extended constitution was adopted. After reciting that the original plans were "to bring under our banner all inebriates, not only here, but in other parts of the state," it provided for the establishment of branch associations, and that all persons admitted as members should take the pledge. The substance of the previous constitution was adopted. the purpose of promoting the cause of temperance, " under Hitt. Gen. Laws Cal. § 1024 et seq., providing for the incorporation of "religious, social, benevolent, and learned associations." Some years afterwards, the membership having greatly decreased, a resolution was passed that the trustees sell the property, pay off some outstanding indebtedness, and purchase other cheaper property suitable for the uses and purposes of the association." A petition asking for leave to sell, and stating, among other things, that the corporation was "purely and The enterprise seems to have received the solely for the benevolent and laudable purpose of aiding and promoting the cause of temperance, and approbation and assistance of the public. not pecuniary profit," was accordingly filed in the The press gave it encouragement; the Revsuperior court, which granted the prayer of the erend Thomas Starr King consented to depetition, reciting the resolution in its order of liver a lecture for its benefit; and donasale. The property was sold, and a portion of the tions of books, of building materials, and of proceeds divided among a part of the members, money were received. On one occasion the including the trustees, pursuant to a motion "that association received a "donation in money" the association donate to each member in good of $157.50; on another, a subscription of standing the sum of $1,500 for past services, on signing a receipt for the same;" but it was admit- $1,200; on another, $2,107.83; on another, ted on the trial that no services had been rendered $134.50; on another, $154.75,-and letters of other than being good and efficient members of the sympathy were received from other states. organization. Held, a misappropriation of cor- In 1860 the association purchased a lot on porate funds, and that any member not a party Post street, near Dupont, for the sum of $6.thereto could maintain a suit to compel a restora-250, and a building was erected upon it for tion. 2. Where trustees misappropriate corporate funds, claiming the right so to do, a member may institute proceedings for their restoration without demand on the trustees to take action in the matter. Department 2. Appeal from superior court, city and county of San Francisco; T. H. REARDEN, Judge. S. Heydenfeldt, Jr., and Joseph P. Kelly, for appellant. Tilden & Tilden and David McClure, for respondents. the use of the association. This is the lot which was subsequently sold, as mentioned below. It was mortgaged for part of the purchase money, and subsequently other mortgages were placed upon it. In 1862 the association was incorporated. The articles were evidently framed under the provisions of the incorporation of “religious, social, benevolent, and learned associations." 1 Hitt. Gen. Laws, § 1024 et seq. There was no capital stock. The articles state that the organization was "a benevolent association, formed for the purpose of promoting the cause of temperance." A "home" for the care of inebriates was provided, under the auspices of the association; but for this purpose a separate corporation was formed. SHARPSTEIN, J. This was a suit by Charles Ashton, a member of the Dashaway Association, against the corporation, its five trustees, and a majority of the other members, to compel the restoration of funds alleged to have been misappropriated. The trial court nonsuited the plaintiff, who appeals from an order denying his mo- The association had a numerous memtion for a new trial. The original associa-bership. "There were thirty one hundred tion was an unincorporated temperance and sixty-three names before the incorporasociety. It was formed in January, 1859, tion, and forty-nine hundred and sixty-four at the Howard Engine-House, by 17 public- since the incorporation." In 1882, howev spirited men, who took a pledge to abstain er, from some cause which is not explained from all intoxicating drinks, except for by the record, the membership had dwinmedical purposes, the necessity of which dled to 59; and in the following year nowas to be certified by a physician, and tice was given of a meeting of members to adopted a constitution and by-laws. The consider the question of selling the properinitiation fee was fixed at 25 cents, and ty above mentioned, in order to pay the inthe dues at 12%1⁄2 cents a week. The pream- debtedness, "and to reinvest in other propble was as follows: "We, the undersigned, erty suitable for the association." At this anxious to advance our own interests, and meeting a resolution was passed that the to promote a spirit of good feeling, not trustees be instructed to sell the property, only amongst ourselves, but our friends, pay the indebtedness, and purchase other and being impressed with the importance cheaper property suitable for the uses and of concentrated effort to accomplish the purposes of the association." A petition object, and desirous of forming ourselves for leave to sell the property was accordinto an association in which we may labor ingly filed in the superior court, stating, together for the end proposed, have framed among other things, that the association the annexed constitution," etc. It was was incorporated "purely and solely for provided that "it shall be the duty of mem-the benevolent and laudable purpose of bers to seek out their friends in the city aiding and promoting the cause of temperand vicinity, and bring them to the meet-ance, and not pecuniary profit;" and the ings, and introduce them to the members," court granted leave to sell, reciting in its and "to assist those members who are in order the above-mentioned resolution. The need to obtain employment, and aid and property was then sold for the sum of $156,encourage the poor and needy, as far as lay 000. Of this sum $45,000 was used in in their power." The name adopted was discharging indebtedness; $31,543.54 was the "Dashaway Association," the mean- placed in savings banks, where it is to be ing of which is said to be that it was the presumed that it now is; and $73,500 was object to encourage the members and their divided among 49 members, including the friends to "dash away" the intoxicating trustees. The answers deny that the decup from their lips. In May, 1859, a more fendants "unlawfully or fraudulently" 662 PACIFIC REPORTER, VOL. 22. took or received any of the money, or that the directors legally use the funds of the that corporation to induce promoters to abanthey took or received any money was held by said corporation in trust," but don a proposed rival company. A stockdo not deny the taking or receiving, and holder may enjoin the directors from makthe evidence of the taking is uncontradict-ing free of tolls a bridge from which a cored. At a meeting of the members held in poration derives its income. The directors December, 1883, the minute-book shows the may be held liable for allowing the presifollowing entry: "Brother Eagan then dent to use the corporate funds for lobbymoved that the association donate to each ing purposes. An unreasonable use of the member in good standing the sum of $1,500 corporate profits of a leased railroad to for past services, on signing a receipt for build up and improve the lessor railroad, And without reference to the rights of the forCarried unanimously." the same. this is followed by a receipt in the following mer, has been held to be good cause of comform: "San Francisco, Dec. 31, 1883. We, plaint on the part of a stockholder in the the undersigned, members of the Dashaway leased railroad company; and, in general, Association, hereby acknowledge the re- any misapplication or waste of the properceipt of $1,500, donated to us for past serv-ty of a corporation may be remedied by a ices by order of the association." This re-member thereof." Cook, Stocks, § 674. The ceipt was signed by 49 members, including supreme court of Rhode Island, in reference the trustees; the sum of $1,500 being op- to the misappropriation of corporate funds It was admitted at the by a director, said: "The jurisdiction does posite each name. trial "that there were no services rendered not appear to be so firmly settled and deby the defendant members other than in fined in England as in this country; but we the line of being good and efficient members do not believe any English judge has ever of the organization, in accordance with decided that a president or director who the constitution and by-laws and general fraudulently converts or embezzles corpoobjects of the assocation, and that that is rate funds cannot be sued in equity by a all any of the defendants rendered to the stockholder, when the corporation willsociety." The by-laws provide that "no fully neglects or refuses to bring the suit. officer of this association shall receive com- Indeed, to hold that a corporation could pensation for his services, except the secre- gratuitously condone or release such a tary and collector, who shall receive such fraud by anything short of unanimous concompensation as may from time to time be sent would be monstrous; for it would be, It is admitted in effect, to hold that a president or director fixed by the association." by the pleadings that the association "still who can control a majority vote in the coris" a corporation, and no proceedings for poration may rob or despoil it with impunity." Hazard v. Durant, 11 R. I. 206, its voluntary dissolution are shown. 207. In accordance with those principles, it has been held that a stockholder may restrain the directors from paying an unfounded claim of the secretary for extra services, (Butts v. Wood, 37 N. Y. 317,) and may compel the repayment of funds misappropriated by the directors, (Sears v. Hotchkiss, 25 Conn. 177,) and may recover from a trustee property of the corporation which he has converted to his own use, (Carpenter v. Roberts, 56 How. Pr. 216,) and may prevent corporate securities from being misapplied to the benefit of other cor The argument for the respondents is that the organization was not a charity, in its legal sense, and that therefore it could do what it pleased with its property. Take all the evidence," say the learned counsel, "search the record through and through, and not one word indicating a charity can be found." We do not find it necessary to decide this question, and, for the purposes of this opinion, shall assume that the association stands upon the same footing as any other private corporation. So regarding it, we think it clear that any member has the right to the aid of the courts in preventing or setting aside such a plain mis-porations, (Chicago v. Cameron, 120 Ill. 447, appropriation of the corporate funds as is 11 N. E. Rep. 899,) and may have annulled above shown. That any stockholder or a lease made in excess of corporate powers, member has this right in equity is well es- (Mills v. Railroad Co., 41 N. J. Eq. 1,)1 and tablished. The rule is thus stated in a re- may prevent the collection of payment of cent work: "Even the majority have no a tax illegally levied, (Dodge v. Woolsey, right to direct the affairs of a corporation 18 How.331.) and may prevent the payment except in accordance with the provisions of of dividends out of a fund which ought to its charter, for the powers of the majority have been appropriated to repairs of the are derived wholly from the agreement of company's works, (Dent v. Tramways Co., the stockholders, as set out in the charter; L. R. 16 Ch. Div. 344,) and may prevent and every individual stockholder has the the conversion of the corporate assets by right to stand upon his contract, and for- the officers, (Real Estate Co. v. Bank, 75 Ga. bid any departure from its terms. It may 45,) and may have restrained acts which accordingly be stated as a rule that any de- amount to a violation of trust, or a breach parture from the chartered purposes of a of the charter, (March v. Railroad Co., 40 Corporation is an injury to every individual N. H. 548; Wilcox v. Bickel, 11 Neb. 154, 8 stockholder, for which equity will, under N. W. Rep. 436; Teachout v. Railway Co., proper circumstances, provide a remedy." 75 Iowa, 727, 38 N. W. Rep. 145; Manderson Mor. Priv. Corp. §403. Another learned writ- v. Bank, 28 Pa. St. 379,) or which amount er says: "It is ultra vires and illegal for to a fraud upon the company, (Ryan r. the board of directors to donate the funds Railroad Co., 21 Kan. 365.) or to a breach of the corporation to charitable or public of its charter, (Cook, Stocks, § 672.) In Calpurposes, or to aid corporations of a simi-ifornia the rule was laid down in Wright v. lar character, however praiseworthy the purpose of the donation may be. Nor can 12 Atl. Rep. 453. name does not appear on the receipt above set forth; the resolution offered by him at the meeting preliminary to the sale seems to us to have been perfectly proper; and his subsequent proceedings show, to his credit, that he was not a party to the transaction. Mining Co., 40 Cal. 20, in which case it was the majority of the members of any club, held that a stockholder could compel the or social, religious, or benevolent society, company to refund the sum paid by him for could, without winding up the concern, dithe redemption of corporate property which vide up the funds whenever they felt in need the directors had allowed to be sold, and of a little money. It does not appear that had wrongfully neglected to redeem, and the plaintiff consented to the proceeding; WALLACE, J., delivering the opinion, said: he is not shown to have been present at "It is settled that courts of equity in this the meeting at which the resolution above country will, at the instance of a stock-quoted was "unanimously carried;" his holder, control a corporation and its officers, and restrain them from doing acts even within the scope of corporate authority, if such acts, when done, would, under the particular circumstances, amount to a breach of the very trust upon which, as we have seen, the authority itself has been conferred. Dodge v. Woolsey, 18 How. 341. It is argued for the respondents, however, And upon the same principle the court will, that a member or stockholder cannot have even after such an act has been done, re- redress for any wrong or injury to the corlieve an injured stockholder from loss, if, in poration "until after he has exhausted all the mean time, no superior equity has inter- the means within his reach to obtain revened, nor the rights of innocent third par-dress of his grievances. He must make an ties attached." See, also, Neall v. Hill, 16 earnest effort with the managing body of Cal. 145; Beach v. Cooper, 72 Cal. 99, 13 Pac. the corporation.” This is undoubtedly Rep. 161; Chicago v. Cameron, 120 Ill. 458, the general rule. But the complaint alleges 11 N. E. Rep. 899. And the relief does not that the trustees of the corporation “condepend upon the existence of a fraudulent trol and manage its affairs, and were parintent, although such intent very frequent- ties to the said unlawful and fraudulent ly exists. acts, being aided and abetted by the said Now, in the present case there was a other defendants members; that it would plain misappropriation of corporate funds. be futile and useless to make a demand upon The corporation was not dissolved, or, so said corporation defendant, or upon its far as appears, to be dissolved. It was a trustees or officers, to commence a suit to simple case of trustees who were in pos-obtain the relief which the plaintiff seeks, session and in control of corporate funds, or any relief whatever." The answers deny acting in pursuance of a vote of the ma- that the trustees “were ever parties to any jority of the members, "donating" the cor- unlawful or fraudulent transaction," but porate funds to themselves and other do not deny the remainder of the allegamembers upon the pretext of "past serv- tion; and from the whole case it is apparices," although the fact was, as admitted ent that the defendants claimed the right to at the trial, that no services had been ren- do what they did, and that the trustees dered other than such as the parties were were parties to the transaction. Under bound to render as members of the associ- these circumstances, it was not necessary ation. The answers deny that the associa- for the plaintiff to demand that they should tion was not a corporation for profit. But take action. "The law does not require a it is too plain for discussion that this de- useless act to be performed; and when it is nial was untrue. The corporation was not claimed, from the answer, that, if a demand for profit. Its articles define it as "a be- had been made, it would have been refused, nevolent association, formed for the pur- it does not lie in the mouth of the defendpose of promoting the cause of tempe-ant to object that no demand was made." rance;" and it is evident, as stated in the petition for leave to sell the property, that the association "was incorporated purely and solely for the benevolent and laudable purpose of aiding and promoting the cause of temperance, and not pecuniary profit." This being so, the division of more than one-half of the corporate property among 49 members was a diversion of the same from the cause of temperance, which was the "benevolent and laudable" purpose of the institution, into the private pockets of said members. It was an attempt to make a profit out of an undertaking which was not for profit. It is not inconsistent with the conclusion that the preamble of the constitution of the unincorporated association stated that the object of the members was "to advance our own interests." It is perfectly clear, from the circumstances, that this meant their interests with respect to temperance and sobriety. But, aside from this, the old constitution was super-lidity of the alleged preferred claims of certain seded by the articles of incorporation, which explicitly define the object of the association, as above stated. If such a transaction as appears here would be sauctioned, Parrott v. Byers, 40 Cal. 622,623. See, also, Heath v. Railroad Co., 8 Blatchf. 347; Mor. Priv. Corp. § 395; 3 Pom. Eq. Jur. 10. We see no material error in the admission of evidence; but, if there had been, it would not affect the result here. McCloud v. O'Neall, 16 Cal. 397. The order appealed from is reversed, and the cause is remanded for a new trial. We concur: MCFARLAND, J.; THORNTON, J. SHOWERS V. WADSWORTH. (Nos. 12,299, (Supreme Court of California. Nov. 22, 1889.) the sheriff, after the judgment was rendered, dis- | brought in the name of the sheriff against charged the attorneys because they, on behalf of the claimants. Judgment in these suits the attaching creditor, refused to give a stay-bond, was rendered in favor of the defendants, thereby preventing an appeal. 2. A contract to furnish a bond of indemnity will be treated as a contract of indemnity, if the bond is not furnished. Commissioners' decision. Department 2. Appeal from superior court, city and county of San Francisco; J. G. MAGUIRE, Judge. Geo. C. Gorham, Jr., (Haggin, Van Ness & Dibble, of counsel,) for appellant. P. Reddy, (W. H. Metson, of counsel,) for respondent. and it was thereby adjudged that the claims against the sheriff were valid. These suits were brought in consequence of the request of the sheriff that his interests should be protected; and we think that the request was properly made. It was made to the attorneys who had acted for Wadsworth in his transactions with the sheriff. Mr. Gorham was the one who arranged the transaction for the delivery of the property and the making of the contract of indemnity. The defendant, Wadsworth, says, with reference to him: "Mr. Gorham was acting as agent to do anything that was done. He was the only one that had authority to do anything. I sent him there was necessary." And he acted as the attorney of Wadsworth, and not as attorney of the sheriff, though at all times he was acting under the direction of other attorneys. Mr. Haggin was acting for those whom Wadsworth represented. These gentlemen were applied to by the sheriff because they were the only attorneys for Wadsworth whom he knew in the premises. Upon these facts we think that the judgment in favor of the plaintiff was right. The contract was, in substance, a contract of indemnity. In form, it was to furnish a bond of indemnity. But, so far as the principal is concerned, we think that, inasmuch as the contract was not superseded by such promised bond, it must be treated as itself, in effect, a contract to indemnify. The in there was a right of recovery upon the contract as soon as the liability was incurred. Civil Code, § 2778, subd. 1, Tunstead v. Nixdorf, ante, 472, (No. 12,158, filed Oct. 1, 1889 ;) McBeth v. McIntyre, 57 Cal. 50. HAYNE, C. Action by a sheriff upon a contract to indemnify him against liability arising from the claims of certain parties upon property which was in his custody, and which he delivered to the defendant to attend to that business,-to do what upon receiving said contract. Judgment passed for the plaintiff, and the defendant appeals. The general features of the case are as follows: An action was brought against two mining companies by the defendant, Wadsworth, who, it appears, was acting in the interest of Wells, Fargo & Co., which corporation was the real owner of the claims. A writ of attachment was issued in the case, and under it the sheriff took possession of certain personal property of the mining companies. Thereupon certain of the miners who had claims for labor, and who claimed to be preferred | -creditors, gave notice of their claims to the sheriff and to the attaching creditor, under section 1206 of the Code of Civil Procedure, as amended in 1874, which provides, in substance, that, if such claims are undisput-demnity was against liability, and hence ed, the sheriff shall satisfy them out of the property in his hands; and that, if they are disputed, the claimants shall establish their validity by action, which must be brought within 10 days. Judgment was rendered in favor of Wadsworth, the attaching creditor, (defendant here,) and the property was sold to him. He did not pay the price bid for the property, but induced the sheriff to deliver it to him without payment, upon his agreement, which provided that he would furnish the sheriff "a good and sufficient bond indemnifying him against all loss and liability which he may incur by reason of delivering the bullion attached, or which he may become responsible for by reason of the preferred claims in said cases filed with him." The agents who acted for Wadsworth in the matter had authority to make such a contract. It is admitted by the pleadings that Wadsworth never gave a bond of indemnity. At the trial he applied for leave to amend his answer in this respect, but the court denied the application. This ruling is not complained of in the briefs filed; and, if it had been, we could not say that, upon the showing made, there was any abuse of discretion. It is therefore an established fact that the defendant failed to perform his agreement to give a bond of indemnity. After the property had been delivered to him, one of the claimants commenced an action against the sheriff, and the others were about to do so; and in order to prevent a multiplicity of actions, and to settle the question of the validity of the various claims, two suits were * The arguments of the learned counsel for the appellant go, in effect, to the point that no liability was incurred by the sheriff. They say that section 1206 of the Code of Civil Procedure is unconstitutional because it does not provide for notice to the judgment debtor; that no notice of the claims of the miners was in fact given to the judgment debtor; and that the claims were disputed, etc. But we think that the sheriff's liability was conclusively established by the judgments in the suits mentioned. We do not regard the form which the litigation assumed as important. The suits in question were brought for the purpose of determining the validity of the claims asserted against the sheriff. They were merely to cut off and forestall the multiplicity of actions which would otherwise have been brought against him. They were substitutes for actions against him; and, so far as the defendant Wadsworth's relation to them is concerned, it is clear that he stands in the same position as if the suits against the sheriff had been allowed to go on. This being the case, the sheriff having made a proper request that the indemnifier should litigate the claims against him, it is immaterial whether the indemnifier did so or not. If he neglected to do so, the judgments would be conclusive against him. "If, after request, the person indemnifying neglects to defend the person Cal.) indemnified, a recovery against the latter, sence of defendant and his attorney, judgment was Commissioners' decision. Department 2. HAYNE, C. This was an action for malicious prosecution. The trial took place in the absence of the defendant and his counsel, and resulted in a verdict for $1,500, for which judgment was entered. The defendant moved for a new trial on the ground of accident, surprise, etc., which motion was denied. The appeal is from the judgment, The only argument that can be made and the order denying a new trial. But the against this proposition is that the attor- sole point made is that the trial court neys for Wadsworth were discharged by ought to have granted a new trial on the the sheriff after the judgments had been ground of surprise; and to this we agree. no opposing affidavits. It rendered, and were thereby prevented from There were taking appeals which might have resulted therefore stands admitted that the absence in the reversal of the judgments. The rea- of the defendant and his attorney was son for which they were discharged was caused by their reliance upon the promise that they, on behalf of Wadsworth, refused of the plaintiff's attorney to notify the deto give a stay-bond upon the proposed ap- fendant's attorney before taking up the peals. We think that the refusal justified case, and the failure to comply with such the sheriff in refusing to proceed further promise. It is true that this promise is with the litigation. Wadsworth, through verbal, and therefore that it could not be his attorneys, had control of the suits. It enforced as such. But it seems to us that was for his interest ultimately that they reliance upon the word of a reputable atshould be prosecuted. Having been request-torney is excusable neglect, for which relief ed to take charge of the litigation, he was may be given, so far as to set aside the adbound to do so, and his indemnity em- vantage taken in violation of the promise. braced the costs of the litigation. Civil Code. If the promise had been denied, then we § 2778, subds. 3, 4. The word "costs," in this think that, in view of the practical diffiprovision, is used in an extended sense, and culty of investigations of that character, it includes all things which are necessary in or- would have been proper to refuse relief. der to make the litigation effectual. The But, the fact being admitted, we think sheriff was not bound to suffer his property that the motion should have been granted. to be seized for this liability, against which The learned counsel for the respondent inthe defendant had agreed to hold him harm-timates in his brief that the promise was less; nor was he bound to put his property out of his hands for the purposes of concealment; nor was he bound to give a bond to answer the liability in case the judgment should be affirmed. The contract of indemnity bound Wadsworth to answer this liability; and we see no reason why he should be allowed to compel the sheriff to bind himself, or get others to bind themBelves, to answer a liability which he (Wadsworth) had agreed to become responsible for. For these reasons we think that the discharge of Wadsworth's attorneys after judgment does not do away with the conclusiveness of the judgments as against him. In the view we have taken, it is unnecessary to consider the other questions argued. We therefore advise that the judgment and order be affirmed. made so long before the trial that he had forgotten about it. But the affidavits do not show this; and, if they did, it is evident that the plaintiff's attorney had not forgotten the promise, but relied upon it. No objection is taken to the sufficiency of the record; and we assume, in consequence, that any objections which exist are waived. We therefore advise that the judgment and order appealed from be reversed, and the cause remanded for a new trial. We concur: BELCHER, C. C.; FOOTE, C. PER CURIAM. For the reasons given in the foregoing opinion the judgment and order appealed from are reversed, and the cause remanded for a new trial. We concur: BELCHER, C. C.; VAN CLIEF, C. GRAVES et al. v. Moxo LAKE HYDRAULIC PER CURIAM. For the reasons given in the foregoing opinion the judgment and order are affirmed. ROBERTSON V. WILLIAMS. (No. 12,005.) Nov. 22, 1889.) (Supreme Court of California. MIN. CO. (Supreme Court of California. Nov. 26, 1889.) CORPORATIONS-DEBTS TO OFFICERS-MORTGAGESRATIFICATION-EVIDENCE. 1. The superintendent of a mining company testified that the services rendered by the presi dent and secretary of the company outside of the performance of their duty as such officers were worth a certain sum, but it appeared that he resided at the mine, was seldom at the offices of the NEW TRIAL-EXCUSABLE NEGLECT. Reliance on a verbal promise by plaintiff's company, and did not know what services were attorney to notify defendant's attorney before tak-rendered by the president and secretary. The oning up the case is excusable neglect, and authorizes the granting of a new trial, where no notice was given, and, the trial taking place in the ab ly evidence as to the value of his own services was the fact that he was superintendent. Heid, that this evidence was insufficient to show that these |