been enforced by his brother. The

moral hazard was not increased by it. The incumbrance to avoid a policy must be valid, not merely nominal, and such as would have a tendency to create or increase temptation or motive for the destruction of the property, or decrease the owner's interest in guarding and preserving it." On the same point, see, also, Olmstead v. Insurance Co., 24 Iowa, 503. While none of these cases presented facts exactly like those involved in this case, the principle involved was the same, and they are clearly authority for the appellee herein. See, also, German Ins. Co. v. Gibe, 162 Ill. 251, 44 N. E. 490; Kyte v. Insurance Co., 144 Mass. 43, 10 N. E. 518; Schloss & Kahn v. Insurance Co., 141 Ala. 566, 37 South. 701, 109 Am. St. Rep. 58.

The rule of the cases cited also disposes of the appellant's contention relative to the mortgage to the Windom bank. The appellant says, however, that the law presumes that the consideration recited in the deed and in the mortgage was the true consideration, and that such presumption raised a conflict in the evidence which should have taken the case to the jury on those two questions. There was no conflict in the testimony of the witnesses on these questions, and we think there can be no possible question as to the true nature of the transactions. The mere presumption arising from the recitals should not therefore be held sufficient to raise a substantial conflict in the evidence. If it was not conclusively shown that the premises were not at the time of the fire occupied and used as stated in the application and policy, it was at least a question of fact for the jury, as was also the question whether facts were proven which would constitute an estoppel on the part of the appellant. There was evidence tending to show that when the application was made, and when the policy was issued, the premises were occupied substantially as stated in the application, and that at the time of the fire they were vacant. A change in the use and occupancy of insured premises will avoid the policy where it is so stipulated. Limburg v. Insurance Co., 90 Iowa, 709, 57 N. W. 626, 23 L. R. A. 99, 48 Am. St. Rep. 468. And under the record in this case it was error not to submit this question of change and the question of estoppel to the jury.

The plaintiff seeks to avoid this conclusion by the contention that the answer pleaded a change of occupancy, as distinguished from a vacancy which the evidence tended to show. The defendant pleaded that after the issuance of the policy "the possession and occupancy of the buildings described therein and of said insured premises was changed, and said premises ceased to be occupied in fact as provided in the policy." The policy provided that it was to become void if the buildings became vacant or unoccupied. The pleading was sufficient. "The terms vacancy and nonoccupancy are used interchangeably and as equivalent in meaning." Limburg v. Insurance Co.,