must rely upon signals, yet he says he gave no warning to the plaintiff. His reason for failing to warn the plaintiff was that it was none of his business, and that he was not a flagman, and, again, that he was too far away. The last reason was absurd for he was only 125 feet away, and the first reason is brutal, if it be a fact that he saw the train so near, sounding no warning signals, and invisible to the plaintiff. If the engine bell was ringing, his failure to warn the plaintiff is explicable. On the other hand, the engineer testified that the bell rang continuously from the time the train left Chrome, about a mile from the crossing, until it struck the wagon of the plaintiff. He says the bell was rung entirely by air, automatically; that there was another crossing between Chrome Station and this crossing, and so the bell was kept ringing, and that he distinctly remembers shutting it off when the train stopped, after the accident. The conductor says the bell was ringing from Chrome, and when they stopped the train after the accident, the engineer shut the bell off. Two brakemen swear that the bell was ringing until it was shut off, after the accident. Mr. Gorke, who is a section foreman for the defendant, was at the second crossing in Leibig's woods, which is about 300 to 500 feet from this crossing. He says he heard the bell from the time the train started from Canda Station, which station is between Chrome and this crossing, and that it continued to ring while passing him, and that the whistle blew right in front of him. After the train stopped, he ran down with his gang, and saw the upset wagon. Mr. Smith was a passenger on the train. He boarded the train at Chrome, and says his attention was first directed to the bell by its ringing at Canda, and that it continued to ring until after the train passed this crossing. So the affirmative testimony is of the most convincing kind that the bell rang automatically during the statutory period, and there is nothing to contradict this testimony, except the "I did not hear it" of the three witnesses for the plaintiff. As against positive affirmative evidence of credible witnesses to the

road, and when he, sitting in the wagon, was within 15 feet of the road. Regardless of the testimony in the case, which shows that the track could be witnessed at various distances from the track while traveling in a wagon along Woodbridge avenue, toward the crossing, the testimony seems to be conclusive that, at the point where the plaintiff says he stopped and looked and listened, the train must have been visible when he started to drive across the track. The distance from this crossing to Leibig's crossing, according to the scale of the map used, is 540 feet, and between those points the railroad track seems to be curveless. The distance from the warning sign upon Woodbridge avenue to the railroad track, by the same scale, is 30 to 40 feet. It is clear from the map, and not refuted by the photographs, that when the plaintiff reached the warning post, neither the bank nor the bushes along the road were so placed as to obscure his view down the railroad track, certainly as far as Leibig's crossing. The plaintiff stopped between the warning post and the track. While still there, and before he started to drive across, the train must have been visible between Leibig's crossing and Woodbridge avenue crossing. The train, by the testimony of the engineer, who says they lacked steam, and by another witness, was running slowly, not more than 10 or 12 miles an hour. The plaintiff must have traveled not more than 40 feet before the rear of his wagon was caught by the engine. Assuming, by a moderate assumption, that his horse was walking at the rate of 2 miles an hour, the train would have run, during the period he was traveling 40 feet, only 240 feet; therefore the train when he started must have been about halfway be tween Leibig's woods crossing and the Woodbridge avenue crossing, and entirely visible to the plaintiff.

On both of these grounds we think there should have been a direction for a verdict for the defendant.

(76 N. J. L. 419) JERSEY CITY WATER SUPPLY CO. v. METROPOLITAN CONST. CO. et al.

1. PRINCIPAL AND SURETY LIABILITY OF SURETY ALTERATION OF CONSTRUCTION CONTRACT.

But again we think that the plaintiff him. self was guilty of contributory negligence. As already remarked, his testimony is that he stopped and looked and listened when 5 feet from the track of the defendant's rail

A construction contract, after stating that a dispute had arisen between a water company and a city as to the form of a dike to be built by the water company, expressly stipulated that the contractor, hired by the water company to build the dike, should perform such additional work as might be required under the demand of the city, at the price bid in the contract, and provided that 20 per cent. of the value of monthly estimates of work done should be withheld from the contractor. The contractor's bond recited that the surety agreed to such modifications and alterations as might be made by the water company and the contractor, or to such increase in the quantity of work to be performed as might become necessary through the demands of the city, and was conditioned that the

contractor would "perform the work and furnish the materials in accordance with the terms of the contract as it now is, and as it may at any time be changed by any such modifications or alterations." Held, that the surety was chargeable with knowledge of the terms of the contract it undertook to guarantee, and modifications made necessary by the compromise of the dispute between the water company and the city did not relieve it from liability on its bond. 2. SAME.

The provision in the bond as to the surety's liability for modifications related solely to the performance of the work and furnishing of materials, and not to the provisions of the construction contract respecting the retention of the percentage of monthly estimates. 3. SAME.

Where a construction contract provided that 20 per cent. of the value of monthly estimates of work done should be withheld, and it appeared that if the provision had been observed, and the amount retained until the contractor abandoned the work, it would have been sufficient to complete the work according to the contract, the payment of the 20 per cent. in advance relieved from liability the contractor's surety which had guaranteed the contractor's performance of the work according to the contract.

Action by the Jersey City Water Supply Company against the Metropolitan Construction Company and another, on a bond. Judg ment for plaintiff. On rule to show cause why the verdict and judgment should not be set aside. Rule made absolute.

Argued February term, 1908, before GUMMERE, C. J., and BERGEN and MINTURN, JJ.

BERGEN, J. This suit was brought to recover upon a bond given by the Metropolitan Construction Company as principal and the Fidelity & Deposit Company of Maryland as surety, to the plaintiff, conditioned that the principal obligor would construct an embankment or dike for the plaintiff ac cording to the terms of a written contract. The construction company having failed to fulfill its contract, the plaintiff, as it had a right to do under the contract, completed the work at a cost in excess of the contract price of $4,531.01, as ascertained by the verdict in this case. The Fidelity Company was allowed a rule to show cause why the verdict and judgment thereon should not be set aside, and insists, in support of the rule, that the plaintiff so altered and modified its contract with the construction company as to relieve it from liability. The alterations and modifications claimed were, first those relating to the character of construction, resulting in increasing the amount and cost, and second, payments were made contrary to the terms of the contract in advance of maturity out of moneys to be retained until the completion of the work.

The first point has no merit, for while it is admitted that after the signing of the contract the original plan of construction was changed to such extent as to require new 69 A.-69

plans to be prepared, made necessary by the compromise of a dispute with Jersey City, article 35 of the contract, after stating that a dispute had arisen between the water company and the city of Jersey City as to the form of dike which should be built, expressly stipulated that the contractor should perform such additional work as might be required under the demand of Jersey City at the price bid in the contract. The condition of the bond contains the following, "said surety herein has agreed, and does hereby agree, to such modifications and alterations as may be made by the said Jersey City Water Supply Company and said principal, or to such increase in the quantity of work to be performed as may become necessary through the demands of Jersey City." The surety is chargeable with knowledge of the contents of the contract it undertook to guarantee, and it recited that a dispute then existed between the plaintiff and the city of Jersey City as to the form of the dike to be built; that the dispute concerned the cross-section and specifications of the dike, and if the demand of Jersey City with regard to the specifications should be adopted, it would require a large increase in certain of the estimated quantities, and the condition of the bond recognized the existence of the dispute, and agreed to such modifications as the acceptance of the demands of the city might require. We are of opinion that the claim of the surety company on this branch of the case has no legal support, and that the modifications referred to were of the character contemplated by the parties to the bond, and do not relieve the surety of its obligation.

The second point involves the question whether, under the contract, the water company was required to retain, from each monthly estimate of the work done, 20 per cent. of the value thereof, and, if so, whether the neglect to retain such percentage operated as a discharge to the surety from all liability under its condition of indemnity. Article 21 of the contract in providing for an approximate estimate of the value of the work done for each month reads, "This estimate will be countersigned by the chief engineer and 80% of such estimate will be paid to the contractor by the company within five days thereafter." Article 23 provides that after the completion of the work a final estimate shall be made, and when approved by the chief engineer the company should pay the entire sum, after deducting "all previous payments and all amounts to be kept, and all amounts to be retained under the provisions of this contract."

The water company, it is admitted, did not retain the 20 per cent. until the completion of the work, but paid to the contractor, on account of the monthly estimates, money in excess of the 80 per cent. The trial court instructed the jury on this subject as follows: "I charge you that, under that clause

in the bond, the surety company became liable for any modifications and alterations which were made by the water company and the construction company relevant to this twenty per cent. * * * So I charge you that that gave the water company and the construction company the power without consulting the surety company on making modifications." This we conceive to be an erroneous construction of the contract expressed in the bond. The modifications and alterations named in the reciting part of the condition of the bond manifestly refer to such as may become necessary through the demands of Jersey City as set out in section 35 of the contract, and the condition proper is "perform the work and furnish the materials in accordance with the terms of said contract as it now is, and as it may at any time be changed by any such modification or alterations"; clearly indicating that the performance of the work and furnishing of materials are alone the subject of modification. We are of opinion that under the bond and contract the surety was entitled to have 20 per cent. of each monthly estimate held until the completion of the contract, and that being entitled to such indemnity, where it is admitted, as in this case, that the 20 per cent., if retained and held in hand until the contractor abandoned the work, would have been sufficient to complete it, the payment of the 20 per cent. in advance releases the surety from liability.

We have been referred to Guttenberg v. Vassel, 65 Atl. 994, as supporting the plaintiff's case, but in that case the condition of the bond expressly stipulated that it should not become void by reason of any payment made to the contractor in advance, or contrary to the terms of the contract. No such waiver or stipulation appears in this bond, and the payment of the 20 per cent. in advance was in violation of the contract of the surety, and to the extent it is injured thereby it is released. The present case, in its legal aspect, is practically identical with Welch v. Hubschmitt Co., 61 N. J. Law, 57, 38 Atl. 824. If the 20 per cent. had been retained it would have been more than was required to complete the contract and therefore the surety is entitled to be entirely discharged.

The rule is made absolute.

(76 N. J. L. 417)

HESS v. REICK et al.

(Supreme Court of New Jersey. June 8, 1908.) 1. CORPORATIONS MORTGAGE OF ASSETS TO PAY FOR STOCK.

Persons purchasing the capital stock of a corporation have no power to mortgage the assets of the company to pay their individual debt for the stock thereby depleting its capital and impairing the rights of creditors, and a mortgage so given is void, and there remains an implied promise of the purchaser to pay the agreed price for the stock.

2. CONTRACTS COVERY.

1

Where a person sold all the capital stock of a brick company, $2,500 of the price to be paid in brick to be manufactured by the company, and did not rescind the contract for the brick, but accepted a certain amount, and afterwards recovered a judgment on the contract for $1,250, he could not subsequently have the contract set aside as illegal, and also recover the full proportion of the purchase price which was to be paid by furnishing the brick.

Action by Lilburn M. Hess against Jacob Reick and another to recover the value of capital stock transferred. Judgment for plaintiff. On rule to show cause why there should not be a new trial. Rule made absolute.

Argued February term, 1908, before GUMMERE, C. J., and BERGEN and MINTURN, JJ.

Walter H. Bacon, for plaintiff. L. H. Miller and W. A. Logue, for defendants.

BERGEN, J. The plaintiff holding all of the shares, except two which he controlled, of the Millville Brick Manufacturing Company, agreed with the defendants to sell them the plant and all the capital stock of the company for $12,000 to be paid as follows: $4,000 by taking the property subject to a mortgage for that sum which was then a lien thereon; $2,500 by a second mortgage on the real estate of the company; $1,500 in cash; $1,000 by assignment of a mortgage held by one of the purchasers of the capital stock; $500 by a note; and $2,500 in bricks to be manufactured by the company. The cash was paid, the note given, the mortgage for $1,000 assigned, a mortgage on the property of the company executed and delivered for $2,500, and a contract entered into by the company under which it agreed to furnish bricks to the plaintiff to the extent in value of $2,500 at prices fixed by the written agreement. This suit was brought to recover from the defendants the value of the capital stock of the company transferred by the plaintiff to the defendants, and was tried before the court, a jury being waived. The court, after finding for the plaintiff and assessing his damages at $5,380.23, then allowed a rule to show cause why there should not be a new trial, and that rule is the matter now under consideration. The only dispute is whether the mortgage given by the corporation for $2,500 and the contract for the delivery of bricks to the value of $2,500 was a payment on account of the purchase price of the stock to the extent of either, or the sum of both, of these amounts. The result reached by the trial judge indicates that he found that so much of the consideration as was represented by the mortgage and contract had not been paid, and that the plaintiff was therefore entitled to recover the sums which they represented, with interest. The history of the two items is as follows: The defendants, before the mortgage matured, had sold the

stock of the company, and it had passed into other hands, and the plaintiff being advised that the purchasers of the stock of a corporation had no lawful right to apply a part of the assets of the company towards the payment of their individual debts, working thereby a distribution of capital, and that the mortgage could not be enforced against the company, voluntarily canceled it, and claimed that no payment had ever been made of so much of the consideration as was represented by the mortgage. This claim we think is a just one. The defendants had the stock and disposed of it without making any lawful payment, for the depletion of capital to pay for the stock of a corporation purchased by individual holders cannot be tolerated or supported under our corporation act. To countenance such a theory would be to permit any person having control to incumber all of the assets of a corporation to the extent of the value of capital stock purchased, and impair the rights of creditors. The plaintiff had a worthless and void security, and the debt due from the defendants to him for the stock transferred to them had never been satisfied by any valuable consideration, and no such consideration having been given, there remained an implied promise to pay the agreed price. The trial judge was right in finding against the defendants for the amount of the mortgage.

The brick contract stands in a different situation, for the plaintiff did not rescind it, but accepted some of the bricks, the case does not clearly disclose to what extent, but it does appear that plaintiff brought suit on the contract against the company and recovered a judgment for $1,250, which indicates a judicial finding that in some way he had received from the company or the defendants bricks to the value of $1,250 on account of the contract, and it appears that he now holds a judgment for that amount against the company. Whether this payment in bricks manufactured was a part of the earnings of the company belonging to the defendants as stockholders, or whether the company is now estopped from repudiating the brick contract, need not be decided, because it has been established by a competent tribunal that there was due the plaintiff on this account only $1,250, and not $2,500, as adjudged 'in this cause by the trial judge. The finding upon which the judgment is based is erroneous, and a new trial should be awarded. The rule will be made absolute.

(76 N. J. L. 292)

STATE v. MARTIN (Supreme Court of New Jersey. June 15, 1908.) 1. USURY-GUARANTEEING PAYMENT.

Where money is actually loaned by one who also assumes to act as a broker in procuring the loan, and takes a security in the name of another as a device to conceal the real transaction, the loan is usurious in case the total amount agreed to be paid exceeds the law

ful rate of interest and brokerage, although the usurious charge may be concealed as a charge for guaranteeing the payment of the money. 2. SAME CRIMINAL RESPONSIBILITY-PROSECUTION AND PUNISHMENT.

Upon an indictment for keeping a disorder. ly house in making loans of money at usurious rates of interest, it is erroneous to charge that the defendant may be convicted if he habitually took illegal brokerage fees; but, where the jury find, not only a general verdict of guilty, but find specially under the court's instructions that the defendant was guilty of habitually taking illegal interest and also guilty of taking illegal brokerage, the last finding may be disregarded and judgment given upon the general verdict. (Syllabus by the Court.)

Error to Court of Quarter Sessions, Mercer County.

William R. Martin was convicted of keeping a disorderly house in making loans of money at usurious rates of interest, and he brings error. Affirmed.

Argued February term, 1908, before GARRISON, SWAYZE, and TRENCHARD, JJ. Gilbert Collins, for plaintiff in error. W. J. Crossley and W. R. Piper, for the State.

SWAYZE, J. The plaintiff in error was indicted jointly with C. H. Woodward and F. J. Devendorf for keeping a disorderly house. The particular offense charged was the making of loans of money at usurious rates of interest, and at rates in excess of the amounts provided by law. The first count of the indictment, which alone is now ma terial, follows the form that we sustained in State V. Diamant, 73 N. J. Law, 131, 62 Atl. 286. This case is said to be differentiated by the fact that it was here proved that the loans were made at lawful interest, with written contracts in solemn form for the compensation and expenses of the loan agency. Upon the face of the papers there was a loan made by Clara H. Woodward, secured by a chattel mortgage at the lawful rate of interest, which was duly recorded, and a second chattel mortgage to the Capital Loan Company, which seems not to have been acknowledged or recorded, and not to have been perfected by the mortgagee's affidavit required by statute. This second mortgage was given to secure various expenses and a commission of 5 per cent., besides a sum amounting to about 20 per cent., charged for guaranteeing the loan. The trial judge instructed the jury that, if they found that C. H. Woodward was a myth or a name put in the papers for the purpose of having some person other than the Capital Loan Company appear as the lender, it would be for them to say whether this making part of the papers in the name of C. H. Woodward and part in the name of the Capital Loan Company was a mere device and a scheme for exacting illegal rates of interest. He also charged that, if the defendant habitually took illegal brokerage fees, the jury must convict. There was a general verdict of guilty as charged and a special finding that he was guilty of habitually tak

ing illegal interest, and guilty of habitually taking illegal brokerage.

Disregarding for the present the instructions and verdict as to the illegal brokerage, the jury must under the court's charge have found that the form of the papers was a mere device and scheme for exacting illegal rates of interest. It can hardly be questioned that, if such was the real scheme, the solemnity of the form adopted cannot avail the defendant. The case is, in effect, the converse of one where a lender of money attempts to conceal the usurious character of the transaction by the device of a commission to a third party. If the loan was really made by the Capital Loan Company, the charges it made were clearly usurious, and none the less so because in appearance the loan was made by Woodward. The only question open is whether there was evidence that justified the court in submitting this question to the jury. There was no evidence that Woodward was a myth, and, if the judge had rested the case on that alone, the charge could not be sustained. He did not rest it on that alone, but upon the question whether part of the papers were taken in her name and part in the name of the Capital Loan Company as a mere device and scheme for exacting illegal rates of interest. We think the circumstances of the case justified this instruction.

Clara H. Woodward is a woman residing in Reedsburg, Wis., a place a thousand miles or more from Trenton, so small that it does not appear in the list of towns having 5,000 population by the census of 1900. According to the testimony in behalf of the defendant, Woodward sends money to the office of the Loan Company in Chicago, and, when money is needed at Trenton, it is sent from that office. The loans are guaranteed to her by the Capital Loan Company, which is a business name for one J. S. Mackey, of St. Paul. The general manager is one C. F. Weatherby, of Chicago, who is also general manager of a number of loan agencies. The guaranty was by Martin, the manager at Trenton, and not by Mackey, the principal.

The second mortgages given to the Capital Loan Company were never recorded, and, when paid off, the practice was to return only the signature torn from the mortgage. All the papers were kept at Trenton and reports of the loans were made to Mackey, and not to Woodward, the ostensible lender. We think these facts justified an inference that the money loaned, although it may originally have been furnished by Mrs. Woodward, was really at the time of the loans the money of the Capital Loan Company. If so, the loans were usurious, and under our decision in the Diamant Case the instruction of the court in this respect was correct.

The instruction that the defendant might be convicted if he habitually took illegal brokerage fees standing by itself cannot be sustained. The charge of the indictment was

that the defendants made loans at usurious rates of interest and at rates in excess of the amounts provided by the law. The making of loans naturally imports the lending of money as a principal, and not the procuring of a loan as a broker. Such is the meaning actually and properly attributed to the words in the main portion of the judge's instructions. It would not comport with that meaning allow a defendant to be convicted upon proof that, as a broker, he charged more than the legal brokerage, and, if there was nothing more in the case, we should be unable to sustain the judgment; for the general verdict of guilty might have been the result of this erroneous charge. There is, however, an element in the case which renders the judgment sustainable. Under the judge's instructions, the jury not only found a general verdict of guilty as charged, but found specially that the defendant was guilty of habitually taking illegal interest. This is sufficient in itself to justify the general verdict independently of the charge of illegal brokerage, and the finding of guilt in the latter respect may be disregarded. The case resembles one where the indictment contains bad counts and there is a general verdict. In such a case, if there is a single good count, the verdict is sufficient, and an entire judgment may be given. 1 Chitty, Criminal Law, *249, *640; Stone v. State, 20 N. J. Law, 404, 408. State v. Weller, 20 N. J. Law, 522, 526. The judgment is affirmed.

(76 N. J. L. 267)

STATE v. BRAND et al.

(Supreme Court of New Jersey. June 15, 1908.) 1. ARSON-STATUTES-CONSTRUCTION.

Crimes Act, § 126 (P. L. 1898, p. 829), providing that any person who shall willfully, etc., set fire to or burn, or aid, counsel, procure, or consent to the setting fire to or burning of, any insured building, etc., with intent to prejudice the underwriter, etc., shall be guilty of a misdemeanor, denounces two distinct crimes, one the willful, etc., setting fire to or burning of the insured property with intent to prejudice the underwriter, and the other aiding, counseling, procuring, or consenting to the setting fire to or burning of such insured property; and the counseling of such an act is a crime, whether the act is ever done or not.

2. SAME INDICTMENT AND INFORMATION.

Under Crimes Act, § 126 (P. L. 1898, p. 829), providing that any person who shall willfully set fire to and burn, or aid, counsel, procure, or consent to the setting fire to or burning of, any insured building, etc., the words "aiding, counseling, and consenting," in an indictment charging defendants with willfully aiding, counseling, procuring, and consenting to the setting fire to and burning of certain insured property, might be rejected as surplusage, and the indictment would still charge the substantive crime of counseling a fire. 3. SAME-ISSUES AND PROOF.

In a prosecution for feloniously aiding, counseling, and consenting to the setting fire to and burning of certain insured property belonging to defendants, evidence that defendants had brought certain suits against various insurance companies and had settled such suits at 50 cents on the dollar was admissible for the purpose of