company insures the goods "while located and contained as described herein, and not elsewhere," the place described being the Chronicle building. The description of the goods was immediately followed by the qualifying phrase, "all while contained in the Chronicle building." The policy provided that it could be canceled at any time "at the request of the insured, or by the company by giving five days' notice of such cancellation," and that in case of such cancellation the unearned premium should be returned on the surrender of the policy. It further provided | that the policy should become void "if the hazard be increased by any means within the control or knowledge of the insured, * or if any change, other than by the death of the insured, takes place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard)," and the usual clause that no agent of the company had power to waive any provision of the policy, except by indorsement on the policy or by writing attached thereto. We think the above-quoted passage, relating to a change of "possession" of the goods, refers to the person having the possession, rather than to the location of the property, and it does not make the policy void where the only change relating to the possession is a mere change in the location of the goods by removal to another building. About two months before the removal of Steil to the Shreve building a fire occurred in the Chronicle building which damaged his goods. This loss and the amount thereof due from each of the defendants was in process of adjustment at the time of the removal. The evidence on the question whether Steil notified the defendant companies of his removal to the Shreve building of the goods covered by the policy is in sharp conflict. That for the plaintiff tended to show that he had presented the policies to the defendants for the purpose of having the consent of the companies to the removal indorsed thereon, that owing to the pending settlement of the previous loss, he declined to leave the policies with the companies to have such indorsement made, and that he was thereupon informed by the agents of each of the defendants that it would be all right and that the goods were covered in the Shreve building, as before the removal. The facts that none of the companies have objected to the removal, or have given notice that the goods were not covered in the new place, are not disputed. It was to this condition of the evidence that the above instructions were addressed. [4] As above stated, there is no provision in the policy that the removal of the goods should operate to annul it. The provision in the insurance clause that the goods were insured while contained in the Chronicle building, and not elsewhere, coupled with the qualified description, operated to relieve the company of further obligation, upon the re respect to the goods so removed. The quali fication was a part of the description of the things insured. They were not merely the goods, but were the goods while contained in the Chronicle building. A loss of the goods by fire while they were out of the building would not be a loss covered by the policy, and the insured would not be liable therefor. Mawhinney v. Southern I. Co., 98 Cal. 184, 32 Pac. 945, 20 L. R. A. 87; Benicia A. Works v. Germania I. Co., 97 Cal. 468, 32 Pac. 512; Slinkard v. Manchester, etc., Co., 122 Cal. 595, 55 Pac. 417. This language of the insurance clause did not constitute a warranty, either express or implied, by Steil, that he would not remove the goods. The company had no occasion to demand of Steil a warranty against removal. Such removal would not increase its obligation, but would relieve it therefrom. The insurance clause completely protected it against a loss occurring to the goods in any other place. The language does not imply a warranty. Its effect is merely that the goods were insured only while kept in the building designated. There being no condition or covenant against removal, the result would be that while such removal would, for the time being, terminate the risk incurred by the company, it would not avoid the policy. If the goods were subsequently returned, the company would be liable, as before, for a loss occurring to them while in the building. [5] In order to continue the insurance upon the goods, or, in other words, to carry it to the goods in the new location, something more was required than a mere notification by the insured to the insurer of the fact that the goods were, or were about to be, removed. That fact alone would only suspend the insurance risk. The insurer must be informed, or be given good cause to believe, that the party insured desired to have the insurance on the goods continued in the new place, that he wished a modification of the policy to make it cover the goods in the new location, and must then, by positive act, or by failure to act, cause the insured to believe that the insurer consented to such transfer or modification, and that the goods were covered by the policy. Something in the nature of a new agreement, either express, or implied from conduct or words, or created by estoppel, was necessary. The instructions informed the jury that a notification of removal, followed by silence and failure to cancel the policy and return the unearned premium, would operate to estop the insurer from denying that it had consented to the removal and had agreed that the policy should cover the goods notwithstanding such removal. They should have contained the additional premise that the assured, upon such notification, requested that the policy be transferred to the new location, or that the insurance be continued notwithstanding the removal, or something to indicate that the which would have given the insurer reason- | insurance. They are therefore not authority able cause to believe that the assured de for the proposition that bare knowledge, or sired or expected the matter to be so adjust- a mere notice of the fact of removal, followed. The evidence concerning the notification ed by silence and inaction, will estop the referred to all indicated that such desire company and carry the insurance to the new and expectation existed and was made known place. We are of the opinion that the court to the assured, but the instructions omitted below was correct in its conclusion that these all reference thereto. In this respect they instructions do not fully state the law. We were defective, incomplete, and possibly mis- cannot say that its order was an abuse of leading. discretion. It is stated in the briefs that the instructions were based on a passage from Cooley's Briefs on Insurance (vol. 3, p. 2665) regarding "the effect of an insurer's failure to act on obtaining knowledge of facts which either avoid or forfeit a policy," and saying: "The weight of authority supports the proposition that an insurance company waives or is estopped to assert a violation of the terms of an insurance contract if the company, on being notified of the violation, remains silent and fails to object or to declare a forfeiture, or cancel or rescind the contract, within a reasonable time. This rule is, no doubt, in most cases based on the theory that it is a breach of good faith on the part of an insurance company to remain silent and inactive on notice of a breach, and to retain the unearned premiums, and so lead the insured to believe that his insurance contract is regarded as valid notwithstanding the breach." This rule is doubtless applicable in all cases where the facts brought to the insurer's knowledge show some violation of the terms of the policy which, either by law or because of some provision of the policy itself, operates to avoid or forfeit the policy. As we have shown, the removal of the goods neither forfeited nor avoided the policy, and was not a violation of any of its express provisions. Some cases are cited which it is claimed support the position that a mere knowledge of removal, under such a policy, requires prompt action by the insurer by way of rescission or cancellation and return of the unearned premium, if it does not consent to the removal and to a continuation of the insurance in the new location. These are Pollock v. German Co., 127 Mich. 460, 86 N. W. 1017; Williamsburg v. Cary, 83 Ill. 453; Ohio, etc., Co. v. Burget, 65 Ohio St. 119, 61 N. E. 712, 55 L. R. A. 825, 87 Am. St. Rep. 596; McIntyre v. Liverpool, etc., Co., 131 Mo. App. 88, 110 S. W. 604; Shutts v. Milwaukee, etc., Co., 159 Mo. App. 436, 141 S. W. 15; Henschel v. Oregon, etc., Co., 4 Wash. 476, 30 Pac. 735, 31 Pac. 332, 765; and Maryland, etc., Co. v. Gusdorf, 43 Md. 506. An examination of the opinions in these cases shows that they did not involve instructions so bare of detail as those here given. In each of them the law was predicated upon a statement of facts which included a request, express or implied, by the assured to continue the insurance described in the policy, notwithstanding the removal of the goods insured to a place not covered by the terms of the policy. In the Ohio case, the policy provided that a removal of the goods without the consent of the insurer would forfeit the [6] It was not error to admit evidence that the Shreve building was a less hazardous location than the Chronicle building. It was material upon the disputed question whether or not the companies' agents had consented to continue the risk in the new place, showing that it was not against their interest, and, consequently, that it was more probable that they would consent than if the risk had been thereby increased. It tended to corroborate the testimony of the plaintiff's witnesses as to such consent. There are no other points that require notice. The order is affirmed. Where no time was fixed for performance by plaintiff of certain agreements with reference to the exchange of lands, unexplained delay from April 10th to June 11th warranted defendants in rescinding. [Ed. Note. For other cases, see Vendor and Purchaser, Cent. Dig. §§ 148, 149, 151, 156; Dec. Dig. 89.] 2. SPECIFIC PERFORMANCE 130-JURISDICTION-RELIEF TO DEFENDANTS. formance of a contract for the exchange of Where plaintiff filed suit for specific perlands, he could not complain that a court of equity, having taken jurisdiction, granted relief to defendants, who cross-complained, asserting rescission. [Ed. Note.-For other cases, see Specific Performance, Cent. Dig. 88 424, 425; Dec. Dig. 130.] Department 2. Appeal from Superior Court, Los Angeles County; Chas. Wellborn, Judge. Action by J. L. Rector against Wellington J. Lewis and another, who cross-complained. From a judgmet for defendants and an order denying new trial, plaintiff appeals. Affirmed. Smith, Miller & Phelps and M. M. Meyers, all of Los Angeles, for appellant. Geo. L. Sanders, of Los Angeles, for respondents. MELVIN, J. Plaintiff sued for specific performance of an alleged contract for the exchange of real property. Defendants answered, pleading a rescission of the contract after breach thereof by the plaintiff, and by cross-complaint averred that plaintiff was wrongfully withholding their property from them. They prayed for restitution of the premises, for an award by way of damages, and for rent. The defendants were successful both in their defense and in their action upon the cross-complaint. Plaintiff appeals from the judgment and from an order denying his motion for a new trial. The important findings requiring discussion on this appeal were to the effect that plaintiff had not surrendered to defendants or to either of them the property which was to be exchanged for the realty which is the subject of this suit; that by means of misrepresentation plaintiff had obtained entrance upon the property of defendants in Los Angeles county on February 15, 1912, and that, on the 17th day of the same month, by threats and intimidation, he had compelled them to yreid possession of the premises to him, a possession still retained by him at the time of the action; that after frequent vain demands upon plaintiff for performance of the contract defendants rescinded it on the 11th day of June, 1912; that plaintiff during his occupancy had made certain improvements on the land which were equal to the value of the use thereof exclusive of the crops grown thereon; and that up to the time of the receipt by him of the notice of recission of the contract plaintiff had not attempted in good faith to carry out the terms of the agreement with defendants. An interlocutory decree was given following these findings and ordering an accounting between the parties with reference to the personal property. The contract was evidenced by two certain writings. By the first of these W. J. Lewis agreed to transfer the land in question, located in Los Angeles county, together with all the personal property thereon (except certain named chattels) for $15,000, the consideration being certain lands in Nebraska, subject to an existing lease continuing from March 1, 1912. The land in Nebraska was to be subject to two mortgages of $1,000 each, and the property in California to a mortgage of $3,000. The closing paragraph of this "Time being the essence of this agreement, it is hereby agreed by both parties hereto that said Lewis is to look at the Nebraska land within 30 days, and upon his approval within that period of time all papers appertaining to both parties' lands are to be placed in escrow 325 So. Hill St., Los Angeles, Cal., which comwith Los Angeles Abstract & Trust Company, pany will deliver to each party the certificates of title and complete the deal for all concerned. "W. J. Lewis. "Beulah V. Lewis. "J. L. Rector." This agreement was dated January 11, 1912. The court found that on January 23, 1912, the defendants placed in escrow all of the documents so required to be deposited by them according to the agreement. On April 10, 1912, the plaintiff and defendant, W. J. Lewis, signed the following writing: "It is agreed that the adjustment of all matters pertaining to personal property which should have been left on place sold by Mr. W. J. Lewis to Mr. J. L. Rector leaves a balance due of $10.00 from Mr. Lewis to Mr. Rector. Mr. Rector agrees to procure for Mr. Lewis a written lease of a certain 240 acres in Nebraska and turn same over to Mr. Lewis, said lease to be duly executed by M. S. Johnson, G. I. Johnson, and Charles Johnson, lease running from March 1, 1912, to March 1, 1913, Mr. Lewis to be entitled to interests of Mr. Rector in and to all in the transaction as of the date of Jan. 23/12." crops on any of the Nebraska land included On June 5, 1912, by a formal letter the defendants offered to complete the transac tion by delivering to Rector a proper grant deed to the property belonging to them, together with a certificate of title and all other papers to be by them delivered. The closing |paragraph of this letter was as follows: "And we hereby demand that you carry out your part of said escrow agreement immediately and without any further delay upon your part." The letter of rescission signed by both defendants and dated June 11, 1912, was based upon the failure of plaintiff to carry out the terms and conditions of the escrow agreement. Appellant's first contention is that, as no time was specified in the second writing within which he was to secure a tenant and execute the transfer of the property in Nebraska, he was entitled to a reasonable time for doing those things, and that the time allowed was, under the circumstances, most unreasonable. He calls attention to the fact that on July 8, 1912, he tendered to defendants warranty deeds to the Nebraska property from himself and wife, abstracts of title, insurance policies, and two leases, one between himself and one Sheffield, dated February 15, 1912, and another signed by himself and G. I., M. S., and C. C. Johnson, dated June 1, 1912, for a portion of the land in Nebraska. It appears that one of the leases-that signed by Sheffield-was not contemplated in the agreement of April 10, 1912. Therefore, under appellant's own theory, the belated offer does not fill the exact measure of the two agreements. The judgment and order are affirmed. say that the chancellor erred in determining | cient facts are not alleged. They do not that the delay from April 10, 1912 (the date | give their reasons for their belief that the of the supplemental agreement), to June 11th cross-complaint should be ignored. We have of the same year (the date of the rescission) | examined it, and agree with the learned was unreasonable and that such delay, cou- judge of the superior court who overruled pled with the other facts and circumstances, plaintiff's demurrer to the cross-complaint. supported a finding that Mr. Rector had not, Under the circumstances we do not feel called prior to June 11, 1912, attempted in good upon to give in detail our reasons for such faith to carry out the terms of the contract. agreement. It was in evidence that appellant, without giving anything in return had, on February 17, 1912, by threats and intimidation, compelled defendants to yield possession of their property to him. The court found that the testimony on this point was true. It was also GINTY et al. v. OCEAN SHORE R. CO. et al. in evidence that respondents wrote numerous letters to Mr. Rector requesting compliance on his part with the contract, but that no results were obtained. These circumstances might well have justified the court in the finding of lack of good faith. We concur: HENSHAW, J.; LORIGAN, J. (S. F. 7080.) (Supreme Court of California. Feb. 3, 1916. PLAN. [2-4] The judgment of restitution was fully in accord with the pleading and proof of the cross-complaint. Having invoked the jurisdiction of a court of equity, and that court having determined that he is not entitled to specific performance of the contract of exchange, the appellant may not well complain that his dispossession of the land was unwarranted. He reminds us that there were other things to be done besides the pass-discretion, could purchase the property at the ing of deeds between him and Mr. and Mrs. Lewis and instances the circumstance that the agreement of modification recites the obligation on the part of the respondents to pay $10 due on "the adjustment of all matters pertaining to personal property." Respondents were not obligated to pay the $10 as a prerequisite to rescission of the contract or to the maintaining of their suit by cross-complaint. This money was to be paid as part of the consummation of the transfer of the property. It was not an independent debt or a partial payment on the contract which Mr. and Mrs. Lewis were bound to restore before they could seek equity. It was in evidence that Mr. Rector had given the respondents absolutely nothing in return for the use of the land prior to the rescission of the contract. Therefore the item of $10 must have been merely an estimated charge which would accrue upon the final consummation of the agreement to exchange the two parcels of land. In any view of the matter appellant will not be harmed because there is to be an accounting between the parties to this suit. Appellant attacks the cross-complaint as insufficient because in itself it did not present facts sufficient to constitute a cause of action against the plaintiff. It is conceded by respondents that such facts must be pleaded in a cross-complaint, but appellant's counsel do not point out the particulars in which the pleading is vulnerable. They content themselves with the general statement that suffi Defendant, a railroad company, had issued bonds secured by deed of trust. Default having been made in the payment of interest on the bonds, the trustee declared both principal and interest due, as was provided for in the deed of trust, and instituted foreclosure proceedings. Under a provision in the trust deed that the bonds might be used to buy in the property on foreclosure, the bondholders appointed a committee with whom the bonds were deposited under an agreement whereby the committee, in its sale and reorganize the railway on any plan deemed practicable "and to do anything they may deem to be for the best interests of the bondholders." The property having been so purfor the organization of a new corporation with chased, the committee announced a definite plan a capital stock of $9,000,000, with provisions for bond issues to meet all outstanding obligations and to be issued to the previous bondholders in discharge of the original bonds. The scheme having proved impracticable, and the property being in immediate danger of resale by new lienholders, the committee adopted and put tion was organized, with a capital stock equaling in execution a new plan whereby a new corporathe amount of the original bond issue; the committee conveying all the property of the old company to the new corporation for the latter's agreement to issue its stock to those whom the committee might name, and causing the issuance of the stock to the old bondholders in amounts identical with the face value of their holdings. This action was brought by several original bondholders to enforce the committee's first plan as a trust and to have the second reorganization declared void on the ground that the committee's first plan became a fixed and irrevocable trust upon its declaration. Held that, upon the failure of the first plan, the second reorganization was valid under the committee's authority to do anything it might deem to be for the best interests of the bondholders. [Ed. Note.-For other cases, see Railroads, Cent. Dig. §§ 656-658, 660; Dec. Dig. 195.] 2. RAILROADS 195-BONDHOLDERS' SUITCOMPLAINT AMENDMENT. Where a party plaintiff to such action had not deposited any bonds with the committee had bought her bonds at a pledgee's sale, the or signed the agreement, it appearing that she bonds having been pledged by the committee under a special agreement with a bank, from amend, so as to set up her purchase of the which she bought, her motion for leave to bonds, was properly denied, where such amend ment did not allege that the bonds had ever | 000,000 under a deed of trust executed to been deposited by the pledgeė bank or by her the Mercantile Trust Company of San Franwith the committee. [Ed. Note.-For other cases, see Railroads, Cent. Dig. 88 650-658, 660; Dec. Dig. 195.] 3. RAILROADS 195 REORGANIZING RAILROAD-BONDHOLDERS' SUIT-PARTIES PLAINTIFF "PARTY SIMILARLY SITUATED." In a bondholders' suit to enforce a railway reorganization agreement and to prevent the reorganization committee from changing the plan of reorganization, a bondholder, who had not signed the agreement or deposited her bonds with the committee in conformity therewith, but who had purchased her bonds at a pledgee's sale of bonds which the committee had pledged to a bank, was not a proper party plaintiff to such action, since she was not "a party similarly situated" with the other plaintiffs within Code Civ. Proc. § 382, providing for joinder of par ties. [Ed. Note.-For other cases, see Railroads, Cent. Dig. §§ 650-658, 660; Dec. Dig. 195.] In Bank. Appeal from Superior Court, City and County of San Francisco; James M. Seawell, Judge. Action by John Ginty and others against the Ocean Shore Railroad Company and others. Judgment for defendants, and plaintiffs appeal. Affirmed. Morrison, Dunne & Brobeck, Edward Lynch, and Stratton, Kaufman & Torchiana, all of San Francisco, for appellants. W. W. Kaufman, of San Francisco, specially appearing for appellant Folger. J. Howard Smith, in pro per. Edward J. McCutchen and A. Crawford Greene, both of San Francisco (McCutchen, Olney & Willard, of San Francisco, of counsel), for respondents. HENSHAW, J. This action was brought to enforce a trust, and in enforcing it to have declared void the reorganization of the Ocean Shore Railway Company into the Ocean Shore Railroad Company, defendant. Added as defendants to the corporation are the members of the reorganization committee, the trustees who effectuated that reorganization. John Ginty, plaintiff, is or was a bondholder of the Ocean Shore Railway Company. After the commencement of this action he was joined by other bondholders in seeking the relief indicated. The court in equity found against all of the contentions of the plaintiffs and gave its decree for defendants. From that decree this appeal has been taken and all of the evidence is presented for consideration. This brief indication of the nature and result of the action it is necessary to follow with a detailed statement of fact. The Ocean Shore Railway Company was organized as a railroad corporation under the laws of the state of California. It purposed to construct, build, and operate a railroad extending along the Ocean Shore from San Francisco to Santa Cruz. It was capitalized for $5,000,000, and all of its capital stock was subscribed; the stock owners having paid on their holdings approximately $2,250,000. It had also issued its bonds in the sum of $5, cisco. These bonds had been sold to and were owned by many persons. In November, 1909, the company defaulted in the payment of interest upon its bond coupons, and cantile Trust Company, pursuant to the proagain defaulted on May 1, 1910. The Mervisions of the deed of trust, then declared the principal and interest of the bonds to be due, and on June 7, 1910, gave notice of sale in accordance with the provisions of the trust deed empowering it so to do. Prior to this date (in December, 1909), a creditors' bill was filed by the Baldwin Locomotive Works in the federal Circuit Court against the railway company. Answer thereto was filed and a receiver was appointed by the court. He took charge of the railroad property on that date. Following the notice of sale so given by the Mercantile Trust Company, the stockholders and creditors of the company (other than the bondholders) caused the Mercantile Trust Company to be made a party to the action in the federal court. It obtained from that court authority to proceed with its sale under terms and conditions expressed in the court's order. At this time the financial and physical condition of the railway company and of those interested in it was, roughly stated, as follows: At the time when the sale was effectuated there was chargeable against the property the comparatively small sum of $135,000, representing the expenditures of the receiver. The stockholders had paid in about $2,250,000 upon their subscriptions of $5,000,000 capital stock. There was owing to the bondholders $5,000,000, and there was owing to other creditors about $2,250,000, approximately $500,000 of which was unsecured. The distance between San Francisco and Santa Cruz by way of the railroad is 83 miles. Part of the road outward from the two termini had been constructed, but there was an uncompleted gap of 26 miles. The road was unprofitable, in the sense that its earnings could not make a fair, or indeed any, return upon the money invested in it. Under the terms of the trust deed, the bondholders were empowered to use their bonds on the sale of the properties in payment of the purchase price. The usual procedure in such cases followed. The bondholders were called together to enable them in combination to use the purchasing power of their bonds effectively and to take steps looking to the reorganization of the road, in the event that the organized bondholders should become the purchasers. On July 22, 1910, at a meeting of the bondholders a committee of five was selected to represent the body. The members of that committee are the defendants in this case, saving that upon the original committee was A. C. Kains, whose place was later taken by Walter S. Martin. |