AND APPEALS.

upon the taxpayers the cost of an election | NEW JERSEY COURT OF ERRORS unless the charges made approved themselves to their understanding, and they

were seriously dissatisfied with the services SISTERS OF CHARITY OF ST. ELIZAof the incumbent of the office.

The idea of removing public officers at the discretion of the appointing power, as we have seen, is not a novel one. The concept that this may be done at the direct instance and upon the motion of the electors, the ultimate source of power in a republic, only carries back the power of removal one step farther. If it is not

BETH, Plff. in Err.,

V.

1. The de facto existence of the corporation secking to exercise the right of eminent domain may be inquired into at the instance of the property owner to defeat the proceedings. Corporation

· existence — inquiry into. corporation seeking to exercise the right of 2. The question of the existence of the eminent domain cannot be inquired into upon certiorari to review the condemnation proceedings if either the facts or the inferences to be drawn from them are in dispute.

Eminent domain right to exercise de facto corporation.

3. A corporation having a de facto existence may exercise the right of eminent domain.

(White, J., dissents.)

(April 24, 1913.)

RROR to the Supreme Court to review judgment affirming an order ap

Note. Right of de facto corporation to exercise power of eminent domain. Central of Georgia R. Co. v. Union Springs This note is supplementary to the note to &

obnoxious to the Constitution to allow an elected officer to remove an appointed one, how can it be a violation of that law to allow it to be done by the people themselves? They are no doubt better qualified to determine the capability and efficiency of their administrative agent after giving him an opportunity to perform the duties of the office than they were when they first selected him to fill the position. The officer takes the position for a fixed term with the condition attached that he is subject to removal whenever his services are not desired by the number of his fellow citizens named in the statute. The policy of the recall may be wise or it may be vicious in its results. We express no opinion as to its wisdom with respect to the removal of administrative officers. If the people of the state find, after a trial of the experiment, that the provisions of the statute lead to capable officials being vexed with petitions for their recall, based upon mere insinuations or upon frivolous grounds, or because they are performing their duty and enforcing the law, as they are bound to do N. R. Co. 2 L.R.A. (N.S.) 144, and conby their oath of office, or lead without good tains only the cases decided since that note. and sufficient reason to frequent costly and The right of defendant in a condemnaunnecessary elections, they have the power, tion proceeding to attack the corporate exthrough their legislature, to amend the stat-istence of the petitioner as a defense to the ute so as to protect honest and courageous officials. This may be done by increasing the number of names required to be signed to the election petition, or by requiring specific charges of misconduct to be made therein, and thus allowing the officer at tacked to meet the charges made, or by adding both of these provisions to the recall feature of the law. Accusations of wrongful acts attributed to an officer merely by innuendo or by vague generalities, as may now be done, are often the most difficult to refute by proof and the hardest to meet by argument. Whether the best public policy is subserved by the statute in its present form is for the legislature to consider, and not for the court, which must declare the law as it finds it.

We find no error in the record, and the judgment of the District Court is affirmed.

that note, and will be discussed here in the proceeding was incidentally considered in

same way.

The fact that this incidental

question arose in a certiorari proceeding to
review the condemnation proceeding in SIS-
TERS OF CHARITY V. MORRIS R. Co. placed
some limitation upon the right, and added
the courts were already divided.
new feature to a question upon which

a

Upon the authority of the cases cited in the note to which reference has been made supra, it is there said: "The rule undoubtedly is that generally the existence of a de facto corporation may be put in issue annul the charter. The division of opinion only by the state in direct proceedings to is upon the point whether or not an exception to the rule should be made in this class of cases where a corporation attempts to exercise the power of eminent domain, although it has but a de facto existence."

facto corporation has the power of eminent Presumably upon the ground that a de 'domain, the following later cases are in

pointing commissioners to appraise certain | v. Sullivant, 5 Ohio St. 276; New York lands sought to be condemned by the Morris Railroad Company under the right of eminent domain. Affirmed.

Messrs. Elmer King and Alan H. ever, went further and passed upon the Strong for defendant in error. question whether the general railroad law authorized the construction of a railroad

Swayze, J., delivered the opinion of the lying wholly within one city. Apparently, court: if the court had construed the act adverse

We agree with the result and the reason-ly to the National Docks Railroad, it would ing of the supreme court, and would add have retained the injunction. In one sense nothing but for the fact that an expression this inquiry involved only the de facto exin the opinion seems to have been misunderstood and given a meaning more extensive than is warranted when the opinion is read in view of the facts of the case.

The learned judge who spoke for the supreme court said that it was settled by that court upon the motion to strike out reasons that the prosecutor (now the appellant) had no right to inquire into the legality of the corporate existence of the defendant. The opinion upon the motion to strike out added that it was enough that the corporation might be such de jure and was such de facto. This was the logical result of the decision of this court in National Docks R. Co. v. Central R. Co. 32 N. J. Eq. 755. It was held in that case that the court of chancery would not, on a motion for a preliminary injunction to restrain the National Docks Railway Company from constructing its railroad across the Central Railroad Company's land, in quire into the de jure existence of the former company as long as it had complied with all formal requirements and was a corporation de facto. The decision was put upon the ground that there was no jurisdiction in the court of chancery to determine the legality of the existence of such a corporation.

In

istence of the railroad, since it might well be said it was an inquiry whether there was any statute under which a railroad of the character of the National Docks Railway could exist; but the inquiry, if determined adversely to the railroad, would determine also its de jure existence. It must often happen that a determination of corporate existence de facto involves necessarily the legal right to exist. In State, De Camp, Prosecutor v. Hibernia Underground R. Co. 47 N. J. L. 43, the supreme court considered whether an underground railroad having one terminus on private property without any outlet in that direction, and authorized by its charter to carry freight only, was incorporated for a public purpose so that it might condemn land. In Hampton v. Clinton Water & Water Supply Co. 65 N. J. L. 158, 46 Atl. 650, the supreme court held that a water company under the act of 1876, which had not filed with its certificate the required consent in writing of the corporate authorities of the municipality, could not condemn land. Philadelphia & C. Ferry Co. v. Intercity Link R. Co. 73 N. J. L. 86, 62 Atl. 184, the same court considered the question whether the railroad proposed was wholly underground, a circumstance which, it was argued, would prevent incorporation under the general railroad act; the court held that the fact was otherwise, but did not suggest that the question was not one that could be considered upon certiorari in condemnation proceedings. In the Hudson Tunnel R. Co.'s Case, we said that the landowner asked no affirmative relief, but was purely on the defensive, resisting the claim of the defendant to appropriate the land for its uses, and asking the court to say whether there was any authority to do so. Although the question involved in that case did not go to the very existence of the Tunnel Company, the language of the eminent judge who spoke for this court is significant. There is no doubt that the de facto existence of the corporation may be inquired into at the instance of the owner whose lands it seeks to condemn. To hold otherwise would put it out of the power of the landowner to resist the invasion of his land, no matter how clear the usurpation might be.

The decision is not, however, authority for the broad proposition that the court will never, upon proceedings to condemn land, inquire into the legality of the corporation that seeks to condemn. We had already decided that the landowner was entitled to question the right to take his land without his consent (State, Morris & E. R. Co., Prosecutors, v. Hudson Tunnel R. Co. 38 N. J. L. 548), notwithstanding a contrary view expressed in the supreme court (38 N. J. L. 17). The right to inquire into the existence of the corporation de facto was conceded in the National Docks Case as it was by the supreme court in the present case, and we in fact determined the constitutionality of the general railroad law under which the National Docks Company had been organized. This was necessary and proper in order to determine whether it was a corporation de facto; for, if there was no law under which such a corporation could exist, the attempt to build across the Central Railroad property and to condemn the right so to do would At the same time, certiorari of the probe a mere usurpation. The court, how-ceedings to condemn is not the proper rem

ing Co. v. Greenville & H. R. Co. 59 N. J. Eq. 372, 46 Atl. 638; Id., 60 N. J. Eq. 154, 46 Atl. 636; Id., 62 N. J. Eq. 772, 48 Atl. 568; Trenton Street R. Co. v. United New Jersey R. & Canal Co. 60 N. J. Eq. 500, 46 Atl. 763; State, De Camp, Prosecutor, v. Hibernia Underground R. Co. 47 N. J. L. 43; Olmsted v. Morris Aqueduct, 47 N. J. L. 311.

82

Upon this point we need add nothing to what has been said by the supreme court upon the motion to strike out reasons. N. J. L. 214, 81 Atl. 817. The judgment is affirmed.

edy to oust the corporation of its assumed franchises. This was conceded in the Hudson Tunnel R. Co. Case. When, however, the inquiry into the right to condemn results in the determination of a question, such as the constitutionality of the act of incorporation or the applicability of the act to the corporation whose existence is challenged, we know of no rule which compels the court to stay its hand because its decision incidentally involves the very right of the corporation to exist. When the question involved is a purely legal question, or when the facts are clear and the inferences to be drawn therefrom are indisputable, no inconvenience can arise from having the court pass upon them. When, however, the facts are questioned or the inferences are disputable, the court ought not, upon certiorari, to settle either the facts or the inferences. The proceedings should be held until the legality of the corporation can be settled once for all upon an information by the attorney general. Terhune v. Potts, 47 N. J. L. 218. The corporation whose existence is challenged is L. C. WILSON, Receiver of State Bank of

entitled to take the verdict of a jury in
quo warranto, and not to be exposed to the
hazard of conflicting judgments in con-
demnation proceedings against different
landowners. The present case, like that of
the National Docks Railway Company, is
of this character. The organization of the
railroad is regular on its face, the act has
been declared constitutional, and the pro-
posed railroad is of a character authorized
by the act. Whether its organization was
fraudulent or not depends upon disputable
inferences to be drawn from the facts, and
is a question to be decided on a quo war-
ranto at the suit of the attorney general.
It is said, however, that a corporation
which merely exists de facto cannot exer-
cise the power of eminent domain. The
logical result, however, of the decision in
the National Docks Railway Company Case
is, as we have said, to the contrary. If the
landowner is not entitled to challenge by
injunction the right of a corporation to
invade his land, he certainly cannot be en-
titled to challenge it when the effort is to
acquire his land by paying its value.
the view of the New York courts differ, we
must be guided by our own decisions, but
it is to be observed that the case cited from
New York seems to have been one where
the failure to comply with conditions pre-
cedent prevented even a de facto corporate
existence. New York Cable Co. v. New
York, 104 N. Y. 1, 10 N. E. 332.

If

That the court, however, may inquire whether an existing corporation is or is not acting in excess of its power is well settled. Grey ex rel. Morris & C. Dredg.

For affirmance-The Chancellor, Chief Justice, Swayze, Trenchard, Minturn, Bogert, Vredenburgh, Congdon, JJ. 8. For reversal-White, J. 1.

IDAHO SUPREME COURT.

Commerce, of Wallace, Appt.,

V.

BAKER CLOTHING COMPANY, Respt.

(25 Idaho, 378, 137 Pac. 896.)

insolvency withdrawal of duty to return.

Bank
deposit
1. The mere fact that a bank depositor
Note.— Liability of one to whom an in-

solvent bank has paid a check.

WILSON V. BAKER CLOTHING Co. and Livingstain v. Columbian Bkg. & T. Co. 81 S. C. 244, 22 L.R.A. (N.S.) 445, 62 S. E. 249, seem to be the only cases to have passed upon the question of the liability of one to whom an insolvent bank has paid a check, since the compilation of the note to McGregor v. Battle, 13 L.R.A. (N.S.) 185, wherein the earlier cases upon this point are treated. In connection with that note, see also James Clark Co. v. Colton, 49 L.R.A. 699.

In Livingstain v. Columbian Bkg. & T. Co. supra, it was held that money paid to a depositor by a bank which is actually insolvent, in due course of business, at a and when it claims to be solvent, is not time when it was paying all checks in order, impressed with a trust, although the deposit is withdrawn because the depositor suspects the bank's insolvency. And it was further said in this case that even under the South Carolina assignment law against undue preferences (Civil Code 1902, § 2647) the question whether the payment made by the debtor is obnoxious to the statute depends upon the intention of the parties to create a preference, and that the present facts would not render the payment illegal. G. J. C..

provision.

knows that the bank is insolvent at the from doing so by some express statutory time he withdraws his deposit does not render him liable to return the amount to the bank's receiver.

Same

- return of funds.

· payment of checks

2. The trust-fund theory does not require a return of money paid out by an insolvent bank in due course of business on its customer's checks.

Same collusive payment.

3. Collusion in the payment of a check on an insolvent bank is not shown by the fact that the cashier refused to pay it when presented, but put the funds aside for future payment, and that the president of the bank went with the depositor in the night to secure the fund, but failed, so that it was not paid until in the usual course of business after the bank had opened the following morning.

A

(December 30, 1913.)

PPEAL by plaintiff from an order of the District Court for Shoshone County sustaining a demurrer to the complaint, and dismissing an action brought to recover the amount of deposit alleged to have been fraudulently withdrawn by the defendant from an insolvent bank. Affirmed.

The facts are stated in the opinion. Messrs. John P. Gray and James A. Wayne, for appellant:

A depositor of a bank who, with knowledge of its insolvency, withdraws his money therefrom, is liable to the receiver for its

return.

McGregor v. Battle, 128 Ga. 577, 13 L.R.A. (N.S.) 185, 58 S. E. 28; Livingston v. Columbian Bkg. & T. Co. 81 S. C. 244, 22 L.R.A.(N.S.) 445, 62 S. E. 249, 77 S. C. 305, 22 L.R.A. (N.S.) 442, 122 Am. St. Rep. 568, 57 S. E. 182; Burrell v. Bennett, 20 Wash. 644, 56 Pac. 375; James Clark Co. v. Colton, 91 Md. 195, 49 L.R.A. 699, 46 Atl. 386; McDonald v. Chemical Nat. Bank, 174 U. S. 610, 43 L. ed. 1106, 19 Sup. Ct. Rep. 787. Messrs. James E. Babb and J. H. Wourms also for appellant.

3 Clark & M. Corp. p. 2365, § 780; Tiffany, Banks & Bkg. p. 346; Merced Bank v. Ivett, 127 Cal. 134, 59 Pac. 393; O'Brien v. L.R.A. 122, 56 N. E. 74; 2 Bolles, Bkg. p. East River Bridge Co. 161 N. Y. 539, 48 803; Grand De Tour Plow Co. v. Rude Bros. Mfg. Co. 60 Kan. 145, 55 Pac. 848; Ames & F. Co. v. Heslet, 19 Mont. 188, 61 Am. St. Rep. 496, 47 Pac. 805; Warfield, H. & Co. v. Marshall County Canning Co. 72 Iowa, 666, 2 Am. St. Rep. 263, 34 N. W. 467; Blair v. Illinois Steel Co. 159 Ill. 350, 31 L.R.A. 269, 42 N. E. 895; West v. Hanson Produce Co. 6 Colo. App. 467, 41 Pac. 829; National Bank v. George M. Scott & Co. 18 Utah, 400, 55 Pac. 374;

Colorado Fuel & Iron Co. v. Western Hardware Co. 16 Utah, 4, 50 Pac. 628; Levering v. Bimel, 146 Ind. 545, 45 N. E. 775; Slack v. Northwestern Nat. Bank, 103 Wis. 57, 74 Am. St. Rep. 841, 79 N. W. 51; Bank of Montreal v. J. E. Potts Salt & Lumber Co. 90 Mich. 345, 51 N. W. 513.

Sullivan, J., delivered the opinion of the court:

This is an appeal from a judgment of dismissal entered on an order sustaining the respondent's demurrer to the appellant's amended complaint. The action was brought by the receiver of the State Bank of Commerce, of Wallace, against the defendant corporation, the Baker Clothing Company, to recover the sum of $2,000, which the amended complaint alleges was fraudulently withdrawn from said bank by the respondent in contemplation of said bank's insolvency, and for the purpose and with the intent of securing to the defendant corporation a preference over other creditors and depositors of said bank. The allegations of the amended complaint set forth the organization of said State Bank, and allege that it was transacting a general banking business at Wallace, Idaho, and that it continued to conduct a banking business for a number of years, and down to the 12th day of May, 1911, when it availed itself of the provisions of § 70 of chap. 124 of the Session Laws of 1911, by placing its affairs in the hands of the state bank commissioner. It is alleged that on the 12th day of May, 1911, and for a long time prior thereto, and particularly on the A corporation, although it may be hope- 10th and 11th days of May, 1911, said bank lessly insolvent, and although it may be was hopelessly insolvent, and that it had about to go into the hands of a receiver, not opened its doors for the transaction of or to assign for the benefit of creditors, or business since the 12th of May, 1911. Then may be in the act of making an assign is alleged the appointment of a receiver, ment, has the same power as a natural per- and that the liabilities of said bank on son to prefer one or more creditors to the May 12th amounted approximately to $450,exclusion of others, unless it is prevented' 000, while its assets did not exceed $175,000,

Mr. J. E. Gyde, for respondent: Saying that an act is fraudulent does not make it fraudulent.

Kemmerer v. Pollard, 15 Idaho, 34, 96 Pac. 206; Smith, Fr. § 251; Oroville & V. R. Co. v. Plumas County, 37 Cal. 354; Heller v. Dyerville Mfg. Co. 116 Cal. 127, 47 Pac. 1016; Bliss, Pl. § 211.