have had no operation. In all the cases which have been decided I can find none where parol evidence has been admitted on the ground of a latent ambiguity in a case similar to the present. There is a subject-matter to which the devise applies, and no necessity can be alleged for the admission of parol testimony to give effect and validity to this part of the will. Parol evidence should be avoided, whenever it can be done, that a purchaser or heir at law may be able to judge, from the instrument itself, what lands are or are not to be affected by it." What was stated, at the time the above opinion was written, to be the modern principle, has now become a more or less ancient doctrine, and has been consistently followed and applied in a long line of subsequent decisions, of which Best v. Hammond, 55 Pa. 409, Root's Est., 187 Pa. 118, 40 Atl. 818, Hunter v. Hunter, 229 Pa. 349, 78 Atl. 849, and Metzger's Est., 242 Pa. 69, 72, 88 Atl. 915, are illustrations. [3-5] While the primary consideration in construing a will is to ascertain the intent of the testator, such intent must be gathered from the terms of the will; the question being not what the testator intended to say, but the meaning of the words used. Hancock's App., 112 Pa. 532, 5 Atl. 56; Woelpper's App., 126 Pa. 562, 17 Atl. 870; Bruckman's Est., 195 Pa. 363, 45 Atl. 1078. A latent ambiguity can exist, within the meaning of our decisions, only where the necessary to identify the subject-matter or object of a devise; and if there is in existence a subject or object that satisfies the terms of the will, and to which they are applicable, there is no occasion for the introduction of parol evidence, and a doubt suggested by extrinsic circumstances cannot be permitted to affect its construction. To do so would, in effect, amount to changing the will of testator, and writing a new one for him, rather than interpreting the will of his making. Appel v. Byers, 98 Pa. 479; Root's Est., supra. This question is discussed and Pennsylvania cases collected in Henry's Penna. Trial Evidence, § 379. [6, 7] It must be presumed testator, a man of considerable property, was aware of the Condition of his estate and of the securities held by him, and therefore knew that portions of them had a market value below, and others in excess of, their par value. He also, undoubtedly, realized the market value of the securities was subject to change from time to time, and that the value of a particular security at the time of executing the will might not be a criterion of its value at a future time, when the will would become effective. Knowing this, he deliberately adopted “par value" as the standard of valuation of the gift, made no reference to market or actual value, and left the matter of choice to the legatee. While the terms of the legacy would be fulfilled by the transfer of bonds of the par value of $30,000, even though without market value, the legatee would not likely make such choice. Her natural selection, on the contrary, would be of bonds bearing the highest market value. This the testator must have contemplated, yet placed no limitation on such choice, except that measured by par value. In construing testator's language all words must be given effect, and the court can place no limitation on the market value of the gift without ignoring the words "par value." To say this is contrary to the intent exhibited by other parts of the will to equalize the gifts to all his children is no answer. On the contrary, the more logical argument is that the subsequent execution of the codicil is evidence of testator's change of mind in so far as that specific gift is concerned. Manifestly if testator intended to restrict the gift to bonds of the face value of $30,000, he would have said so, and have omitted from the gift the words "par value." The conclusion is irresistible that these words placed a single, definite limitation on the number or amount of bonds the legatee was empowered to select, regardless of their market value. The judgment is reversed, and the execWe find no latent ambiguity in the present utors are now ordered to deliver to the peticase with regard to the subject-matter of the tioner the bonds selected by her, and specified legacy sufficient to warrant the admission of in her petition, to the par value of $30,000, parol evidence within the meaning of the gen- or such part thereof as have not in good faith eral rules above stated. That the estate in- been sold by the executors for the purpose of cludes a large number of bonds out of which settling the estate, and to pay to the guardmay be selected an amount equal to $30,000, ian the value of any bonds so disposed of, or par value, is admitted. A subject-matter ex- deliver to her, at her option, other bonds seists, consequently, to which the legacy ap-lected by her sufficient to realize the total plies. The doubt arising is one suggested by par value of $30,000. extrinsic circumstances, to wit, the fact that the market value of the bonds varies and is not the same as their par value. As the problem of choice, however, was impliedly left to the legatee, no difficulty is presented requiring the aid of extrinsic evidence for its solution. We must, therefore, discover intention from the words of the will alone. The gift is of "thirty thousand dollars, par value, of bonds." Nothing is said concerning the market value of such bonds. (262 Pa. 68) PARDEE et al. v. HARWOOD ELEC- (Supreme Court of Pennsylvania. July 17, 1918.) 1. CORPORATIONS 152-DIVIDENDS - DISCRETION OF DIRECTORS. So far as not regulated by contract, question of dividends on corporate stock is commit ted largely to discretion of directors, and, though their action is reviewable by the courts, it will corporation, organized March 1, 1912, by merbe set aside only in case of bad faith, or when ger with 10 other corporations. It has $3,arbitrary, manifestly erroneous, or when con-000,000 of common stock and $CSS,000 of prestituting an abuse of discretion. 2. CORPORATIONS 178-PREFERRED STOCK-ferred stock. The certificates for the latSTATUS OF OWNERS ter provide, inter alia: "CREDITORS." - "STOCKHOLDERS" The owners of preferred stock in a corporation are "stockholders," and not "creditors." [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Creditor; Stockholder.] 3. CORPORATIONS 334-IMPROPER DECLARATION OF DIVIDENDS LIABILITY OF DIREC 7. APPEAL AND ERROR 1009(7)—CHANCEL LOR'S FINDINGS-WEIGHT. Chancellor's findings, approved by court below, are entitled to same weight as verdict of a jury, especially where they are the result of an investigation of business affairs of a manufacturing corporation, and of its system of bookkeeping, etc. 8. CORPORATIONS 178-CONTRACT WITH PREFERRED STOCKHOLDERS-VALIDITY. A corporation cannot so contract with the holders of its preferred stock as to destroy its usefulness as a public service corporation. Appeal from Court of Common Pleas, Philadelphia County. Bill in equity to compel declaration of dividends on preferred stock by Calvin Pardee and others against the Harwood Electric Company. From a decree dismissing the bill, plaintiffs appeal. Affirmed. Argued before BROWN, C. J., and MESTREZAT, POTTER, MOSCHZISKER, FRAZER, and WALLING, JJ. Reynolds D. Brown, Russell Duane, and John Hampton Barnes, all of Philadelphia, for appellants. Abraham M. Beitler, Paul C. Hamlin, and William Jay Turner, all of Philadelphia, for appellee. "The holders of the preferred stock shall be entitled to receive cumulative dividends at the rate of 6 per cent. per annum, which must be declared by the board of directors, when earned, to the extent of, and only from, the undivided net earnings of the Harwood Electric Company remaining after the payment of all operating expenses and fixed charges in each and every fiscal year, and which shall be in preference and priority to any payment in or for such fiscal year of any dividend on other stock. If, after providing for the payment of full dividends on the said preferred stock for any fiscal year, and all arrearages of dividends due thereshall remain any surplus net earnings, the board on at not exceeding 6 per cent. per annum, there of directors of the Harwood Electric Company may declare, and out of such surplus net earnings may pay, dividends upon any other stock of that company." For the first two years, ending March 1, 1914, dividends on the preferred stock were paid as therein provided. Meantime by transfer of stock the company passed from the control of the plaintiffs, who organized it. No dividends were ever paid on the common stock, and none since March 1, 1914, on the preferred stock, and the chancellor found both as a matter of fact and law that the evidence failed to show any net earnings available for that purpose. His findings were approved by the court below, and the bill was dismissed; plaintiffs brought this appeal. Defendant has an interest-bearing debt of about $3,000,000, and there is no doubt as to its amount or as to fixed charges; the controversy is as to operating expenses. The contract between defendant and its preferred stockholders is silent as to what shall constitute operating expenses, or by whom it shall be determined. That is primarily a question of fact, and we find no error in the conclusion of the chancellor that: "The reserve set aside by the defendant company for the purpose of providing for bad debts, for depreciation of plant and property, for de preciation of the physical assets of subsidiary companies to cover the merger value in excess of the par value of the securities thereof, for depreciation of automobiles, for depreciation of waste coal, culm, and slate banks, and for workmen's compensation, are all of them proper operating expenses for the protection and preservation of the capital of the company for the benefit of all the stockholders." [1] It is largely a matter of business practice, and the above finding is based on the evidence. In the absence of an express stipulation, what shall constitute operating expenses is a matter primarily for the directors of the corporation. In fact, so far as WALLING, J. This action in equity is to not regulated by contract, the question of compel the payment of dividends on pre- dividends on corporate stock is committed ferred stock of the defendant corporation. largely to the discretion of the directors; It was heard upon bill, answer, and testi- and while their action may be reviewed by mony. The Harwood Electric Company, de- the courts, it will be set aside only in case fendant, is a Pennsylvania public service of bad faith, or when arbitrary, or manifestFor other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes ly erroneous, or such as to constitute an material that is consumed, the same as a ་ abuse of discretion or disregard of official fund may be set aside to replace machinery duty. See 7 R. C. L. § 269; McLean et al. that wears out or becomes obsolete. See v. Plate Glass Co., 159 Pa. 112, 117, 28 Atl. Knoxville v. Knoxville Water Co., 212 U. S. 211; N. Y., L. E. & W. R. R. Co. v. Nickals, 1, 29 Sup. Ct. 148, 53 L. Ed. 371. People ex 119 U. S. 296, 7 Sup. Ct. 209, 30 L. Ed. 363; | rel. Jamaica W. S. Co. v. Tax Com'rs, 196 N. Corgan v. Lee Coal Co., 218 Pa. 386, 67 Atl. Y. 39, 89 N. E. 581; Park v. Grant Locomo655, 120 Am. St. Rep. 891, 11 Ann. Cas. 838. tive Works, 40 N. J. Eq. 115, 120, 3 Atl. 162; "The affairs of a corporation are managed by Mobile & Ohio R. R. Co. v. Tennessee, 153 U. a board of directors, who, in the first instance, S. 486, 14 Sup. Ct. 968, 38 L. Ed. 793; 2 Cook are to determine whether profits have been earned, and whether, in their discretion, they ought on Stockholders (7th Ed.) § 546. It cannot be to be divided among the shareholders." Per determined as a matter of law that it is not opinion of present Chief Justice Brown in an operating expense. Goetz's Estate (No. 1), 236 Pa. 630, 635; 85 Atl. 65, 67. In the case at bar there is no question of fraud or bad faith, or suggestion that the directors were animated by improper motives, and we find nothing in the record to indicate a want of sound business judgment upon their part. The corporation must have a reasonable working capital and be kept in such a state of efficiency as to properly serve the public. [6-8] A public service corporation is not required to declare such dividends as will destroy or impair its efficiency. The evidence supports the chancellor's findings, in effect that defendant's business has been properly managed, and that the different funds set aside to maintain the property, etc., are such only as good business judgment requires, and also that the refusal to declare dividends was in good faith and not arbitrary. The rule that the findings of a chan[2, 3] The owners of preferred stock are cellor, approved by the court below, are enstockholders, and not creditors, and divi- titled to the same weight as the verdict of dends can be declared in their favor from a jury is especially applicable where such the net profits, but never so as to impair the findings are the result of an investigation of capital stock of the corporation. Act May the business affairs of a manufacturing cor23, 1913 (P. L. 336); Act April 29, 1874 (P. L. poration, its system of bookkeeping, etc. 81), § 16 (1 Stewart's Purdon, p. 803); Gilling-Childs v. Adams, 43 Pa. Super. Ct. 239. ham v. Gillingham & Son Co., 260 Pa. 559, In our opinion, to so construe the contract 103 Atl. 991. An improper declaration of div-between defendant and the holders of its preidends constitutes a breach of trust that will render the directors individually liable. Loan Society of Philadelphia v. Eavenson, 248 Pa. 407, 94 Atl. 121. See, also, Cornell v. Seddinger, 237 Pa. 389, 85 Atl. 446. When defendant began business March 1, 1912, it had a surplus of $363,880.93. On December 31, 1916, its surplus was $342,254.38, showing a net loss of surplus capital of $21,626.55. This surplus, which had existed from The fact that certain balances are denomithe time of the merger, could not be regard-nated in the books of a corporation as net ed as net earnings, nor considered as such on the question of dividends to the holders of preferred stock. [4, 5] At the merger the stock of subsidiary corporations, including that of the Harwood Coal Company, was taken by defendant at an overvaluation and so carried on the books. The property of the coal company consisted largely of coal and culm that are being rapidly exhausted by the defendant company. This exhaustion depreciates the value of the coal company stock; to meet which, and the overvaluation defendant in 1916 set aside $146,000 as an amortization or a sinking fund, which covered the five years, 1912 to 1916, inclusive. The evidence shows this to be proper practice; otherwise, for example, when the property of the coal company is exhausted, its stock will be worthless, and defendant's capital to that extent impaired. ferred stock as to require the payment of dividends when it would lessen the efficiency of the corporation to serve the public, would be to render the contract to that extent invalid. Such company cannot so contract with its stockholders as to destroy its usefulness as a public service corporation. See Warren v. Queen & Co., 240 Pa.. 154, 161, 87 Atl. 595. earnings, is as against the corporation, persuasive, but not conclusive, evidence that they are such. In the absence of intervening rights, they are subject to explanation. As plaintiffs cannot prevail in this action, the question of cumulative dividends need not be considered. The assignments of error are overruled, and the appeal is dismissed, at the costs of appellants. It seems to be a method which in effect cre- 2. EMINENT DOMAIN 85-COMPENSATIONUSE OF ALLEY-PUBLIC RIGHTS. Where railroad condemned alleged easement of way over alley, and it appeared that the alley was platted on a recorded plat before plaintiff purchased his land, and his deed referred to it as a boundary, a holding that, without regard to public rights, plaintiff might have right to the alley, and, if so, might be compensated for depreciation in value of property, was proper. ing left north of said building. In 1912 a portion of the alley was obstructed by movable coal bins, but sufficient space for travel was left during the greater part of the time. In the latter part of 1913 the railroad company under its right of eminent domain condemned the entire alley and occupied it with a fill, upon which additional tracks were built, so that plaintiff was entirely excluded Appeal from Court of Common Pleas, Cum- from the use of the alley and access to his berland County. property from the north. S. B. Leach appeals from an award of viewers in proceeding by the Philadelphia, Harrisburg & Pittsburgh Railroad Company to condemn an easement of way over an alley for railroad purposes. From a judgment on a verdict for plaintiff, defendant appeals. Affirmed. See, also, 258 Pa. 518, 522, 102 Atl. 174, 175. From the record it appeared that plaintiff purchased his land in Lower Allen township, Cumberland county, from the Hummel heirs in three lots, all of which were adjoining; the first by deed in 1902, the second by deed in 1905, and the third by deed in February, 1913. The land was bought according to a plan of lots laid out, acknowledged, and recorded prior to his purchase, by the Hummel heirs, the owners of the whole tract. The recorded plans showed a 15-foot alley running immediately north of the lots conveyed to the plaintiff, and immediately south of the right of way of the defendant, and in each of the deeds to the plaintiff this alley was called for as the northern boundary of the various tracts conveyed to him. At the time of the first purchase by the plaintiff, when he examined the ground, he found that the 15-foot alley referred to was located on the ground; its position being marked by stakes placed there by the Hummels, and its surface showing by wagon tracks and ruts that it had been used and traveled. It appeared that it had been so used by other persons called as witnesses in the trial of the case. From the time of the first purchase, until the taking by the railroad company, the alley was used as a means of access to plaintiff's property by the plaintiff and by the public generally who chose to use it. It was the only regularly planned and plotted means of access to the first tract of land that he bought, and upon which his cement products factory was located. Plaintiff's factory and property generally were planned and arranged so that the alley was a principal means of access. The alley was unobstructed for almost its entire length, except that, through a mistake of the contractor, the factory building encroached between 4 and 5 feet thereon, ample space for travel, however, be Further facts appear in Leach v. Philadelphia, Harrisburg & Pittsburgh R. R. Co., 258 Pa. 518, 102 Atl. 174. [1] On the trial the court refused defendant's ninth point for charge, which was as follows: "The court is respectfully moved to instruct the jury what weight and credence to give the testimony of the witness for the plaintiff, who could not give any reason for damages, or gave improper reasons, such as inconvenience of entry all matters not relating to easement of passage to quarry, removal of building from alley, and over said alley, in common with the public, when opened for public use; to define how a dedicated alley can become public; to define the character of use the plaintiff would have in said alley, and charge whether or not the use made of it by the plaintiff, at any or all points in connection with bis business, was a public use, or legal, under the evidence." [2] Plaintiff's eighth point for charge, and the court's answer thereto, were as follows: "Eighth point: So far as the plaintiff's right to recover damages in the present action is concerned, it is immaterial whether the public accepted the dedication of the 15-foot alley or not. "Answer: We have tried to say to you, gentlemen of the jury, that, without regard to any rights of the public, this plaintiff may have a deeds, bounding that property by an alley. The right of property, which he obtained by those right there is a right of travel over that 15 feet. if he has such a right, and that his property. without regard to any rights in the public. may be condemned by a proceeding like this. If you find, under the evidence in the case, that he considered, and his grantor considered, that he had a right of property in that, then he may be compensated for it, whatever it may have been worth; that is, whatever the deprivation of it may injure or depreciate the value of his property." Verdict for plaintiff for $2,500, and judgment thereon. Defendant appealed. Argued before BROWN, C. J., and MOSCHZISKER, FRAZER, WALLING, and SIMPSON, JJ. J. W. Wetzel, of Carlisle, for appellant. E. M. Biddle, Jr., of Philadelphia, for appellee. PER CURIAM. Appellant's assignments disclose no error on the part of the court below in the trial of this case, which were prejudicial to the rights of the defendant, and they do not, therefore, call for a fourth trial. Judgment affirmed. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes (262 Pa. 130) EDWARD E. BUHLER CO. v. CHIDESTER. (Supreme Court of Pennsylvania. July 17, 1918.) 1. BILLS AND NOTES 96-ACCOMMODATION NOTE-LIABILITY. In view of Act May 16, 1901 (P. L. 194) $ 29, maker of accommodation note, given in part payment of pre-existing indebtedness of another, was absolutely liable thereon. 2. BILLS AND NOTES 439-AccOMMODATION NOTE-RIGHT OF ACTION-ACCOMMODATION. In action on accommodation note, given in part payment of a pre-existing indebtedness, contention that a subsequent composition by principal obligor with its creditors extinguished claim on note was without merit, where obligor's correspondence with plaintiff thereafter knowledged existence of indebtedness. ac it the original note of the appellee, in April, 1911. From Atkinson's Own testimony, which we quote at length as conclusive upon the appellee, who called him as his main witness, it most clearly appears that the note was indorsed to the appellant by Atkinson, as a partial payment of its claim against the construction company: "Q. We want to take up the situation as it existed when this original note was given, 1911? A. At that time we owed Buhler $9,000, which he said was more than they could carry without some assistance. I asked Mr. Chidester"Q. What sort of business was the Buhler Company in, in 1911? A. They were supplying us with cement on the railroad right of way contract-the cement business. "Q. What work was the Atkinson Construction Company doing at that time? A. Doing Appeal from Court of Common Pleas, the right of way work on what was called the Philadelphia County. Assumpsit on a promissory note by the Edward E. Buhler Company against David D. Chidester. Judgment for defendant, and plaintiff appeals. Reversed, and record remitted, with direction that judgment be entered for plaintiff non obstante veredicto. Argued before BROWN, C. J., and POTTER, MOSCHZISKER, FRAZER, and WALLING, JJ. Joseph P. McCullen and James B. McGrane, both of Philadelphia, for appellant. John C. Gilpin, of Philadelphia, for appel lee. BROWN, C. J. In April, 1911, the Atkinson Construction Company owed the Edward E. Buhler Company, the appellant, $9,474.85. On the 26th of that month David J. Chidester, the appellee, gave to his friend, George H. Atkinson, his promissory note for $3,000, payable to the order of Atkinson some days after date. The note was made for the accommodation of Atkinson, to enable him to give it to the Edward E. Buhler Company on account of the indebtedness to it of the Atkinson Construction Company, of which Atkinson was treasurer. He indorsed the note as an individual and as treasurer of the construction company, and delivered it to the appellant. It was renewed from time to time, and this action is on the last renewal, dated March 26, 1912. The defense made in the court below was that the original note had been given merely as security for a portion of the indebtedness of the Atkinson Construction Company to the appellant, and, as the same had been paid or discharged, there was no further liability on it. This defense, allowed by the trial judge, prevailed in the court below, and from the judgment on the verdict in favor of the defendant there is this appeal by the plaintiff, whose just contention is that, under the evidence, a verdict should have been directed in its favor. The appellant dealt only with Atkinson in the negotiations which led up to his giving Merritt & Gilbert contract of the New York, Westchester & Boston Railroad, out of Pelham, just outside of New York City. "Q. This railroad was in process of construction at that time? A. Yes, a new railroad. "Q. And you had become responsible to Buhler & Co. to the extent of some $9,000 for cement? A. About that amount; yes-about $9,000, and I obtained this $3,000 accommodation note for them to use, to get money at their Sherman bank. "Q. It enabled you, under your arrangement with Buhler, to carry your account? A. To get more cement, and carry the account; yes. *** "Q. Now you say that you gave the original note to Mr. Entwisle. Do you recall what was said between you and Mr. Entwisle when this note was to be given, as to why it was to be given, and what it was to be used for? A. Well, that the account was larger than it had been, and that they did not want to extend further credit unless we could make some payments on account. I got this note for them, and gave them $2,000 cash, as their statement shows at that time-$5,000 payment. "Q. There is no question about the fact in your mind that this note was given to secure the cement bill owing them? (Objected to.) "Q. Just tell us what, if any, relation there was between the delivery of this note and the payment of this cement bill. A. That note was given as a check would be given, to pay on account of that cement, that we had had delivered to us, and used in that railroad work." Egbert B. Entwisle, who was the credit man of the appellant at the time the note was given, testified that in April, 1911, the Atkinson Construction Company asked for additional credit, as they needed more material; that this was refused, because the account had reached a point which the company regarded as too large; and that, after refusing to extend further credit, Atkinson gave the company a check for $2,000 and the note of the appellee for $3,000, for which a credit was allowed on the account. [1] In view of the foregoing, it is not to be questioned that the note was given to the appellant by Atkinson, clothed with authority from the appellee to do so, in payment of part of its claim against the construction company, and the appellee became absolutely liable on it, for "an accommodation party is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some oth |