foreclosure sale of a railroad undertook to organize a corporation to receive and hold the purchased property; but shortly prior thereto an act had been passed providing for the imposition of a tax upon incorporation, which in that case amounted to $18,000. The secretary of state refusing to file the certificate of incorporation without the payment of that sum, application for a mandamus was made to the special term in this state to compel him to file it, which motion was denied. The decision was affirmed in the general term (People v. Cook, 47 Hun, 467) and in the court of appeals (Id., 110 N. Y. 443, 18 N. E. 113). It was said in the court of appeals (Peckham, J., writing): "We think it is also plain that, under the reorganization acts above mentioned, when the purchaser at the foreclosure sale undertook to reorganize under those acts, and for that purpose filed in the secretary's office a certificate, upon the filing of which they became a body politic and corporate, the corporation thus formed is a new and an entirely different one from that whose property and franchises the purchasers may have bought under the foreclosure proceedings. It is true that the corporation about to be formed by the filing of the certificate has, by force of the statute, when formed, all the rights, franchises, powers, privileges, and immunities which were possessed before such sale by the corporation whose property was sold; but that does not make the corporation the same by any means. The right to be a corporation, which the old corporation had, was not mortgaged, and was not sold, and did not pass to the purchasers; and they only obtained such a right upon filing the certificate mentioned, and they then obtained it by direct grant from the state, and not in any degree by the sale and purchase of the franchises, etc., of the old corporation." This language was quoted with approval by the supreme court of the United States when that case reached it, and it further said: "There is no provision of law under which they made their purchase requiring them to become incorporated; but, desiring corporate capacity, they demanded the grant of a new charter under which to exercise the franchise so acquired, and the right therein conferred [referring to the statute under which the original charter was secured] upon purchasers of corporate properties and franchises sold under foreclosure of mortgages thereon, to reorganize and become a new corporation, is subject to the laws of the state existing or in force at the time of such reorganization, and the grant of a new charter of incorporation." It is established, therefore, by authority, that the purchasers of the property, rights, franchises, powers, and privileges of the railroad in question did not acquire the right to continue the old corporation, nor to have one precisely like it, and that the state can reg

ulate the terms and provide the conditions upon which it shall grant a new charter. This the state has done by this statute, which permits such purchasers to apply for the grant of a new charter if they desire it, and at the same time imposes certain conditions.

The only question, therefore, open for decision, is whether it is the purpose or the provision of the statute under consideration to require those asking for the assistance of the state by way of a new incorporation, under which to operate old properties, to be come subject to those general laws which experience has shown to be for the best interests of the state. Now, while there is opportunity for controversy about it, it would seem as if the statute was not only fairly capable of such a construction, but, further, that it ought, in reason, to be accorded to it. If the legislature had intended that the new corporation should be subject only to the same duties and liabilities as were imposed on the old corporation, the section would have read, "and shall be subject to all the provisions, duties and liabilities imposed by law on such corporation." The legislature, however, did not employ that language, but said that it should be subject to the duties, etc., imposed by law upon "such corporations," thereby indicating a purpose to subject it to all the general provisions of law governing railroad corporations. It cannot be urged that such use of the plural in the last line was inadvertent, for the section is very carefully drawn, and provides that "such corporation [the new corporation] shall be vested with rights, privileges and franchises vested in the corporation last owning the property sold, or its receiver, and shall be subject to all the provisions imposed by law on such corporations." Giving to the language employed its natural and ordinary meaning, as we must, the conclusion necessarily follows that the legislature intended to impose upon each new corporation created for the purpose of taking over the property, rights, and franchises of an old corporation, as a condition of its creation, that it should be subject to the general provisions of law applicable to other corporations of like character. But if it were doubtful whether that construction or a different one should be adopted, the same conclusion would result from the application of the general rule stated by Mr. Justice Harlan in Coosaw Min. Co. v. South Carolina, 144 U. S. 550, 561, 12 Sup. Ct. 689, 36 L. Ed. 537, namely, that, when either of two constructions of a statute be possible, "the interpretation must be adopted which is most favorable to the state."

the

The judgment should be affirmed, with costs.

CULLEN, J. (dissenting). I agree with the Chief Judge that this appeal presents only the question of the proper construction of our statutory provisions which authorize the pur

chasers, on a sale of the property and franchises of a domestic corporation, to reorganize and become a corporation. Laws 1892, c. 688, 3. This concession, however, is made only on the assumption that the following remark contained in the opinion of this court in Parker v. Railroad Co., 165 N. Y. 275, 59 N. E. 81, "While it is doubtless true that natural persons cannot exercise the franchises which the state has conferred upon railroad corporations, there is no reason why they cannot be the conduit for transmitting them to another corporation in the manner provided by law," does not state the existing state of legislation on the subject, and that individuals can, under the laws of this state, acquire, maintain, and operate a railroad, which they may purchase on the foreclosure of a mortgage, which is my own judgment. For, if this assumption is erroneous, and does not truly state the position of the majority of the court on the question, then it seems to me plain that the application of the mileage book laws, as to this defendant, would be unconstitutional. The supreme court of the United States held in Railroad Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565, 43 L. Ed. 858, that a similar statute of the state of Michigan was not valid as an exercise of the police power of the state to establish maximum fares, but an invasion of the property rights of the company. To this decision we gave effect in Beardsley v. Railroad Co., 162 N. Y. 230, 56 N. E. 488. The present defendant is the successor in interest of the defendant in the case last cited. It acquired its railroad from the purchaser at a sale on the foreclosure of a mortgage of the property of the earlier cor poration. The state authorized that corporation to mortgage its road and franchise, and it is clear that it could not by subsequent legislation deprive the bondholders or mortgagees of their security, or prevent them, after their acquisition of the road on a foreclosure, from exercising their franchises unimpaired. If, therefore, the state forbade the purchasers from operating and running the railroad without forming a corporation, it could not require, as a condition of their incorporation, that they should surrender part of the fran chises which they had acquired under the mortgage. On the assumption, however, which I have stated, I admit that the state might say to the purchasers of any railroad: "Hold and operate the railroad you have bought as tenants in common or as partners. That is your right. But if you wish to become incorporated, that is a privilege which we will accord to you only on condition that you give up a part of your franchise." The question then is, is that the effect of our legislation?

The statute reads: "Such [the new] corporation shall be vested with and be entitled to exercise and enjoy all the rights, privileges and franchises which at the time of such sale belonged to, or were vested in the corporation last owning the property sold, or its receivers,

and shall be subject to all the provisions, duties and liabilities imposed by law on such corporations." It is doubtless true that, under these provisions, a franchise, personal to the old corporation, such as an exemption from taxation, an exemption from the exercise of the police power to prescribe maximum fares, and the like, would not pass. But the right which the defendant must have surrendered in this case, if it is held subject to the mileage book act, was not of that character, but was pro tanto a part of the franchise connected with the property itself. This distinction should be clearly apprehended. It lies at the foundation of a line of authorities found in the Reports of the Supreme Court of the United States. Shields v. Ohio, 93 U. S. 319, 24 L. Ed. 357; Maine Cent. R. Co. v. Maine, 96 U. S. 499, 24 L. Ed. 836; Atlantic & Gulf R. Co. v. Georgia, 98 U. S. 359, 25 L. Ed. 185; Norfolk & W. R. Co. v. Pendleton, 156 U. S. 667, 15 Sup. Ct. 413, 39 L. Ed. 574; Railroad Co. v. Adams, 180 U. S. 1, 21 Sup. Ct. 240, 45 L. Ed. 395. Speaking of franchises or privileges of the first class, it is said in the Yazoo R. Co. Case that: "Exemptions from taxation are not favored by law, and will not be sustained unless such clearly appears to have been the intent of the legislature. Public policy in all the states has almost necessarily exempted from the scope of the taxing power large amounts of property used for religious, educational and municipal purposes, but this list ought not to be extended except for very substantial reasons; and while, as we have held in many cases, legislatures may, in the interest of the public, contract for the exemption of other property, such contracts should receive a strict interpretation, and every reasonable doubt be resolved in favor of the taxing tower. Indeed, it is not too much to say that courts are astute to seize upon evidence tending to show either that such exemptions were not originally intended, or that they have become inoperative by changes in the original constitution of the companies." But these considerations have no application to the case before us. While, as I have said, natural persons may hold and operate a railroad in this state, I think it has plainly been the public policy of the state to have them operated by corporations. Nearly all the statutory regulations for the operation of railroads are in terms confined to corporations. The same is the case with almost all imposed duties. It is only a corporation that is required when its road is intersected by a new railroad to unite with the corporation owning the new railroad in forming the necessary intersections and connections, an obligation that we are enforcing by a decision made this day. It is not necessary to dilate on this subject. I think it may be safely said that nearly every statutory provision in this state ignores the possibility, or at least the probability, that a railroad will be run by natural persons, except in the case of receivers of the company owning or leasing

the road. Therefore the state was equally interested with the purchasers in having such purchasers incorporate. It is hardly probable that in such a situation the state intended to exact from the purchasers a partial surrender of their franchise, as a condition for becoming a corporation and complying with state policy. Nor does it seem to me that the statute requires such result. The mileage book act, though a general act, is of but very limited application, and confined to new railroads. The intent of the statutory provision for consolidation was to subject the reorganized company to all duties and liabilities which the legislature might lawfully impose on corporations as a class, but not to require of it a loss of the property and franchises of the old corporation, all of which the statute says the new company shall be entitled to enjoy and possess.

The order granting a new trial should be reversed, and the judgment of the trial term should be affirmed, with costs.

MALOTT v. STATE ex rel. BOARD OF COM'RS OF CLAY COUNTY. (Supreme Court of Indiana. June 3, 1902.) RECEIVER-MANDAMUS-LEAVE TO SUE-NECESSITY OF ALLEGATION-REPLY BRIEFNEW POINT-CONSIDERATION.

1. An application for mandamus against the receiver of a railroad, which fails to allege either that he was appointed by the United States court, or that leave from the court appointing him has been obtained to sue him, is demurrable.

2. Under Sup. Ct. Rule 22 (55 N. E. v), providing that the brief of appellant shall contain the errors relied upon, with the propositions or points made thereunder, and that no alleged error or point not contained in the statement of points shall be afterwards raised either by reply brief or in argument, etc., an objection to the sufficiency of an application for mandamus urged in a reply brief cannot be considered.

Appeal from circuit court, Clay county; P. O. Colliver, Judge.

Mandamus by the state, on the relation of the board of county commissioners of Clay county, against Volney T. Malott, as receiver. From a judgment for relator, respondent appeals. Reversed.

John G. Williams, D. P. Williams, and George A. Knight, for appellant. A. W. Knight, for appellee.

MONKS, J. This proceeding was brought to compel appellant, by writ of mandamus, to restore a certain highway, under clause 5 of section 5153, Burns' Rev. St. 1901 (section 3903, Rev. St. 1881; Horner's Rev. St. 1901).

No alternative writ was issued, but appellant demurred to the application for the writ for want of facts, and the same was overruled, and, appellant refusing to plead over, judg ment was rendered in favor of appellee. The overruling of appellant's said demurrer is assigned for error.

It is insisted by appellant that the application for the writ was insufficient, because it did not show that appellant was receiver by appointment of a court of the United States, or that leave had been obtained to sue appellant as receiver from the court appointing him. There is no allegation in the application for the writ of mandamus showing by what court appellant was appointed receiver of said railroad company, or that leave had been obtained from such court to bring this proceeding. It has been uniformly held by this court that, as a general rule, a receiver cannot be sued without leave of the court making the appointment is obtained, and such fact must be alleged by the party bringing the action against the receiver. Malott v. Shimer, 153 Ind. 35, 37, 54 N. E. 101, 74 Am. St. Rep. 278; Wayne Pike Co. v. State, 134 Ind. 672, 34 N. E. 440, and cases cited; Keen v. Breckenridge, 96 Ind. 69, 71, 73; High, Rec. § 254. Where, however, the receiver is appointed by a court of the United States, said rule has been materially modified by an act of congress. Malott v. Shimer, 153 Ind. 35, 54 N. E. 101, 74 Am. St. Rep. 278, and cases cited; Same v. Hawkins (Ind. Sup.) 63 N. E. 308; Railroad Co. v. Johnson, 151 U. S. 81, 101, 14 Sup. Ct. 250, 38 L. Ed. 81; Gableman v. Railway Co., 179 U. S. 335, 338, 21 Sup. Ct. 171, 45 L. Ed. 220. It follows that the court erred in overruling said demurrer.

Another objection to the sufficiency of said application is urged by appellant in his reply brief, but under rule 22 of this court (55 N. E. v), in force since November 26, 1900, the same cannot be considered.

Judgment reversed, with instructions to sustain appellant's demurrer, and for further proceedings not inconsistent with this opinion.

COMPLAIN IN TIME-EFFECT.

Suit cannot be maintained on a warranty accompanying a sale of a stallion, and conditioned "to be null and void" on a date named, where no complaint of breach was made before such date.

Appeal from superior court, Howard county; Hiram Brownlee, Judge.

Action by Edward L. Wilson and others against Harry Ward and others. From a judgment for defendants, entered on sustaining a demurrer to the complaint, plaintiffs appeal. Affirmed. Transferred from appellate court under Acts 1901, p. 590 (section 1337u, Burns' Rev. St. 1901).

John B. Joyce and Harness & Voorhis, for appellants. Blacklidge, Shirley & Wolf, for appellee.

GILLETT, J. This was a suit commenced by appellants against appellees on a written warranty that accompanied the sale of a stallion. A demurrer was sustained to each paragraph of appellants' complaint, and they assign said ruling as error. It is alleged that the instrument sued on was executed February 6, 1899. The action was instituted June 12, 1900. The contract contains the following words: "This contract or guaranty to be null and void May 1, 1900." Neither paragraph of the complaint alleges that complaint was made within the time that the horse did not fulfill the provisions of the warranty. We need not determine whether the language we have quoted amounted to an agreement not to sue after the expiration of the time fixed. At the least, we think that it must be held that the omission to sue or give notice of the breach within the time is a waiver of any right of action upon the warranty. In Chapman v. Gwyther, L. R. 1 Q. B. 463, the warranty that was given upon the sale of a horse was as follows: "Warranted sound for one month." It was held that a suit could not be maintained upon such warranty after the expiration of such time, where complaint had not been made of the unsoundness of the horse within one month of the date of the sale.

The court below did not err in sustaining the demurrer to each of appellants' paragraphs of complaint.

Judgment affirmed.

(158 Ind. 675)

RINEHARDT et al. v. REIFERS. (Supreme Court of Indiana. June 3, 1902.) MORTGAGE-ERRONEOUS DESCRIPTION-PRESUMPTION-SUBSEQUENT MORTGAGE-PRIORITY INTERVENING QUITCLAIM DEED - EFFECT.

1. A mortgagee, whose mortgage erroneously describes lots 13 and 14 in University Park, Second addition to W. L., as "lots 13 and 14 in University Park addition to W. L.," is not entitled to priority, by virtue of the recording thereof, over a mortgagee of the mortgagor's subsequent grantee, who took without actual notice of the first incumbrance.

2. The supreme court will presume, in the absence of contrary averment or showing, that there is some existing city addition to which a description in a mortgage conforms which erroneously designates the city addition in which the lots in controversy are.

3. Burns' Rev. St. 1901, § 3349, enacts that a mortgage providing that the mortgagor "mortgages and warrants" to the mortgagee, etc., shall constitute a good and sufficient mortgage with warranty of perfect title and against prior incumbrances. A mortgage having been executed and recorded with an erroneous description, the mortgagor conveyed by quitclaim deed to a grantee, who "mortgaged and warranted" the land to a second mortgagee. Held, that the fact that the grantee took by quitclaim deed did not devest his mortgagee of the character of an innocent purchaser, so as to give the first mortgage priority.

Appeal from superior court, Tippecanoe county; W. De Witt Wallace, Judge.

Mortgage foreclosure suit by Nicholas S. Reifers against Charles F. Rinehardt and others. From a judgment for plaintiff, de-. fendants appeal. Transferred from appellate court under section 1337u, Burns' Rev. St. 1901. Affirmed.

John M. La Rue, W. C. Mitchell, and W. H. Bryan, for appellants. John F. McHugh, for appellee.

HADLEY, J. William D. Mann, being the owner of lots 13 and 14 in University Park, Second addition to West Lafayette, on April 10, 1896, mortgaged the same to appellants, as trustees of Tippecanoe Lodge, I. O. O. F. (hereafter called the "Lodge"), to secure a debt of $400. By mutual mistake the premises were erroneously described as "lots 13 and 14 in University Park addition to West Lafayette." The defective mortgage was timely recorded. On June 20, 1897, Mann conveyed the premises by quitclaim deed, in which the lots were correctly described, to Patrick Carr, who, on December 3, 1897, mortgaged the same to appellee to secure the payment of $200. When appellee accepted said mortgage, he had no notice or knowledge of the mistake, or of the existence of the mortgage to the lodge, and at the time believed the lots free and unincumbered. Appellee, upon Carr's default, brought foreclosure against Carr, the lodge, and others, alleging that the lodge claimed some adverse interest which was unfounded. The lodge filed a cross complaint against appellee, setting up its mortgage from Mann, the mutual mistake in description, and prayed that said mortgage be reformed, and declared to be senior and paramount to the lien of appellee's mortgage. Upon proper issues there was a finding and judgment for appellee.

The sole contention presented by the record is whether the lodge or appellee is entitled to the paramount lien. It is undoubtedly the law that an erroneous descripton real estate in a mortgage that is full, and consistently complete within itself, and clearly and correctly identifies another body of land, will not be reformed to embrace an entirely different tract, to the prejudice of a subsequent mortgagee, who accepted his mortgage in ignorance of the mistake, and in bona fide reliance upon the appearance of the public record. Pence v. Armstrong, 95 Ind. 191. Here the description in the lodge's mortgage is "lots 13 and 14 in University Park addition to West Lafayette." We must assume, because the cross complainants do not aver to the contrary, nor does it otherwise appear, that there was on the public records of Tippecanoe county an addition known as "University Park Addition to West Lafayette," and that it contained lots numbered 13 and 14. While appellee was bound to take notice of the record of both additions,

as well as of the mortgage record, he was not required to take notice that a mortgage which fully and accurately described lots 13 and 14 in University Park addition was really meant and intended to describe lots 13 and 14 in the Second addition.

But it is contended by appellants that appellee is not entitled to protection as an innocent purchaser, because his mortgagor held title by quitclaim deed only. To this we cannot assent. It has been held that a grantee in a deed of general warranty, who acts in good faith, and without notice, and whose grantor held title by quitclaim, may be an innocent purchaser within the meaning of the law. Meikel v. Borders, 129 Ind. 529, 29 N. E. 29. This, and other like cases, rest upon the theory that, however it may be, it is the much-mooted question whether a grantee, by his acceptance of a quitclaim deed, is put upon his inquiry as to the title by the very form of the deed; yet when he conveys the same title by a warranty for like reason the form of the latter deed furnishes sufficient assurance to justify confidence that upon inquiry the title had been found good and unincumbered. A mortgage with warranty is entitled to as much faith and confidence as a warranty deed. Carr's mortgage to appellee is in the usual form, the granting words being "mortgage and warrant." With respect to such mortgages, section 3349, Burns' Rev. St. 1901, provides that a mortgage of land worded as follows: "A. B. mortgages and warrants to C. D.," etc., "to secure the payment," etc., "shall be deemed and held to be a good and sufficient mortgage to the grantee, his heirs, assigns, executors and administrators, with warranty from the grantor and his legal representatives, of perfect title in the grantor, and against all previous incumbrances." It follows that the trial court rightly ruled that appellee, having accepted his mortgage in good faith, and without notice of the mistake in appellants' mortgage, was an innocent purchaser or mortgagee, and entitled, as against appellants, to the prior lien. Judgment affirmed.

(159 Ind. 1)

WHICKER v. HUSHAW et al. (Supreme Court of Indiana. June 4, 1902.) MORTGAGES-CONTRACT FOR SALE OF LANDPROMISE TO ASSUME MORTGAGE-LIABILITY TO MORTGAGEE - PROOF OF CONTRACT MODIFICATION BURDEN OF PROOF-CONSTRUCTION OF CONTRACT.

1. A mortgagee may avail himself of the executory agreement of the mortgagor's grantee to assume the incumbrance, contained in the written contract for the sale of the land, where the mortgagor has performed by conveying.

2. The executory contract of a mortgagor's grantee to assume and pay the incumbrance, contained in the contract of sale, may be proved in behalf of the mortgagee, even against a general warranty contained in the mortgagor's conveyance; and it is not necessary that a new statement of the obligation should be taken

from the grantee at the time of such convey

ance.

3. Where, in a contract for the sale of land, the prospective grantee promises to assume and pay a mortgage thereon, the burden is on him, as against the mortgagee relying on such promise, to show a modification of the contract between himself and the mortgagor prior to the mortgagee's acceptance thereof.

4. In a contract for the sale of land, the grantor to convey by "good and sufficient warranty deed," in consideration whereof the grantee promises to assume and pay "all unpaid taxes and mortgages shown of record and all other liens, including the attachment proceed. ing now pending," the words "all other liens" are to be construed as ejusdem generis with the liens specifically mentioned, which are all of record, and hence will not include an unrecorded mortgage, though the grantee had notice thereof at the time.

Appeal from circuit court, Fountain county; Joseph M. Rabb, Judge.

Action on a written contract to assume and pay a mortgage, by Jacob Hushaw and another, against J. Wesley Whicker. From a judgment for plaintiffs, defendant appeals. Transferred from appellate court, under Acts 1901, p. 590 (section 1337u, Burns' Rev. St. 1901). Reversed.

Whicker & Bryant and Lucas Nebeker, for appellant.

GILLETT, J. On the 5th day of October, 1899, appellant and appellee Margaret A. Hopton entered into an executory contract in writing, by the terms of which the latter bound herself to sell and convey to appellant, "by good and sufficient warranty deed," a certain tract of real estate. The obligation of appellant was expressed in said contract as follows: "Said J. Wesley Whicker, party of the second part, to pay cash in hand, on the delivery of the deed, the sum of (1752.50) one thousand, seven hundred and fifty-two dollars and fifty cents, and assume all unpaid taxes and mortgages shown of record and all other liens on said lands, including the attachment proceeding now pending." This contract was consummated, upon the part of said Margaret, on the same day, by the execution of a warranty deed to appellant. At the time of making said contract there was an unrecorded mortgage against said land, made by appellee Margaret and held by appellee Jacob Hushaw, that had been long overdue, and appellant had full knowledge of its existence at the time he entered into said contract. The endeavor of appellees in this action was to hold appellant personally responsible for the amount of said mortgage, as upon a debt assumed. The evidence is not in the record. The complaint does not allege, and the special findings that were filed in the case do not show, any further extrinsic facts that might aid in determining the intent of the parties to the contract, such as the value of the land, whether there were liens against it aside from those mentioned, and whether the parties to the contract had knowledge of the fact that the mortgage was not of record.

The cases are many in this state that rec