[257]

menced, the insurance had not become absolute | The proceedings which took place in the
in Hamilton, and did not become so until July Circuit Court of St. Louis in the course of
14, 1884,-previous to which time his children liquidating the affairs of the association may
had a contingent interest therein, they being the be referred to in this connection.
In the prog-
beneficiaries in case he should die before that ress of the case an actuary was appointed by
date. But this reason cannot be sound; for a the court to value all the policies of the com-
settlement of the company's affairs cannot be pany then in force. Hamilton presented a pe-
postponed to await the determination of every tition to the court, claiming that the net value
contingency on which its policy engagements which his policy had on November 10, 1879
are suspended. This would postpone a settle- (the day the association was declared bank-
ment for at least half a century. Every per- rupt and dissolved) should be an offset to his
son's interest in life insurance is capable of note of $3,850, and the interest thereon. The
instant and present valuation, almost as cer- actuary made a report exhibiting the particu-
tain and determinate as the discount of a note lars relating to the policy, and concluded as
or bill payable in the future. Tables of mor- follows: "The value of the policy on Novem-
tality and of all values dependent thereon are ber 10, 1879, the date of the dissolution of the
adopted by every company, and furnish an as- company by order of the court, was, of the
sured basis of computation for this purpose. whole $10,000, $7,779.95; from which deduct-
The table used by the Life Association of ing outstanding note of $2,372.90 left $5,407.05,
America is set out in the record, and other as the net value, and which amount was al-
tables based upon it are used to facilitate the lowed by the commissioner and approved by the
calculations desired.
circuit court."

Another reason urged against allowing a set-off in this case is that the defendant, Hamilton, holds the policy as trustee, and cannot set off his claim as trustee against a debt due in his own right.

This argument has no better foundation than the other. Hamilton was only trustee so far as his children were interested; he could not be trustee for himself; and his interest was separate from theirs. The value of each was easy of calculation by any competent actuary. The policy had less than five years to run, and the interest of his children was contingent upon his dying within that time, he being then fifty-one years of age. Calculated according to the American table of mortality annexed to the charter of the association and contained in the record, at 5 per cent compound interest (the usual rate assumed), the value of the children's interest was less than 7 per cent of the total insurance, or less than $700; whilst the value of Hamilton's interest was more than 70 per cent of the insurance, or more than $7,000.* Or, first deducting from the whole present value of the policy (which at 5 per cent per annum for five years deferred is $7,836.26) the amount due for deferred premiums ($2,372.90), the value of the children's interest was less than $500, and that of Hamilton's nearly $5,000-a [258] sum sufficient to cancel all his indebtedness to the company and leave a considerable balance

over.

The process is a simple one, as shown by the ele-
mentary books on the subject. The policy at the
time the association failed (Nov. 1879) had nearly
five years to run; suppose it five. Present value of
$10,000, five years deferred, at 5 p. c. compound in-
terest is $7,835.26. This sum, less the value of his
children's expectancy, was the value of Hamilton's
interest. He was then fifty-one years old. The
mortality table shows that out of 68,842 persons
living at that age, 1,001 die the first year; 1,044, the
second year; 1,091, the third; 1,143, the fourth; and
1,199 the fifth; showing that the chances of the
children's receiving the Insurance the first year were
only 1,001 in 68,842, or 100; the second year, 1,044,
etc.; and the present value of the expectancy for
each year would be the sum expected divided by
1.05, 1.052, 1.058, etc. The present value of the
children's expectancy for each year, therefore, was
as follows, to wit:
1st year,

2nd year,

10880 1001 108822= 1044

10000

3rd year, 1091 X 108823=

$138.48

It does not appear whether the Circuit Court of St. Louis allowed the set-off or not. But the Circuit Court of the United States dismissed the original bill in the present case, and granted a perpetual injunction against the sale of the defendant's property under his mortgage, but disallowed his demand of reconvention. The form of the decree was as follows: After stating the titles of the bill and cross bill, the decree was in the words following, to wit:

"In the above cases, after trial and due consideration by the court, it is ordered and adjudged by the court that John F. Williams, superintendent, take nothing on his bill of complaint, and said bill is hereby dismissed.

"And it is further adjudged and ordered that the bill of complaint of W. E. Hamilton be sustained and the injunction of said Hamilton be, and is hereby, made perpetual.

"And it is further ordered that the demands in reconvention of the said Hamilton in his bill of complaint be, and is hereby rejected, without prejudice and of nonsuit." Also, decree for costs.

We think that this decree attained the substantial justice of the case. If not absolutely correct it erred against the defendant, who has not appealed. The counsel for the appellant, however, strenuously contends that compensation could not properly be allowed in this case. In support of his views he refers to the case of Newcomb v. Almy, 96 N. Y. 308, decided by

In November, 1879, his interest would be a little more, and that of the children's a little less, than in July. By the subsidiary tables in use by all life insurance companies the above calculation would be greatly shortened and simplified.

[259]

[260]

[261]

the Court of Appeals of New York. That | covered by him and deducted from the amount
case was almost parallel with the present one of his indebtedness to the company. This de-
and the claim of set-off was disallowed. The cision was based on a Statute of Louisiana,
suit was brought by the receiver of an insolv-enacted in 1839, as an amendment to article 375
ent life insurance company against the holder of the Code of Practice. Article 375 was
of an endowment policy issued by the company originally in the following form, to wit: "In
to recover the amount of a promissory note. order to entitle the defendant to institute a
The defendant, as in this case, sought to set off demand in reconvention, it is requisite that
the value of his policy against the note. The such demand, though different from the main
policy was not yet due, and in case the defend action, be, nevertheless, necessarily connected
ant died before it became due, the amount was with, and incidental to, the same; as, for in-
payable to his wife. The court assumed that stance, the demand instituted by the possessor
the interests of the assured and his wife were in good faith against him who sues in order to
so involved together that they could not be evict him, or for the purpose of obtaining the
separated; and that it did not yet appear who payment of the improvements made on the
would be entitled to the insurance,-not ad- premises." The amendment adopted in the
verting to the fact that the interests of all the Act of 1839, and now forming part of the arti
parties became fixed by the insolvency of the cle, provides, "that when the plaintiff resides
company, and must be computed as expectan- out of the State, or in the State, but in a differ-
cies reduced to present values. It is true, the ent parish from the defendant, said defendant
court does, in the next sentence, concede that may institute a demand in reconvention against
the policy had a reserve value,-but asks, "To him for any cause, although such demand be
whom was that value payable?" The plain not necessarily connected with, or incidental
answer was at hand, that the reserve value of to, the main cause of action." The court in
each person's interest was payable to him or Life Asso. v. Levy says: “The right of the de-
her. We cannot but think that if the true fendant to set up and urge his demand in
character of the interests in question had been reconvention against the plaintiff, a resident of
brought to the attention of that learned court, the State of Missouri, is, under our law, and
it would have come to a different conclusion the jurisdiction of our State, too plain to re-
from that which was reached.
quire argument;" and reference is made to
Spinney v. Hyde, 16 La. Ann. 250; Spears V.
Spears, 27 La. Ann. 642. The court adds:
"The objections urged by plaintiff to the al-
lowance of the reconventional demand, on the
ground that it would be a compensation of
plaintiff's demand, and that this cannot take
place, because plaintiff is insolvent and defend-
ant cannot compensate his own debt, but is
entitled only to such dividend as may be de-
clared after a final settlement, and because the
policy holders of the association are partners
and can only sue for a settlement of the part-
nership affairs, are fully met, discussed and
overruled by the lower judge, and we think,
properly." The court, in its judgment, allowed [262]
the cash value of the policy, as reported by the
actuary, with interest thereon from the time of
the adjudication in bankruptcy, November 10,
1879. In our opinion this was a just judg
ment, and the present case, being precisely
like, is governed by it.

The counsel for the appellant further contends that, by the Law of Louisiana (which must undoubtedly govern the case), compensation is not allowed against an insolvency in favor of a party whose credit was not due when the insolvency occurred. The Civil Code of Louisiana on the subject of set off is identícal with the Code Napoleon. The article apropos of the point now under consideration is the 1291st of the Code Napoleon, and the 2209th of the Civil Code of Louisiana, and reads as follows: "Compensation takes place only between two debts, having equally for their object a sum of money, or a certain quantity of consumable things of one and the same kind, and which are equally liquidated and demandable [exigibles, i. e. due]". Now, although upon a bankruptcy declared, all claims against the bankrupt become instantly due (subject, of course, if not matured, to a rebate of interest), and are equally entitled to dividends of the bankrupt assets, yet, in order that a claim may be the cause of compensation, the commentators hold that it must be due [exigible] at the time when the bankruptcy is declared. Touillier, Vol. 7, art. 381; Demolombe, Vol. 28, art. 540. There have also been judicial decisions to the same effect, though not uniformly 80. See Merlin, Rep. Vol. 3, p. 262, tit. Compensation.

But if there are technical reasons in the Law of Louisiana for rejecting the defense when set up by way of compensation, it was nevertheless allowed by the supreme court of that State, by way of reconvention, in a case exactly like the present. Life Asso. of America v. Levy, 33 La. Ann. 1203. Levy was the holder of an endowment policy in the same company as Hamilton, and in the same district (Shreveport). As in this case, the policy had not matured. But the court held that it might be set up by way of reconvention, and that the amount to which the defendant was entitled could be re

It is true, the court below disallowed the claim in reconvention; but it decreed a perpetual injunction against the enforcement of the defendant's mortgage, and thereby did substantial justice. The result which the court reached was correct, though it may have been led thereto on an insufficient ground. We are free to say, however, that if the court below went on the ground that the defendant was entitled to the benefit of compensation, we should be disposed to concur with it, notwithstanding the doctrine laid down by the commentators. We are inclined to the view that where a holder of a life policy borrows money of his insurer, it will be presumed, prima facie, that he does so on the faith of the insurance and in expectation of possibly meeting his own obligation to the company by that of the company to him, and that the case is one of mutual credit, and entitled to the privilege of compensation or set-off whenever the mutual liquidation of the demands is judicially decreed on the insolvency

of the company.
The case of Scammon v. |
Kimball, 92 U. S. 362 [23:483], is in concur-
rence with this view. It was there held that
a banker, having insurance in a company
which was rendered utterly insolvent by the
great Chicago fire of 1871, by which the bank-
er's insured property was consumed with the
rest, had a right to set up the amount of his
insurance against money of the company in
his hands on deposit. The insurance was not
a debt due at the time of the insolvency; it be-
came due afterwards, when the banker had
performed all the conditions required in such

Verbal contract for exchange of lands-part performance, what constitutes-obligationestoppel consolidation of railway companies, effect of trust, binding on grantee-defenses.

1. Where a railway company orally agreed upon the exchange of lands with an individual, although the contract, for want of the signature of the corporation or its agents, was void under the Statute of Frauds, yet, possession taken of the several parcels in pursuance of the contract and continued ever since, and expenditures for buildings and other improvements upon the respective parcels, constitute a part performance sufficient to take the contract out of the operation of the statute and authorize a decree for its full performance.

formance.

pudiate the contract on the ground that the plaint-
iff is willing to accept the deed for less land than
was originally agreed upon.
[No. 128.]

Argued Dec. 14, 17, 1888. Decided Jan. 28, 1889,

APPEAL from a decree of the Circuit Court
of the United States for the District of
Kansas, in favor of complainants in a suit for
the specific performance of a contract for the
exchange of land. Affirmed.

Reported below, 23 Fed. Rep. 168.
The facts are stated in the opinion.
Messrs. J. M. Wilson, John F. Dillon, A.
Williams and J. P. Usher for appellant.
Messrs. John W. Day, Wm. M. Springer
and James M. Mason, for appellees:

L.

Where a person contracts to sell land, and subsequently conveys the same to a third party, who has notice of the prior contract of sale, such third party stands in the place of his vendor, and equity will decree a specific performance against such subsequent purchaser.

A species of assignment results where a railroad or other public company, after entering into a contract, becomes consolidated with another company; liability under the then existing company being transferred to the new company thus formed.

Waterman, Spec. Perf. $$ 64, 75, 77, 512; also Pom. Spec. Perf. § 465 and notes and decisions there cited; Gregg v. Hamilton, 12 Kan. 333.

A railroad company contracting obligations and then consolidating with another may be sued thereon by the new name thus assumed, and will be estopped from denying it.

Columbus etc. R. Co. v. Skidmore, 69 Ill. 566; Ridgway Twp. v. Griswold, 1 McCrary, 151. Purchasers of distinct parcels of land cannot be made codefendants.

Waterman, Spec. Perf. § 60.

Time is not of the essence of the contract.

Taylor v. Longworth, 39 U. S. 14 Pet. 172 (10: 405); Hepburn V. Auld, 9 U. S. 5 2. The fact that possession was taken before the Cranch, 262 (3:96); Hepburn v. Dunlop, 14 U. ratification of the contract by resolution of the board of directors of the company, did not impair S. 1 Wheat. 179 (4:65): Brashier v. Gratz, 19 the effect of that possession as an act of part per- U. S. 6 Wheat. 528 (5:322); Bank of Columbia, 3. The obligation of the contract was not impaired V. Hagner, 26 U. S. 1 Pet. 455 (7:219); Rader by the fact that when the superintendent of the V. Neal, 13 W. Va. 373. company notified the other party that the company would not complete the exchange, the other party wrote to the superintendent asking him when the company would be ready to remove its track from the lands and come to a settlement for its use.

If a principal ratifies the part of a transaction that favors him, he ratifies the whole. Gaines v. Miller, 111 U. S. 395 (28:466).

Silence is ratification.

Field v. Farrington, 77 U. S. 10 Wall. 141 (19:923); Southern L. Ins. Co. v. McCain, 96 U. S. 84 (24:653).

4. One will not be permitted to lead another to act upon a contract of purchase with him and incur expenses by reason of it, and then, upon some pretext of a defect in a matter of form, refuse compliance with its provisions, and thus deprive the purchaser of the benefit of his labor and ex-dividuals. penditures. Courts of equity, in such cases, compel the vendor to keep his engagements.

5. Where the railway company subsequently consolidated with another company, under a new name, and transferred its property to the new company subject to all charges, liens and equities to which it was before subject, such new company is under obligation to complete the contract and to make a conveyance.

6. Whenever property charged with a trust, is conveyed to a third party, with notice, he will hold it subject to that trust, which he may be compelled to perform equally with the former owner.

This applies to corporations as well as to in

Marshall Co. v. Schenck, 72 U. S. 5 Wall. 772 (18:556).

An individual, under similar circumstances, must rescind or affirm in toto.

Peninsular Bank v. Hanmer, 14 Mich. 208; Davenport Sav. F. & L. Asso. v. North Am. F. Ins. Co. 16 Iowa, 74; Phila. W. & B. R. Co, v. Quigley, 62 U. S. 21 How. 202 (16:73); Merchants Nat. Bank v. State Nat. Bank, 77 U. S

7. The railway company cannot set up a mort-10 Wall. 604 (19:1008); Waterman, Spec. Perf. gage, executed by it upon the land agreed to be exchanged, as a release from its obligation to make Kan. 232.

a conveyance in execution of the contract.
8. In a suit for specific performance of a contract

306; Durham v. Carbon Coal & Min. Co. 22

The letters of the officers form a sufficient

for the exchange of land, the defendant cannot re-signing of the agreement.

[307]

Western Union Teleg. Co. v. Chicago & P. R.
Co. 86 Ill. 246.

For years the company silently acquiesced
in the arrangement made by its managing offi-
cers, and is estopped to deny it.

Mahaska Co. R. Co. v. Des Moines Valley R. Co. 28 Iowa, 437; Singer Mfg. Co. v. Holdfodt, 86 Ill. 456; Erie R. Co. v. Del, etc. R. Co. 21 N. J. Eq. 283; Elysville Mfg. Co. v. Okisko Co. 1 Md. Ch. 392; Durham v. Carbon Coal & Min. Co. 22 Kan. 232; Carithers v. Weaver, 7 Kan. 110; Caldwell v. Carrington, 34 U. S. 9 Pet. 86 (9:60); Bigelow v. Armes, 108 U. S. 10 (27: 631); Howard v. Patent Ivory Mfg. Co. R. & Corp. L. J. of Oct. 13, 1888, 341.

When the officers of a corporation are cog-
nizant of a contract made in the company's
behalf, by one employed for the company, and
allow it to be acted upon without any objection,
this is evidence of ratification by the com-
pany.

Lee v. Pittsburgh Coal & Min. Co. 56 How.
Pr. 373.

The company ratifies by appropriating the
benefits of the contract.

Alexander v. Brown, 9 Hun, 641; Hoyt v.
Thompson, 19 N. Y. 207.

Failure to repudiate is ratification.
Walworth Co. Bank v. Farmers Loan &
Trust Co. 16 Wis. 629; Shaver v. Bear River &
A. Water & Min. Co. 10 Cal. 396.

No express vote necessary.
Howe v. Keeler, 27 Conn. 538; Ridgway v.
Farmers Bank, 12 Serg. & R. 256; Ala.
& T. R. R. Co. v. Kidd, 29 Ala. 221.

Although there is no resolution to that effect.
Bank of U. S. v. Dandridge, 25 U. S. 12
Wheat. 64 (6:552); Eureka C. W. Machine Co.
v. Bailey W. & W. Machine Co. 78 U. S. 11
Wall. 488 (20:209); Gottfried v. Miller, 104 U.
S. 521 (26:851); Bank of Columbia v. Patterson,
11 U. S. 7 Cranch, 299 (3:351); Mahoney Min.
Co. v. Anglo Cal. Bank, 104 U. S. 192 (26:707).
Authority may be implied from the manner
in which the officer has been permitted to trans-
act business.

Fifth Ward Sav. Bank v. First Nat. Bank, 48 N. J. L. 513, 1 Cent. Rep. 438; Morrel v. L. I. R. Co. 1 N. Y. S. 65.

A long course of dealing in which one had been put forward as agent of the company proves that he is the agent of the company.

Union Gold Min. Co. v. Rocky Mountain Nat. Bank, 2 Colo. 248; Elysville Mfg. Co. v. Okisko Co. 1 Md. Ch. 392; Southgate v. Atlantic & P. R. Co. 61 Mo. 89; Perkins v. Washing- | ton Ins. Co. 4 Cow. 645; Badger v. Bank of Cumberland, 26 Maine, 428; Smiley v. Chattanooga, 6 Heisk. (Tenn.) 604; Fister v. La Rue, 15 Barb. 323; Peterson v. New York, 17 N. Y. 449; Phillips v. Campbell, 43 N. Y. 271.

Mr. Justice Field delivered the opinion of the court:

This case comes from the Circuit Court of the United States for the District of Kansas. It is a suit for the specific performance of a contract for the exchange of lands in the State of Kansas between Maria W. McAlpine, one of the complainants below and appellees here, and the Kansas Pacific Railway Company, alleged to have been made in 1878, her contention being that the defendant, the Union Pacific Rail

| way Company, has succeeded not only to the
property but to the obligations of that com-
pany. The decree of the circuit court was in
favor of the complainants, and the case is
brought here on the appeal of the defendants.
McAlpine v. Union Pac. R. Co. 23 Fed. Rep.
168.

Nearly every fact essential to the mainte
nance of the suit is controverted, and in rela-
tion to many of the facts there is a perplexing
conflict of evidence. It would serve no useful
purpose to detail and discuss the mass of testi-
mony contained in the record and show, out
of the varying statements of witnesses, the at-
tendant circumstances and the accompanying
documents, where the preponderance of evi-
dence rests with respect to any essential matter.
We shall briefly state the facts which seem to
us to be sufficiently established. It appears that
the Town of Wyandotte, in Kansas, is situated
at the junction of the Kansas and Missouri
Rivers, and that on the 16th of September,
1861, the title to a small tract of land bordering
on the north side of the Kansas River, within
the town, being four acres in extent, and
known as the "Ferry Tract," was vested in one
Isaiah Walker under a patent of the United
States. This tract afforded an available and
convenient landing from the steamboats. On
the 21st of October, 1874, the title to it passed
to Maria W. McAlpine by conveyance of the
Sheriff of Wyandotte County, under a decree
of the District Court of the Tenth Judicial
District of Kansas, rendered in a partition suit
between her and parties claiming interest there-
in. The other complainant and appellee,
Nicholas McAlpine, is the husband of Maria.
In the early part of 1878 negotiations were had
between the McAlpines and officers of the Kan-
sas Pacific Railway Company, for the exchange
of two acres and seventy one-hundredths of an
acre of this Ferry tract for a parcel of land con-
sisting of twenty-five acres and a quarter, lying
north of Wyandotte, then owned by that com-
pany. The two acres and seventy one-hund-
redths of an acre were valued by the McAl-
pines at $2,000. The 25-acre tract held by
the railway company was valued at $1,500.
For the difference in value the McAlpines of-
fered to take a quarter section of land in Pot-
tawatomie County, Kansas, which was esti-
mated to be worth $3 an acre. The negotia-
tions were had with the company through its
president, its general superintendent, and its
attorney at law. It does not appear that any
of these officers, except its president, Robert
E. Carr, acted upon any previous authority
conferred by the Board of Directors. All its
members, however, were aware of the negotia-
tions, and no one expressed any doubt that
what was done in the matter would be finally
approved by the Board. Mr. Carr testified that
whatever he did in regard to the exchange as
an officer of the railway company was done
after consultation and advice with the Board of
Directors; and that in this case he also consult-
ed with the receiver. The railway company
was then and for some period subsequently, in
the hands of a receiver appointed in a foreclo-
sure suit apparently of a friendly character,
resulting in a decree extending the time for
paying the amount due. The rights of the
receiver were merely temporary, the title of the

[308]

[309]

[310]

before this action of the board, it was discovIt appears that, pending the negotiations and ered that a small part of the Ferry tract was clouded by a tax claim of some kind, and it is "T. F. OAKES, Gen. Supt. "DEAR SIR: Respecting the settlement for to the release of that claim that reference is made in the proceedings of the board. The right of way with McAlpine, I beg to say you McAlpines were informed by the attorney of can settle with him on the basis of exchanging the company of its resolution. In accordance the lot of land belonging to company above with its condition, they proceeded to take measWyandotte, about twenty-five acres, for his Walker-Ferry tract. That we will also, in ad-ures to remove the tax claim, and they did so, dition, give him 160 acres of land, to be selected by him out of the lands of the company, the appraised price of which does not exceed $500; back taxes and claims on all to be satisfactorily cleared up.