Railway Company, plaintiff appeals. Affirm

ed.

Thomas Whitson and B. F. Davis, for appellant. W. B. Given and Brown & Hensel, for appellee.

MITCHELL, J. 1. By clause 8 of section 1 of the act of March 22, 1887 (P. L. 9), motorpower companies were authorized "to lease the property and franchises of passenger railway companies which they may desire to operate, and to operate said railways." It is claimed by appellant that this clause is unconstitutional, because it contains a subject not indicated in the title, to wit, the lease of their roads by passenger railway companies. The title of the act is "An act to provide for the incorporation and regulation of motor power companies for operating passenger railways by cables, electrical or other means." As the very object of the incorporation of the motor company indicated by this title is to operate a passenger railway, it must have some means of obtaining such railways to operate. It was clearly not intended that they should build, nor necessarily to buy, for in either case they would become not merely operators, but passenger railway companies themselves. The most obvious, if not the only other, way in which they could operate a road was to lease it. As was said by McPherson, J., in Smith v. Railroad Co., 2 Pa. Dist. R. 490: "In 1887 traction companies were a new device. The legislature decided to permit their creation, *** and to give them as a field of action the street railways of the commonwealth." And it may be added that motive power was then a subject of active discussion. There was a strong popular demand for cheap and rapid transit. The old forms of horse power were yielding to the objections of expense and want of speed; cables had been tried with varying success, and the use of electricity was beginning to take practicable shape. Passenger railway companies themselves, whether prosperous or struggling, had their capital and their business bound up in the old ways, and the whole subject of improvement was passed over as a matter of investigation and experiment to the newly-invented motor companies. The title of the act gave notice that they were incorporated with power to operate passenger railways, and an obvious way to do so was by lease of already existing roads. The objection to the constitutionality of the clause in question is wholly untenable.

Nor is there any weight in the objection that the passenger railway had no power to lease its road. The power to take a lease is expressly given to the motor companies, and the corresponding power in the passenger railway companies, as owners, to give a lease, is necessarily implied. Without it the grant in the act would be nugatory. That the grant was intended to be general, and not

confined to the very few passenger railways that had, by their charters, express power to lease, is well shown by McPherson, J., in Smith v. Railroad Co., 2 Pa. Dist. R. 490. On appeal to this court, 156 Pa. St. 5, 26 Atl 779, we followed our usual practice, and declined to decide the merits of the case until the facts were developed at the final hearing. The dissolution of the preliminary injunction was therefore affirmed, and we see no reason now to doubt the correctness of that result.

The objection that the powers of passenger railways cannot be indirectly enlarged is fully answered by the established principle that the constitutional mandate as to revival, amendment, extension, etc., of acts by re-enactment at length applies only to express amendments, etc., and does not affect those which are merely incidental to the passage of other acts, complete and valid in themselves. In re Greenfield Ave., 191 Pa. St. 290, 53 Atl. 225. In addition to this, the present appellee, the Columbia & Donegal Railway Company, was incorporated under the act of May 14, 1889 (P. L. 211). That act contains no express prohibition of the power to lease, and, as such power was already granted by necessary implication, so far as concerns motor-power companies as lessees, under the act of 1887, the later act cannot be construed as an implied repeal of a power already existing, and not necessarily inconsistent with the act's own purpose.

2. Appellant further argues that the Pennsylvania Traction Company was not a legal corporation by reason of its failure to comply with the provisions of the act of 1887 by recording its certificate, and therefore the lease in question was void. On this point it is enough to say that it was a de facto corporation, acting as such under letters patent, and its charter could not be impeached collaterally. Cochran v. Arnold, 58 Pa. St. 399; Spahr v. Bank, 94 Pa. St. 429; Johnston v. Association, 104 Pa. St. 394. It made the lease in its corporate capacity, was sued as a corporation, and, though this action is in tort, its necessary basis is in the rights of a passenger by virtue of the contract in a passage ticket bought from the railroad as an acting corporation. The cases cited by appellant are not in conflict with this settled principle. Guckert v. Hacke, 159 Pa. St. 303, 28 Atl. 249, was an action against individuals as partners, and they sought to defend on a charter of incorporation issued, but not recorded until after the contract by plaintiff with defendants personally. It was held that exemption from individual liability did not begin until notice of the incorporation was given by recording the certificate as required by the statute. It was, however, expressly conceded, referring to Spahr v. Bank, 94 Pa. St. 429, that actual knowledge by the plaintiff, and dealing as with a corporation, would have estopped him, notwithstanding the failure to record. Bank v. Crowell, 177

Pa. St. 313, 35 Atl. 613, was also an action against defendants as partners, and the same rule was applied again. The distinction in the cases and the underlying reason are thus stated by the late Justice Trunkey in Eliot v. Himrod, 108 Pa. St. 569, 580: "When a charter of incorporation has been actually granted, and certain persons are in possession of the rights thereby conferred, though the charter might be declared void by the court in a proper proceeding, its validity cannot be determined in a collateral suit. Spahr v. Bank, 94 Pa. St. 429. The formation of a limited partnership association is materially different from the creation of a corporation. Such association is treated in the statute as a partnership, which, upon the performance of certain acts, shall possess specified rights and immunities. When they are sued for debt, and claim immunity founded on such statement, it is competent for the plaintiff either to point to a fatal defect on its face, or to prove that an essential requisite, though formally stated, is falsely stated."

The

3. The last point made by appellant is that, even if the Pennsylvania Traction Company was incorporated, the lease to it by the Columbia & Donegal Railway did not exonerate the latter from liability. But such a proposition is contrary to all the established rules of law in regard to lessor and lessee. latter steps into the place of the former, is substituted for him, and assumes all subsequent liabilities incurred in the operation of the property leased. That is the very ground on which it is held that a corporation cannot lease or transfer any part of its franchises without express legislative or charter authority. Nelson v. Railroad Co., 26 Vt. 721. If a lease did not exonerate the lessor, but left his liability unaffected, and only added the liability of the lessee, no one could possibly be hurt by it, or have any standing to complain. It is conceded that a franchise is a duty imposed, as well as a privilege granted, by the state, and the duty cannot be avoided or transferred to another without the state's authority. But when such authority is shown, as in the act of 1887, to motor-power companies to assume by lease the operation of passenger railway companies, it must be construed as a grant, with all the ordinary attributes of such authority between lessor and lessee, unless the statute or the contract makes a reservation of continuing liability in the lessor. Neither is alleged in the present case. Neither Van Steuben v. Railroad Co., 178 Pa. St. 367, 35 Atl. 992, nor Hanlon v. Turnpike Co., 182 Pa. St. 115, 37 Atl. 943, have any bearing on the present question. In the former the lessee was a New Jersey company, and it was held that the statute authorizing railroads to lease their lines did not extend to a foreign corporation; and in the latter it was said that there was no evidence of authority to make the lease. The remarks on this subject must, therefore, be

taken as applied to the state of facts then before the court. In other states there is some conflict in the cases, and some difference of opinion among the text writers as to the weight of authority. But, as is well said in 5 Thomp. Corp. § 5884n, after stating the admitted rule that, if the lease is not valid, there is a continuing liability of the lessor; "Some of the courts state the doctrine loosely, without any apparent regard to the question whether the lease was lawful or unlawful. * But by running back through the decisions of these courts on the subject, it will generally be found that in the first case stating the doctrine stress was laid on the fact that the legislature had not authorized the railroad company to assign its franchises, or devolve its public duties upon another person or corporation." This points out clearly the source of most of the conflict in the cases. Two of them are specially relied on by the appellant, and were cited in Hanlon v. Turnpike Co., supra, Nelson v. Railway Co., 26 Vt. 717, and Railway Co. v. Brown, 84 U. S. 445. In the former it nowhere appears that the lease was authorized by law, and in the latter the railroad was operated jointly by the lessee and the receiver of the lessor, and the passage ticket which was the basis of the action was issued in the name of the lessor company. On the general subject, see Booth, St. Ry. Law, § 425; Pierce, R. R. 283; Patt. Ry. Acc. Law, §§ 130, 131; 19 Am. & Eng. Enc. Law, 891, note. After consideration of both views, we are of opinion that the settled principles of law and the decided weight of authority are in favor of the rule that, where a lease is duly authorized by law, there is no further liability of the lessor for negligence of the lessee in the operation of the road. Judgment affirmed.

TAPPER v. SUNLIGHT OIL & GASOLINE CO. (Supreme Court of Pennsylvania. Oct. 6, 1899.) PRINCIPAL AND AGENT-CONTRACT BY AGENT -LIABILITY OF PRINCIPAL FOR BREACH.

An agent, by altering a contract for furnishing oil, previously signed by his principal, procured the acceptance of a customer to supply him for a year at a certain price. The principal, after supplying oil for a time, refused a further compliance, the price of oil having advanced, and the customer sued for damages for the breach. Held that, in the absence of evidence showing that the agent exceeded his authority, the principal was bound to supply the oil required by the customer according to the

contract.

Appeal from court of common pleas, Philadelphia county.

Action by William E. Tapper against the Sunlight Oil & Gasoline Company for breach of contract to supply plaintiff with gasoline. From a judgment for plaintiff, defendant appeals. Affirmed.

Walter C. Rodman, for appellant. Alexander & Magill, for appellee.

furnish you your supply of 75 gasoline for the year 1895 at 7 cents per gallon. Delivered at No. 428 N. 64th street. Empties to be returned at 95 cents each. Sunlight Oil & Gasoline Co., H. Livegay, Mgr. & Treas. Accepted: W. E. Tapper." In the negotia

tions which resulted in the contract included herein, the defendant was represented by its agent employed to sell its gasoline. The paper presented to the plaintiff by the agent of the defendant was not a completed contract, although it was signed by the latter. It was an offer to furnish to the former his supply of 75 gasoline for a time and on terms specified therein. There were two blank spaces in it, through which spaces, and five words in close proximity to them, a line was drawn by the agent. This was followed by an acceptance from the plaintiff of the offer as it then stood. If the action of the agent in drawing the line aforesaid was within the scope of his authority, the plaintiff's acceptance of the offer constituted his contract with the defendant; and if the agent exceeded his authority in this particular, and his act was ratified by his principal, the result would be the same. As the defendant made no objection to compliance with the terms of the contract before there was an advance in the price of gasoline, it may be fairly inferred that the real ground of its refusal to comply with its contract was the appreciation in the market value of the article it had previously agreed to furnish the plaintiff for the period of one year. It may be noted here that the contract was in duplicate, each party to it having a copy of it and knowledge of its terms. The uncontradicted testimony showing that the copies delivered to the parties by the agent of the defendant were precisely alike, and there being no averment or claim of any alteration by him in either of them, the inference is that the erasure of the line drawn by him as herein before stated, and the insertion of the words written over or above it, was the work of his principal. Another noticeable fact in connection with the case is that the defendant has offered no evidence showing that its agent exceeded his authority, or produced on the trial the altered copy of its contract exhibited to the plaintiff, in justification of its refusal to furnish the gasoline as it had agreed to do. To the facts already referred to herein we may add the further fact that the defendant did not notify the plaintiff of its intention to limit its sale of gasoline under its contract with him to 12 barrels a week until the 5th of June, 1895, when gasoline had advanced to 12 cents per gallon.

The only conclusion deducible from the uncontradicted evidence in the case is that the contract contained herein correctly expresses the agreement and understanding of

the parties to it. By it the defendant was bound to furnish the plaintiff with the gasoline he might require in his business during the year 1895, and to pay to him 95 cents for each empty barrel returned. On the other hand, the plaintiff was bound to return to the defendant each empty barrel at the price aforesaid, and to pay for the gasoline furnished him at the rate specified in the contract. The respective obligations of the parties were not impaired or in any wise affected by the rise or fall in the market of the price of the article to which their contract related; and probably, if there had been no change in the market value of the article, each party would have been satisfied with the contract by which they were, respectively, bound. We have carefully examined and considered all the specifications of error in the case, and are of the opinion that there is nothing in any of them which would justify a reversal of the judgment. Judgment affirmed.

In re ORNE'S ESTATE. Appeal of HAMILTON et al. (Supreme Court of Pennsylvania. Oct. 6, 1899.)

PAYMENT-PRESUMPTION-EXECUTORS.

1. The only debt of testatrix, whose estate was a considerable one, being paid by her executor, will be presumed to have been paid with her money, not his.

2. Where an executor, to whom testator gave certain shares of stock for life only, pledges them as security for his debt, his property is rightly used by his executor in paying the debt and releasing the stock.

Appeal from orphans' court, Philadelphia county.

In the matter of the estate of James D. Orne, deceased. From a decree dismissing exceptions to the report of the auditor on the accounting of Dwight Pratt, executor, Emily V. Hamilton, formerly Orne, and the Union Trust Company, guardian of minor children of James D. Orne, appeal. Affirmed.

John G. Johnson, for appellant. John C. Bell, for appellee.

DEAN, J. James D. Orne, of Philadelphia, died on the 31st of July, 1894, leaving a will, of which he appointed Dwight Pratt, his nephew, of Springfield, Mass., and Henry S. Lee, executors. Lee having declined to ac cept, Pratt acted as sole executor. The testator left to his widow, Emily, such share of his estate as would pass to her under the intestate laws, and the remainder to his three children. For some years before his death he had been a manufacturer of hosiery in a small way, and the stock and capital in this business made up the larger part of his estate. One James H. Millhouse had been employed by him to assist in conducting his business. The executor filed an inventory of the assets of the business, amounting to $13,

in this stock having terminated by his death, the executor delivered it to the executor of Lucy G. Orne for his (James') children, to whom it had been bequeathed by his mother.

The claim made by appellants before the auditor and here, in effect, is that the stock was in fact pledged by Lucy G. Orne in her lifetime for her own debts; which, in substance, through all the subsequent renewals, continued the same debt, until James D. Orne's death. Apparently, in the face of the papers, this contention is plausible. The same 76 shares, first pledged by her, remained in the possession of the same bank, with a transfer to it as collateral. The note, after the mother's death, was signed, "James D. Orne, Executor of Lucy G. Orne," and by James D. Orne. But the papers are the subject of explanation. Henry S. Lee, treasurer of the Savings Institution, and one of the executors of Lucy G. Orne, testifies positively, with the books of the bank before him, that her note of $12,000 was paid off gradually by her executor, James D. Orne, the last payment of $50 being made on the 5th of June, 1892, more than two years before James D. Orne's death. The evidence does not show from what source the money came to pay the note, but as it was a debt of Lucy G. Orne, as her estate was a considerable one, as she owed no other debts at her death, and as it was paid by her executor, the presumption is it was paid with money belonging to her estate. Being released, the stock at once passed into the possession of the executor, James D. Orne, who individually, by his own mother's will, had in it a life estate, which would, at least, equal the income from the stock. With the title to the stock in that situation, and he having the possession, he at once commenced pledging it for loans to himself, and continued so to do until his death. There is no evidence that he thereafter borrowed one dollar upon it for his mother's estate. On the contrary, there is the evidence of his own admissions that he borrowed for himself, and used the money for his own purposes, to the amount of $9,100, which debt was unpaid when he died. It is wholly immaterial that he had no authority as executor, or as a life beneficiary, to thus pledge the stock, or that the bank had no authority to accept it as pledge, as against the children to whom it was bequeathed by their grandmother. That is not the point now. The learned auditor, on ample evidence, which he fully sets out, has found the debt for which the stock was pledged at the death of James D. Orne was solely his debt. This being the case, it was the duty of his executor to pay this debt, as he did do, and then hand over the 76 shares of stock, as he did do, to the executor of Lucy G. Orne, to be disposed of as her will directs. That the executor of James D. sold the railroad bonds to pay this debt is not material. They were unquestionably his own bonds, and the executor had a right to make that use of them. That they were not included in the 44 A.-19

inventory was a mere mistake, which, at the suggestion of the executor himself, was corrected. All the assignments of error are overruled, and the decree of the court below is affirmed, at costs of appellants.

In re KELLY'S ESTATE.

Appeal of FIDELITY INSURANCE, TRUST
& SAFE-DEPOSIT CO.
(Supreme Court of Pennsylvania. Oct. 6,
1899.)

WILLS-CONSTRUCTION-DISTRIBUTION OF
ESTATE.

Testator directed his estate to be held in trust for the benefit of his brother and sister, declaring that they "shall receive the income * * * absolutely and the survivor of them, with power to them or the survivor of them to devise by any last will and testament they or either of them may choose to make." Both beneficiaries survived the testator, and the brother died testate as to his interest. Held, that the intention of the testator was to divide the income equally between the brother and sister during life, and on the death of either the survivor was to receive the entire income until death, when the principal of each was to be distributed as directed by will.

Appeal from orphans' court, Philadelphia county.

Proceeding in the estate of Joseph Kelly, deceased. From a decree a decree of the orphans' court in bank, modifying the decree of the auditing judge as to the distribution of the fund comprising the estate, the Fidelity Insurance, Trust & Safe-Deposit Company, trustee of the will of the deceased, appeals. Reversed.

The following is the opinion of the court below (ASHMAN, J.):

"The testator gave his estate to the executor, in trust for the benefit of his brother and sister, and particularized the trust as follows: "To collect and receive the income of my estate, and upon the receipt thereof to pay over the same into the hands of my brother and my sister, or their duly authorized agent or attorney. I hereby declare it is my will that my brother and my sister shall receive the income of my said estate absolutely and the survivor of them, with power to them, or the survivor of them, to devise by any will or testament, they or either of them may choose to make.' The brother and sister survived the testator. The brother has since died, leaving a will by which he disposed of his interest in this estate.

"Two rules of construction suggest themselves in any consideration which may be given to the will of the testator. One is that a gift of income indefinitely, with no disposition over of principal, is an absolute gift of the entire estate. This, of course, is subject to the qualification that nothing in the context of the will shall disclose a contrary purpose. The gift here is of that character. That it is for life can be inferred only from the use of the word 'survivor' and from the