application, the Governor would not have granted them a charter. By joining in the application which set forth the complainant and others as corporators according to law, the respondents estopped themselves from contesting the truth of that fact." The decision was affirmed by this court, though no opinion was formally expressed on the particular point here involved. But in Sturgeon v. Apollo Oil & Gas Co., 203 Pa. 369, 53 Atl. 189, the same principle was applied to the declaration of parties under the statutes regulating limited partnerships; the court saying the fact that in Rowley's Appeal it was stockholders in a corporation who sought for their own advantage to allege a violation of law made no difference in principle. "Both stockholders in corporations and shareholders in limited partnerships organize or associate under the law because of the special privileges such organizations give them, and the special immunity from unlimited liability. Their organizations must therefore be made in good faith, in obedience to the law." Citing the passage quoted supra from Rowley's Appeal.

Judgment affirmed.

STATUTE OF FRAUDS-MEMORANDUM OF SALESPECIFIC PERFORMANCE-CORPORATION

-AUTHORITY OF TREASURER.

1. A receipt for a portion of the price of a hotel property, designating the hotel by name, is a sufficient memorandum in writing, under the statute of frauds.

2. Plaintiff sued for specific performance of a contract to sell land, alleging that the treasurer of a corporation took an option to purchase real estate under authority from the corporation, and subsequently sold the property, giving a receipt in the name of the corporation to the purchaser for a portion of the price; that thereafter the treasurer took a conveyance of the property in his own name, and executed a deed to a third person, who had knowledge of the prior transaction. The business of the corporation was dealing in real estate and taking options. Held, that specific performance in favor of the first purchaser should be enforced against the corporation, the treasurer, and the second purchaser.

3. A treasurer of a corporation, the business of which was dealing in real estate and taking options, authorized by the corporation to take an option in his own name to purchase real estate, was authorized, without written authority, to sell the property to an intending purchaser.

Appeal from Court of Common Pleas, Allegheny County.

Bill by D. F. Henry and Annie E. Henry against Sarah Black and others. From a decree dismissing the bill, plaintiffs appeal. Reversed.

Argued before MITCHELL, C. J., and DEAN, FELL, BROWN, MESTREZAT, POTTER, and THOMPSON, JJ.

Wm. A. Stone and Stephen Stone, for appellants. Henry A. Davis, Reed, Smith, Shaw & Beale, S. S. Mehard, and Ralph Longenecker, for appellees.

DEAN, J. This is a bill to compel the specific enforcement of a contract for the sale of land. The bill of complainants is met by a demurrer in which defendants aver (1) that the bill does not set out sufficient facts to make it cognizable in a court of equity; (2) that it does not set out sufficient facts to entitle plaintiffs to the relief prayed for; (3) the bill does not set out any contract in writing, or any contract enforceable specifically in a court of equity. "The bill should be a simple statement of the essential facts of the case." Winebrenner v. Colder, 43 Pa. 244.

The facts averred in the bill are these: That Sarah L. Black, one of the defendants, on January 7th and for years prior thereto, was the owner in fee simple of a lot of ground on the corner of Smithfield street and Virgin alley, in the city of Pittsburg, known as the "Hotel Duquesne Property." That plaintiffs owned the Hotel Henry property, adjoining the Hotel Duquesne. The Union Realty Company is engaged in the business of buying and selling on commission the property of owners. On May 7, 1903, Sarah L. Black gave to R. J. Coyle, stockholder and treasurer of the Union Realty Company, and to his nominee and assigns, an option for 30 days on the Hotel Duquesne property at the price of $800,000, payable $25,000 cash; the balance, $775,000, to be secured by bond and mortgage for 10 years, bearing interest at 4 per cent., payable semiannually. Sarah L. Black agreed to pay the Union Realty Company $10,000 if sale was made. Coyle and one John K. Ewing, a director of the company, then sold to Annie E. Henry the Hotel Duquesne property on June 1st following, within 30 days, at the exact price specified in the option of Mrs. Black to Coyle, but substituting as the vendor the Union Realty Company. This is a copy of the writing delivered to Mrs. Henry:

"June 1st, 1903. Received from Mrs. Annie E. Henry five thousand dollars ($5,000) hand money on account of sale of Hotel Duquesne property as per agreement made this day. "$5,000

"[Signed] Union Realty Company, "Per J. K. Ewing." The negotiations for the sale were madeand carried on by and through Ewing and Coyle. The $5,000 named in the receipt or contract was paid them. The plaintiffs on June 5, 1903, within five days, tendered to Sarah L. Black $25,000 in cash, and a purchase-money mortgage, payable, with interest, as stipulated in her option, and demanded a deed. She refused to accept the money or deliver a deed. In 5 days after

filing this bill, and 10 days after plaintiffs tendered to her the cash, mortgage, and bonds, Mrs. Black executed and delivered to Coyle a deed for the property, and received from him the $25,000 cash, with the mortgage and bond in the sum of $775,000. The same day Coyle executed to A. W. Mellon his deed for the property for the consideration agreed to be paid by Mrs. Henry to the Union Realty Company. Mellon took the deed with the full knowledge of the previous negotiations and transactions between Coyle and Mrs. Black, and between Coyle, Ewing, the Union Realty Company, and Mrs. Henry. The Union Realty Company received from Sarah L. Black $10,000 commissions on the first sale of the property to Mrs. Henry. Either the company, or Coyle for the company, received an additional commission from Mellon for the sale of the property to him.

These are the facts averred, either within the knowledge of plaintiff, or on information and belief. The defendants have only demurred. Therefore we must take them as true, at least so far as concerns the issue raised by this appeal. Then, as a fact, the Union Realty Company did declare to D. F. and Annie E. Henry that it was the owner of an option, with the power to sell the Hotel Duquesne property, and made a sale in writing, signed by it, of property to Mrs. Henry, who made a payment of $5,000 down, which the company, by its agent, received. The bill avers the full price was to be $800,000. The writing states that the $5,000 was "on account of sale of Duquesne Hotel property as per agreement made this day." This was not, as appears from the receipt, a very explicit statement of the full consideration, for, when bill and receipt are read together, the consideration was much larger, and the method of payment was fully set out and agreed upon. The demurrer, in effect, admits the contract in all its details. But aside from the full averments in the bill, which are not part of the receipt, we have a writing reciting a sale of a specific property, identifying it by name, and an actual payment of $5,000 of the consideration. If the description was sufficiently certain, this was a complete contract between the Union Realty Company to sell the Hotel Duquesne property, and on the part of Mrs. Henry to buy it, at a price exceeding $5,000. Was the description sufficiently certain? The hotel was a prominent one, on one of the principal streets of Pittsburg. Probably three-fourths of the citizens of Pittsburg know its exact location. But that, under the authorities, is not sufficient. Is the description in the writing full enough to enable a court to make a decree of specific performance of the contract? The identity of the location is fixed by the name of the hotel. Given the hotel site, the lots on which it stands, and the ground properly appurtenant to it, can be ascertained by

measurement to a certainty. Our records in rural counties are full of deeds which describe thousands of tracts of land conveyed only by their warranty names. No one thinks of objecting to them for insufficiency of description. If a dispute arises, a survey identifies their location. A copy of the official survey from the land office establishes their exact boundaries and quantities of land. So, here, the identity of the hotel site being fixed, the city and county records establish the boundaries and quantity. This contract then clearly identified the subject of it. That identification furnished the purchaser or a court the means of making clear the boundaries and quantity of land. This, since Wilson v. Clarke, 1 Watts & S. 554, and especially since McFarson's Appeal, 11 Pa. 503, which gave authoritative interpretations of our statute of 1772, as compared with the British statute of frauds, has been held a sufficient memorandum in writing to escape the inhibition of the statute of frauds, and such has been the ruling in the long line of cases since the decisions in these two cases. What was said of the contract in the last-named case may be said of the one in this: "It is in writing, is sufficiently certain, and defined in every required particular, inclusive of the question of estate to be conveyed, was made by parties able to contract, upon a valuable consideration, and imports to be fair and equal. Why should it not, then, be executed?"

Up to this point, then, these facts distinctly appear as averred in the bill: That the Union Realty Company, professing to be the owner of the Hotel Duquesne property, sold it by a memorandum in writing to the plaintiff. It is further averred that Mrs. Black, the original owner, had on May 7, 1903, given to R. J. Coyle, Jr., a full and complete written option for the sale of the property at the price of $800,000. Of this, $25,000 was to be cash, and the balance, $775,000, was to be paid in 10 years, with interest at 4 per cent., to be secured by bond and mortgage upon the property. The option was to continue for 30 days. Coyle was a stockholder, treasurer, and employé of the Union Realty Company. Sarah L. Black further agreed with the Union Realty Company, through its officer and employé, Coyle, to pay to the company a commission of $10,000. The conveyance of the property, by the option, was to be made to Coyle, or to his nominee or assigns. It will be noticed that by paragraph 4 of the amendment to the bill it is averred that Mrs. Black agreed with the Union Realty Company to pay to it this $10,000 as commission for the sale of the property at the price named. Further, in paragraph 3 it is averred, in substance, that the realty company authorized its employés, in the transactions of its business, to obtain options. The averments in the bill, although unskillfully if not carelessly drawn, yet show, clearly enough to be obvious, that

Coyle took the option for the corporation of which he was a stockholder, officer, and employé. Coyle and Ewing-the latter a stockholder and director in the company-then, with Mrs. Black's option in their possession, representing the property as that of the Union Realty Company, opened negotiations with Mrs. Henry, the plaintiff and purchaser of the hotel. Mrs. Henry agrees to buy at exactly the same price as that stipulated for by Mrs. Black in her written option. A memorandum in writing is made, as heretofore quoted, signed by the Union Realty Company. It will be noticed that paragraph 4 of the bill avers that Coyle, Ewing, and the realty company approached Mrs. Henry, and offered to make sale to her of the property specified by Mrs. Black in her option to Coyle or his nominee, and the written receipt showing the sale made by them is signed by the realty company.

We must take the facts as here averred, and whatever inferences are reasonable and obvious we must draw. We do not demand of a pleader that he shall express every obvious inference necessarily to be drawn from plain facts. A man with his senses of sight and hearing unimpaired, who goes in front of a moving railroad train, we infer, is negligent. The facts are susceptible of no other reasonable inference. Here Coyle was an officer transacting business for the realty company. He takes this option from Mrs. Black in his own name-a conveyance to be made to him or his nominee within 30 days. She agrees to pay the company a fee of $10,000-what for? The answer is an obvious inference for making the sale at the option price. Coyle and Ewing, both officers of the company, representing it to be for the optional period the property of the company, by a writing sell to Mrs. Henry. Whose property is it? Clearly, that of the company, for that, from the writing, is the obvious inevitable inference. Suppose Coyle and Ewing had claimed after the sale to Mrs. Henry the property was theirs as individuals, and did not belong to the company; I would a court of equity have hesitated one minute, on these facts, to decide the property was that of the company when Mrs. Henry bought? That the option, although in the name of Coyle, was merely held by him as trustee for his company? Mrs. Black, it appears, refused to execute a deed to Mrs. Henry when the latter formally tendered performance of all the stipulations of the option. She did, however, in a very few days, convey the property to Coyle. On the same day Coyle conveyed it to Mellon, and, in addition to the $10,000 commission received from Mrs. Black, received, either for himself or his company, another fee from Mellon.

The facts averred in the bill are sufficient to induce a court of equity to declare Coyle a trustee of the equitable title in favor of the Union Realty Company, and that the

rights of that company passed to Mrs. Henry by writing of June 1, 1903. If Mrs. Black still held the legal title, equity would compel her to convey either to Coyle or the realty company, and one or the other of them to convey to the plaintiff. She had, however, conveyed to Coyle. Of course, he is affected with notice of the fraud attempted to be practiced on plaintiff, and, if he still held the title, would be ordered to convey to plaintiff. But he conveyed to A. W. Mellon, another of the defendants, who, it is averred, had full notice of all the transactions and all the conduct of the parties up to and including the sale to plaintiff. If that be so, he holds it subject to the same trust, and the strong arm of a chancellor will reach him as effectively as it could have reached Coyle, had he retained the legal title. The statute of frauds does not protect a fraud of that character. That a corporation which can only conduct its business by and through its officers and employés must show, whenever called upon, a written authority to that officer to do that particular act, and when that officer, acting for the company, executes a written contract by which the corporation is to receive the benefit of the first act performed by its officer before it can be held up to that contract must show a written authority, would be to stretch the inhibition of the statute far beyond anything contemplated by its framer.

Much stress is laid in the argument of defendants' counsel on the entire absence of any writing showing that Coyle was the agent of the Union Realty Company in the transactions. But the business of the company was to take options for the sale of real estate. Coyle was one of its officers and employés employed in conducting its business. When he took the option from Mrs. Black, she agreed to allow his company a commission of $10,000 on a sale at the optional price. With Mrs. Black's written option, Coyle and Ewing offer the property for sale at Mrs. Black's price to Mrs. Henry. She accepts, and the Union Realty Company, not Coyle, sells to her. Within a very few days Coyle, in the face of the written contract of his company to sell to Mrs. Henry, which he assisted in making, sells the property, for an additional fee to himself, to Mellon. What clearly results from these facts? A trust in Coyle in favor of his company-a palpable trust ex maleficio. It is immaterial that the realty company is not here asserting the trust in this suit. It asserted its title under the right which came to it through Mrs. Black's option; by its written contract of sale, to Mrs. Henry. All its rights passed by that sale to her, and she can effectively assert them in spite of the quiescence of the realty company. And if Mellon took his deed from Coyle with notice of Coyle's mala fides, he is but a trustee of the title for the first purchaser Mrs. Henry. The learned judge of the court below held,

in his opinion on the exceptions, not apparently with much confidence, that this contract was within the statute of frauds. We hold differently. Our first impression on the argument was that it was only one of those sharp business transactions, which, however reprehensible in itself, the moving spirit was cunningly careful to keep within the law, so that he might make double fees; but a more careful consideration of the averments of the bill, and of the law applicable to them, leads us to the conclusion that a much stronger adjective than "sharp" would properly characterize it. Exactly at whose door the fraud lies, or to what extent each must share the consequences of it, we cannot now determine. Our inability to so determine at this stage of the case moves us to only reverse the decree, order the bill to be reinstated, and direct defendants to answer over.

(210 Pa. 253)

MACHIN et al. v. PRUDENTIAL TRUST CO.

(Supreme Court of Pennsylvania. Dec. 31, 1904.)

CONTRACT-ACTION-EVIDENCE-FRAUD-AFFIDAVIT OF DEFENSE.

1. In an action on a written agreement, defendant can show that he was induced to execute it by fraudulent representations affecting the consideration.

[Ed. Note. For cases in point, see vol. 20, Cent. Dig. Evidence, §§ 2005-2020.]

2. A guarantor of a building contract, in an action thereon, filed an affidavit of defense, alleging that plaintiffs, the contractors, had agreed with the owner of the building that there should be no mechanics' liens filed against it, and represented to defendant at the time of the execution of the guaranty that their agreement with the owner contained a full waiver of the right to a lien, and that they delivered their agreement in reliance on this representation; that thereafter a clause practically nullifying the provision was secretly inserted, with intent to defraud the owner and the defendant, and that the latter signed the agreement without knowledge of the alteration; and that a large number of liens had been filed by plaintiffs and others. Held a sufficient affidavit of defense.

Appeal from Court of Common Pleas, Allegheny County.

Action by Arthur Machin and others against the Prudential Trust Company. From an order making absolute a rule for judgment for want of a sufficient affidavit of defense, defendant appeals. Reversed. Argued before MITCHELL, C. J., and DEAN, FELL, BROWN, MESTREZAT, POTTER, and THOMPSON, JJ.

H. L. Castle, of Stone & Stone, for appellant. C. C. Dickey, G. Von Phul Jones, and Pier Dannals, for appellees.

FELL, J. The substance of the statement of claim is that the plaintiffs agreed to construct for the Monongahela Real Estate Cor59 A.-68

poration two buildings, for which they were to be paid $477,000. The capital of the corporation was only $1,000, and the payments were to be provided for by an increase of capital, and by loans to be secured-one of $200,000 on first mortgage, and one of $40,000 on second mortgage. Of the second loan, $30,000 was to be paid the plaintiffs on the completion of the building. The agreement between these parties was in writing, but was not to become binding until the defendant guarantied the final payment of $30,000. This the defendant, having taken the second mortgage, agreed with the plaintiffs to do, and the agreement was put in writing. This action is on the agreement to recover the amount of the reserved payment. It is substantially averred in the affidavit of defense that the plaintiffs had agreed with the real estate corporation that no mechanics' liens should be filed against the building, and that, at the execution of the agreement sued upon, the plaintiffs represented that their agreement with the real estate corporation contained a full and absolute waiver of the right of lien, and that, relying on this representation, the defendant executed and delivered its agreement; that this representation was an essential part of the inducement, and without it the agreement would not have been made; that, after a draft of an agreement containing a provision against filing liens had been submitted to and approved by the real estate corporation, a clause practically nullifying the provisions was covertly inserted for the purpose of defrauding the corporation and the defendant, and that the agreement was executed without knowledge of the alteration; that liens aggregating over $474,000 have been filed by the plaintiffs and others.

These averments, if established by proof, would show such fraud in the procurement of the agreement as would relieve the defendant from liability. The defendant would not be precluded from showing the facts averred on the ground that the evidence would be in contradiction of the written instrument. It is competent for a defendant to prove that he was induced to execute a written agreement by fraudulent representations affecting the consideration. Such testimony does not alter or vary the terms of the contract, but shows a failure of consideration, which entitles the defendant to relief from the written obligation. Stubbs v. King, 14 Serg. & R. 206; McCulloch v. McKee, 16 Pa. 289; Schuylkill Co. v. Copley, 67 Pa. 386, 5 Am. Rep. 441; Atherholt v. Hughes, 209 Pa. 156, 58 Atl. 269. It is unnecessary to consider the other grounds of defense set out in the affidavit, because this one was sufficient to prevent judgment. The order of the court making absolute the rule for judgment is reversed.