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(205 Pa. 479)

BRIDGEMAN BROS. CO. v. SWING et al. (Supreme Court of Pennsylvania. May 4, 1903.)

ASSUMPSIT STATEMENT-SUFFICIENCY-
JUDGMENT BY DEFAULT.

1. A statement in an action of assumpsit, setting forth a debt on book account for merchandise sold and delivered to defendants at their request, that the charges were just and reasonable, and setting out a copy of the account sued on, is sufficient to require an affidavit of defense.

2. Where defendant in assumpsit demurs to a statement, and the court holds it sufficient, it may enter judgment against the defendant without giving him leave to file an affidavit of defense.

Appeal from Court of Common Pleas, Philadelphia County.

Action by the Bridgeman Bros. Co. against Thomas C. Swing and William H. Bateman, Jr. From a judgment entering judgment on demurrer to statement, defendants appeal. Affirmed.

The grounds of demurrer were as follows: "(1) Said statement fails to disclose a delivery of any goods or chattels by the plaintiff to the defendants. (2) The statement of claim fails to show any liability on the part of the defendants, or either of them. (3) The alleged copy of plaintiff company's book of original entry, upon which the action is based, fails to disclose any charge against the defendants by the plaintiff company." The court found that the statement was sufficient, and entered judgment in favor of the plaintiff, denying defendants' request for leave to file an affidavit of defense on the merits.

Argued before MITCHELL, DEAN, FELL, BROWN, MESTREZAT, and POTTER, JJ. J. H. Brinton, for appellants. Julius C. Levi, for appellee.

PER CURIAM. The procedure act of 1887 relieved plaintiffs from a certain amount of formality in the statement of their claims, but not from any obligations of substance in the stated cause of action. Fritz v. Hathaway, 135 Pa. 274, 19 Atl. 1011. But if the substance was there, the act was not intended to increase mere technicality of presentation. The statement in the present case sets forth an indebtedness on "a book account for merchandise sold and delivered to the defendants at their request," with a further averment that the charges are "just and reasonable," and a copy of the account, showing in detail the articles and their prices. This would have been entirely good as a common count with bill of particulars under the previous practice, and no defect has been pointed out as to precision or certainty of parties and amounts, which would make it bad in any of the features the procedure act was intended to require. The defendant, instead of filing an affidavit of his defense, if

2. See Pleading, vol. 39, Cent. Dig. § 570.

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(Supreme Court of Pennsylvania. May 4, 1903.)

JUDGMENT-RULE TO VACATE-AFFIDAVIT OF DEFENSE.

1. Where an affidavit of defense is not filed in time, but comes before the court on a rule to open judgment, regularly entered, the court will examine the averments, and require further evidence as to the facts, as in other cases of an application to open judgment.

2. In an action on a note, judgment was rendered for want of affidavit of defense. Thereafter, on motion to open judgment, an affidavit of defense was filed, alleging "that it does not appear from the plaintiff's statement of claim that the note was stamped." Held, that such an averment was a mere argumentative denial, and a technical objection to the pleading, which is not the office of the affidavit of defense or an application to open judgment.

Appeal from Court of Common Pleas, Philadephia County.

Action by John B. Hunter, doing business as John B. Hunter & Co., against William F. Forsyth. Judgment for plaintiff. From an order discharging a rule to open it, defendant appeals. Affirmed.

Judgment was entered for want of an affidavit of defense on May 16, 1902. Upon the following day defendant filed an affidavit of defense, which was as follows: "Defendant avers that the said note was given by deponent without consideration, and was given for accommodation of one Elworth B. Shearer, who was indebted or about to become indebted to the plaintiff. The said note was given to guaranty the indebtedness of said Shearer to the plaintiff. Defendant avers that it was well known to said plaintiff that said note was given by defendant for the accommodation of said Shearer. Plaintiff knew that the said note was given to guaranty the said Shearer's indebtedness, and that Shearer was to pay the said note; that the defendant was never notified as to the fact or amount of said Shearer's indebtedness, and said plaintiff never brought suit against the said Shearer, and has never made any attempt to collect from the said Shearer money which may be due, if any money be due from said Shearer to said plaintiff. Defendant further avers that the indebtedness, to guaranty which the said note was given, was incurred by the sale and delivery of hardware by said plaintiff to said Shearer; that defendant was induced to sign the said note and guaranty the said indebtedness of said Shearer to said plaintiff upon the faith of representations made to this defendant by the said Shearer, and concurred in by said plaintiff, that the actual, bona fide amount

2. See Judgment, vol. 30, Cent. Dig. § 295.

of the contract or indebtedness of said Shearer to said plaintiff was $1,353.25, viz., the amount of the note upon which suit is brought. Defendant subsequently has ascertained that the said Hunter and said Shearer unlawfully agreed together to add to the said contract or indebtedness of Shearer to said Hunter a certain sum, in fraud of this plaintiff's rights, which this defendant is informed, believes, and avers to be at least ten per centum of the actual, bona fide indebtedness of said Shearer to said plaintiff, which fraudulent and fictitious sum, being added to the actual indebtedness of said Shearer to said plaintiff, makes the sum of $1,353.25 for which the defendant was induced to become a guarantor. Defendant further avers that the statement of claim filed by the plaintiff is insufficient to support a judgment in this case, in this: that it does not appear from the plaintiff's statement of claim filed that the note upon which plaintiff brings this suit was stamped with internal revenue stamps of the United States of America, as required by the act of Congress in force on the date of the execution of said note, viz., March 20, 1899; that the same, not being stamped according to law, is, under said act of Congress, to be deemed invalid and of no effect. All of which is true, and defendant expects to be able to prove the same at the trial of the cause." The court discharged the rule to open the judgment.

Argued before MITCHELL, DEAN, FELL, BROWN, MESTREZAT, and POTTER, JJ. William F. Johnson and A. L. Lewis, for appellant. H. B. Hodge, C. R. Woodruff, and W. D. Neilson, for appellee.

PER CURIAM. When an affidavit of defense is filed, and its sufficiency is in question, the court must accept it for verity, and regard all the facts properly set forth in it as proved. But where the affidavit is not filed in time, as in the present case, and comes before the court only on a rule to open a judgment regularly entered, the court is entitled to examine the averments critically, and to require further evidence as to the facts, as in other cases of application to open judgments. The court below was not satisfied that a prima facie defense was sufficiently made out to justify sending this case to a jury. Plaintiff sued on a promissory note of which defendant was the maker. The defense was that defendant was a guarantor for the real debtor, one Shearer, and made the note on the faith of representations made by Shearer, "and concurred in by the plaintiff," that it represented the actual debt of Shearer to plaintiff, but that defendant had "subsequently ascertained that the said Hunter and said Shearer unlawfully agreed together to add to the said contract or indebtedness of Shearer to said Hunter a certain sum, in fraud of this plaintiff's rights, which this defendant is informed, believes, and

avers to be at least 10 per centum of the actual, bona fide indebtedness of said Shearer to said plaintiff." It is objected to this affidavit that it is vague, inter alia, in not stating whether the debt of Shearer was due at the date of the note, or was to be incurred thereafter; in not stating either the actual debt, or the amount added, with any certainty; and especially in not averring any representations by plaintiff, except inferentially, by the use of the word "concurred." For these and perhaps other objections, the court did not deem the defense sufficiently made out. It was entitled to satisfactory depositions or further evidence, and we cannot say that there was error in requiring something more than this affidavit.

A further defense is based on the want of a revenue stamp on the note, as required by the act of Congress of June 13, 1898, 30 Stat. 448, c. 448 [U. S. Comp. St. 1901, p. 2284]. It was held in Chartiers, etc., Turnpike Co. v. McNamara, 72 Pa. 278, 13 Am. Rep. 673, that the act of Congress. of 1866 (14 Stat. 98, c. 184) prohibiting the admission in evidence "in any court" of an unstamped paper applied to state as well as federal courts. That decision was made by a divided court, and has never commanded the general acquiescence of the profession. The decisions in other courts of high authority are against the power of Congress to interfere, even indirectly, with the rules of evidence in state courts. Whether the same construction would now be given to the act of 1898 may therefore be open to doubt. But the question does not arise in the present case, for the affidavit is not that the note was not duly stamped, but that "it does not appear from the plaintiff's statement of claim" that it was so stamped. This is merely an argumentative denial, and amounts, at most, to a technical objection to the pleadings, which is not the office of an affidavit of defense, and still less of an affidavit to open a judgment. Judgment affirmed.

(205 Pa. 435)

In re STURGIS' ESTATE. Appeal of POTTER. (Supreme Court of Pennsylvania. May 4, 1903.)

WILL-CONSTRUCTION-ESTATE CONVEYED. 1. Testatrix devised the residue of her estate to her seven children. If any of them were dead, leaving issue or married, she gave the share of such deceased child to the uses of his or her will; and if such child should have died intestate, leaving issue or a widow, such share should go to the persons and for the estates they would have taken, had such child died the owner of that share. In the event of the death of any of the devisees before testatrix, so much of the share of such child as did not vest by the provisions of the will was given to the persons and the estates to whom the residue of testatrix's estate was devised. One son died before testatrix, leaving a widow and children; giving to his widow all his estate for life, with full power to dispose of the

same by will, and, in default of such disposi- | inappropriate to. a case of intestacy, the testion, to his children living. Held, that the widow's power of appointment by will, being unlimited, carried the fee, and that her children had no standing to demand partition of the real estate of the testatrix.

Appeal from Orphans' Court, Philadelphia County.

In the matter of the estate of Susan B. Sturgis, deceased. From a decree dismissing the petition for partition, James Potter, guardian of Mary L. Sturgis and Henrietta H. B. Sturgis, appeals. Affirmed.

The material portion of the will of Robert Sturgis, deceased, is as follows: "I give, devise, and bequeath all of my property both real and personal of every kind and nature whatsoever and wheresoever situated which I now possess or to which I may hereafter become entitled, to my beloved wife, Marion Sturgis for life, with full power to dispose of the same by will, but if she should die without leaving any last will and testament, then I give, devise and bequeath all of my said property, on the death of my said wife, absolutely and in fee to such of our children who may be living at the time of her death, share and share alike, provided, however, that if any of our said children shall have died before the death of my said wife, leaving issue, the child or children of such deceased child, living at the time of the death of my said wife, shall be entitled to the share the parent would have taken if living. share and share alike."

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

James E. Hood, for appellant. John G. Johnson, for appellee.

MITCHELL, J. The testatrix, after devising the residue of her estate to her seven children, provided: "If any of these devisees are dead leaving issue or married, I give the share such deceased child would have taken if living, to the uses of his or her will; and if he or she should have died intestate, leaving issue or a widow, I give the said share to the persons and for the estates they would have taken in the same had such child died the owner of that share. If any of the said devisees or if my two daughters, hereinafter named, or either of them, shall have died before me; I give so much of the share of that child, as does not vest in his or her issue, husband or wife by the provisions of this will, to the persons and for the estates to whom and for which the residue of my estate is devised." Robert Sturgis, a son, died before the testatrix, leaving a widow and children, and the questions in this case arise under the first clause of the passage above quoted. The language in itself is not at all ambiguous. The expression "to the uses of his will" means exactly the same thing as the phrase in the next clause, "had such child died the owner of that share." Having expressed the intent in the first clause in a way

tatrix changed the form of expression in the next, but used one that conveyed the same meaning, to wit, that the share of the child dying before her, leaving a widow or children, should pass, whether he died testate or intestate, as if he had died the owner of that share, or, as the older lawyers would have expressed it, quasi seised in his demesne as of fee. On the words of the clause, this meaning is not at all doubtful. But it is urged that a different interpretation must be put on it, in view of the concluding clause of the same paragraph, to wit: "If any of the said devisees or if my two daughters hereinbefore named or either of them shall have died before me, I give so much of the share of that child, as does not vest in his or her issue, husband or wife, by the provisions of this will, to the persons, and for the estates to whom and for which the residue of my estate is devised." This, as said by the learned judge below, is obscurely expressed, but, by reading the whole paragraph together, it is sufficiently clear that this clause does not in any way affect the first, with which alone we are concerned. Taking the whole paragraph together, it provides for three contingencies that might arise by the death of a child in the lifetime of the testatrix: First, death testate, leaving widow or issue; second, death intestate, leaving widow or issuethe devolution of the property in either case being as if the child had died the owner of the share. But a third contingency was possible, to wit, death in the lifetime of the testatrix without leaving widow (or husband) or issue. This was what the last clause of the paragraph was intended to meet. It was not to put any limit on the disposition by will of a child under the first clause, but to provide for a possible contingency not provided for in the first and second clauses. It gives to the persons, etc., to whom the residue is devised, "so much of the share of that child (dying before me) as does not vest in his or her issue, husband or wife, by the provisions of this will," not the provisions of his or her (the child's) will but of this (the testatrix's) will. It is not, therefore, as suggested, to meet the case of a child excluding by will his widow or issue from the succession. That case was already covered by the first clause, by which the will of a child dying testate in the lifetime of testatrix, leaving widow or issue, is to apply to the share devised to him, as if it had vested in his lifetime. The new clause was not intended to be inconsistent with this. The testatrix had already provided for the widow and issue of a deceased child, so far as she could without limiting the estate in fee she intended to give the child; that is, the widow and issue took what the child gave them by will, or, in case of intestacy, what they would take under the intestate law. In either case they were provided for, as far as might be, by "this" (i. e., the testatrix's) will. But if there should be

neither widow nor children, then there would be a contingency not provided for, and the last clause was to meet this. It has no bearing on the first or second clauses of the paragraph.

The share of Robert therefore passed under his mother's will as if it had vested and been part of his estate in his lifetime. By his will his estate passed to his widow for life, with a general power of disposition by will, and, in default of such disposition, to his children living at her death, with right of representation in their issue if any. The widow's power of appointment by will, being unlimited, will carry the fee; and the estates of the appellant's wards are therefore contingent on her failure to exercise the power, as well as on their own survivorship. The court was therefore right in holding that they were not entitled to partition. Decree affirmed.

(205 Pa. 439)

FURTH v. STAHL et al. (Supreme Court of Pennsylvania. May 4, 1903.)

AUDITOR'S REPORT OPINION OF COURT BANKRUPTCY-FORECLOSURE SALE-ESTOPPEL-PREFERENCES-ATTORNEY'S FEE.

1. On overruling an auditor's report, the court should file an opinion stating its grounds for so doing.

2. A trustee in bankruptcy is estopped from contesting the jurisdiction of the court to appoint an audítor to report distribution of a fund raised by the sale of the real estate of the bankrupt under a mortgage when he had agreed to such sale.

3. Under Bankr. Act July 1, 1898, § 60, 30 Stat. 562, c. 541 [U. S. Comp. St. 1901, p. 3446], a person who anticipates the filing of a petition in bankruptcy against himself may employ an attorney, and give to him a mortgage to secure to him payment of the fees for services to be rendered in the bankruptcy proceedings.

4. The state court has jurisdiction to appoint an auditor to distribute fund arising on foreclosure of the real estate of a bankrupt.

Appeal from Court of Common Pleas, Philadelphia County.

Action by Emanuel Furth against Gustav Stahl and another. From an order dismiss

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

John G. Johnson, Max Herzberg, and Jacob Singer, for appellant. Julius C. Levi, for appellees.

MITCHELL, J. It is to be regretted that the court did not file an opinion, or give reasons in any form for its decree. Where the decision of an auditor, referee, or other officer acting in a judicial capacity is overruled by the court, justice to the court itself, as well as to the officer and the parties, suggests that the reasons should be stated. In the present case, to a careful and elaborate report made by the auditor, the court's own officer, exceptions which went merely to the result, without indicating the grounds, were sustained. No reasons were given by the court, and no sufficient ones are advanced by the appellee or perceived by this court. We are obliged, therefore, to discuss the case from the report of the auditor.

The jurisdiction of the court is clear. The auditor found, and it is not questioned, that the trustee in bankruptcy expressly agreed that the property should be sold under the mortgage. For this there was good reason, as such sale divesting dower would be likely to bring a larger fund than a sale under the bankruptcy proceedings, which would leave the dower existing as an inchoate incumbrance. The purchase money was then paid into court, and an auditor appointed to report distribution on the petition of the trustee. He was, therefore, estopped from contesting the jurisdiction.

But, independently of his acts or agreement, the jurisdiction is clear. The court was distributing a fund in its own hands, raised by it on its own process. Its authority to do so did not depend on any one's consent. See Bardes v. Hawarden Bank, 178 U. S. 524, 20 Sup. Ct. 1000, 44 L. Ed. 1175; Louisville Trust Co. v. Comingor, 7 Am. Bank. Rep. 421, 184 U. S. 18, 22 Sup. Ct. 293, 46 L. Ed. 413.

The second question raised before the auditor, and elaborately discussed by him, is

ing exceptions to the auditor's report, plain- equally clear. The appellant was the morttiff appeals. Reversed.

From the auditor's report it appeared that on November 24, 1899, the firm of Stahl & Straub, composed of Gustav Stahl and Joseph H. Straub, stockbrokers, suspended payments. On the following day Emanuel Furth, Esq., a member of the Philadelphia bar, was retained by Stahl. Shortly afterwards Stahl agreed to give to Mr. Furth a second mortgage on real estate to secure Mr. Furth's fees for services in bankruptcy proceedings which were then in contemplation by creditors. The mortgage was executed on December 19, 1899, while the efforts of Mr. Furth were in progress to avoid the bankruptcy proceedings. The petition in bankruptcy was filed on December 28, 1899.

gagee in the mortgage upon which the fund was realized, the mortgagor being one of the bankrupt firm; and the point made against the claim is that it was void as a preference under the bankrupt act. But, under the facts as found and reported by the auditor, it was within the express exception of paragraph "b" of section 60 of the act (Act July 1, 1898, 30 Stat. 562, c. 541 [U. S. Comp. St. 1901, p. 3446]): “If a debtor shall, directly or indirectly in contemplation of the filing of a petition by or against him, pay money or transfer property to an attorney and counselor at law, solicitor in equity, or proctor in admiralty for services to be rendered, the transaction shall be re-examined by the court, on petition of the trustee or any cred

itor, and shall only be held valid to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the trustee for the benefit of the estate." A pledge or payment for a consideration given in the present or to be given in the future, whether in money or goods or services, is not a preference. The object of prohibiting preferences is to prevent favoritism, whether for secret benefit to himself or other reason, among a debtor's creditors, who ought, in fairness, to stand on the same footing. A transaction by which the debtor parts with something now in return for something he acquires or is to acquire in the future, is not within the mischief the act was aimed against. Section 60, therefore, expressly recognizes this class of transactions, but, as it is capable of abuse, provides for a re-examination, and reduction, if necessary, to a reasonable amount, by the court, on petition of the trustee or a creditor. No such examination has been called for in the present case, and the auditor finds expressly that the amount of plaintiff's fee was reasonable for the services rendered.

It was urged before the auditor that the services were not of the kind mentioned in section 64 of the act (30 Stat. 563 [U. S. Comp. St. 1901, p. 3447]), and therefore could not be allowed. But the two sections have no necessary connection. The language of section 64 is: "The debts to have priority, except as herein provided, and to be paid in full out of bankrupt estates, and the order of payment shall be (1) the actual and necessary cost of preserving the estate subsequent to filing the petitions; (2) the filing fees paid by creditors in involuntary cases; (3) the cost of administration, including the fees and mileage payable to witnesses as now or hereafter provided by the laws of the United States, and one reasonable attorney's fee for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases, to the bankrupt in involuntary cases while performing the duties herein prescribed, and to the bankrupt in voluntary cases, as the court may allow," etc. Clause 3 is the one under which the objection is made. The two sections have entirely different objects. Section 64 defines the debts which are to have priority and be paid in full by virtue of the statute itself, without regard to any act or agreement of the parties. The services of an attorney included in this class are those "actually rendered while performing the duties herein prescribed." The services referred to in section 60 (30 Stat. 562 [U. S. Comp. St. 1901, p. 3446]), on the contrary, are those "to be rendered," which are paid for in advance, "in contemplation of the filing of a petition by or against" the bankrupt. Such fees are not determined by the statute, and allowed in full out of the bankrupt estate, as the other class are, but

* *

depend, both as to payment and amount, on the acts of the parties; and what the statute does is to recognize the validity of their payment, but subject the reasonableness of the amount to the supervision of the court. The services of the plaintiff belong to this class." They were none the less rendered in contemplation of the filing of a petition in bankruptcy because directed primarily and principally to the prevention of such petition. A man is usually very much in contemplation of a result which he employs counsel to avoid.

The argument of the appellee in this court is based on the view that, as the mortgage was not actually executed until after the services of the plaintiff were partly rendered, it was a payment or pledge for an antecedent debt, and therefore must stand in the same class as the claims of general creditors. But this view ignores the facts as found by the auditor. The plaintiff was retained as counsel on November 25th, and within a few days his compensation was agreed upon, "without regard to the length of time occupied"; the services, as already noted, being primarily to try to arrange the affairs of the firm with the creditors so as to avoid proceedings in bankruptcy. The mortgage was executed on December 19th, while the efforts of plaintiff were still in progress, and the petition in bankruptcy was not filed until December 28th. The character of the act as to whether it. should be regarded as a preference or not must be determined by the circumstances under which it was done. Here the compensation was agreed to in advance on the retainer of the plaintiff, and payment by the mortgage was made during the continuance of his professional efforts "in contemplation of the filing of a petition." It was within the letter as well as the spirit of the act.

The judgment is reversed, and distribution directed to be made in accordance with the report of the auditor; the costs of this appeal to be paid by the appeilee Frank M. Crawford.

(205 Pa. 460)

HARRIS v. HARRIS et al. (Supreme Court of Pennsylvania. May 4, 1903.)

WILLS-CONSTRUCTION-ACTION-TRUST.

1. Testatrix devised her real estate to her executors, in trust to divide the profits among her children, with full power to sell any part thereof till such time as such children shall determine that the whole shall be sold or divided, when the real estate, or remaining portion thereof, should be equally divided among the children. Held to constitute an active trust, which could be terminated only by the consent of all of the children or their survivors.

Appeal from Court of Common Pleas, Philadelphia County.

Bill by Albert H. Harris against Henry G. Harris and others. From a decree dismissing the bill, plaintiff appeals. Affirmed.

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