into court for the use of plaintiff, that amount is considered as stricken from the complaint; and if more is claimed by plaintiff, he proceeds for the excess of his demand above the tender only: Bank v. Sutherland, 3 Cow. 336; Spalding v. Vandercook, 2 Wend. 431; Johnston v. Insurance Co., 7 Johns. 315; Hubbard v. Knous, 7 Cush. 556. After a plea of tender, a plaintiff may be nonsuited in proceeding to recover beyond the tender: Jenkins v. Cutchens, 2 Miles, 65; McCredy v. Fey, 7 Watts, 499. From this position, it follows inevitably that, if the court were right in finding the defense made out, it erred in adjudging the money brought into court in support of the tender of May 19th to defendants. The effect of the judgment, in such case, was to give to defendants under the contract both the water and the money, which, by their fourth defense, they confess the payment or security of was a condition precedent to their right to use the water. But as we shall hereafter see, defendant wholly failed to sustain his alleged defense.

The first assignment of error "that the court erred in overruling the plaintiff's demurrer to the further and separate answer and defense contained in defendants' answer" — presents a question that will be best disposed of by first referring to a few rules and principles of pleading, and to some of the settled rules of the law of corporations.

As to the rules of pleading which it is necessary to examine here, it may be said that it is elementary that a demurrer admits all the material facts well pleaded in the pleading to which the demurrer applies, and all the necessary intendments and inferences of and from such facts, but no more; and that as to all facts not alleged in a pleading attacked by a demurrer, or arising from necessary inference out of the facts alleged, they are assumed not to exist: Jones v. Latham, 70 Ala. 164, in which case a demurrer was filed to a bill in equity, and the court held the following language: "It is our duty to construe the bill most strongly against the pleader, and on such a motion as this, to hold that every material fact not averred does not exist," citing Cockeral v. Gurley, 26 Id. 405; Lucas v. Oliver, 34 Id. 631. In the next place, argumentative pleading is bad under all systems of pleading in this country. The application of these rules will be made further on in this opinion.

The law of corporations applicable to the questions under discussion will be stated in a few words:

1. The relation of stockholders to the corporation whose stock they hold is that of contract; and the rights and duties of both parties grow out of contract, implied in a subscription for stock, construed by the provisions of the charter or articles of incorporation.

2. The corporation is a trustee for its stockholders, and is bound to protect their interests: 1 Morawetz on Corporations, sec. 237, and cases cited; Lowry v. Bank, Taney, 310; Bayard v. Bank, 52 Pa. St. 232; Atkinson v. Atkinson, 8 Allen, 15; Shaw v. Spencer, 100 Mass. 382; Fisher v. Brown, 104 Id. 259; Duncan v. Jardon, 15 Wall. 165.

3. Certificates of stock are assignable, and pass from hand to hand by indorsement, as bills of exchange and promissory notes pass, and holders of such certificates are prima facie presumed to be the bona fide owners thereof, and an innocent purchaser thereof for value will hold them against the true owner, where the latter has placed it in the power of the assignor to perpetrate a fraud upon the innocent assignee: Lanier v. Bank, 11 Wall. 369. In that case, Justice Davis, speaking for the court, says: "The power to transfer their stock is one of the most valuable franchises conferred by Congress upon banking associations. Without this power, it can readily be seen, the value of the stock would be greatly lessened, and obviously, whatever contributes to make the shares of stock a safe mode of investment, and easily convertible, tends to enhance their value. It is no less to the interest of the shareholder than the public that the certificate representing his stock should be in a form to secure public confidence; for without this he could not negotiate it to any advantage. It is in obedience to this requirement that stock certificates of all kinds have been constructed in a way to invite the confidence of business men, so that they become the basis of commercial transaction in all the large cities of the country, and are sold in open market the same as other securities. Although neither in form nor character negotiable paper, they approximate to it as nearly as practicable. If we assume that the certificates in question are not different from those in general use by corporations (and the assumption is a safe one), it is easy to see why investments of this character are sought after and relied upon. No better form could be adopted to assure the purchaser that he can buy with safety. He is told, under the seal of the corporation, that the share-holder is entitled to so much stock, which can be transferred on the books of the

corporation in person or by attorney, when the certificates are surrendered, but not otherwise. This is a notification to all persons interested to know that whoever in good faith buys the stock and produces to the corporation the certificates, regularly assigned, with power to transfer, is entitled to have the stock transferred to him. And the notification goes further, for it assures the holder that the corporation will not transfer the stock to any one not in possession of the certificates."

4. A corporation is ordinarily justified in treating the assignee and holder of certificates of stock as the legal and equitable owner thereof: Lanier v. Bank, supra.

5. Any transfer of stock by a corporation upon its books, in the absence of the original certificate, is made at its peril, and the real owner of the stock, evidenced by such certificate, losses nothing thereby; but upon the stock so issued by wrong or mistake, the corporation is liable to a bona fide holder thereof: Davis v. Bank, 2 Bing. 393; Pollock v. Bank, 7 N. Y. 274; Cohen v. Gwynn, 4 Md. Ch. 357; In re Railway Co., L. R. 3 Q. B. 584; Donaldson v. Jaillot, L. R. 3 Eq. 374; Sewall v. Boston W. P. Co., 4 Allen, 277.

Testing the admitted facts of this case by these rules of law, it is manifest that the demurrer to the fourth defense ought to have been sustained. When, on the nineteenth day of May, 1883, defendant in error, Elliott, applied for the water, and tendered the twenty dollars, the company did not know he was the owner of this Moyer stock, and he did not so inform it. He did not even declare himself to be such owner, and exhibited no evidence of title. He did not then demand a transfer of the stock to himself on the company books, but made his request for water, as a mere stranger desiring to buy so much water. We say this, because in the answer there is no averment that Elliott informed the company of his rights in the premises, either orally or by any written evidence; nor does it appear that at that time he made any demand for a transfer of the stock to himself, nor presented the certificates he claimed by assignment from Phillips.

To assume from the averments of the cross-complaint that he did so would be the most vicious kind of argument, which no court will make in favor of the pleader. The absence of all allegations to that effect, by the sound rules of pleading, require the assumption that no such facts existed, and the company was bound, in the absence of such evidence, from its duties to its stockholders, to refuse to recognize Elliott as the

owner of the stock, and was justified in refusing to permit him to take any more water from the ditch than he was entitled to under the three shares of stock admitted to belong to him. If on that occasion Elliott did submit to the company proper evidence of his title, he should have so alleged in his pleading. The company, therefore, was not in default in refusing to accept the tender of twenty dollars, and to permit Elliott to take the water for which he applied, and if not in default, then defendants in error were not justified in taking the water as they did. Hence, unless the conduct of the plaintiff in error in refusing, on the first day of June, 1883, to transfer the stock to defendant in error, Elliott, was so far wrong as to justify defendants in their conduct,-if trespass could be excused,there is nothing in the case to relieve them from the charge of trespass upon the property of plaintiff in error. To determine this question, a brief review of the transactions of June 1st, between the company and the defendant in error Elliott, Moyer, and the two Phillipses, is necessary. From the admitted averments of the cross-complaint, it appears that on June 1st Elliott did not demand water under these shares, nor offer to pay for it, but only required the transfer of the stock to himself; that he did not then have in his possession the two certificates for this stock, but that they were in the possession of I. M. Phillips; that the latter did not, until about six weeks after this demand by Elliott, surrender these two certificates to the company for Elliott's benefit. As has been seen, a corporation always acts at its peril in issuing stock to an alleged assignee thereof, in the absence of the assigned certificates, because, if new certificates of stock are issued without the surrender of the old ones, and such new stock passes into the hands of an innocent purchaser, it will be good in his favor against the corporation.

Here, then, on June 1st, a demand was made on the company for a transfer of this stock, upon the order of Moyer and the two Phillipses, but the certificates were not produced, and no excuse or explanation was given for their non-production. When, on the books of the company, was recorded the certificate of sale of this same stock to Buck on February 8th preceding? The company did right in refusing to make the transfer. But if the missing certificates had been produced, and offered for cancellation, and the transfer had been made, such act alone would not have entitled defendants in error to the water. They still had to pay, or offer to pay, or secure

AV. ST. REP., VOL. III.-88

the twenty dollars due the company for the water before they could lawfully demand it. This they failed to do, and by reason of such failure they could have no right to withdraw water from the ditch, and in doing so were trespassers.

The court erred in overruling the demurrer to the crosscomplaint; and for this, the judgment must be reversed, and the cause remanded, with directions to proceed according to law.

RISING, C., and STALLCUP, C., concurred.

By COURT. For the reasons assigned in the foregoing opinion, the judgment of the district court is reversed, and the cause remanded for a new trial.

PLEA OF TENDER, EFFECT OF: Davis v. Millaudon, 8′′. Am. Dec. 517, note 523; note to Moynahan v. Moore, 77 Id. 483, 484.

DEMURRER ADMITS ALL FACTS in declaration which are well pleaded: Chicago etc. R. R. Co. v. Sweet, 92 Am. Dec. 206; Tinsman v. Belvidere etc. R. R. Co., 69 Id. 565, and note 580.

STOCK SUBSCRIPTION IS CONTRACT between corporation and subscriber, and courts will enforce it: Blunt v. Walker, 78 Am. Dec. 709, note 719; Edinboro Academy v. Robinson, 78 Id. 421.

SHARES OF STOCK ARE ASSIGNABLE: Sargent v. Franklin Ins. Co., 19 Am. Dec. 306; Commercial Bank v. Kortright, 34 Id. 317, note 329.

CORPORATION IS NOT TRUSTEE for stockholders for what purpose: Hodges ▼. New England Screw Co., 53 Am. Dec. 624, and see note treating the subject 637.

CITY OF DENVER V. DEAN.

[10 COLORADO, 875.]

MUNICIPAL AUTHORITIES OF CITY must exercise ordinary care in keeping the sidewalk free from defects and obstructions, and a failure to perform this duty may lay the foundation of municipal liability.

WHERE CITY DID NOT CONSTRUCT SIDEWALK, a defect in which caused an accident not occasioned by any act of the city, its officers or agents, before a recovery can be had it must be proved that the corporation had notice of the defect, and also that it was in possession of such notice a sufficient length of time before the accident to have cured the defect and prevented the injury. Such notice might be actual or constructive. PERSONAL KNOWLEDGE OF OFFICER OF CITY gained in pursuance of his duties of defects in or obstructions to the sidewalks in such city is actual, but not constructive, notice to the city.

MUNICIPAL CORPORATION MAY BE CHARGED WITH CONSTRUCTIVE NOTICE of defects in its sidewalks so as to be held liable for injury caused thereby, either where an exercise of ordinary care on its part or the part of its officer involves the anticipation of defects that are the natural and legitimate result of use or climatic influences, or where the corporation had