require the parties in good faith to state the matters and things relied upon so as to inform the adversary of the issues to be tried, with a view of disposing of cases upon their merits. It is with this object in view that courts must construe pleadings with reference to the Code, so that neither party may gain an unfair advantage over his adversary. With the provisions of the Code cited before his eyes, the defendant cannot be allowed to lull his adversary into repose, and, for the first time, raise the point which was at all times within his knowledge, but which he waived by not alleging in his answer. Having remained silent when he should have Informed the plaintiff, he will be precluded from speaking afterwards. The rule was the same at common law.

In Rice v. Shute, 5 Burr. 2611, the judgment of the King's Bench was given by Lord Mansfield. On the trial evidence was given that one Cole, who had not been made defendant, was a partner of Shute, and thereupon on motion of the defendant the lower court gave judgment of nonsuit against the plaintiff. The nonsuit was set aside, and the court held that, as the defendant had not pleaded the matter in abatement, he had waived it. The above case was followed by Chief Justice Marshall in Barry v. Foyles, 1 Pet. (U. S.) 311, 7 L. Ed. 157. It was there said: "If, therefore, the defendant fails to avail himself of the variance in abatement, when the form of his plea obliges him to give the plaintiff a proper action, the policy of the law does not permit him to avail himself of it at the trial. The course of decisions since the case of Rice v. Shute has been so uniform that the principle would have been considered as too well settled for controversy had it not lately been questioned by a judge from whose opinions we ought not lightly to depart." Rice v. Shute was again followed and approved by the Supreme Court of the United States in Mason v. Eldred, 6 Wall. (U. S.) 231, 18 L. Ed. 783. The opinion was by Judge Field, and it is there said: "It is true that each copartner is bound for the entire amount due on copartnership contracts; and that this obligation is so far several that if he is sued alone, and does not plead the nonjoinder of his copartners, a recovery may be had against him for the whole amount due upon the contract." In 15 Encyclopedia of Pleading and Practice, p. 98, the rule is stated as follows: "Where one partner is declared against, and nonjoinder is not pleaded in abatement, proof of a partnership contract is not a variance, as partnership obligations are to this extent regarded as joint and several." See, further, Abbott v. Smith, 2 W. Black. 925; Woodworth v. Spafford, 2 McLean, 168; Fed. Cas. No. 18,020; Robertson v. Smith, 18 Johns. (N. Y.) 459, 9 Am. Dec. 227; Wilson v. McCormick, 86 Va. 995, 11 S. E. 976; Smith v. Cooke, 31 Md. 174, 100 Am. Dec. 58. In the cases of

Williams v. Southern Pacific R. R. Co., 110 Cal. 457, 42 Pac. 974, it was held that, in the absence of a plea of misjoinder, one member of a copartnership may recover in his individual name the whole amount due the firm of which he was a member. That case was approved and followed as to the same point in Ah Tong v. Earle Fruit Co., 112 Cal. 679, 45 Pac. 7. It would seem upon principle that if, in the absence of a plea of misjoinder, in abatement, an individual as plaintiff can recover upon a liabilty due a partnershp of which he is a member, a recovery could under like circumstances be had against him as defendant upon a partnership liability due from a partnership of which he is one of the partners. A case very much like the case at bar is Kerry v. Pacific Marine Co., 121 Cal. 564, 54 Pac. 89, 66 Am. St. Rep. 65. The action was there brought against one of the part owners upon a contract relating to the ship, which should have been brought against all the owners jointly, and it was held that the action would lie in the absence of a plea by the defendant of the misjoinder of the other part owners. It would require a great deal of imagination to give a reason why, if a part owner of a vessel cannot claim a misjoinder because he has not availed himself of it by proper plea in abatement, a member of a partnership can under like circumstances claim such misjoinder.

We have examined the cases cited by defendant; and, while there are in many of them expressions which tend to support his position, we do not think any one of them is direct authority for the proposition contended for by defendant here. The one upon which most reliance is placed is McCord v. Seale, 56 Cal. 264. It was stated there in broad terms that the proof of a partnership contract would not sustain the allegation of the complaint as to an individual contract; but the report of the case shows that the answer contained, besides a general denial, "a separate defense of a partnership existing between the plaintiffs under the firm name of McCord & Malone at the time of the alleged transaction between them and the defendant." The case is decided upon the theory that the point was properly raised in the answer. The question of waiver is not mentioned in the opinion.

It follows that the judgment and order should each be reversed; and it is so ordered.

We concur: KERRIGAN, J.; HALL, J.

(5 Cal. A. 702) HERCULES OIL REFINING CO. v. HOCKNELL et al. (Civ. 345.) (Court of Appeal, Second District, California. June 7, 1907.) LIABILITY

1. CORPORATIONS OFFICERS CONSTITUTIONAL PROVISIONS. Const. art. 12, § 3, providing that directors of corporations shall be liable for "all moneys

embezzled or misappropriated" by the officers thereof, etc., makes the directors sureties of officers who are guilty of misappropriating corporate moneys, and the liability created is that of suretyship only.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 12, Corporations, §§ 1350-1355.]

2. SAME.

An officer of a corporation having no authority to sell stock, and having no stock belonging to the corporation to sell, and owning stock, sold stock at 20 cents a share, and received the money therefor without accounting to the corporation. He used treasury stock for which he had paid 2 cents per share to make delivery on such sales. Held, that the directors of the corporation were not liable for the officer's act under Const. art. 12, § 3. providing that the directors of corporations shall be liable for all moneys misappropriated by the officers thereof,

etc.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 12, Corporations, §§ 1350-1355.]

3. TRIAL-NONSUIT-WHEN AUTHORIZED.

A nonsuit should be denied, where the evidence and the presumptions arising therefrom are legally sufficient to prove the material allegations of the complaint, and in other cases it should be granted.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 46, Trial, §§ 332-344, 360, 373.]

Appeal from Superior Court, Los Angeles County; D. K. Trask, Judge.

Action by the Hercules Oil Refining Company against George Hocknell and others. From a judgment for defendants, plaintiff appeals. Affirmed.

E. B. Drake and Jones & Drake, for appellant. A. M. Cates and Geo. A. Corbin, for respondents.

TAGGART, J. This is an action to recover from defendants, as directors of the corporation plaintiff, moneys of the corporation alleged to have been embezzled and misappropriated by an officer of the corporation during the term of office of said directors. The officer who was charged with the misappropriation (defendant Hocknell) was not before the court, but the other defendants appeared and defended, and, as to them, and each of them, the court granted a motion for a nonsuit. Plaintiff appeals from the judgment and presents a bill of exceptions on the ruling of the court granting the nonsuit.

The charge against Hocknell, as president, rests upon the following facts, to wit: On November 25, 1902, the board of directors of plaintiff adopted a resolution authorizing and empowering the defendant B. L. Vickrey, as secretary of the company, to sell and dispose of all the remaining treasury stock of plaintiff (being 130,000 shares of the par value of $1 per share) at the best price obtainable in the market. November 26, 1902, 13 certificates (Nos. 1,718 to 1,730, inclusive) of said stock for 10,000 shares each, were issued to C. Walton Cannon, a broker in New York city, and forwarded to him for sale. He did not sell any of the stock, but under date of August 31, 1903, an entry was made in the books of the company by the book

keeper, at the direction of Hocknell, in the name of W. H. Cannon (conceded to be intended for C. Walton Cannon): "To capital account, 130,000 shares of the capital stock of Hercules Oil Refining Company, two cents. See minutes of meeting of board of directors, 11, 25, 1902. $2,600.00." Hocknell procured the stock certificates from Cannon personally while in New York city at least as early as June 15, 1903, and "when he returned from the East" told the secretary of the company that he (Hocknell) had bought the stock at two cents a share and "turned in $2,600 for the stock." He did not say who he bought it from, but the secretary (who was empowered to sell) testified that he considered he (the secretary) had sold the stock to Hocknell at two cents per share; that being the best price obtainable at the time, and because the company needed the money. He further testified: "I felt I was doing the company a favor to get two cents for the stock," and that "there would soon be an assessment on the stock of 10 or 15 cents a share." There was no transfer of any of the Cannon stock to Hocknell on the books of the corporation. In the latter part of 1902, or the first of 1903, Hocknell sold to Alexander Campbell 25,000 shares of the capital stock of the Hercules Oil Refining Company and received $5,000 cash therefor. On June 15, 1903, Hocknell forwarded from Ocean Park three certificates of stock, one (No. 1,762) for 7,105 shares in the name of George Hocknell, two (1,718 and 1,719) for 10,000 shares in the name of Walter Cannon. Later, September, 1903, three certificates in the name of Campbell for 5,000, 10,000, and 10,000 shares, respectively, were substituted for the original certificates. About the same time Campbell purchased, Fred A. Pennell also bought from Hocknell 1,000 shares, for which he paid $200 cash, and by letter dated at Ocean Park on June 15, 1903, received a certificate for it in the name of George Hocknell. Later, on September 10, 1903, he received a certificate in his own name in lieu of the Hocknell one. Thomas B. McPherson, on October 25, 1901, bought 6,250 shares of stock from George Hocknell and paid him $1,250 for them, and again on the 23d day of January, 1903, made another purchase of a similar amount for the same price. The first certificates of stock sent to him were in his name and bore date September 3, 1903. Each block of stock was paid for on the date of its purchase. Mr. J. W. Hupp bought 10,000 shares of stock from Hocknell, and paid $2,000 cash for them, but does not give the date of purchase. The stock certificate was issued in his name and received about September 6, 1903. The circumstances appear to justify the inference that this purchase was made about the same time that Campbell and Pennell purchased. All of these purchasers bought from Hocknell and knew nothing, apparently, of whether the stock purchased was treasury stock or stock belonging to Hocknell. The

evidence does not disclose how much of the residue of the 600,000 shares of the capital stock of the corporation was held or owned by Hocknell, either at the time of sale or the time of delivery of the stock sold by him.

The books of the company show that the certificates for the 48.500 shares issued to these four purchasers in their respective names in September, 1903, were all by transfer and cancellation of the Cannon certificates to that amount, and that the residue of the 130.000 shares. 81,500 shares, was sold to one B. M. Frees. The latter sale is not material to this action. The time at which the secretary accepted Hocknell's declaration that he had bought the stock, as a sale thereof, is stated with much uncertainty in the testimony. "Sometime in July, if I remember correctly," and "after he returned from the East with the stock." cover Mr. Vickrey's recollection of the matter. The letter from Hocknell to Campbell shows he had the Cannon certificates at Ocean Park as early as June 15, 1903, and was assuming to deal with them as his own. There was nothing on the books of the company until August 31, 1903, to show that he (or any one else) had bought them.

It is admitted that the motion for a nonsuit was properly granted upon the first cause of action, which counted on a participation of the other defendants with Iocknell in the transactions complained of; but appellant claims that there was a sufficient showing made of the liability of the defendants other than Hocknell, under section 3 of article 12 of the Constitution of the state of California, to avoid the granting of a nonsuit as to such defendants on the second cause of action. The section of the Constitution invoked merely makes the directors sureties for their fellow directors and for the officers of the corporation for "moneys," when so misappropriated as to make the officer misappropriating liable, and authorizes the creditors and stockholders to sue. ** The section is not penal in the technical sense, as it allows no recovery as a punishment, but only to compensate for a loss. But the liability created is that of suretyship, in which the innocent always suffers for the guilty, and therefore the surety may always stand upon the very letter of his bond. For this reason the liability must be limited strictly to moneys misappropriated. Winchester v. Howard, 136 Cal. 444, 64 Pac. 692. 69 Pac. 77, 89 Am. St. Rep. 153.

The allegation of the complaint is to the effect that said defendant Hocknell did, on or about January 15, 1903, misappropriate the sum of $8.730 of plaintiff's funds. The evidence to support this shows that in the latter part of 1902, or the first part of 1903. Hocknell received from Campbell $5.000, from Pennell $200, and from Hupp $2,000. That he received $1.250 from McPherson in October, 1901, and $1,250 in January, 1903. The

October, 1901, payment by McPherson is apparently not included in the sums alleged to have been misappropriated. At this time the Cannon stock was in New York city in the hands of Cannon for sale, subject to the direction of the secretary of the company. The first connection between Hocknell and this stock appears when he, on June 15, 1903, assumed to send two of the certificates therefor (1,718 and 1,819) from Ocean Park to Campbell on account of the sales of stock made to the latter about five or six months before. If Vickrey's fixing of dates is correct, the next is when he told Vickrey he had bought the Cannon stock, and the latter accepted him as the purchaser thereof, after his return from the East about July. The circumstances surrounding these transactions might justify a finding that the return mentioned was at least as early as June 15, 1903, thus accounting for the stock being in Hocknell's possession on that date after he had purchased it. Giving the inconsistency between the assumption of ownership of the stock by Hocknell June 15, 1903, and Vickrey's testimony that it was in July, all the consideration rationally possible, and it cannot to be said that the trial court should have done more than to hold for the purpose of the nonsuit that Hocknell took control of the Cannon stock as early as June 15, 1902. We find, then, that he sold stock of the Hercules Oil Company at 20 cents in January, and that about five months thereafter he used the treasury stock of the corporation, for which he paid but 2 cents per share to the company, to make delivery on such sales. The date of the purchase from the secretary was either in June or July, and some uncertainty exists as to whether he made this purchase before or after he had used the stock for the purpose named. This stock was never registered in the name of Hocknell in the books of the company, but transferred to Hocknell's vendees upon cancellation of the Cannon certificates, and a record of the purchase of the stock in Cannon's name did not appear upon the books until August 31, 1903.

Conceding that the lack of certainty in the evidence as to the transactions from June to September was sufficient to arouse a suspicion or put the company upon inquiry as to these matters, there is no evidence to justify an inference that the money received in January belonged to the company. At that time the Cannon stock was in New York. Hocknell had no stock of the corporation to sell, and was not authorized to sell any on the company's account. There was no stock belonging to the company under his control that he could have fraudulently sold. The company could not have been compelled to deliver any stock to make good these sales. There is nothing in the evidence to show that the transactions were anything more than sale: by Hocknell for future delivery made on his own individual account. A misrepresentation

cuse given for not offering the testimony when the other was given.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 46, Trial, § 151.]

Appeal from Superior Court, Los Angeles County; G. A. Gibbs, Judge.

Action by Linna A. Higgins and others against the Los Angeles Railway Company. Plaintiffs appeal from a judgment for defendant. Affirmed.

A. D. Warner and Ansel Smith, for appellants. Bicknell, Gibson, Trask, Dunn & Crutcher (Norman S. Sterry, of counsel), for respondent.

SHAW, J. On the night of December 6, 1904, John T. Higgins, while crossing Central avenue at its intersection with Sixth street in the city of Los Angeles, was struck by an electric street car operated by the Los Angeles Railway Company, receiving injuries which caused his death on the following morning. His widow in her own right and as administratrix of his estate, and also as guardian

ad litem of his minor children, instituted this action against said railway company to recover damages claimed to have been sustained on account of his death. Judgment was rendered for defendant, from which, and an order denying a motion for a new trial, plaintiff prosecutes this appeal.

The complaint charges that the death of the deceased was due to the negligence of said railway company in making and leaving unprotected certain excavations along its tracks at the intersection of said Central avenue and Sixth street, into one of which excavations said Higgins stepped while attempting to cross said avenue in the nighttime while the same was unguarded by signal lights and in the absence of any warning as to its dangerous condition, and from which he was unable to extricate himself before being struck by a car operated over the track at said point at a high, dangerous, and reckless rate of speed, and thereby received injuries which caused his death. The answer is a general denial, with an allegation that the death of said Higgins was due to his own carelessness and negligence, which directly contributed to the collision which caused his death.

The transcript contains certain affidavits which purport to embody the opinion of the trial judge, delivered orally at the close of the trial. It is claimed that these affidavits incorporating this opinion were used in support of the motion for a new trial, and the reasoning of the trial judge in determining the case in favor of respondent is assigned as error and here strenuously urged as a ground for the reversal of the order denying appellant's motion for a new trial. The reasons assigned by the trial judge for his conclusions upon the final determination of a case constitute no part of the record on appeal. However erroneous the reasoning may be, error cannot be predicated thereon. Such

an opinion may be cited and referred to in argument, and thus be the means of assisting the court in reaching a correct solution of the questions submitted; but a proper ruling will not be disturbed because the court reaches its conclusions by a process of erroneous reasoning. "If this court finds that upon any ground or for any reason the action of the court below was correct, such action will be affirmed, regardless of the reason which the court may have given for it." White v. Merrill, 82 Cal. 14, 22 Pac. 1129; Schwerdtle v. Placer County, 103 Cal. 589, 41 Pac. 448. The affidavits cannot be considered on appeal from the order denying the motion for a new trial, because they are not incorporated in a bill of exceptions as required by rule 29 of this court (78 Pac. xii), which provides: "In all cases of appeal from the orders of the superior courts, the papers and evidence used or taken on the hearing of the motion must be authenticated by incorporating the same in a bill of exceptions, except where another mode of authentication is provided by law." The law provides no other mode. their incorporation in a bill of exceptions is the exclusive method of presenting such affidavits to this court for its consideration upon an appeal from an order denying a new trial. Skinner v. Horn, 144 Cal. 278, 77 Pac. 904. The affidavits in question, as printed in the transcript (after title of court and cause) are entitled: "Affidavits of A. D. Warner, Linna A. Higgins, Joseph Tilley, on Motion for New Trial." And are indorsed "Used on Motion for New Trial. G. A. Gibbs, Judge." Following these affidavits there is printed in the transcript a counter affidavit entitled, "Affidavit of Geo. A. Gibbs on Motion for New

Hence,

Trial," with a like indorsement. While it is reasonably certain that these affidavits were used at the hearing of the motion for a new trial, it does not appear that such affidavits were the only ones so used. Shain v.. Eikerenkotter, 88 Cal. 13, 25 Pac. 966; Spreckels v. Spreckels, 114 Cal. 60, 45 Pac. 1022; Melde v. Reynolds, 120 Cal. 234, 52 Pac. 491.

Counsel for appellant, while contending in a general way that the evidence is insufficient to justify the findings, does not direct our attention to any specific finding thus unsupported, or point out wherein the evidence is insufficient. His argument is directed to a vigorous attack upon what he terms the "system of ratiocination" by means of which the learned trial judge arrived at his conclusion in deciding the case. As we have seen, this "system" is not a subject of review by this court.

The court, in effect, finds that the excavations made by the defendant in repairing its track were not large, deep, or dangerous; that defendant placed lights at each excavation to warn travelers of its presence; that defendant was not negligent in making or leaving said excavations, nor in the manner of placing its lights to warn persons of the