estate to exonerate the stock in the possession of if the proceeds of trust property can be the bank from its liability for the indebtedness traced into a particular fund, the trust may as the only property pledged being trust prop

be established and enforcnd as a charge upon erty, there was no opportunity to marshal assets in the payment of the debts from the pro

the fund. This priuciple has often been ceeds of the pledged property.

recognized both in England and America.

A leading case on this subject is In re HalReport from Superior Court, Suffolk County; Jas. B. Richardson, Judge.

lett's Estate, 13 Ch. Div. 696. The opinions

in this case have sometimes been understood Bill by Stephen C. Lowe against M. B.

as carrying the law further in the direction Jones, administrator. Reported to the Su

of following proceeds to enforce a trust than preme Judicial Court. Bill dismissed.

it was actually carried. As a consequence, Powers & Hall, for plaintiff. Warner, there have been decisions in some of the Warner & Stackpole, for defendant.

American states to the effect that, if one's

general estate has been enriched by the proKNOWLTON, C. J. The defendant's in

ceeds of trust property, the trust may be testate, one Merriam, held stock of the plain

established against the general assets, even tiff under an arrangement which established though the estate is insolvent. See McLeod a relation of trust between the parties, and

V. Evans, 66 Wis. 401, 28 N. W. 173, 214, 57 made it his duty to continue to hold it until Am. Rep. 287; Davenport Plow Company y. the conditions should change. It is averred Lamp, 80 Iowa, 722, 45 N. W. 1049, 20 Am. in the bill that he sold a part of it and St. Rep. 442; Myers v. Board of Education, received the proceeds as his own, and pledged 51 Kan. 87, 32 Pac. 658, 37 Am. St. Rep. 263; the remainder of it to the defendant bank Carley v. Graves, 85 Mich. 487, 48 N. W. 710, as security for a loan made to him personally. 24 Am. St. Rep. 99. But these cases have all On the facts averred there is nothing to been either expressly overruled or greatly show that the bank did not take the pledged limited and qualified. Nonotuck Silk Comproperty in good faith, under such circum- pany v. Flanders, 87 Wis. 237, 58 N. W. 383; stances as would enable it to hold it as se- Burnham v. Barth, 89 Wis. 362, 366, 62 N. W. curity for the loan. Indeed, this part of the 96; Bradley v. Chesebrough, 111 Iowa, 126, stock, with Merriam's note which it was 82 N. W. 472; Fire Commissioners v. Wilpledged to secure, has been taken up by kinson, 119 Mich. 658, 670, 78 N. W. 893, 44 the plaintiff under a stipulation that the re- L. R. A. 493; Travelers' Insurance Company demption should be without prejudice to v. Caldwell, 59 Kan. 156, 52 Pac. 440; Kansas the right of any of the parties. There is State Bank v. First State Bank, 62 Kan. 788, no doubt of the plaintiff's right to hold this 64 Pac. 634. In some states it is held that, part of the stock as trust property, except while it is not enough to show that trust as to the claim of the bank under its loan. property went into the general assets, it is Were it not for the bank's claim he could enough to charge the whole estate with a redeem it from the defendant, in accordance

trust, if it can be shown that the proceeds with the arrangement under which it was remain unexpended somewhere in the estate. originally held. The present contention as to See Slater v. Oriental Mills, 18 R. I. 353, 27 this stock relates only to that part of its Atl. 443; Bradley v. Chesebrough, ubi supra : value which is represented by the loan. As Hopkins v. Burr, 24 Colo. 502, 52 Pac. 670, to that part the rights of the parties are 65 Am. St. Rep. 238; Pearson v. Haydel, 90 substantially the same as they are in regard Mo. App. 264; Lincoln v. Morrison, 64 Neb. to the other stock which Merriam sold in 822, 90 X. W. 905, 57 L. R. A. 885. But violation of his trust.

by the great weight of authority, a trust The plaintiff avers that Merriam's estate cannot be established against the proceeds has been represented insolvent, and he seeks of trust property which has been disposed of, to establish a trust against the general assets unless the proceeds can be identified and of the intestate in the hands of the adminis- traced into some specific fund or property. trator, in such a way as to obtain the full This is the doctrine of In re Hallett's Estate, value of the stock to the corresponding to which we have already referred. In the diminution of the amount to be divided later case of In re Hallett & Company (1894) among the creditors. All the stock that was 2 Q. B. 237, 244, it was said in the opinion: sold and the interest of the bank in that “There is nothing in our decision in the which was pledged have gone into the hands present case which is in conflict with the deof holders in good faith for a valuable con- cision in Re Hallett's Estate. In order to folsideration. The plaintiff therefore cannot low trust money there must be specific propobtain it in specie. His only right, if he erty, capable of being identified, into which has any beyond that of the general creditors, the money has been converted, and in that is to follow the money received on account case this doctrine was applied in this way. of it, and establish his trust against that. It was said that where a trustee pays his own

The rule stated in some of the early cases money and also trust money in his banking that a trust cannot be enforced against account, it is the same thing as though he money mingled with other money in a com- had placed them in a box, and his drawing mon fund, because money has no earmarks, for his own purposes must be assumed to be has been relaxed, and it is now held that out of his own money. That decision in no

ca

(192 Mass. 137)

55 Neb. 93, 75 N. W. 49. The plaintiffs

. FRANCIS et al. v. HAZLETT.

claimed before the master, and offered to (Supreme Judicial Court of Massachusetts.

show that the conditions precedent to any Bristol. May 18, 1906.)

right of action against them had not in fact 1. JUDGMENT-RES JUDICATA - PARTIES CON

been complied with. CLUDED-STOCKHOLDERS.

There is no claim that any of these plainStockholders of a bank are concluded by tiffs were directly made parties to the suit a judgment in an action in which the bank was

in the district court of Nebraska in which a party, by which a receiver was appointed and the court, having found that the assets of the

the proceedings in question were taken. If bank had all been disposed of and the proceeds the corporation, the American Bank of Beatpaid out and applied in pursuance of the order

rice, had not been a party to that suit, unof court, that there had been claims adjudicated against the bank, and that the bank was wholly

doubtedly the present plaintiffs would not insolvent and had no property, authorized the

have been bound by any action taken therein. receiver to bring suits against its stockholders. This was assumed in Clark v. Knowles, 187

[Ed. Note. For cases in point, see vol. 30, Mass. 35, 72 N. E. 352, 105 Am. St. Rep. Cent. Dig. Judgment, g 1226.]

376, and Hancock Nat. Bank v. Ellis, 172 2. EQUITY—PLEADINGS-CROSS-BILL.

Mass. 39, 45, 51 N. E. 207, 42 L. R. A. 396, In a suit by stockholders to restrain the

70 Am. St. Rep. 232. They would be neither prosecution of actions by a receiver against them for debts due the corporation, a cross-bill

party nor privy to such a suit; having no cannot be maintained for the amounts due, es- notice of its inception and no duty to make pecially where actions at law had been brought

any contest in it, they would be mere stranagainst the plaintiffs for the recovery of those

gers to it, and no rights of theirs could be amounts.

affected by any findings or adjudication made Report from Supreme Judicial Court, therein. Eayrs V. Nason, 54 Neb. 113, 74 Bristol County; John W. Hammond, Judge. N. W. 408. But there is no dispute that the

Bill in equity by Francis and others plaintiffs were stockholders in this bank; against Hazlett to restrain the prosecution and the decrees which we are considering of actions brought against shareholders of were made in a suit brought directly against a failed bank. Case reported to Supreme the bank, alleging its insolvency and asking Judicial Court. Bill dismissed.

for the appointment of a receiver, and no Fredk. S. Hall, Wade Keyes, and Wm. J.

question is made but that the bank was Davison, for complainants. Hollis R. Bail- properly served with process and appeared, ey and Elliott B. Church, for defendant. or that the court in which the suit was

brought bad full jurisdiction both of the subSHELDON, J. The principal question ject-matter of the suit and of the parties raised is whether the plaintiffs are bound

thereto. Under such circumstances, it is well

settled that the stock holders of the bank are by the proceedings had in the district court of Gage county, Neb., on March 5, 1895,

bound by the proceedings taken in the suit. in which the defendant was appointed re

Hambleton v. Glenn, 72 Md. 331, 20 Atl. 115; ceiver of the American Bank of Beatrice

Parker v. Stoughton Mill Co., 91 Wis. 174, in that county, and by the interlocutory de

64 N. W. 751, 51 Am. St. Rep. 881. The cree entered in June, 1898, by which the

decrees entered in the Nebraska court and court, having found that the assets of the

the findings made and stated therein are bank had all been disposed of, and the pro

conclusive in that state against both the ceeds paid out and applied by the receiver

corporation and the stockholders, and must in pursuance of the order of court, that there

have the like force and effect when their had been adjudicated and put in judgment

enforcement is sought in our courts. Hanclaims against the bank to the amount of

cock Nat. Bank v. Farnum, 176 U. S. 640, $32,795.08 and accruing interest and costs, 20 Sup. Ct. 506, 44 L. Ed. 619. The plainand that the bank was wholly insolvent and tiffs were bound by the provisions and laws had no property of any kind out of which

of the state of Nebraska which entered into to make the amounts due to its creditors,

the contract by which they acquired their authorized and instructed the receiver to

shares; they have assented to this obligation bring suits against the several stockholders by receiving their stock, and have subjected of the bank. The importance of this ques

their rights to that extent to the jurisdiction tion arises from the fact that, as is agreed

of the Nebraska courts, and are sufficientby both parties, under the Constitution and ly represented by the corporation in proceedlaws of Nebraska, by which the substantive ings before those courts. Tompkins v. Bailey, rights of the parties are governed, the lia

70 N. H. 584, 49 Atl. 111; Childs v. Cleaves, bility of the stockholders for the payment of 95 Me. 498, 50 Atl. 714; Andrews V. Steele the debts of the bank is merely secondary,

City Bank, 57 Neb. 173, 77 N. W. 342; Richand can be enforced in suits brought by the

ards v. People, 81 Ill. 551. receivers only after the amount of the debts It is not necessary, however, to multiply has been judicially ascertained and other citations for the support of these proposicorporate property exhausted. Farmers' tions. They have been settled in this comLoan & Trust Co. v. Funk, 49 Neb. 353, 68

monwealth by the decision in Howarth V. N. W. 520; State V. German Savs. Bank, Lombard, 175 Mass. 570, 56 N. E. 888, 49 L. 50 Neb. 734, 70 N. W. 221; Hastings v. Barnd, R. A. 301. In the carefully reasoned opinion by Mr. Justice Knowlton in that case it is in fact absolutely exhausted. The correct posaid:

"The question arises how far these sition is that the court had not the right to proceedings in the court of Washington are enter these decrees until it had found the binding on the defendant. The stockholders necessary facts, including the exhaustion of must be assumed to have understood the stat- the corporate assets. It had jurisdiction to ute from the first as it has been construed by determine this question; and its determinathe court. They must be presumed to have tion thereof is conclusive in the state of Neagreed that on the insolvency of the corpora- braska. Brinkyvorth v. Hazlett, 64 Neb. 592, tion a receiver might be appointed by the 90 N. W. 537; Andrews v. Steele City Bank, 57 court, and the affairs of the corporatión ad- Neb. 173, 77 N. W. 342; State v. German ministered, and the amount of its assets and Savs. Bank, 59 Neb. 292, 80 N. W. 901; Stenliabilities determined, and the deficiency as- burg v. State, 48 Neb. 299, 316, 67 N. W. 190; certained under the order of the court, and an Smithson v. Smithson, 37 Neb. 535, 56 N. W. assessment to meet this deficiency made rat- 300, 40 Am. St. Rep. 501. That it must be ably upon all who were then stockholders.

given like force and effect here under the ConThis is the only proper way of accomplish- stitution of the United States, art. 4, § 1, is ing the object of the statute, and the statute, settled by the decisions already cited. as construed by the local courts, means this It follows from what has been stated that as plainly as if every part were expressed. none of the plaintiffs' exceptions to the masUnder the statute the stockholders impliedly ter's report can be sustained, and that the agreed that if their subscriptions were in part defendant's fourth exception at least must be unpaid when they were needed for creditors, sustained. It necessarily follows also that they would pay the balance to the corpora- the plaintiffs' bill cannot be maintained. It tion or its legal representative, and that if is unnecessary, accordingly, to consider the more was needed they would also pay their defendant's demurrer to the bill; and the only proper share, up to the amount of their sub- question which remains to be disposed of is scriptions, to the trustee of this additional that which arises upon the defendant's apfund, for the benefit of creditors. The de- peal from the decree dismissing his crosstermination of the questions involved are a bill. part of the proceedings of the court in the It may be granted, as the defendant conadministration of the affairs of a local in- tends, that a "cross-bill for relief is proper solvent corporation. The court of Washing- in cases where in the original suit all things ton, acting under its general authority in

in litigation touching the subject-matter can. such administration, is the only tribunal

not be brought before the court, but the dewhich has jurisdiction to determine the

fendant, in order to obtain a complete settleamounts due creditors, and to collect and ap

ment of the controversy, is entitled to some ply the assets of the corporation. The under- relief which the scope of the plaintiff's bill taking of the stockholders relates directly

will not afford him.” Morton, J., in Richards to the payment of amounts, so to be ascer

v. Todd, 127 Mass. 167. Nor is it necessary tained. The ascertainment is like a common that a cross-bill should show any independent case of a judgment against a corporation right to equitable relief, if it really involves which is binding on stockholders. The mem

a part of the subject-matter of the original bers of such corporations, as well as the cor

bill. North British & Mercantile Ins. Co. v. porations themselves, are within the juris

Lathrop, 70 Fed. 429, 17 C. C. A. 175; Spring. diction of the local court so far as is neces

field Milling Co. v. Bernard & Leas Manuf. sary for the determination of the rights and

Co., 81 Fed. 261, 26 C. C. A. 389. But the liabilities of the corporation and its members

subject-matter of this bill is not strictly the among themselves. In reference to this kind

question whether the plaintiffs are respecof liability such decisions and orders are

tively liable to pay assessments upon the binding on stockholders who are not before

stock for the benefit of creditors of the corthe court otherwise than by virtue of their

poration; it is rather whether the conditions membership in the corporation." And see

precedent to the defendant's right to enforce the cases cited in that opinion. Although these plaintiffs were not parties to the Neb

his claim that they are thus liable have been

performed. Moreover, it appears that some raska suit, yet they were bound by the orders which are here in question. Howarth v. Ell

time before the filing of the bill the defendwanger (C. C.) 86 Fed. 54, quoted in Ho

ant had brought actions at law against the warth v. Lombard, 175 Mass. 580, 56 N. E.

respective plaintiffs for the recovery of the 888, 49 L. R. A. 301.

amounts for which he claims that they are The cases relied upon by the plaintiffs to

severally liable; and it is only a several liasupport their contention that they are not

bility against each one of them that he seeks bound by these orders made by the Nebraska

to enforce. In our opinion, he has no legal court in the suit there pending against the

right in such a case to enforce his claims by a bank contain nothing at variance with what cross-bill, but should be left to the remedy has been said, and need not be particularly

at law to which he first elected to resort. considered. The argument of their counsel The result is that each of the decrees aprests upon the fallacy that the court had no pealed from must be affirmed, and that the jusisdiction over the subject-matter of these plaintiffs' bill must be dismissed; and it is decrees unless the assets of the bank were So ordered.

(192 Mass. 412)

this was acquired, and it was less than $350,EVANGELICAL BAPTIST BENEVOLENT 000 in value, it comes within the exemption. & MISSIONARY SOCIETY v. CITY In other words it contends that the exempOF BOSTON.

tion is specific rather than general in char(Supreme Judicial Court of Massachusetts. acter and attached for the benefit of the Suffolk. June 21, 1906.)

plaintiff to particular parcels as acquired up TAXATION-EXEMPTIONS-BENEVOLENT INSTI

to the limit named. In support of this conTUTIONS.

tention it relies upon the cases of Hardy v. Acts 1857, p. 503, c. 154, $ 2, incorporating Waltham, 7 Pick. 108, and Harvard College a benevolent society, authorized it to hold real

V. Boston, 104 Mass. 470. These cases and personal estate to the amount of $350,000 and exempted the same from taxation. The cor- arose under the charter of Harvard Col. poration acquired property worth less than lege where the language is quite different $350,000, at a time when it had no other prop

from that in the case before us. The material erty, but the property became worth more than $350,000. Held, that the excess of value over

part of the charter is printed in the margin $350.000 was pot exempt from taxation.

in Harvard College v. Boston, 104 Mass. 473, [Ed. Note.-For cases in point, see vol. 45, 474. The provision relating to exemption Cent. Dig. Taxation, $ 349.]

is as follows: "And further, be it ordered Appeal from Superior Court, Suffolk by this court and the authority thereof, that County.

all the lands, tenements and hereditaments, Action by the Evangelical Baptist Benevo

houses or revenues, within this jurisdiction, lent & Missionary Society against the city

to the aforesaid president or college apperof Boston. From a judgment in favor of de- taining, not exceeding the value of five hunfendant, plaintiff appeals. Affirmed.

dred pounds per annum, shall from henceforth

be freed from all civil impositions, taxes Jas. R. Dunbar and Harrison M. Davis,

and rates.” This was construed in the cases for appellant. Thos. M. Babson, for appellee.

above referred to as exempting specifically

lands and tenements not exceeding in value MORTON, J. This is an action of con

£500 per annum.

There is an intimatract to recover back taxes alleged to have been tion in Harvard College v. Boston, 104 Mass. unlawfully assessed and collected. The taxes 489, that if the question were a new one a were assessed as of May 1, 1903. The case different construction might be adopted. was submitted to the superior court on agreed However that may be the language of the facts, and a pro forma finding was made for charter particularly exempts lands, tenements, the defendant from which the plaintiff ap- hereditaments and houses not exceeding in pealed.

value the amount named. The exemption The plaintiff is the owner of the land and therefore is not only an exemption of a given building on Tremont street, Boston, known as amount of property but of the specific parTremont Temple, the total valuation of which cels of which it may be composed. In the as determined by the assessors in 1903 was

present case the plaintiff is given the general $935,000. From this the assessors deducted

right to hold property to the amount of the sum of $350,000 and assessed the plaintiff $350,000, and then it is provided generally on the balance. This deduction was made

that “the same shall be exempted from taxapursuant to section 2, c. 154, p. 503, Acts of tion.” The intention was to provide that the 1857, under which act the plaintiff was in- corporation could hold property to a given corporated and organized. That section is

amount and to exempt that amount from as follows: "Sec. 2. Said corporation may taxation. It follows that all above that hold real and personal estate to the amount amount however and whenever acquired is of three hundred and fifty thousand dollars liable to taxation. This is the construction which property, and the net income thereof, on which the assessors have acted. There after the same has been paid for, shall be is no contention that the property is exempt appropriated exclusively for the purposes in on any other ground and the result is that this act specified, and the same shall be ex- the judgment must be affirmed. empted from taxation.” The property was So ordered. acquired by the plaintiff in 1858 and the total value of the land and building was then and

(192 Mass. 211) continued for some years to be less than $350,000. In 1893 the building was destroyed WHITCOMB v. CITY OF BOSTON. by fire and a new one was built at a cost of (Supreme Judicial Court of Massachusetts. upwards of $346,000. For purposes of assess

Suffolk. June 18, 1906.) ment the land was valued at $611,000, and

1. DEEDS REQUISITES ACCEPTANCE BY the building at $324,000, making the total of GRANTEE-EVIDENCE. $935,000 referred to abc ve. The plaintiff Evidence held insufficient to show that a contends, in substance, that the effect of the deed was accepted by a city, so as to render

covenants therein binding on it. section quoted above is to exempt from taxa

2. MUNICIPAL CORPORATIONS - CONTRACTS tion property acquired by it up to the value

AUTHORITY OF OFFICERS. of $350,000 regardless of the subsequent in

The board of street commissioners of a city crease in value, and that as the plantiff had

have no authority to bind a city by a contract no other property so far as appears, when

giving up betterments assessable on the laying out of a street, except under St. 1884, p. 185, c.