Opinion of the Court. that fund to the payment of his demand, or of a ratable proportion with other creditors. But the right to compel such application cannot be invoked by a stockholder consenting to such disposition of the trust fund, and himself participating in its appropriation, as in the present case. Here the lands conveyed to the trustee were subject, as stated above, to a mortgage of $75,000, and its payment was assumed by the company. It turned out that the company was not prosperous in its business, and in the year following its organization it became involved in litigation, and a receiver of its property and effects was appointed. And in April, 1880, its stockholders upon consultation came to the conclusion that it would be impossible for the company to comply with its engagement to pay off that mortgage, and they therefore advised, and at their meeting resolved, that the lands should be reconveyed to the original owners, and the company be thus released. The bank, through its stockholders, who were also stockholders of the Lumber Company, united in this advice and resolution, and in pursuance thereof the several reconveyances were made, as stated above, and among others to the stockholders of the bank. It was expected that the original owners would then hold the lands as they had held them before the Lumber Company was organized. That the property when reconveyed was sold by the holders at prices which, if the company could have obtained them, would have made its retention advisable, does not alter the transaction. The case of Thompson v. Bemis Paper Co., 127 Mass. 595, supports this conclusion. There a judgment creditor of the corporation, unable to enforce his judgment by execution, filed a bill in equity on behalf of himself and all other creditors, against the corporation and certain stockholders, to enforce a personal liability of the latter, on the ground that the capital of the corporation had been withdrawn and paid to the stockholders. He had at that time contracted for eight shares of the stock, paid for them in part, and voted as owner at meetings of the stockholders. At one of the meetings the sum of $16,528, being the amount of the cash assets of the corporation, was withdrawn from the capital of the corporation and divided among Statement of the Case. the stockholders in proportion to the amount of stock held by them respectively. The plaintiff was present and voted in favor of the division. Upon these facts it was held that the bill could not be sustained, although upon its filing the plaintiff was the absolute owner of the eight shares; and that he could not make the act which he had favored and voted for a ground for charging the stockholders with a personal liability for a debt due from the corporation to himself. The indorsement of the note of the Black River Lumber Company for $10,000, by Ketchum in the firm name of Ketchum & Waterman, was made by way of security to the bank for its loan to that company. The transaction had no connection with the business of the firm. It was a guarantee of another's obligation which no member of the firm had any authority to give. It was not shown, moreover, that the indorsement was made with the consent or even knowledge of Waterman. His estate, therefore, cannot be held liable upon the note. Decree affirmed. UNITED STATES v. CORWIN. ERROR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF TEXAS. No. 123. Argued December 12, 1888. Decided February 4, 1889. In an action against the sureties on a contractor's bond to the United States to recover damages suffered by reason of the nonfulfilment of the contract, the burden of proof is on the United States to show a demand upon the contractor for performance, and his failure and refusal to perform; and a statement of such nonperformance, demand, failure and refusal, inade by an officer of the government in the line of his official duty in reporting them to his official superior, is not legal evidence of any of those facts. AT LAW, on a contract. Judgment for defendants. Plaintiffs sued out this writ of error. opinion. The case is stated in the Opinion of the Court. Mr. Assistant Attorney General Maury for plaintiffs in error. No appearance for defendants in error. MR. JUSTICE LAMAR delivered the opinion of the court. On the 17th of November, 1883, the plaintiffs in error brought suit in the Circuit Court of the United States for the Western District of Texas against the defendants in error, Dennis Corwin and John Cardwell, as sureties in two bonds, one in the penal sum of $3000, and the other, $2150, given by one Edwin P. Phillips, to secure the faithful performance of two contracts, dated May 20, 1881, between Phillips and these plaintiffs. Phillips being without the jurisdiction of that court, was not sued. By one of these contracts Phillips agreed to furnish to the quartermaster's department, United States army, at the military station of San Antonio, Texas, "such quantity as may be required, not exceeding in all 1,000,000 pounds, of good merchantable oats," at a stipulated price; "the said oats to be furnished and delivered as may be required for the wants of the said station, between the 1st day of July, 1881, and the 13th day of July, 1882, in such quantities and at such times as the receiving officer may require; and by the second contract he agreed to furnish to the same authorities, at the same place, such quantity as may be required, not exceeding in all 1,000,000 pounds, of good merchantable corn, at a stipulated price, between July 1, 1881, and June 30, 1882, upon like terms, as to quantity and time of delivery, as in the case of the oats. The petition, after setting out the material parts of both of these contracts, and also of the bonds, alleged that Phillips "wholly failed, refused and neglected to carry out any one or all of his stipulations in said agreements;" that, as a result of such failure on his part, the plaintiffs were compelled to, and did, go into the open market and purchase large amounts of both kinds of grain at a much higher price than was stipulated in said contracts; and that plaintiffs were thus subjected to a loss of $11,564.55, for which sum, or so much thereof as Opinion of the Court. did not exceed the amounts named as penalties in the bonds, together with interest and costs, etc., they prayed judgment. Each of the defendants below demurred to the petition, and, at the same time, traversed its allegations. August 24, 1884, a formal stipulation was filed, waiving a jury and submitting all matters of law and fa to the court. On the following day an amendment to the petition was filed, alleging that on the 8th day of July, 1881, demand was made on Phillips, under the contract, for the delivery of 150,000 pounds of corn and a like quantity of oats. Issue being joined, the United States introduced their evidence, which was wholly documentary, and consisted of transcripts of various original papers deposited in the Treasury Department, and which, it was claimed, was relevant to the case. The defendants in error offered no evidence at all. On the 3d of September, 1885, the court overruled the demurrers to the petition, and upon consideration of the case upon its merits rendered judgment in favor of the defendants in error, upon the ground that, under the contracts sued on, a demand upon Phillips for their performance was a condition precedent to the right of action on the bonds, and that there had been no legal evidence submitted showing that any demand ever had been made. From this judgment the United States sued out the writ of error which brings the case here. The burden of proof was upon the United States to show that a demand had been made upon Phillips for the performance of each of his said agreements, and to show his failure and refusal to so perform them. The evidence submitted by the United States to establish this demand and refusal, consisted of several letters, of differ ent dates, written by the quartermaster in charge of the depot at San Antonio to the Chief Quartermaster of the Department of Texas, for authority to purchase certain stated amounts of oats in open market, because (as was alleged therein) Phillips had failed to make deliveries under his contract; all of which letters were referred by the last-named officer to the Adjutant General, with a recommendation that such authority be granted. The Adjutant General approved these requests, and Opinion of the Court. the purchases were accordingly made. These letters were substantially alike, differing only as to dates and amounts of oats desired, one of which, including indorsements, is as follows: "Office Depot Quartermaster, U. S. Army, "San Antonio, Texas, Aug. 2d, 1881. "Chief Quartermaster, Department of Texas, "San Antonio. "Sir: 1 respectfully request authority to purchase 40,000 lbs. of oats, in open market, the contractor, Mr. E. P. Phillips, having failed to make deliveries under his contract. "Very respectfully, your obedient servant, 66 "L. E. CAMPBELL, 'Capt. & A. Q. M., U. S. A., Depot Q'r M'r." (First indorsement.) "H'dq'rs, Dep't of Texas, "Office of Chief Quartermaster, "San Antonio, Texas, Aug. 2d, 1881. "Respectfully referred to the Adj't General, Department of Texas, recommending approval of this request in accordance with article 1 of the contract. Mr. Phillips, after having had due notice by requisition from the depot quartermaster to furnish certain quantities of grain, has so far failed to make any delivery, and the amount of grain for which authority is here requested to purchase in open market is absolutely needed for issue to the public and private animals pertaining to this station, and the San Antonio depot, and will last about ten days. "(Sig'd) "WM. B. HUGHES, "Major & Chief Q'r'master." (Second indorsement.) 'Headquarters Department of Texas, "Respectfully returned by the Commanding General to the Chief Quartermaster of the department approved. "(S'g'd) "THOMAS M. VINCENT, "Adjutant General." |