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plaint set out specifically the items of claim-, livered are not the articles which the vendee ed damage in the sum of $1,000, and asked agreed to purchase, and there is an implied that the judgment be set off against such warranty that the articles shall answer the judgn:ent as the appellant might recover un- character called for or be of the quality de der his complaint. To the cross-complaint scribed. Here, however, under the pleading appellant filed a demurrer in several para- in question, it was alleged that these 600 graphs, which was overruled by the court, odd head of sheep were not accessible to inwhereupon he filed a reply, and the case was spection by appellee, that he did not see heard by the court without the intervention them, that appellant pointed out certain of a jury. The court found that the allega- sheep then under examination by both tions of the cross-complaint were true, and parties, and stated to appellee that the sheep that appellee was entitled to recover the sum to be delivered under the second contract of $737 damages, and that such sum should would be of a better quality than those ex. be set off against the amount due appellant hibited, and that the lambs would weigh 60 under the note and mortgage, leaving a net and 70 pounds. This clearly constituted an sum of $74.65 due appellant from appellee. implied warranty that the sheep to be de Judgment was rendered accordingly, from livered were of the quality described, and which judgment this appeal is prosecuted by a failure on the part of appellant to comply appellant.

therewith constituted a breach of his con[1] Appellant relies upon two propositions tract, for which he was liable, unless appelfor a reversal: First, that the court com- lee waived his right by the acceptance of mitted error in not sustaining the demurrer the sheep. A case note to the case of Springto the cross-complaint; and, second, in not field Shingle Co. v. Edgecomb Mill Co., 35 sustaining the demurrer interposed by appel. L, R. A. (N. S.) 258, collects all the author. lant to the evidence at the conclusion of ities upon the question, which upon examina. cross-complainant's case. Appellant concedes tion will be found to fully support our conthat, if the cross-complaint stated facts suffi- clusion herein. Here, as stated, there was cient to constitute a cause of action, he has no opportunity for inspection, and the sheep waived the error in overruling the demurrer were sold and the note and mortgage given by filing a reply, but he insists that the cross- upon representations made by the seller as complaint wholly failed to so state a good to the quality of the sheep compared with cause of action. He relies upon two grounds samples exhibited to the purchaser, and the stated in his demurrer. First:

representations so made entered into and be "That the rule of caveat emptor applies in all came a part of the contract. such purchases of personal property, and the [2] It is true that in cases of executory cross-complainant at the time of the delivery of the sheep, as well as at the time of the pur- contracts for the sale and delivery of person. chase, had a right to buy or not to buy the al property, if the article furnished fails to sheep at the price named by the owner, and conform to the agreement, the vendee's right by future purchase, delivery, and acceptance and to recover damages does not survive an acsale of the sheep the cross-complainant will be deemed to have waived any such rights." ceptance of the property after opportunity Second:

to ascertain the defect, unless notice has

been given to the vendor or the vendee offers “That at the time of delivery and acceptance and purchase of the sheep the cross-complain- to return the property. Fairbanks Canning ant had his remedy in his hands, and need not Co. v. Metzger, 118 N. Y. 260, 23 N. E. 372, have purchased or accepted the sheep; but, aft- 16 Am. St. Rep. 753; Reed v. Randall, 29 N. er purchase and acceptance and resale, any rep- Y. 358, 86 Am. Dec. 305; Beck v. Sheldon, 48 resentations of opinion of the plaintiff as to value, 'weight, or condition of the second herd of N. Y. 365; Coplay Iron Co. y. Pope, J08 N. Y. sheep purchased by cross-complainant will be 232, 15 N. E. 335; note to the case of Ameri. deemed to have been concurred in by cross-com- ca Theatre Co. v. Siegel, Cooper & Co., 4 L. plainant by the acceptance of the sheep when R. A. (N. S.) 1167. But here the cross-comdelivered, especially as the sheep were purchased at a fixed price per head, and not by weight.” plaint shows that notice was given to the

vendor, and the vendee offered to return the From the argument advanced by appellant, property. Hence, if the failure of the goods it is evident that he relies upon the rule to conform be treated as a breach of conthat where the article sold is equally open to tract, and not as an express warranty, appelthe inspection and examination of both lee brought himself within the rule and was parties, and the purchaser relies upon his entitled to recover. If, however, the condiown information and judgment without re- tion be treated as an express warranty, then quiring any warranty of the quality, no his right to recover damages for breach of liability exists if the purchaser thereafter warranty would survive acceptance. discovers some defect in the article; but Opinion of Parker, J., in the case of Fair. this rule does not apply where the purchaser banks Canning Co. v. Metzger, supra. See, orders goods of a certain character and he also, Elliott on Contracts, vol. 5, $ 4998, and relies on the judgment of the seller, or goods cases cited in note to Springfield Shingle Co. of a certain described quality are offered v. Edgecomb Mill Co., supra. for sale, and when delivered they do not It thus appears that the cross-complaint answer the description directed or given in stated a good cause of action, and that the

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As to the second point urged by appellant, ! negligence of plaintiff in error and the town it is sufficient to say that the proof produced of Farmington in constructing a ditch, in on behalf of appellee, if believed by the which water mains were to be laid for the court fully sustained the allegations of the purpose of supplying the inhabitants of said cross-complaint, for which reason the action town with water. The alleged negligence of the court in overruling the demurrer to arose through the digging of such trench unthe evidence requires no further considera- derneath an irrigating ditch, by which the tion.

waters from such ditch broke through into For the reasons stated the judgment of the works of plaintiff in error and flooded the court below will be affirmed, and it is the property of defendant in error. The so ordered.

court found for the town of Farmington, and

dismissed the complaint as to it, but awardHANNA, C. J., concurs. PARKER, J., ed judgment for defendant in error against being absent, did not participate.

plaintiffs in error for $3,345. The judgment

was based upon a finding that the plaintiffs (23 N. M. 546)

in error were independent contractors "under LOFTUS et al. v. JOHNSON. (No. 1824.)

the terms of the contract." If they were, (Supreme Court of New Mexico. Dec. 26,

concededly the judgment was proper, in so 1917.)

far as it is here subject to review. In the

former opinion, heretofore referred to, we (Syllabus by the Court.)

were of the opinion that this point might be 1. APPEAL AND ERROR O 671(5) - RECORD reviewed here, on the record proper, and it REVIEW.

is raised by the only assignment of error not Where a contract, under which rights are asserted, is not a part of the record proper, directed to proceedings occurring upon the and the proceedings occurring upon the trial trial. have been stricken from the transcript, because

[1, 2] Defendant in error, however, has of defects in the certificate, and no question is sought to be reviewed, save the proper interpre- raised the point that the contract in questation of such contract, there is nothing before tion is not a part of the record proper, not the court for review.

having been set forth in, or attached to, any 2. APPEAL AND ERBOR w524—PAPERS FILED of the pleadings in the case; that it was inIN CAUSE.

Papers regularly filed in a cause with the troduced as an exhibit, upon the trial of the clerk of the district court include only such case; hence it necessarily went out of the papers which by statute, or rule, or order of case with all other proceedings occurring court, are required or directed to be filed in a

upon the trial. Plaintiff in error, however, cause.

insists that the contract is a part of the recAppeal from District Court, San Juan ord proper, because immediately preceding County ; E. C. Abbott, Judge.

it the clerk inserted the following: Action by J. Allen Johnson against the

“At such trial the following contract in writTown of Farmington, T. L. Loftus, and oth- ing was introduced by the defendants and the ers. Judgment in favor of the Town of same became a part of the record herein." Farmington, and for plaintiff against the oth- Clearly, however, the clerk of the district er defendants, and they bring error. Af- court, by certificate or recital, cannot make firmed.

that a part of the record proper which is not Frank A. Burdick, of Farmington, for such by virtue of the statute. Section 4491, plaintiffs in error. E. P. Davies, of Santa Fe, Code 1915, provides what shall constitute the for defendant in error.

record proper, as follows:

"All entries, orders and rulings of record in

the clerk's office, and all papers regularly filed ROBERTS, J. In this case plaintiff in er- in a cause with the clerk of the district court ror attempted to make the proceedings occur- shall be considered a part of the record proper." ring upon the trial a part of the record, un- Sections 44,93, 4494, and 4495, Code 1915, der and pursuant to the provisions of section provide the procedure for preserving all 4493, Code 1915. Upon motion, what pur other matters for review. In the case of ported to be the transcribed notes of the Territory v. McGrath, 16 N. M. 203, 114 Pac. stenographer, certified to by the trial judge, 364, the territorial Supreme Court held: were stricken from the transcript, for rea- “ 'All papers regularly filed in a cause with sons fully stated in the opinion. Loftus V.

the clerk of the district court include only such Johnson, 22 N. M. 302, 161 lac. 1117. The papers which by statute, or rule, or order of

court are required or directed to be filed in a case is now for decision on the merits, upon cause." a point which plaintiff in error asserts can There was no order of court, shown in this be decided on the record proper, notwith- record which directed the filing of the constanding the absence of the proceedings oc- tract in question with the clerk, and certaincurring upon the trial.

ly no statute or rule of court requires the The action was for the recovery of dam- filing of an exhibit, introduced in evidence ages for injuries alleged to have been sus- upon the trial of a cause, with the clerk of tained by defendant in error, through the the court. For this reason, even if the clerk

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

170 P.-4

should certify that he did file it, which he | for an injunction and the appointment of a does not do in this case, it would not there receiver providing for the presentation of by become a part of the record proper. claims, and allowing the claim of the First

Without the contract before us, it would National Bank of Albuquerque, and plaintiff be impossible to determine whether plaintiffs excepts and appeals. Part of judgment adin error were independent contractors; hence judicating the validity of the trust deed to we can only affirm the judgment of the trial the First National Bank of Albuquerque and court, and it is so ordered.

awarding possession of the property covered

thereby to the trustee named therein reHANNA, C. J., concurs. PARKER, J., be

versed. ing absent, did not participate.

The appellant, Sylvestre Mirabal, a stock

holder in the Albuquerque Wool Scouring (23 N. M. 534)

Mills, a corporation, filed a complaint in the MIRABAL V. ALBUQUERQUE WOOL district court of Bernalillo county, seeking an SCOURING MILLS et al.

adjudication of insolvency against the said (No. 2001.)

Albuquerque Wool Scouring Mills and the ap(Supreme Court of New Mexico. Dec. 20, pointment of a receiver; also an injunction 1917.)

against the further exercise of its corporate (Syllabus by the Court.)

functions and the winding up of its affairs 1. CORPORATIONS 558 RECEIVERSUIP

as an insolvent corporation under the proviPOWER OF COURT-STATUTE.

sions of our statutes. The complaint, hoi. Upon the appointment of a receiver of an in- ever, is unusual in this, that it made the solvent corporation by virtue of section 957, First National Bank of Albuquerque, among Code 1915, the receiver has full power and authority to demand, sue for, and collect, receive others, a party defendant, setting up that the and take into his possession, all the property of plaintiff is informed and believes that the the corporation to which it was entitled to the defendant bank claims to be a creditor of the possession. These powers and prerogatives are given to the receiver when he is appointed by said corporation in a large amount and to the statute, not by order of the court. This hold mortgages and other evidences of inbeing true, and title vesting in him by virtue of debtedness upon the property of said defendthe statute, and likewise the right to possession, ant corporation as security therefor; that or, to say the least, the right to sue for possession and recover the same it entitled thereto, the plaintiff is further informed and believes that court, at the time of adjudicating the insolvency a large part of the indebtedness so pretended of the corporation and decreeing that a

re to be secured is not, and never was, a valid ceiver should be appointed, has not the power, in the same degree, and prior to the appointment indebtedness of the defendant Albuquerque and qualification of the receiver, to strip the re- Wocl Scouring Mills, but that said evidences ceiver of these statutory rights and prerogatives. of indebtedness were given for the individual 2. CORPORATIONS Ow557(4)--RECEIVERSHIP- indebtedness of James Wilkinson, deceased, JURISDICTION-STATUTE,

Under the statute (section 956, Code 1915), who for a time acted as president and genwhich regulates the procedure for adjudicating eral manager of the said corporation. The the insolvency of a corporation and the appoint- plaintiff by his prayer asks that the defendment of a receiver, the court is without juris- ants and all other persons having claims diction, upon the application for the adjudication for insolvency, to, at that time and in the against the Albuquerque Wool Scouring Mills same proceeding, pass upon the validity of a be required to come into the proceeding and mortgage covering specified property belonging set up their respective rights and claims to to the corporation. 3. APPEAL AND ERROR m883—JURISDICTION up might be adjudicated and the property

priority, and that such claims when so set --ESTOPPEL.

As to errors relating to jurisdiction, a plain- sold, and the proceeds of the sale distributed tiff against whom judgment is rendered is not to the persons thereto entitled, in accordance estopped to assert on appeal or error that the with any priority so ascertained to be adcourt to which he resorted had no jurisdiction of the subject matter of the suit; hence a petition-judged. ing stockholder who applies for adjudication of The summons was served on the defendant insolvency against the corporation, and who bank on the 2d day of August, 1916, and the makes the mortgagee a party to such proceed, notice of hearing was likewise served on the ing, is not estopped from asserting on appeal that the court had no jurisdiction to pass upon following day. On the 12th day of August, the validity of a mortgage and to award posses- the day fixed for the hearing, the bank apsion of the mortgaged property to the mortgagee. peared and filed objections to the appoint

Appeal from District Court, Bernalillo ment of a receiver, setting up that it had a County; Mechem, Judge.

first mortgage lien upon all of the real esSuit by Sylvestre Mirabal against the Al- tate, machinery, and buildings in which the buquerque Wool Scouring Mills, First Nation- defendant Albuquerque Wool Scouring Mills al Bank of Albuquerque, and others, for an carried on its business to secure an indebtedadjudication of insolvency, and for an in-ness exceeding $13,000, which indebtedness junction against the Albuquerque Wool Scour-was past due; wherefore said defendant bank ing Mills. Judgment adjudging the Albu- had heretofore requested the trustee named querque Wool Scouring Mills insolvent and in the deed of trust, executed to secure such

indebtedness, to take immediate possessionscribed; that the said trustee on the 20 day of said real estate and proceed to sell the of August, 1916, took possession of said propsame under the powers contained therein. erty and commenced the advertisement of the The said First National Bank objected to the same for sale, to be made on the 5th of Sepappointment of a receiver, and especially to | tember, 1916, and said trustee had ever since any action being taken which would in any had possession of said property; that the way interfere with the possession of said said property described in said deed of trust trustee or the right to sell the mortgaged covers the lands, buildings, and machinery property, or any action which would in any of the Albuquerque Wool Scouring Mills, “beway involve costs or expenses, or give the re- ing practically all the property of the said ceiver any right or priority for expenses, at- defendant"; that the plaintiff is entitled to torney's fees, or otherwise, superior to the a receiver of the property of the Albuquerque said bank's mortgage lien. The objections to Wool Scouring Mills not covered by said deed the appointment of a receiver were supported of trust, but, is not entitled to a receiver for by the affidavit of the president of the said the property covered; that the plaintiff is enbank to the effect that the Albuquerque Wool titled to the statutory injunction. The judgScouring Mills had executed and delivered to ment concluded with the designation of the said bank its three certain promissory notes receiver, and, after defining the powers of aggregating the said sum of $43,000, which said receiver, further provided that all the were dated January 4, 1913, payable one day real and personal property of the defendant after date, copies of which were attached to Albuquerque Wool Scouring Mills, with the said affidavit; that at the time of the exe-exception of the property described in the cution and delivery of said notes the said deed of trust, should forthwith vest in said Albuquerque Wool Scouring Mills executed receiver, and that the defendants and each of and delivered to the trustee a certain deed of them, and all other persons having claims trust conveying the property therein describ- against the defendant Albuquerque Wool ed for the purpose of securing the payment Scouring Mills, be required to come into the of the said notes; that the said trustee had proceedings and set up their respective rights been requested to take immediate possession and claims to priority, except the First Naof the property described in the deed of trust tional Bank, as to the property described in and proceed to sell the same, and pursuant the deed of trust. To this judgment the thereto the said trustee had taken possession plaintiff excepted, filing his formal objection, of said property and had advertised the same and prayed and was allowed an appeal to for sale. Affant further represented that

this court. the closing down of said business or the ap Neill B. Field, of Albuquerque, for appelpointment of a receiver would greatly prej- lant. A. B. McMillen, of Albuquerqne, for udice the security of the defendant bank and appellees. greatly injure the value of said property, and that such receiver was not necessary for the HANNA, C. J. (after stating the facts as protection of the property or for making the above). This proceeding was instituted unsale, and that the said deed of trust pro- der the provisions of sections 954 to 976, invided full and ample powers for taking pos- clusive, Code 1915, which were originally session of said property and for the sale of parts of chapter 79 of the Laws of 1905, the said property in accordance with its terms. General Incorporation Act. The sections The affidavit concluded with the denial that were copied, with some modifications, from the indebtedness above described was in the the New Jersey Corporation laws, and have indebtedness of any person other than the been before the court for consideration in said Albuquerque Wool Scouring Mills. An part in other cases. Sacramento Valley Irr. additional affidavit, of similar tenor and ef. Co. v. Lee et al., 15 N. M. 567, 113 Pac. 834, fect, of the trustee named in said deed of 33 L. R. A. (N. S.) 558; Eagle Mining Co. trust, was also presented in support of the v. Lund, 15 N. M. 698, 113 Pac. 810; Departobjections to the appointment of a receiver.

ment Store v. Gauss-Langenberg Hat Co.,

17 N. M. 112, 125 Pac. 614; State ex rel. ParAt the hearing the plaintiff introduced evidence establishing the insolvency of the de- M. 694, 133 Pac. 1063, 47 L. R. A. (N. S.)

sons Mining Co. v. McClure, Judge, 17 N. fendant corporation and the bank offered the 744, Ann. Cas. 1915B, 1110; and State v. affidavits in support of its objections to the First State Bank, 22 N. M. 661, 167 Pac. 3. appointment of a receiver. The court in its The history and object of the sections are disjudgment made findings of fact adjudging cussed in some of these cases. the defendant corporation Albuquerque Wool Pierce v. Old Dominion, etc., Co., 67 N. J.

See, also, Scouring Mills insolvent and not about to re- Eq. 399, 58 Atl. 319, and Gallagher v. Asphalt sume its business; that it had executed its Co. of America, 65 N. J. Eq. 278, 55 Atl. 239. notes to the First National Bank aggregating The First National Bank of Albuquerque, $13,000, which were past due and unpaid, with others, was joined as a party defendant and to secure the payment of said notes had with the Albuquerque Wool Scouring Mills. executed a deed of trust to A. B. McMillen, The purpose of such Joinder was evidently as trustee, conveying certain property de- to afford the appellant the opportunity of

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litigating with the bank the validity of its "Whenever any corporation shall become inclaim against the Albuquerque Wool Scouring solvent or shall suspend its ordinary business Mills. In Pierce v. Old Dominion, etc., Co., I creditor or stockholder may by complaint setcited supra, the court said:

ting forth the facts and circumstances of the "Before leaving the consideration of the essen- case, apply to the district court for a writ of intial nature of our statutory equitable action junction and the appointment of a receiver or against an insolvent corporation, it is important receivers or trustees, and the court being satisto observe that the almost uniform practice has fied by affidavit or otherwise of the sufficiency of been to make the corporation the sole defend said application, and of the truth of the allegaant in the suit.

tions contained in the complaint, and upon such "There seems to be no more room for a second | notice, if any, as the court by order may direct, or a third defendant than there is in an action may proceed in a summary way to hear the affito have a person or a corporation adjudged an davits, proofs and allegations which may be involuntary bankrupt.

offered on behalf of the parties, and if upon such The bank in this case was not only an un- inquiry it shall appear to the court that the cor

poration has become insolvent and is not about necessary party, but an improper one.

to resume its business in a short time thereafter [1, 2] This case turns upon the question of with safety to the public and advantage to the the jurisdiction of the trial court concerning stockholders, it may issue an injunction to rethe claim of the First National Bank of from exercising any of its privileges or fran

strain the corporation and its officers and agents Albuquerque. By appellant it is contended chises and from collecting or receiving any that at the time of this adjudication the court debts, or paying out, selling, assigning or transwas without jurisdiction over the subject- ferring any of its estate, moneys, funds, lands,

tenements or effects except to a receiver apmatter of the claim of the bank, for the rea- pointed by the court until court shall otherwise son that the only question before the court order." at that time was the insolvency of the Al

Under the last-quoted section it will be buquerque Wool Scouring Mills and the fact that it was not about to resume its ordinary the only proper party defendant.

seen that the alleged insolvent corporation is business with safety to the public and ad

But the question remains for consideration, vantage to the stockholders. As we have

whether a petitioning stockholder or creditor, said, the bank was made a party defendant having made a lienholder or mortgagee a by appellant. It filed an objection to the party, and invited it to litigate the validity appointment of a receiver of the property in- of its debt and lien in the application for the cluded within the trust deed, on the theory adjudication of insolvency and appointment that it, or its trustee, had a better right to of a receiver, is estopped to allege error upon the possession thereof than did the corpora- the part of the court in so doing. tion or the receiver, and that a receiver was

Upon his appointment, the receiver, by virunnecessary therefor, and unnecessary costs tue of the statute, is invested with the title would be entailed, partly chargeable to it, to all the property of the insolvent corporaon account thereof. The only reason appar- tion, real and personal, of every kind and ent of record for joining the bank as a par- character, and the corporation is divested of ty defendant is that it afforded the appellant the title thereto. Upon his appointment, by an opportunity to contest the validity of the virtue of section 957, quoted supra, the reclaim of the bank against the Albuquerque ceiver has full power and authority to de Wool Scouring Mills. The claims held valid mand, sue for, and collect, receive, and take as against the corporation and the receiver into his possession all such property. These was excluded of possession of the trust prop- powers and prerogatives are given to the re erty.

ceiver, when he is appointed, by the statute, The statute (section 957, Code 1915) pro not by order of the court. This being true, vides :

and title vesting in him by virtue of the "The district court, at the time of ordering statute, and likewise the right to possession, said injunction, or at any time afterwards, may appoint a receiver or receivers or trustees for or, to say the least, the right to sue for the creditors and stockholders of the corpora- possession and to recover the same if entitled tion, with full power and authority to demand, thereto, the court, at the time of adjudicating sue for, collect, receive and take into their pos; the insolvency of the corporation and decree. session all the goods and chattels, rights and credits, moneys, and effects, lands and tene- ing that a receiver should be appointed, has ments, books, papers, choses in action, bills, not the power, in the same degree, and prior notes and property of every description of the to the appointment and qualification of the corporation, and to institute suits at law or receiver, to strip the receiver of these statuin equity for the recovery of any estate, property, damages or demands existing in favor of tory rights and prerogatives. the corporation," etc.

The reason for this is clearly apparent. If Section 959 provides :

the corporation is insolvent, which question "All the real and personal property of an in- only the court in such a proceeding is called solvent corporation, wheresoever situated, and all its franchises, rights, privileges, and effects upon to determine, the stockholders and cred. shall, upon the appointment of a receiver forth-| itors are all mutually interested in all the with vest in him and the corporation shall be assets of the corporation. They are not, divested of the title thereto."

other than the petitioning creditor or stockSection 956, Code 1915, provides for the ap holder, before the court; and such petitionplication for the appointment, and reads as ing creditor or stockholder is only before the

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