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ter, not involving the feelings; that telegraphy is a modem in-
vention; that a telegraph company is a carrier of intelligence
often sent for a purpose not pecuniary, but relating wholly to
matters of sentiment or feeling; and that therefore the damages
resulting from the breach of a contract to transmit such intelli-
gence are not to be, and cannot be, measured by any pecuniary
standard, but according to the standard of injury to the feelings.
In other words, that damages for which a person is liable for
breach of contract depend on the nature of the contract If it
is pecuniary in its nature, only pecuniary damages will be allowed,
but if it relates to the feelings, then damages for injury to the
feelings will be allowed.

But we deny the correctness of the premise upon which this
argument is based. The law looks only to the pecuniary value
of a contract, and for its breach awards only pecuniary damages.
An ^^ action for breach of promise of marriage, as already v*-

Av. 8r. Rip., Vou XUX. <-8S



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514 Francis v. Western Union Tel. Ca [Minn.

markedj is only an apparent, and not a real, exception to the rule.
We recognize the fact that the common law is not a code of cast-
iron rules, but a system of principles capable of being applied
to new conditions as they arise; and when a case arises which
falls within a recognized legal principle, the fact that it is new
in instance will not and ought not to stand in the way of the
courts applying the principle. But to allow damages for injury
to the feelings resulting from a breach of contract — even one like
this — ^would be, not to apply an old principle to a new instance,
but to adopt a new principle entirely unknown to the law. Courts
have no more right thus to abrogate the common law than they
have to repeal the statutory law. Lord Coke said: ^'The wisdom
of the judges and sages of the law has always suppressed new and
subtle inventions in derogation of the common law.'' The wise
remark of another, peculiarly applicable to the present time,
was that ''the variety of judgments and novelties of opinions are
the two plagues of a commonwealth." The great lights of the
law may take some liberties with the law in the way of new ap-
plications of old principles that modesty would forbid to ordi-
nary men; and while we are not disposed to look upon every-
thing ancient with slavish reverence merely because it is ancient,
it would certainly be presumptuous in us to lightly discard a doc-
trine which has been so long approved, and which is so firmly
established by authority. The principles of the comipon law
were founded upon practical reasons, and not upon a theoretical
logical system; and usually, when these principles have been
departed from, the evil consequences of the departure have
developed what these reasons were. The Pandora box that has
been opened by the 'Texas doctrine" proves more forcibly than
argument the wisdom of the common-law rule that damages of
this kind cannot be recovered in actions on contract. And, if
damages of this kind are to be allowed for the breach of a con-
tract of this character^ where are we to stop? Upon what legal
principle can a court refuse to allow them for the breach of any
other contract? The breach of any contract — even the failure of
a debtor to pay his debt at maturity — may result in more or less
mental anxiety or suffering to the party to whom the obligation
is due. Why not allow damages for the mental suffering or dis-
appointment of passengers caused by the delay of trains *••
through the negligence of the carrier? The object of the jour-
neys of travelers is often not pecuniary, but to visit sick relativei
or attend the funeral of deceased ones, which are matters affect-



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July, 1894.] Fbancis v. Weste&n Umion Tkl. Co. 616

ing the feelings as much and as ezclusiyely as a telegram. If the
train is delayed through the negligence of the carrier, so that the
passenger does not reach his destination in time to accomplish
his desired object^ why is he not entitled to damages for his dis-
appointment and mental suffering as much as the sender or ad-
dressee of a delayed telegram? See Wilcox v. Eichmond etc,
Ry. Co., 52 Fed. Hep. 2G4. The truth is, once depart from the
old rule, and we are all at sea, without either rudder or compass.
Any other doctrine is unauthorized by any principle of law, and
would, we are satisfied, work badly in practice, giving rise to a
flood of speculative litigation uncontrolled by any guide as to the
measure of damages except the whim of the jury, or the arbitrary
standard that may be adopted by the particular judge who tries
the cause.

It is suggested that the transmission of intelligence by elec-
tricity is a comparatively new thing; that contracts of this kind are
unlike any others; that as messages frequently have no pecuniary
value, and consequently a failure to transmit them would result
in no pecimiary loss, although it might cause great anxiety or dis-
appointment, therefore, unless damages for mental suffering are
allowed, none could be recovered that would adequately compen*
sate the party or adequately punish the telegraph company for its
neglect of duty. If this be so, it would only go to prove that, in
the progress of the world, a new condition of things has arisen ior
which the existing law is not adequate, and which calls for legis-
lative interposition. This has been done in some jurisdictions
by subjecting a telegraph company to a certain penalty to be re-
covered by, and for the benefit of, the party interested in the
message. Whether this is wise or not, it is certainly better than
to leave it to the courts or juries to assess the vague, shadowy,
and sentimental damages caused by mental anxiety or injured
feelings.

Order reversed.

Buck J., absent, sick, took no part

TELflGBAPH COMPANIES — REGULATION AS TO UNBE-
PEATED MESSAGE.— A stipalation in a message blank of a telemph
company that its liability for any mistake or delay in the tranamfssion
or delivery of a message shall not extend beyond the sum received for
sending it unless the sender orders the message repeated, is a reasonable
regulation, binding on those who assent to it, so as to exempt tlie com-
pany from liability beyond the amonnt stipnlated for any cause except
willful miscondnct or gross negligence on its part: Redington v. Pacific
Postal Tel. etc. Co., 107 Cal. 317; 48 Am. St. Rep. 132. The weight of
authority seems to be opposed to this doctrine, and in support of that of



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616 Stats v. Park and Nelson Lumbeb Co. [Mmiu

•Che principal cue, aa will be aeen by consulting the caeea collected in the
sote to Brown ▼. Foetal Tel. Co., 82 Am. St. Bep. 798.

telegbaph oompanies— yaliditt of oondition limit-

ING TIME FOB PBESENTING GLAIM.-A stipulation in the blanks
of a telegraph company that it "will not be liable for damages in any
case where the claim is not presented in writing within sixty days after
sending the message," is void as an attempt-to limit its liability when
■ooh limitation ia in conflict with a statutory provision : Western Union
Tel. Co. ▼. Kemp, 44 Neb. 194; 48 Am. St. Bep. 723, and note. The
cases discussing tnis subject showing a conflict of authority are collected
in the note to Mathis ▼• Western Union Tel. Co., 47 Am. St. Bep. 174.
TELEGBAPH COMPANIES— DAMAGES FOB MENTAL SUF-
FEBING.— Unless otherwise provided by statute, mental anguish alone
resulting from negligent delay in the delivery of a telegram, does not
constitute suflicient basis for the recovery of aamages: bummerfield v.
Westem Union Tel. Co., 87 Wis. 1; 41 Am. St. Bep. 17, and note.



f



State v. Fabk and Nblson Lumbbb Company.

[68 MiNinsoTiL, no.]

OOBPOBATIONS-FOBFBITUBB of OHABTBB.- Inde-
pendently of statute, it la incumbent upon a private corporation to
%eep ita principal place of buaineaa, ita booka and recoiila, and Ita
principal offices, in the atate in which it la incorporated, to an extent
necessary to the fullest jurisdiction and visitorial power of the state
and ita courts, and the efficient exercise thereof in all proper cases.
A forfeiture of ita charter may be adjudged for a violation or failure
to aubetantially comply with auch obligation.

H. W. Childa, attorney general^ A. Johnaon, and J. C. Michael,

for the relator.

F. M. Wilson and Clapp ft McCartney, for the respondent

■** COLLIN'S, J. This is a proceeding by information in
the nature of quo warranto, filed by the attorney general, to
annul the respondent's corporate existence, and to have its rights,
powers, privileges, and franchises adjudged and declared for-
feited. Many of the acts referred to in the information, and
concerning which testimony was taken, affect stockholders only,
and with these we are not now concerned. The sole object of
these proceedings is to protect public interests; and, to warrant
a forfeiture of respondent's corporate franchises for misuser, it
must have been such as to threaten or to work a subatantial in-
jury to the public.

It is shown by the evidence that, although incorporated under
the laws of this state, the respondent's business has been that of
manufacturing lumber and making boxes at Brasington, Wis-
consin. It bought its supplies and shipped its products there.
All business correspondence was had, all collections made, and



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Julji 1894.] Stats v. Park and Nelson Lumber Ca 617

all bills paid at that point. Prior to the month of March, 1891,
an office, in which more or less business was transacted, had been
maintained at Red Wing, in this state; but about that time, act-
ing under a motion made and carried at a directors^ meeting, the
general manager removed that office, with all of its furniture,
books, papers, stationery, and other articles, to Brasington. The
removal was so complete that, for the purpose of holding a stock-
holders' meeting in June, office room had to be hired. A box in
the postoffice was then rented, but no mail, except a few circu-
lars, has been received at Red Wing, and none deposited. Since
December, 1891, respondent claims to have had an office at that
place, add to have had a secretary and treasurer there. But of
that hereafter. It is claimed that no stockholders' meetings
have been held since 1891, but, as we regard the case, this is of no
consequence.

The person said to have been the secretary and treasurer since
December, 1891, is an attorney at law residing and practicing at
Bed Wing. He has had nothing to do with the business manage-
ment of the corporation; has kept no account or other books,
except one in which is a record of a few business meetings. He
has handled none of the respondent's money, and none has been
kept in this state, save a small balance of twenty-three dollars,
which has been in one of the Red Wing banks. Of respondent's
property, nothing has been in his possession or in its so-called
*** office, except a corporate seal, a stock certificate book,
in which there are two certificates, two record-books, in one of
which are recorded the respondent's articles of incorporation and
its by-laws, and a number of loose papers, consisting principally
of monthly balances and statements of the corporative business,
sent him by a person at Brasington, who seems to be respondent's
real secretary and treasurer. While it is claimed by its counsel
that from these monthly statements or balances the exact con-
dition of its business and financial standing can be readily as-
certained, as fully as if all its account-books were produced,, we
think the Red Wing secretary and treasurer appreciated the situa-
tion when, on being asked if these statements or balances would
show the financial standing and business condition of respondent
at the end of each month, he promptly replied, "Assuming them
to be correct, they would."

By the General Statutes of 1878, chapter 34, section 126, it is
provided that thp pecretarv anrl treasurer of every corporation
organized under the laws of this state shall reside, have theit



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618 Stat£ v. Park and Nblson Lumbbb Ca [Miiuu

place of business^ and keep the books of the corporatioii, within
its borders; and it has been held that^ independently of a statute,
it is incumbent upon a private corporation to keep its principal
place of business, its books and records^ and its principal offices,
in the state in which it is incorporated, to an extent necessary to
the fullest jurisdiction and visitorial power of the state and its
courts, and the efGcient exercise thereof in all proper cases^ and
that a forfeiture may be adjudged for a violation of this common-
law obligation: State v. Milwaukee etc. By. Co., 45 Wis. 679.

The necessity of a substantial compliance with the provisions
of section 126 is evident, and a deliberately planned attempt to
evade the obligation cannot be overlooked or tolerated. After
our statement of the undisputed facts of this case, words need not
be wasted in demonstrating that for the past three years the stock-
holders and officers of respondent corporation have been en-
gaged in evading and violating that part of the statute under
which the corporation was organized which requires that the
place of business shall be, and the books kept, within this state.
This is an abuse and misuser of its corporate rights, powers,
privileges, and franchises which justify and demand a forfeiture
thereof.

*^ Judgment will therefore be entered vacating the charter
and annulling the existence of the respondent corporation.

Buck, J., absent, sick, took no part



CORPORATIONS— DUTY TO KEEP PLACE OP BUSINESS IN
STATE.— It is the duty o( every corporation formed under the laws of
North Carolina to keep its principal place of business, its books, and its
principal office within the state, to the extent necessary to the fullest
Jurisdiction and visitorial powers of the state and its courts, and the
efficient exerciRe thereof in all proper cases which concern such corpora*
tion: Simmons v. Norfolk etc. steamboat Co., 113 N. 0. 147; 37 Am. St.
Rep. 614, and note with the cases collected.



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Julji 1894.] HsiNBOKEL V. National S., L., & B. Ask. _ 619

Hbinbokbl u National Sayings, Loan^ akd
Building Association.

[68 MiminOTA, 340.]

BUILDING AND LOAN ASSOCIATIONS-WITHDBAWAli OF
NONBORROWING MBMBBR— RIGHT TO RECOVBR.—A nonbor-
rowlng member of a mutual building association, who has brought
himself within the rules by notice of withdrawal, cannot bring an]
action and take Judgment against the association when, by reason/
of its by-laws and the statute, there is no money In the treasury*
legally applicable to the payment of his claim. He must abide by
the condition of the treasury and take his money when funds prop-
erly applicable for the purpose are on hand, and not until then»
in the absence of fraud on the part of the association.

Appeal from an order denying a new trial. On July 1, 1889,
plaintiff purchased twenty shares of stock in the defendant asso-
ciation of a par value of one hundred dollars each, to mature by
monthly payments of sixty cents on each share. He paid all re-
quired payments and all dues, fees, and assessments. His share
of the profits on the stock was sixty-six dollars and fifty-seven
cents on June 19, 1893, when he gave notice of withdrawal. Sij^ty
days thereafter, he tendered his stock and pass-book and de-
manded payment, but was refused. He then brought suit to re-
cover six hundred and eighteen dollars and seventy-nine cents,
with interest. Defendant resisted, on the ground that it had no
money which could legally be applied to the payment of plaintifiPs
demand. Judgment for the defendant, and plaintiff appealed.

Holcombe & O'Reilly, for the appellant

C. E. Hamilton and J. M. Hawthorne, for the respondent.

»** COLLINS, J. Section 4 of article 2 of defendant's by-
laws reads as follows: ''A shareholder may withdraw at any time
upon giving sixty (60) days* notice in writing to the association,
when he shall receive the amount of the installments actually
paid in by him on such shares, together with the interest thereon,
if any, at the rate fixed by the board of directors, standing to the
credit of his shares at last preceding adjustment of profits, less all
fines and fees, amount paid in on expense account, and a pro-
portional part of the losses, if any, and other charges accrued sub-
sequent to said last preceding adjustment of profits; provided,
however, that at no time shall more than *** one-half of the
funds in the hands of the trustee be applicable to the demands
of withdrawing stockholders without the recorded consent of the
directi)rs." , . ^ J -. . / • - / . . ' ■ >

J^C(L r^ - * ;^-. ; I •^. » • ^ • • ' *^ f

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620 Heimbokel v. National S., L., A B. Asm. [Minn.

Subsequent to the adoption of these by-laws, the same regula-
tion, in substance, was incorporated into the statutes of this state
(Laws 1889, c. 236, sec. 27); and by an amendment thereto (Lawa
1891, c. 131, sec. 27), it was provided that ''not more than one-
half of the amount received in payment on stock by*' a building
association "in any one month shall be used to pay withdrawals
without the consent of the board of directors.'* The plaintiflf be-
came a member of the defendant association in July, 1889, and
the question now presented for determination is plainly stated
thus: Can a nonborrowing member of a mutual building associa-
tion, who has brought himself within the rules by notice of with-
drawal, be permitted to bring an action and take judgment
against the association when, by reason of the statute and the by-
laws, there is no money in the treasury legally applicable to the
payment of his claim? In United States etc. Assn. v. Silverman,
86 Pa. Si 394, it was determined that he could, the statute under
consideration being almost identical in language with section 27
of chapter 236 of the laws of 1889, and with defendant's by-law.
The same conclusion was reached in the Buffalo (New York)
superior court: Englehardt v. Fifth Ward etc. Assn., 5 Misc.
Rep. 618; 25 K Y. Supp. 835; the chief justice dissenting; and
Mr. Endlich, in his work on Building Associations, sections 141-
143, coincides. The reasoning of the court in United States etc.
Assn. V. Silverman, 85 Pa. St. 394, is that, as the stockholder ceases
to be a member of the association after due notice of withdrawal,
he may, upon refusal of payment, sue it, and recover judgment,
just as any other creditor. The suggestion that the proviso in
the statute stands in the way of his becoming a general creditor,
and that he must be governed by it, is disposed of by urging that,
if this be so, the withdrawing stockholder is in a most unfortu-
nate position, for the association ^^may never choose to make the
necessary provision" for payment of the claim, and therefore he
can never have process to compel it so to do. It is asked, when will
the association have the money — "in one, six, or ten years, or
ever, and will the statute of limitations be suspended in the mean
time?" And, finally, it is said that the design of the statute can
be better met by giving the plaintiff judgment, and ^^ then,
should it seem equitable to the trial court, it may restrain exe-
cution, in order that the association may have a reasonable time
in which to raise the necessary money.

If a stockholder, upon withdrawal, became a general creditor
of the association, there would be force in the position that he



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July, 1894.] H£iNBOKBL V. National S., L., dp B. AuBU 621

could (because his rights would be those of a general creditor)
bring suit immediately, and obtain a judgment. But it is ob-
vious that a stockholder who withdraws from one of these asso-
ciations cannot properly be regarded as having the rights of the
ordinary creditor, and this was admitted by the same learned
court in a later case (Christian's Appeal, 102 Pa. St 189), in
which it was frankly stated that there was manifest error in
United States etc. Assn. y. Silverman, 85 Pa. St. 394, in putting
withdrawing stockholders in the position of general creditors.
The conclusion in the case just mentioned loses potency when we
discover that the reasoning is unsound. Again, with respect to
the query therein as to the effect of the statute of limitations, it
can be observed that in no case can the statute commence to run
until the right of action accrues.

In assuming the relation of a member of the association,
plaintiff contracted with reference to and was to be governed by
its by-laws, in so far as they were reasonable and not opposed to
our statutory provisions regulating associations of this character.
He agreed to abide by the condition of the treasury in case of a
withdrawal, and to take his money when funds properly ap-
plicable for the purpose were on hand. He was not to be paid
until these funds were in the treasury, and, although he could
at any time cease to be a member, and terminate his obligation to
make monthly payments, the amount to be returned to him did
not then become due or payable except in a certain contingency.
If not absolutely and immediately due and payable at with-
drawal, it is difficult to see how his cause of action was then main-
I Jainable^ When the debt is due and payable, the right to sue,
'\ the right to obtain a judgment, and the right to have execution
\ to enforce collection in the usual and ordinary course of pro-
^ cedure are his. And the fallacy of the reasoning in United Statee
i etc. Assn. v. Silverman, 85 Pa. St. 394, is strikingly apparent,
* when we see that a withdrawing member is first squarely placed
in the category of ordinary general creditors, and then — evi-
dently in order to prevent the wreck and ruin of such associations
— it is said that he ®** may be deprived of the benefit of im-
mediate process to collect his judgment. The collection of a
judgment obtained by an ordinary general creditor cannot be
postponed and delayed in that way. Again, we see no force in
the remark that the corporation may never make provision for
the payment of the claim, and therefore it cannot be compelled
to pay. Provision for the liquidation of the claims of withdraw-
ing members is not optional with the association, for, as long a*

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Heikbokbl v. National S., L., & B. Assn. [Minn.

withdrawals are pending^ it is obliged to set aside one-half of iti
receipts for the purpose of meeting and canceling such claims.
Its ability to pay depends upon the fidelity with which remaining
members discharge their obligations, and this is what all sub-
ficribers agree to when taking shares. Again, when oonsidering
the language of the b^-law and statute, as well as the
rights and remedies of withdrawing stockholders, it must be
remembered that if, upon refusal to pay, because not in funds, a
suit may be brought at once, and prosecuted to judgment, even if
further proceedings could be stayed by the court, such judgment
would, as soon as docketed, become a lien upon all real estate,
having priority even over a later judgment obtained by a general
creditor. In this way a withdrawing member could not only se^
cure superior rights as against other members, but also over a
creditor whose judgment was based upon an independent claim.
In addition to this, the association would be seriously crippled
and embarrassed, for no sale of its real property could be made so
long as the lien remained.

The right to withdraw and to receive back what has been paid
into the treasury by a member of the association exists solely by
virtue of the by-law or the statute. If this right to receive
money out of the treasury is made to depend upon its condition,
the right is not perfect or absolute until that condition exists.
We think the by-law and the statute equally plain, and to mean
that, untilthere is money available for the purpofie^ no cause. oL,
action exists. This is the conclusion of the chief justice, who
dissented in Englehardt v. Fifth Ward etc. Assn., 6 Misc. Eep.
518, 25 N. Y. Supp. 835, and also that reached in the supreme
court of Texas in May, 1890 (Texas etc. Assn. v. Kerr), which we
have been unable to find reported except in 13 S. W. Bep. 1020.

It follows that there must be proper allegations in the com-
plaint and proof upon trial as to the existence of funds out
which pajrment can properly be made.

**' Of course, we have been speaking of a case in which there



Online LibraryAbraham Clark FreemanThe American state reports: containing the cases of general value and ... → online text (page 60 of 121)