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1891, she executed another mortgage to the to secure him in case he had to pay the same association for $1,000 upon the same bonds, otherwise, to be the property of Marproperty. Being unable to pay these mort- garet Jones. This was done. gages, the association, in 1903, instituted first bond of $633.33 became due, Margaret When the suit against Lizzie Jones to enforce the lien Jones paid it off. and collect the debt. Judgment was obtain- the second bond, for $716.33, became due, she Six months later when ed in 1905 and a sale of the property direct- failed and declined to pay the bond, and ed. At the sale by the commissioner, Liz- execution was levied upon the property of zie Jones became the purchaser, but was Ford to raise the amount. Ford insisted that unable to execute bond for the purchase price. Margaret Jones should pay the amount, that Thereupon she and her sister Margaret and he was only an accommodation surety, but other members of her family induced Attor- she failed to do so, and he was compelled to ney S. S. Yantis, of Lexington, Ky., to loan and did pay both the second and third bonds Lizzie Jones $1,500 with which to pay off when they became due. The third bond the judgment of the building association and amounted to $691.90. The total amount paid also to take up certain other indebtedness by Ford was $1,408.23. He tried to get then outstanding, and, to secure this loan Margaret Jones to repay him, but she would from Yantis, Lizzie Jones made, executed, not. Ford then brought this action to recover and delivered to Yantis, at his suggestion, a the money thus paid out, and to enforce a deed, absolute on its face, for the lots and lien upon the property. Lizzie Jones had house, for a recited consideration of $1,500, been restored to her former mental status, and, simultaneously with the execution and and became a party to the action, claiming delivery of the deed to Yantis, he executed the property, and denying Ford's right to and delivered to Lizzie Jones an agreement subject the property to his claim. Moreover, or option whereby he obligated himself to re- she attempted to prosecute an appeal to this sell said property to her on or before De- court from the judgment of the Fayette circember 31, 1905, for $1,595 and the accrued cuit court, enforcing the mortgage lien taxes, if she decided to purchase it on or against her property in the case of Margaret before said date. After the execution of the Thurman v. Margaret Jones (see 113 S. W. deed and writing, Lizzie Jones became and 111, not officially reported). This appeal was adjudged insane and was confined in an was dismissed in this court because Lizzie asylum. While in the asylum the option to Jones was not a party to the action below. repurchase the property expired. Shortly thereafter, Mr. Yantis conveyed the property to Margaret Thurman, etc., who, after demand for the possession of the premises, instituted ejectment proceedings to oust Margaret Jones, and the family of Lizzie Jones, and to obtain possession of the premises. Meanwhile Margaret Jones had caused herself to be appointed and qualified as committee for her insane sister, Lizzie Jones. As committee for Lizzie Jones, she filed a petition to be made a party to the ejectment proceedings and set up facts showing that the deed was in fact a mortgage. To save litigation, annoyance, and cost, the parties made a compromise agreement, Margaret acting as committee for her insane sister, Lizzie, whereby the deed was to be considered and held to be a mortgage and declared only a lien against the property described for the amount of Yantis' debt, and sold for the payment of same. Accordingly, judgment was entered in favor of Yantis against Lizzie Jones and her property for the satisfaction of this mortgage, and a sale was ordered. At this sale Margaret Jones became the purchaser at the price of $1,899. She was unable at first to make bond, so she solicited the plaintiff, Ford, to sign her bond as surety. Ford was a friend of the family of long standing, but was sick and begged to be excused. Finally, at the earnest solicitation of Margaret Jones, committee for Lizzie Jones, Ford agreed to sign the bond upon condition that Margaret Jones transfer the benefits of her bid and purchase to him

The proceedings are too numerous, long, and involved to state in detail, and we give only the more important. Many months later, however, to avoid this confusion of pleadings, the trial court allowed plaintiff to file, and there was filed, a substituted petition, setting up and covering most of the allegations made in the petition and several amendments thereof, and defendant filed answer to the substituted petition, and the case was all pleaded over again. In all of this confusion it is difficult indeed to discover the real issues.

The judgment below dismissed plaintiff's petition because in the opinion of that court the five-year statute of limitation which was pleaded had run. With this opinion this court cannot agree. The statute of limitation, upon any view of the case, had not run. Even the five years had not elapsed from the payment by Ford to the institution of the action, and we are of the opinion that the five-year statute of limitations does not apply.

[1, 2] The evidence here presents a plaintiff, who, at the instance of a defendant whom he regards as a friend, became a surety on three sale bonds. He has no interest in the transaction. He is compelled to pay two of the bonds and interest. He receives no benefits from the sale or purchase. He took the precaution, however, before signing the bond, to have Margaret Jones, the purchaser at the sale, to transfer to him her bid and the benefits thereunder. This was for Ford's protection and was entirely satisfactory to all parties at the time. The mon

ey thus paid in by plaintiff, Ford, was ap-gage to the building association, nor can it plied to the extinguishment of the debt of be asserted that Yantis either knew or had Lizzie Jones to Yantis, and to secure which reason to suspect that Lizzie Jones was menshe mortgaged the property herein involved. tally unbalanced at the time the deed or In other words, this friend, the plaintiff, mortgage was made to him. He was acting Ford, was required to and did pay two of in perfect good faith. In fact, she appears to the three sale bonds, amounting to $1,408.23, have been entirely capable of making either and this sum, plus the amount paid by Mar- a deed or mortgage on June 30, 1905, when garet Jones (first sale bond), extinguished this instrument was executed, and the learned the entire debt of Lizzie Jones to Yantis and chancellor below found her to be of sound saved the property of Lizzie Jones. Ford was mind at that time. By agreement of the obligated for the amount of the bonds and parties and judgment of the court, the instrupaid the debt of the defendant Lizzie Jones. ment purporting to be an absolute deed, He did not make the payment voluntarily, bearing date June 30, 1905, was declared to be but was compelled to do so, to save his prop- a mortgage only. This enabled Lizzie Jones erty from sale under execution then in the to have all money arising from the sale in hands of the sheriff and levied upon his prop- excess of the lien debts, and is all that equity erty. Such a payment of the debt of another or good conscience will allow. She will not by a surety cannot be said to be voluntary, be permitted to take the money of the plainbut is such a payment as the principles of tiff, ord, to pay off a mortgage against her equity declare entitle the payor to be sub-property, and deny recourse to her benefacrogated to the rights of the payee. The plain-tor. tiff, Ford, having been compelled to pay the debt of Lizzie Jones, contracted first to the building and loan association and afterwards, by mortgage to Yantis, is entitled to be placed in the shoes of Yantis and the building association. Equity will not allow Lizzie Jones to accept the benefits and renounce the burden. Ford, by paying to Yantis his debt, and saving the property of Lizzie Jones from sale, placed himself in Yantis' position, and Lizzie Jones, in equity and good conscience, will not be permitted to say that Ford shall not be subrogated to the rights of Yantis under his mortgage lien. To hold otherwise would entail gross injustice.

This court, in the case of Ft. Jefferson Improvement Co. v. Dupoyster, 112 Ky. 793, 66 S. W. 1048, 24 Ky. Law Rep. 1199, 2 L. R. A. (N. S.) 263, used this language:

"The doctrine of subrogation is one of equity, to promote justice, and it may or may not arise from a contract. The right to it depends upon the facts and circumstances of each particular case, and to which must be applied the principles of justice. Where a person furnishes money to pay the debt of another, if it is equitable that he should be substituted for the creditor, it will be done."

The subject of subrogation is treated by many text-writers, but we find no better definition than that in 37 Cyc. 363, which is as follows:

"Subrogation is the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt. The doctrine is one of equity and benevolence, and, like contribution and other similar equitable rights, was adopted from the civil law, and its basis is the doing of complete, essential, and perfect justice, between all the parties without regard to form, and its object is the prevention of injustice. The right does not necessarily rest on contract or privity, but upon principles of natural equity, and does not depend upon the act of the creditor, but may be independent of him and also of the debtor."

No one contends that Lizzie Jones was not of sound mind when she first made the mort

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The judgment is reversed and remanded, with directions to enter judgment in favor of plaintiff, Ford, for the amount of his debt against Lizzie Jones, and adjudging a lien upon the property described in the substituted petition for the payment of the same, with interest thereon at 6 per cent. per annum from date of the payment of the bonds, and the cost of the action, subject, however, to such payments of interest, if any, as have been made by or for Lizzie Jones.

GOAD v. LEWIS et al.

(Court of Appeals of Kentucky. March 2, 1917.) 1. CORPORATIONS 121(5) — SUIT TO RECOVER PRICE OF STOCK-VALUE-SUFFICIENCY OF EVIDENCE.

In suit to recover the purchase price of shares of stock in a fire insurance agency company, evidence held sufficient to show that the stock had a market value of at least $50 a share when plaintiff acquired it, trading his property therefor, and was not worthless as he alleged. 2. CORPORATIONS 121(1) ACQUISITION OF STOCK RECOVERY OF PRICE SUBSEQUENT DEPRECIATION.

If corporate stock had a market value when it was taken in a trade for property, the party who received it cannot complain, though it subsequently became worthless.

[Ed. Note.-For other cases, see Corporations, Cent. Dig. & 504.]

Appeal from Circuit Court, Barren County. Suit by C. A. Goad against G. R. Lewis and Lawrence G. Warder. From a judgment dismissing the petition, plaintiff appeals. Judgment affirmed.

C. E. Boles and C. H. Hatchett, both of Glasgow, for appellant. Baird & Richardson, of Glasgow, for appellees.

MILLER, J. This is a suit by the appellant Goad to recover the purchase price of 14 shares of the capital stock of "the Glasgow Mutual Agency Company," sold to him

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

by the appellees George R. Lewis and Law-| paid. A dividend of 8 per cent. was declared rence G. Warder.

in 1907, and a like dividend in 1908; while a dividend of 71⁄2 per cent. was declared in January, 1911. At this time the appellant Claude A. Goad owned a house and lot in Glasgow, which he had bought from the John Lewis Planing Mill Company, and upon which there was a lien for $1,200, and some interest. By their deed dated November 25, 1911, C. A. Goad and his wife conveyed the house and lot to Warder and Lewis in con

On August 1, 1907, the Glasgow Mutual Agency Company was incorporated with a capital stock of $20,000. It was authorized "to act as agent and employé of other persons, companies, and corporations, and to employ, select, and appoint agents of other persons, companies, and corporations, and to acquire and hold property as agent, employé, ' and trustee of other persons, companies, and corporations, and to acquire and hold prop-sideration of their assuming the lien above erty for itself." The immediate purpose of the corporation seems to have been the consolidation of the fire insurance business in Barren and adjoining counties. At that time Huff & Huff and Lewis, Hawkins & Co. were successful fire insurance agencies in Glasgow, Barren county.

By a writing dated August 30, 1907, Huff & Huff conveyed their insurance business to G. R. Lewis and L. G. Warder for a consideration of $5,500 and the agreement upon the part of Huff & Huff not to engage in the insurance business in Barren, Monroe, Columbia, Clinton, Wayne, Adair, Allen, Metcalfe, and Hart counties for a period of five years; and about the same time and upon the same condition, Lewis, Hawkins & Co. conveyed their insurance business to Lewis and Warder for $3,500. Lewis and Warder in turn assigned their contracts with Huff & Huff and with Lewis, Hawkins & Co. to the insurance firm of Lewis, Warder & Co., composed of the defendants George R. Lewis, L. G. Warder, and John T. Hawkins.

referred to, "and other valuable considerations which have been accepted by C. A. Goad." The unspecified part of the consideration consisted of $140 in cash, and 14 shares of stock in the Glasgow Mutual Agency Company, which Goad says were put in at the agreed valuation of $65 per share. Giving the stock a valuation of $65 per share, the aggregate consideration was $2,250. It does not clearly appear that the agency company paid any dividend after Goad acquired his stock in November, 1911, although it is intimated by one witness that Goad collected at least one dividend. That, however, is not important, since it is agreed by all the witnesses that by the time this suit was begun the agency company had become bankrupt.

On January 28, 1915, Goad brought this action against Lewis and Warder to recover $910, the alleged purchase price of the 14 shares of stock at $65 per share, upon the ground that they were worthless when he bought them in 1911, and that they had been sold to him through the fraudulent misrepresentation of Lewis and Warder, as to their value. By their answer, which they sustain

In September, 1907, Lewis, Warder & Co. transferred their insurance business, thus consolidated, to Basil Richardson and his as-ed by their testimony, Lewis and Warder desociates for the sum of $20,000, and by an indorsement upon the contract of September 27, 1907, Richardson and his associates sold their contract with Lewis, Warder & Co., and all their rights and interests thereunder, to the Glasgow Mutual Agency Company for and in consideration of that corporation issuing and delivering to each of the assignors the number of shares of stock of the Glasgow Mutual Agency Company specified in the assignment. In this way Lewis became the owner of 35 shares and Warder the owner of 40 shares of the stock of the Glasgow Mutual Agency Company.

The contract whereby the company became the owner of the business of Lewis, Warder & Co. was the only asset which the Glasgow Mutual Agency Company ever acquired, although its articles of incorporation seem to indicate that its proposed sphere of action was much broader.

Beginning with September, 1907, the Mutual Agency Company received the profits of the business of Lewis, Warder & Co., and declared several dividends ranging from 7 to 8 per cent. annually. The minutes are quite irregular and imperfect; but it is agreed by the witnesses that dividends other than those shown by the minutes were declared and

nied that the house and lot were taken at an agreed valuation of $2,250, or that any valuation was placed by the parties upon the stock. On the contrary, they say they made a trade for the Goad property in which they agreed to assume and pay the lien for $1,200, to pay $140 for some urgent purpose, such as the payment of taxes then due upon the property, and 14 shares of stock in the Glasgow Mutual Agency Company. They deny the charge of fraud, and say that Goad made the trade after satisfying himself that the stock was worth whatever price he put upon it in making the trade. The court dismissed the petition, and Goad appeals.

It will thus be seen that the issue is entirely one of fact, and that it is of a narrow scope.

It is charged in the petition that the corporation never made any money, and that it borrowed the money with which it paid the dividends. Goad testified explicitly that Warder represented to him that the stock was worth $65 per share, when, in reality, it was worthless, and that Lewis joined Warder in the representation. They, however, contradict Goad in this respect, and say they merely told him what dividends the

stock had been paying, and that in their opinion it was good stock. The question of misrepresentation may be put to one side, since the judgment will have to be affirmed upon the issue made as to the actual value of the stock.

In giving his opinion that the stock had no value on November 25, 1911, at the time he made the trade, or at any other time, Goad is sustained only by the testimony of W. C. Turner, who was a stockholder and director in the Glasgow Mutual Agency Company. On the contrary, there is proof by several witnesses that the stock had sold as late as 1913 at $50 per share, and that it had sold at prices ranging from $40 to $60 on other occasions. Furthermore, Holman bought some of the stock in 1908 at $55 per share, and sold a part of it in 1913 at $50; and he says it was worth at least $55 in November, 1911, when Goad acquired his stock. Furthermore, it appears from the testimony of persons versed in the fire insurance business, that in view of the fact that Lewis, Warder & Co. represented 12 or 13 old line companies in six counties, with a renewal list of from $12,000 to $17,000 per annum in premiums, the stock of the agency company was worth from $50 to $60 per share. Moreover, the collapse of the company is accounted for by the fact that Warder, who was an unusually active and able fire insurance man, and had charge of the business from beginning, became addicted to the drink habit to such an extent as to permanently impair his usefulness as a business man. By reason of that fact, the business was neglected, became unprofitable, and resulted in disaster. Furthermore, it appears from the testimony of Jewell, the man who built the Goad house for the John Lewis Planing Mill Company, that the lot was worth $300, and that the house cost $1,250. In Jewell's opinion the property was worth from $1,750 to $1,800 in No vember, 1911. At that time the lien upon the property, with accrued interest, amounted to $1,236; and, counting the stock as worth $40 per share, and adding $140 paid in cash, we have an aggregate of $1,076 received by Goad, which was the full value of the property, according to Jewell.

[1] It thus appears that the stock did have a market value of at least $50 per share at the time Goad acquired his stock in November, 1911, and that the proof wholly fails to support the allegations of the petition in this respect.

[2] If the stock then had the market value at which it was taken by Goad, in the trade, he is in no position to complain, although it subsequently became worthless. The proof sustains the finding of the chancellor that the stock had the value at which it was acquired by Goad.

Judgment affirmed.

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In 1888 plaintiff's brother procured a patent to land, and in 1889 plaintiff secured a patent to other lands in the same community, and, there being a dispute between the brothers as to an alleged overlap, the brother conveyed to plaintiff a half interest in the overlap, plaintiff and his wife at the same time conveying to the brother other lands, their deed reciting that the consideration was the conveyance of a half interest in the overlap. The deeds were placed on record, and less than a month from the execution of the deeds plaintiff conveyed three parcels of land to defendant, one of them conforming to the description of the half interest in the overlap conveyed by his brother. The brother conveyed to defendant the remainder of the parcel covered by his patent. Held, that plaintiff was estopped many years thereafter to assert title to the other half interest in the overlap which was covered by the deed from his brother, for plaintiff's claim was stale, and he had accepted a deed showing ownership in his brother, and had acquiesced in defendant's acts of ownership under the deed from his brother.

[Ed. Note.-For other cases, see Estoppel, Cent. Dig. §§ 81, 183, 185, 187.] 5. DEEDS 194(5)

TIONS.

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Defendant pleaded an estoppel in that plaintiff with full knowledge allowed defendant to purchase the land in controversy from his brother and stood by and acquiesced in defendant's assertion of title. Held, that proof that plaintiff accepted a deed from his brother to one-half and stood by and acquiesced in the sale by the of the land as to which their patents conflicted, brother of the other half to defendant, established the estoppel pleaded; the representations contained in the deed between his brother and plaintiff, and shown by his acceptance, being

continuing.

[Ed. Note. For other cases, see Estoppel, Cent. Dig. § 305.]

Appeal from Circuit Court, Knox County. Action by A. B. Helton, Sr., against the North Jellico Coal Company. From a judg

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

ment for plaintiff, defendant appeals. Re- red oaks, corner to A. B. Helton's survey on a versed, with directions.

Black, Black & Owens, of Barbourville, and J. P. Hobson & Son, of Frankfort, for appellant. J. D. Tuggle and J. B. Campbell, both of Barbourville, for appellee.

THOMAS, J. On December 23, 1889, the appellee (plaintiff) procured a patent for 30 acres of land in Knox county, Ky., which was based on a survey made December 8, 1887. Prior to that time plaintiff's brother, G. W. Helton, had, on May 20, 1887, procured a survey for 21 acres of land located in the same county upon which there was issued to him a patent on May 31, 1888. The fifth corner of plaintiff's patent is Devil's Gap, the location of which is well known in that community, and the fourth corner of his survey and patent is a red oak, at which point it is conceded that instead of one there are two red oaks. The call between the fourth and fifth corner is "N. 71° E. 44 poles." One of the corners of G. W. Helton's survey and patent is also located at Devil's Gap.

Directly after the plaintiff procured his patent, which is junior to that of his brother, a dispute arose between them over about 12 acres of land which is covered by plaintiff's patent, lying southeast of the fourth call above in his patent which runs between the two red oaks and Devil's Gap. It was the contention of G. W. Helton that his survey and patent covered the 12 acres lying southeast of that line, and, his patent being senior to that of plaintiff, the 12 acres belonged to him. After some parleying the parties seemed to have agreed upon a settlement arising out of the disputed 12 acres of land, by the terms of which plaintiff and wife conveyed to his brother, G. W. Helton, another small tract of land not connected with this suit, and G. W. Helton and wife conveyed to plaintiff a one-half undivided interest in and to the disputed 12 acres. Both of these deeds were executed on the 12th day of March, 1891, and both were acknowledged on that day. In the deed which plaintiff and wife executed to his brother the consideration is stated to be:

"For and in consideration of the sum of a half interest of a piece of land on the southeast side of a line run straight from the Devil's Gap to two red oaks, corner to a survey of A. B. Helton, and a line of a 50-acre survey of William Helton. This is a part of a 21-acre survey made and patented to G. W. Helton, the receipt of which is hereby acknowledged."

In the deed of G. W. Helton and wife to plaintiff the consideration is stated to be the land which A. B. Helton and wife conveyed to G. W. Helton, and the description of the land being conveyed by that deed is:

"A certain parcel or tract of land, being in the county of Knox and state of Kentucky, a portion of the 21-acre survey made and patented to G. W. Helton, this being a one-half interest in a portion of said survey on the southeast side of a line straight from the Devil's Gap to two

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line of a survey made by William Helton."

There was never any deed of partition made between A. B. and G. W. Helton of the 12 acres in question, but on April 2, 1891,

within less than a month from the execution of the deeds between them, plaintiff executed a deed to three separate tracts of land to the appellant (defendant), the third tract being for 61⁄2 acres, and conforming to the description of the southeast half of the 12 acres. On that same day G. W. Helton executed a deed to the defendant for the land covered by his 21-acre patent, which he and defendant claimed not only covered the northwest half of the 12 acres (the land involved here), but all of the 12 acres. Previous to the conveyance made to the defendant the overwhelming weight of the evidence shows that there had been an oral division of the 12 acres, allotting to G. W. Helton the northwest half and to A. B. Helton the southeast half, the division line being designated on the map found in the record as running between the figures 7 and 8. These deeds to the defendant were each acknowledged by the respective grantors before the same officer, and shortly after their execution were put to record. For some time the defendant has been operating a coal mine, and has extracted a considerable amount of coal from the northwest half of the 12 acres referred to (lying immediately southeast of the line between Devil's Gap and the two red oaks), and this suit was filed by plaintiff against the defendant to recover that portion of the 12 acres, as well as damages for coal removed therefrom, and injury to and destruction of timber in a total sum of $5,100, upon the claim that the land is covered by his patent, and not by his brother's patent.

The answer is a denial of all of the allegations of the petition, and asserts title to the land in the defendant, and in another paragraph an equitable estoppel is pleaded against plaintiff's right to recover either the land or any sum in damages. The facts alleged in the answer which is claimed estops plaintiff are that the defendant had purchased the land in controversy (being only about 6 acres) from another (G. W. Helton) and paid a valuable consideration therefor, and that plaintiff had full knowledge of the sale of the land to defendant by the other person (G. W. Helton), and stood by and acquiesced therein, and admitted and represented such other person to own the land and acquiesced in its sale. Upon the trial of the case there was a verdict in favor of plaintiff for $1,000, upon which judgment was rendered, and he was also adjudged to be the owner of the land in controversy. Complaining of that judgment, this appeal is prosecuted.

[1] A great deal of the testimony, as well as argument of counsel, is directed toward the location of the land covered by the two patents, one issued to G. W. Helton, and the

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