upon the point that the bill of exceptions is not properly a part of the record of this cause, and not because we have deemed it either necessary or proper for us to consider and decide now the question whether or not the trial court erred in giving the jury, at appellee's request, the instruction claimed by appellant's counsel to have been erroneous.

Our conclusion in relation to the insufficiency of each paragraph of appellee's complaint requires the reversal of the judgment below, and renders it unnecessary for us now to consider or decide any of the questions arising under the alleged error of the court in overruling appellant's motion for a new trial herein.

The judgment is reversed, with costs, and the cause is remanded, with instructions to sustain the demurrer to each paragraph of the complaint, and for further proceedings not inconsistent with this opinion.

NOTE.

RAILROADS ON STREETS. The easement of the abutting owner on a public street or highway is property which may not be taken or impaired without compensation being made. Grafton v. Baltimore & O. R. Co., 21 Fed. Rep. 309; Mollandin v. Union Pac. Ry. Co., 14 Fed. Rep. 394; Pittsburgh Junction R. Co. v. McCutcheon, (Pa.) 6 Atl Rep. ; Ward v. Detroit, M. & M. R. Co., (Mich.) 28 N. W. Rep. 785; McClean v. Chicago, I. & D. Ry. Co., (Iowa,) 25 N. W. Rep. 782; Omaha & R. V. R. Co. v. Rogers, (Neb.) 19 N. W. Rep. 603; Buchner v. Chicago, M. & N. W. Ry. Co., (Wis.) 19 N. W. Rep. 56; Burlington & M. R. R. Co. v. Reinhackle, (Neb.) 18 N. W. Rep. 69; Gottschalk v. Chicago, B. & Q. R. Co., (Neb.) 17 N. W. Rep. 120; S. C. 16 N. W. Rep. 475; Hastings & G. I. R. Co. v. Ingalls, (Neb.) 16 N. W. Rep. 762; Hanson v. Chicago, M. & St. P. Ry. Co., (Iowa,) 16 N. W. Rep. 734; Buchner v. Chicago, M. & N. W. R. Co., (Wis.) 14 N. W. Rep. 273; Mulholland v. Des Moines, A. & W. R. Co., (Iowa,) 13 N. W. Rep. 726; Brakken v. Minneapolis & St. L. R. Co., (Minn.) 11 N. W. Rep. 124; Drady v. Des Moines & Ft. D. R. Co., (Iowa.) 10 N. W. Rep. 754; Carli v. Stillwater St. R. & T. Co., (Minn.) 10 N. W. Rep. 205; Stanley v. City of Davenport, (Iowa,) 6 N. W. Rep. 706; S. C. 2 N. W. Rep. 1064; City of Denver v. Bayer, (Colo.) 2 Pac. Rep. 6; City of Cleburne v. Gulf, C. & S. F. Ry. Co., (Tex.) 1 S. W. Rep. 342. The right to such compensation is regardless of the ownership of the fee in the street. Mollandin v. Union Pac. Ry. Co., 14 Fed. Rep. 394; Burlington & M. R. R. Co. v. Reinhackle, (Neb.) 18 N. W. Rep. 69; Stange v. Hill & W. D. St. Ry. Co., (Iowa,) 7 N. W. Rep. 115; City of Denver v. Bayer, (Colo.) 2 Pac. Rep. 6.

The dedication of a street to the public does not authorize it to be used for a railroad track, Grand Rapids & I. R. Co. v. Heisel, (Mich.) 11 N. W. Rep. 212; and the municipal authorities have no power to authorize such use thereon without compensation, Burlington & M. R. R. Co. v. Reinhackle, (Neb.) 18 N. W. Rep. 69; and, where they have no power to make such compensation, they cannot authorize such use, Chamberlain v. Elizabethport S. C. Co., (N.J.) 2 Atl. Rep. 775. But see City of Olney v. Wharf, (Ill.) 5 N. E. Rep. 366, and note; Dubach v. Hannibal & St. J. R. Co., (Mo.) 1 S. W. Rep. 86; Hedrick v. City of Olathe, (Kan.) 1 Pac. Rep. 118; Fifth Nat. Bank v. New York E. R. Co., 24 Fed. Rep. 114; Newell v. Minneapolis, L. & M. Ry. Co., (Minn.) 27 N. W. Rep. 839. No action can be maintained for a mere encroachment on the street by a company which owns and uses lots on one side of it, when such encroachment causes no injury to abutting property, Rinard v. Burlington & W. Ry. Co., (Iowa,) 23 N. W. Rep. 914; and the owner of lots abutting on a street which the track merely crosses is not entitled to compensation. Morgan v. Des Moines & St. L. Ry. Co., (Iowa,) 21 N. W. Rep. 96.

A railroad company occupying a street with its track before having the damages to the abutting owners assessed, is liable as a trespasser. Mulholland v. Des Moines, A. & W. Ry. Co., (Iowa,) 13 N. W. Rep. 726; Grand Rapids & I. R. Co. v. Heisel, (Mich.) 11 N. W. Rep. 212; Carl v. Sheboygan & F. R. Co., (Wis.) 1 N. W. Rep. 295; Chamberlain v. Elizabethport S. C. Co., (N. J.) 2 Atl. Rep. 775.

(108 Ind. 155)

DUGAN and others v. STATE, for Use of STODDARD, Com'r, etc.
(Supreme Court of Indiana. November 4, 1886.)

L. DRAINS AND SEWERS-COMPLAINT TO ENFORCE ASSESSMENT-DEMURRER.
A complaint to enforce a drainage assessment which shows the filing of a peti-
tion and the giving of notice, followed by proceedings resulting in a judgment es-

tablishing the drain, and confirming the assessment, is good on demurrer, although it does not aver that the defendant's lands were described in the petition, or the notice such in all respects as the law requires.

2. SAME JUDGMENT ESTABLISHING DRAIN-COLLATERAL ATTACK.

Where it appears that there was a petition invoking the jurisdiction of the court, and that some notice was given, the judgment of the court establishing the drain cannot be collaterally attacked on the ground that the notice was given before the petition was filed.

Appeal from circuit court, Porter county.
J. M. Howard, for appellants. E. D. Crumpacker, for appellee.
E. D. Crumpacker, for appellee.

MITCHELL, J. This was a suit by Stoddard, as drainage conmissioner, against Margaret Dugan and her husband, to enforce the collection of an assessment for drainage purposes against the lands of Mrs. Dugan. The assessment was made in pursuance of proceedings instituted and had under the circuit court act of 1881 as amended by the act of 1883. The complaint avers that Paul Freed petitioned the Porter circuit court, setting forth the necessity for the drainage of certain lands, and that he gave due notice of the filing of such petition by posting up notices thereof in three public places in each township in which the lands described in such petition were situate. The complaint avers that such further proceedings were had in that behalf as that an assessment of benefits amounting to $70 was made, and duly confirmed against the appellee's lands, and that the commissioner of drainage duly called for 80 per cent. thereof, which remains due and unpaid. It is now said that, because the complaint fails to aver that the appellants' lands were described in the petition, or that either of the appellants' names appeared in the petition or notice, it was fatally defective, and that error was committed by the court below in overruling the appellants' demurrer thereto.

Substantially the same objections were made to a complaint in the analogous case of Jackson v. State, 104 Ind. 516, S. C. 3 N. E. Rep. 863, where it was held that a complaint to enforce a drainage assessment which shows that a petition had been filed and notice given, and that these were followed by such proceedings as resulted in a judgment establishing the drain, and confirming the assessments, is good as against a collateral attack. Where it appears that there was a petition and notice, in a given case, thus invoking the jurisdiction of the court over a subject-matter and over persons affected by a judgment finally given in such case, the presumption will be indulged, when the proceedings are drawn in question collaterally, that the petition and notice were in all respects sufficient to uphold the judgment, and such as the law required. Indianapolis, etc., Co. v. State, 105 Ind. 37; S. C. 4 N. E. Rep. 316; Pickering v. State, 106 Ind. 228, S. C. 6 N. E. Rep. 611, and cases cited; McMullen v. State, 105 Ind. 334; S. C. 4 N. E. Rep. 903. If assessments were made against lands not described in the petition, or against persons without an attempt to give such notice as the law requires, these become matters of defense as against a complaint which alleges a petition and notice.

There was a special finding of facts by the court, and conclusions of law stated thereon. It appears from the special findings of the court that Freed, who petitioned for the ditch, posted notices on March 19, 1883, of his intention to present his petition for the establishment of the drain to the Porter circuit court on the ninth day of the ensuing April, and that he did not file his petition until the day after the notices were posted. The proceedings having been instituted under the act of March, 1883, which requires the petition to be filed before the notices are posted, it is now contended that, because there was no petition on file when the notices were posted, the notices given, as well as the subsequent proceedings, were void. Mills v. State, 10 Ind. 114; Jones v. Porter, 23 Ind. 66; Briggs v. Sneghan, 45 Ind. 14; and Brooks v. Allen, 62 Ind. 401,-are relied on as sustaining this view. The cases which lend any support to the position contended for are cases which

bring in question, on a direct appeal, the validity of a summons issued in a civil case before the filing of a complaint. They hold that a summous so issued is invalid and void, and that, unless notice is waived by an appearance, a default will not be authorized on such summons. Without further examination of these cases, they do not, in our opinion, exert a controlling influence here, where the attack is collateral. The controlling fact in the case we are considering is that, at the time the court took jurisdiction of the proceedings and gave judgment, there was a petition before it, and some notice had been given. That the notice was prematurely given, was at most but an irregularity. In this proceeding we must assume that the court passed upon and adjudged both the petition and notice sufficient. However erroneous this judgment may have been, it was not void. Not being void, it cannot be assailed, in this indirect method, for mere irregularities and defects. This precise question was made and determined in the case of McMullen v. State, supra.

As we find no error, the judgment is affirmed, with costs.

(108 Ind. 183)

SPENCER v. SLOAN.

(Supreme Court of Indiana. November 6, 1886.)

1. PROMISSORY NOTES-INDORSEMENT OF PAYEE-PAROL EVIDENCE TO EXPLAIN. Parol evidence is admissible to prove that an indorsement of a note by the payee was made at the request of the plaintiff, to show that it had been paid.i

2. PLEDGE AND COLLATERAL SECURITY-CONSIDERATION-PRE-EXISTING DEBT.

A pre-existing debt is a sufficient consideration for the pledge of collaterals as security for its payment.

Appeal from superior court, Marion county.

McDonald, Butler & Mason, for appellant. W. W. Herod, for appellee.

NIBLACK, J. This was an action by Benjamin F. Spencer, as the holder, against William Sloan, as indorser, of a promissory note executed by one Milton Spencer to the said Sloan on the tenth day of July, 1868, for $405, and payable two days after date. The complaint alleged the insolvency of Milton Spencer at the time of, and ever since, the assignment of the note. The defendant answered in seven paragraphs, but he afterwards withdrew the first and second paragraphs; and, a demurrer having been sustained to the fourth paragraph, only the third, fifth, sixth, and seventh paragraphs remain in the record. To these third, fifth, sixth, and seventh paragraphs of answer demurrers were filed at the proper time, and afterwards overruled.

The third paragraph averred that at the time the note in suit was executed Milton Spencer, the maker thereof, and the plaintiff, were partners in business; that the defendant loaned such partners the sum of $405, and, as evidence of the debt thereby created, took the note in question under the belief that it was signed by both of said partners; that a certain railroad bond of the real and face value of $1,000 was at the same time delivered to him, the defendant, as collateral security for the payment of said note; that after the maturity of said note, and by the direction of the plaintiff and the said Milton Spencer, he surrendered the same to one Thomas A. Goodwin, who paid him the full amount due upon such note; that, at the request of the said Goodwin, he, the defendant, indorsed his name upon the note as evidence that it had been paid, and for no other purpose; that, for the reasons given, he never sold or transferred the note to any other person.

The fifth paragraph alleged that, prior to the execution of the note sued on, the plaintiff, to induce the defendant to loan to the said Milton Spencer the

1See Geneser v. Wissner, (Iowa,) 28 N. W. Rep. 471, and note; Smythe v. Scott, (Ind.) 6 N. E. Rep. 145; Houck v. Graham, (Ind.) 6 Ñ. E. Rep. 594.

sum of $405, agreed to put up a certain railroad bond of the value of $1,000 as collateral security therefor; that said loan was accordingly made, and the note described in the complaint executed; that said bond was thereupon delivered to the defendant as such collateral security; that when, in October, 1868, the defendant transferred the note to the plaintiff, he also transferred to him the bond, which was amply sufficient to pay the note, but that the latter had either sold or lost said bond, and converted the same to his own use, without taking any steps whatever to subject such bond to the payment of the note; that at the time said note was transferred to the plaintiff the said Milton Spencer was hopelessly and notoriously insolvent, as the plaintiff well knew, and has ever since so continued to be.

The sixth paragraph asserted that the note herein described was given by Milton Spencer, the maker, in consideration of a loan of $405; that at the time of the execution of the note he, the said Milton Spencer, placed in the hands of the defendant a certain railroad bond of the value of $1,000, to secure the payment of said note; that the defendant accepted and held said bond as such security until in October, 1868, when he transferred said bond and note to the plaintiff: that the plaintiff thereafter sold or destroyed said bond, without making any effort to subject the same to the payment of said note, and whereby said bond, as security for such payment, has become lost; that the said Milton Spencer was at the time of such transfer wholly insolvent, as the plaintiff well knew.

The seventh paragraph stated that the plaintiff is a brother of the said Milton Spencer, the maker of the note declared on, and that, to secure the payment of said note, he delivered to, and placed in the hands of, the defendant a certain railroad bond of the face and actual value of $1,000; that afterwards, to redeem said bond, the plaintiff paid off and discharged said note; that thereupon the defendant surrendered to him said note and bond; that, after the note and bond had been so surrendered to him, the plaintiff asked the defendant to put his name on the back of the note, to show that it had been paid by him, and not Milton Spencer, and that for that purpose, and for no other, the defendant did put his name on the back of the note; that consequently the defendant did not sell, assign, or transfer the note to the plaintiff.

The plaintiff replied in five paragraphs, but afterwards withdrew all but the fifth paragraph. This latter paragraph was addressed only to the fifth and sixth paragraphs of the answer, and averred that the note indorsed by the defendant, as charged in the complaint, was executed as evidence of a prior indebtedness of Milton Spencer, the maker of such note, to the defendant, and payable long before the time of the execution of such note, and for other consideration whatever; that the bond referred to in said fifth and sixth paragraphs of answer was always the property of the plaintiff, and hence never belonged to the said Milton Spencer, either in whole or in part, all of which was fully known to the defendant at the time said bond came into his possession, and at the time he assigned the note to the plaintiff; that the loan of money to Milton Spencer was not made, nor was the note executed, on the faith of such bond; that such bond was not delivered to the defendant until long after the execution of the note, and then only as collateral security for the prior-existing debt evidenced by the note. Wherefore the plaintiff averred that there was no consideration to support the pledge of said bond to the defendant as collateral security for the payment of said note; that the surrender of said bond by the defendant to the plaintiff constituted a relinquishment of all the former's alleged right to have the same held as collateral security for the indebtedness represented by said note.

A demurrer was sustained at special term to this paragraph of reply, and, the plaintiff declining to plead further, final judgment was rendered against him for want of a reply, and that judgment was affirmed at general term.

On behalf of the plaintiff below it is claimed that the indorsement of a

promissory note constitutes a certain and well-defined contract, with as much force and meaning as if all the conditions and stipulations had been written out at full length, and that hence parol evidence is inadmissible to either modify or contradict such a contract of indorsement; and the case of Stack v. Beach, 74 Ind. 571, is relied upon as supporting that doctrine. But the doctrine, as thus stated, was in that case only made to apply to indorsements upon a note or bill which regularly follow that, of the payee, and as to that class of indorsements many exceptions to the general rule announced were recognized. So far as we are advised, so strict a rule has never been applied to indorsements upon a note or bill by the payee.

It is true that, where the law attaches a definite meaning to an indorsement upon a note or bill, parol evidence will not be admitted to qualify or contradict the contract of indorsement; but this rule for the exclusion of parol evidence does not extend to evidence offered to attack the validity of the contract itself for want of consideration, or on account of fraud, or because the consideration has failed. So the fact that it would be inequitable or fraudulent to enforce the contract of indorsement, as that the indorser was an agent, or that the note was indorsed for a special purpose, such as the creation of a trust, or for collection, or for the accommodation of the indorsee, may be proved by parol. Edw. Bills, §§ 393, 399, 440, 442; 3 Kent, Comm. 80.

In the case of Smythe v. Scott, 106 Ind. 215, S. C. 6 N. E. Rep. 145, it was said that "where an indorsement is made by a payee without consideration, or upon some trust arising out of an antecedent transaction, or to accomplish some special purpose, the facts which go to show the transaction may be shown. This for the purpose of showing the equities between the parties, and to determine the consideration upon which the indorsement was made." From what has been said, the inference would seem to be plain that the defendant was entitled to show that when he put his name on the back of the note it had already been paid, and that his name had been so put on the note at the request of the plaintiff, as evidence of such payment. It follows that there was no error in overruling the demurrer to the third and seventh paragraphs of the answer. Daniel, Neg. Inst. §§ 710, 711.

In support of the sufficiency of the fifth paragraph of the reply, it is further claimed that the pre-existing debt of Milton Spencer did not afford a sufficient consideration for the delivery of the railroad bond to the defendant as collateral security for the payment of the note; that, for that reason, the defendant had no lawful right to retain the bond; and therefore, when he surrendered it to the plaintiff, it was simply a return of the bond to its lawful owner, without any incumbrance upon it. Whether a previous debt is sufficient to constitute a holding, for value, of collateral paper, is a question upon which there has been a very sharp conflict of authority in this country ever since the case of Coddington v. Bay, 20 Johns. 636, was decided by Chancellor KENT. That case, in effect, declared that a previously existing debt did not constitute a sufficient consideration for such a holding of collateral paper, and the doctrine of that case has obtained full recognition in a large number of the states. But the supreme court of the United States has uniformly held a contrary doctrine. In the case of Swift v. Tyson, 16 Pet. 1, this latter court declined to follow the case of Coddington v. Bay, and has ever since continued to dissent from the rule recognized in that case. See Jones, Pledges, § 107 et seq.; also Bank of Metropolis v. New England Bank, 1 How. 234; Goodman v. Simonds, 20 How. 343; McCarty v. Roots, 21 How. 432; Oates v. National Bank, 100 U. S. 239; Railroad Co. v. National Bank, 102 U. S. 14.

It may therefore be now regarded as an established legal proposition in the supreme court of the United States that an existing debt affords a sufficient consideration for the pledge of collaterals as security for its payment, and that seems to be in accord with the English decisions on the same subject.