allegations of misappropriation or diversion are denied in the answer, which sets out at length the particulars of the transaction, which are, in my judgment, sustained by the proofs. The payments which are complained of ($400,000 in cash and $700,000 in stock of the Kentucky Company), which were paid for two of the distilling properties which the Kentucky Company was formed to purchase, were portions of the entire payment agreed to be made by the Kentucky Company (about $29,000,000 in stock or cash) to one Stoll, who had options or controlled the properties (over 50 in number) as the vendor for the entire properties, to be conveyed according to the prospectus and underwriting agreement to which complainants were parties. As against the purchaser (the Kentucky Company), Stoll, as the vendor, retained under the arrangement the right to apportion or divide the consideration among the different grantors; and it was under this reservation to Stoll, the vendor, that the Spirits Manufacturing Company, the owner of two of the fifty or more properties conveyed, received the payments now questioned, on making the conveyance to the Kentucky Company. To require now the Spirits Manufacturing Company or its directors to account for or repay this portion of the entire consideration to the Kentucky Company, which has received the properties and retains them, would be, in effect, to make a new bargain for the purchase, and in the absence of Stoll. This suit is not appropriate for the trial of a question of this character, and the charge that the alleged diversion was the result of any fraud or breach of trust on the part of the directors of the Kentucky Company for the benefit of the Distilling Company or its directors is not sustained by the proofs.

The remaining question, as to diversion of assets of the Kentucky Company charged by the amended bill, arises out of the following facts appearing by the answer and proofs: The Kentucky Company has organized under the laws of West Virginia two subsidiary companies for the purpose of selling and distributing some of the whiskies which it manufactures to retailers. It conveyed to each of these companies a portion of its stock of whisky-to one company, whisky valued at $75,000, and to the other an amount valued at $900,000-for which it has received full-paid capital stock of the respective companies to these amounts. These sums are the entire capital stock of the companies, and this stock in both companies is owned by the Kentucky Company, and is controlled by it through its nominees, who are employés, subject to removal. The company with the capital of $75,000, called the "Y Company" in the proofs, was formed for the purpose of selling to the retail trade, direct, a particular brand of whisky manufactured by the Kentucky Company, and, according to the evidence of Mr. Bradley, the president of the

As

company, it has been successful and profitable; the Kentucky Company selling to the Y Company its whiskies at a profit, and in turn making a reasonable profit upon the capital of the Y Company. With the Z Company, capitalized at $900,000, business of the same character is transacted, but on a larger scale, and at present it supplies the largest outlet for the product of the Kentucky Company; distributing about 50,000 barrels a year, upon which both the manufacturers' and retailers' profits are made. The Kentucky Company is also the owner of another distributing company, which was previously organized, called the "W Company," the stock of which it purchased and controlled. The W Company distributes for the Kentucky Company annually between 20,000 and 30,000 barrels-about one-seventh of its entire product-and is doing now a business of about $100,000 monthly. The business and property of the W Company, including its good will, was purchased for about $150,000. appears by its certificate of incorporation, the Kentucky Company was formed for the manufacture, sale, and dealing in whiskies, and also for the purpose of carrying on any part of its business, and to invest in all kinds of property, real or personal, within or without the state of New Jersey, including the shares of stock of other corporations. The right of the Kentucky Company, under the charter and under the laws of the state, to purchase the stock of the pre-existing company-the W Company-for the purpose of its business was not contested at the hearing. It cannot be questioned, I think, that the method of distribution of its products by the machinery of subsidiary companies, considered merely as a matter of business management, is one with which this court will not interfere; nor will it attempt to control the business judgment of the directors, which appears to have been honestly exercised. The only question is that of power of the Kentucky Company to invest its capital and organize such companies for this purpose. The doctrine of ultra vires, where it concerns purely a matter of business management of the corporate property by the directors or by the company, and where the power is called in question by a stockholder, must be applied reasonably, and not unreasonably. The rule applied in these cases is the one announced by Lord Selbourne, in the House of Lords, in Atty. Gen. v. Directors, etc., of Great Eastern Railway Co., 5 App. Cas. 473, 49 L. J. Ch. (N. S.) 545, 547 (1880), and approved by Vice Chancellor Green in Ellerman v. Chicago Junc. R. Co., 49 N. J. Eq. 242, 23 Atl. 287. This rule is that whatever may be fairly and reasonably regarded as incidental to or consequential upon those things which the Legislature has authorized ought not (unless expressly prohibited) to be held by judicial construction to be ultra vires. The Legislature has here expressly authorized the manufacture and sale of a product,

and this sale may undoubtedly be either at wholesale or retail. It has also, by the certificate, authorized the purchase of stocks of other corporations for the purpose of this business of selling, and by the express provisions of the corporation act (section 51) has also authorized the purchase of the stock of corporations of other states. Considering this fifty-first section of the statute to be subject to the implied limitation that the purchase and ownership must be for the purposes of the business, this condition is complied with in the present instance, for the purchase and ownership is exclusively for the promotion of the business of the sale or distribution of the product manufactured by the company. The ownership of stock of other corporations for the purpose of the corporate business is the substantial thing authorized in these provisions, and in the case of a private business corporation, exercising no public franchise of any kind, the method of acquiring such ownership of stock is incidental only. The second section of the corporation act of 1896 expressly authorizes corporations to exercise all the powers contained in the act, so far as the same are necessary or convenient to the attainment of the objects set forth in the charter or certificate. Under this provision, no question is or can be raised as to the power of purchasing stocks of existing companies for the purpose of accomplishing the distribution of the product; and, in my judgment, the organization of subsidiary companies for the same purpose and with the same object may be fairly and reasonably regarded as incidental to or consequential upon the business which is expressly authorized, and convenient for the attainment of its objects, and should not by a judicial construction be held to be ultra vires. As to companies in which New Jersey Companies may hold stock, and the states in which subsidiary companies may be organized, it may be that the late decision of the Court of Errors and Appeals in Coler v. Tacoma Railway Co. (March, 1903), 54 Atl. 413, limits the power of New Jersey companies to hold stock of corporations of other states to the holdings of stock in companies organized in states whose laws authorize their own domestic corporations to hold stock in and control their own domestic companies. In the Coler Case the Court of Errors and Appeals, on the application of the stockholder of a New Jersey Company which owned a railroad in the state of Washington, enjoined the sale of the railroad to a Washington Company in consideration of stock of the Washington Company; one ground being that, under the statutes of Washington and the decisions of the Washington courts, a Washington corporation had no power to purchase or hold the stock of a Washington Company, and that it must therefore be concluded by the courts of this state that the ownership of the stock of a Washington corporation by a foreign corporation was against

the public policy of Washington, and, this holding and control being thus against the public policy of the state of Washington, it should be enjoined in New Jersey. In the present case there is no proof as to the statutes or decisions of the state of West Virginia upon the question of the right of a West Virginia corporation or of a foreign corporation to hold stock in a West Virginia corporation; and it must, in the absence of such proof, be assumed, under the laws of evidence, as well as of comity, that the laws of West Virginia are similar to our own laws, and authorize the Kentucky Company, formed under our laws, to exercise within the limits of West Virginia the powers conferred upon it under our statutes and its charter. The law of comity, settled in American jurisprudence by the decisions to which I referred at some length in my opinion in Coler v. Tacoma Ry. Co., 53 Atl. 680, is that a corporation of one state of the Union may exercise within another state all the powers of its charter, to the extent that its exercise thereof has not been prohibited in such other state, or affirmatively declared by the Constitution, statutes, or decisions of such other state to violate its own public policy. Such violation of the declared public policy of a foreign state must be proved, and cannot be assumed.

The questions above considered are a!! of the claims for relief raised by the bill or amended bill which were relied on at the argument, or briefs on final hearing, and the only remaining question is the application of complainants to amend the bill. This application, which was made after the closing of the proofs and at the time fixed for argument of the cause, is resisted. No application is made to open the proofs, and the general rule applicable to amendments applied for under such circumstances is that amendments may then be made, if necessary and proper, in order that issues which have been in fact tried by the parties, and upon which both parties have been practically and fully heard, may be formally set out in the pleadings, so that the pleadings may conform to the proofs. Story, Pl. 905, and cases cited in Ogden v. Thornton, 30 N. J. Eq. 569, 573. But complainant cannot amend at the hearing in order to present a new or inconsistent case. Pasman v. Montague, 30 N. J. Eq. 385, 393, (Runyon, Ch., 1879); 1 Dan. Ch. Prac. (6th Am. Ed.) 418, note "a." The amendment sought is to add a claim that complainants, as the preferred stockholders of the Kentucky Company, under the certificate of incorporation, are entitled to receive a stated dividend, payable quarterly, from the net profits arising from the business of the company; that net profits applicable to such dividends have been accumulated, but have not been paid. A prayer is added that such dividends may be directed to be declared and paid by the Kentucky Company to the complainants. It is manifest that this cause of

action concerns the Kentucky Company and its directors alone, and that the parties to this suit, other than the Kentucky Company and its directors, have no interest in this litigation. This amendment would make the bill multifarious. This claim, also, is for the specific performance of the contract to pay dividends, based on the valid, continuous existence and management of the Kentucky Company as a going corporation. It is therefore inconsistent with the case and claim for relief set up in the bill, which are based upon the supposed illegality of the management of the company, and pray for its dissolution and winding up by this court, and for the repayment to complainants of the amounts paid for their stock. It is also a claim as to which no notice was given in the issues made up on the pleadings, and to which no evidence has been specially directed, and upon which the Kentucky Company and its directors have not been heard.

The application to amend is denied, and the bills must be dismissed.

to transact business, and did not apprehend the nature of his act. Held, that a decree compelling the repayment of the money was justified. 2. Where the repayment of money given by a father to his son is compelled because of the mental incapacity of the father at the time of making the transfer, it is proper to order that the money should be paid to the guardian of the father, who was appointed after the suit for reconveyance was begun.

Appeal from Court of Common Pleas, Wayne County; Purdy, Judge.

Bill by John Polt against Joseph Polt. Decree for plaintiff, and defendant appeals. Affirmed.

The court below found the following facts and conclusions of law:

"Findings of facts: On September 4, 1900, the defendant obtained from the plaintiff a transfer of $1,635 from the plaintiff's account in the Wayne County Savings Bank to that of his own, by means of a check given by the plaintiff for this amount without consideration. At the time of this transfer the plaintiff, then eighty years of age, was having trouble with his family, was in great mental distress, and was largely under the influence and control of his son, the defendant. In giving the check to the defendant, the design of the plaintiff was to put the money beyond the reach of his wife and other members of his family; and, while he was not a lunatic, his mental condition was such that he did not understand the legal effect of the transaction, or that he was putting the money beyond his control, but supposed it was to be for his use as before. This money so transferred was substantially all of the property the plaintiff owned, except a lot of land which was fully covered by a judgment for $1,500 which he had confessed to the defendant but a short time before. The money still remains to the credit of the defendant in the Wayne County Savings Bank, no other rights having intervened. The transfer was not the intelligent and deliberate act of John Polt, the plaintiff, but was made under mental stress, without a clear understanding of its legal effect, and was an improvident disposition of his property.

"Conclusion of law: The defendant should be declared a trustee of the said money for the benefit of the plaintiff; the same to be paid to the plaintiff, or to such person as may be legally authorized to receive it for him.

"Decree: This cause came on to be heard at an adjourned court held January 14, 1902, and was duly argued by counsel, and determined by the court that the said plaintiff was entitled to the relief asked for in his bill, but that the said plaintiff was not of sufficient ability to properly care for the money due him; and the exceptions of the defendant to the decision of court having been considered and dismissed, and the or phans' court of said county, upon petition for said purpose, having appointed C. C.

Jadwin guardian of said plaintiff, and upon due consideration thereof, it is now, July 14, 1902, ordered, adjudged, and decreed that the said Joseph Polt, defendant, be, and hereby is, declared a trustee of $1,635, deposited in the Wayne County Savings Bank on September 4, 1900, to the credit of Joseph Polt, together with the accrued interest thereon, for the benefit of said John Polt, and the said Wayne County Savings Bank is hereby ordered and directed to pay the said sum of $1,635, with the accrued interest thereon, to C. C. Jadwin, guardian of said John Polt, and that the costs of this proceeding, with reasonable counsel fees for plaintiff, be paid by said guardian from the said fund so to be received by him as aforesaid."

Argued before DEAN, FELL, BROWN, MESTREZAT, and POTTER, JJ.

H. Wilson and P. H. Hoff, for appellant. F. P. Kimble and E. C. Mumford, for appellee.

Be

PER CURIAM. The plaintiff is an old man, of 80 years. He had on deposit in the Wayne County Savings Bank $1,635. On September 4, 1900, he transferred to his son, Joseph Polt, this defendant, the full amount of this deposit. It constituted his entire estate. He had not a dollar left. sides the son, he had a wife and daughter. The court below found, on ample evidence, that the old man at the date of the transfer lacked mental capacity to transact business, and did not comprehend the nature and consequences of his act. Besides the evidence of witnesses, the learned judge saw the father in court, and observed his appearance and conduct. In the interval between hearing and final decree, in proper proceedings, a guardian was appointed for the father, to take charge of his estate, and then the money was ordered paid to this guardian. It is probable that the orderly procedure would have been to have had the guardian appointed first, and then have instituted this proceeding in equity, but that is now unimportant.

The decree is affirmed on the findings of fact by the court below.

(205 Pa. 114)

DEVINE v. FRANKFORD STEEL & FORGING CO. et al. (Supreme Court of Pennsylvania. Feb. 11, 1903.)

CORPORATIONS-ACTION BY MINORITY STOCKHOLDER-SETTING ASIDE CON

TRACT-RECEIVER.

1. A minority stockholder sued to set aside an alleged fraudulent contract between the corporation and another corporation, the majority stockholders in both companies being the same, and making parties defendant the two corporations and the majority stockholders. The bill stated that, because of certain representations made to the complainant, she was induced at a stockholders' meeting to vote in favor of the contract, and that the company in which she

was a stockholder had been deprived of profits for the benefit of the other company, and that it was proposed to transfer the business of her company to the second company. The court appointed a receiver, and enjoined the officers from removing the machinery of plaintiff's company, or changing its mode of operation, until final hearing of the bill. Held, that the appointment of the receiver should be reversed, but the decree affirmed in other respects, but so as not to prevent the officers of plaintiff's company from operating it, or removing such employés thereof as they deemed fit.

Appeal from Court of Common Pleas, Lawrence County; Wallace, Judge.

Bill by Annie M. Devine against the Frankford Steel & Forging Company and others. Decree for plaintiff, and defendants appeal. Modified.

The bill averred in substance that plaintiff was the owner of 205 shares of stock of the Frankford Steel & Forging Company, and that the defendants were the owners of a majority in interest of the capital stock of the Frankford Steel & Forging Company and the Tindel-Morris Company; that Tindel and Morris, through their control of the two corporations, fraudulently conspired to bring about an agreement between the two companies, by which the Tindel-Morris Company was to take over the business of the Frankford Steel & Forging Company in consideration of the guaranty by the Tindel-Morris Company of a dividend of 10 per cent. per annum upon the capital stock of the Frankford Steel & Forging Company; that plaintiff was induced to vote in favor of this agree ment at a stockholders' meeting by reason of misrepresentations made to her by Tindel and Morris. The complaint charged that: "(7) Your oratrix is informed and believes, and so charges, that the consideration for said transfer by the Frankford Steel & Forging Company of its business to the Tindel-Morris Company was appropriated by said Tindel and Morris; that said transfer was made illegally, without proper warrant or authority, upon terms and conditions that were unfair, inequitable, and unjust to the Frankford Steel & Forging Company and its stockholders, and that said arrangement, contract, or agreement, in whatever form made, would never have been made except for the fact of the conspiracy, confederacy, and fraudulent intent of said Tindel and Morris as aforesaid, and could never have been effected except through the control of both of said companies by said Tindel and said Morris, who by specious promises lulled the suspicions of your oratrix, and induced her by protestations of friendship and interest in her and her children to consent to such transfer, she at the time having no sufficient knowledge or information in the premises to enable her to form any intelligent opinion upon the subject." The defendants, in their affidavits, denied that there had been any misrepresentation. The court granted a preliminary injunction enjoining the defendants Adam Tindel, L. I. Morris, and the Tindel

Additional Opinion.

Morris Company from in any manner interfering with the present operation of the Frankford Steel & Forging Company, and the said Tindel and Morris and other officers of the Frankford Steel & Forging Company from in any manner interfering with the present management and operation of said Frankford Steel & Forging Company, and from dismissing, discharging, or removing any of the managers, employés, or operatives of said Frankford Steel & Forging Company, except by and with the consent of its present superintendent and manager, Robert F. Devine; and that the said Tindel and Morris and the officers of said Frankford Steel & Forging Company be further inhibited and enjoined from discharging, dismissing, or removing until the further order of court said Robert F. Devine, as manager and superintendent of said Frankford Steel & Forging Company; and the said Frankford Steel & Forging Company and its officers and managers are inhibited and enjoined from in any manner dismantling the plant, removing its machinery, transferring the same, or otherwise changing its present method of operation. Subsequently the court continued the injunction, and appointed receivers to take charge of the property, estate, and effects of the Frankford Steel & Forging Company, and to manage the same, make all contracts necessary to keep it in operation, conduct and manage its business, employ the necessary clerks, assistants, laborers, and workmen to carry on and conduct the business as heretofore conducted, etc., and to demand of Adam Tindel, L. I. Morris, and Tindel-Morris Company that they turn over to the said receivers all the orders received by them for the manufacture of products by the Frankford Steel & Forging Company, and all other orders for the manufacture of products hereafter coming into their possession for the use, benefit, and advantage of the said the Frankford Steel & Forging Company.

Argued before MITCHELL, DEAN, BROWN, MESTREZAT, and POTTER, JJ. John G. Johnson and E. Hunn Hanson, for appellants. A. Leo Weil, Winternitz & McConaghy, and Charles M. Thorp, for appellee.

PER CURIAM. And now, to wit, February 11, 1903, this case having been argued and considered, it is adjudged and decreed that so much of the injunction as prohibits and enjoins the Tindel-Morris Company and the Frankford Steel & Forging Company and the officers thereof from in any manner dismantling the plant, removing its machinery, or otherwise materially changing its present method of operation until final hearing is affirmed. The rest of the injunction is reversed and dissolved, the appointment of receivers is revoked, and they are ordered forthwith to turn over the property to the officers of Frankford Steel & Forging Company, and file an account of their transactions.

(Feb. 20, 1903.)

It appearing that question has arisen as to the extent of the decree of February 11, 1903, it is now further adjudged and decreed that the officers of the Frankford Steel & Forging Company are not enjoined from discharging or removing the superintendent and such of the managers, employés, and operatives of the said company, including Robert F. Devine, as they may deem expedient, and the said officers shall have full authority and control over all matters concerning the conduct of the works pursuant to the method of operation which was in existence at the time the special injunction issued.

(205 Pa. 119)

In re LESIEUR'S ESTATE. Appeal of JOLY. (Supreme Court of Pennsylvania. Feb. 23, 1903.)

WILL-CONSTRUCTION "LEGAL REPRESEN

TATIVES."

1. Testator devised certain real estate in trust for his niece during life, with power of appointment by will of the principal, "or, in default of a will, to her legal representatives." The niece died, leaving a husband and two children surviving. Held, that he could not take a share of the estate as a legal representative of his wife.

Appeal from Orphans' Court, Philadelphia County; Ashman, Judge.

In the matter of the estate of Louis Lesieur, deceased. From a decree dismissing exceptions to the adjudication, Charles Joly appeals. Affirmed.

An attachment sur judgment was presented as a claim against a debt alleged to be due by testator to the executor, John C. Springman, the accountant. The court found as follows: "Mr. Brightly offered in evidence a copy of an attachment sur judgment wherein Charles Joly is plaintiff, John C. Springman defendant, and John C. Springman, executor, is garnishee, issued March 15, 1899, from court of common pleas No. 3, to December term, 1894, No. 620; real debt, $2,770.87. Interest from March 1, 1899, and costs, which was duly served upon said defendant, and as garnishee. By said writ, it appears, were attached, inter alia, 'debts due to John C. Springman, which came into the hands of Louis Lesieur, executor of the last will and testament of Alfred Nicholas Verrier, deceased, and which became due the said John C. Springman by the said Louis Lesieur, executor as aforesaid, in his lifetime, and which has since come into the hands of the said John C. Springman as executor of the said Louis Lesieur, deceased, or which became due and owing the said John C. Springman by the said Louis Lesieur in his lifetime.' Mr. Brightly also offered in evidence a copy of a will executed by A. N. Verrier on June 14, 1866, by which, inter