written agreement for 30 shares, made with the same corporators simultaneously with signing the certificate of organization, should be deemed a contract with the company, and as effectual as if made in the certificate itself. The rule held in Dorris v. French, above cited, is so far sustained by the court of appeals, and on principle we think that such rule is the correct one. The formation of every corporation is based upon a contract between individuals that they will form such an association, and assume the relations of shareholders in it. The act of the legislature is simply to confer upon the individuals so contracting the right to form the corporation, and of acting in a corporate capacity. Therefore, when a nember of individuals agree among themselves that they will take certain shares in a corporation to be formed, and, at the sane time, themselves execute the certificate, and take the steps necessary to acumire the corporate franchise given by the state, each act is but a part of the one contract between them, by which they form the association intended. Mor. Corp. §§ 24, 25. See, also, Railroad Co. v. Gifford, 87 N. Y. 294. As applied to this case, such reasoning assumes that the writings express the real transaction between the defendant and the other corporators, but the defendant claims that such is not the fact. From his explanation, it is clear that he understood that he was joining with the others in forming the company, and that he intended to do so; also, that he understood that he was signing an agreement to take and pay for 30 shares of its stock. It is quite likely that he did not understand the liability that would attach to him if he became a stockholder; but there was no fraud or deception practiced upon him as to the contents of any paper he was signing, and his ignorance as to the effect of the relations he was voluntarily assuming with the company does not relieve him from the legal responsibilities imposed upon them. As to the rest of his explanation, it is not quite clear whether he means that it was agreed by parol that the writing should not be binding upon him, or that Egbert Knapp and Norris Winslow agreed that they would take upon themselves all the obligations which he assumed, and save him harmless from any liability thereon. The fact that he agreed to assign to them anything that was supposed to be his, as soon as the company was fully organized, seems to indicate that the latter agreement was the understanding which he had of the matter. But whichever way it was is not very material, as we are of the opinion that no arrangement that was made between him and his associates, operating to contradict the written contract, can be invoked to relieve him from its obligations. In Warehousing Co. v. Badger, 6 Hun, 293, the defendant had subscribed in the certificate of organization for 250 shares of stock. When sued on behalf of the company's creditors for the subscription price thereof, he sought to defend on the ground that he had agreed with the other incorporators, at the time he subscribed, that he would be liable for only 50 shares, and that they would take the other 200 shares. The court held that, as against the creditors

of the company, the plain terms of the subscription could not be contradicted, and that the agreement constituted no defense. That case practically decides the question presented by this claim, and it is but the application of a very familiar rule, that the terms of a written contract cannot be varied or nullified by a contemporaneous parol agreement. Engelhorn v. Reitlinger, 122 N. Y. 76, 25 N. E. Rep. 297; Thomas v. Scutt, 127 N. Y. 133, 27 N. E. Rep. 961. See, also, Upton v. Tribilcock, 91 U. S. 45. It appears, then, from the controlling evidence in the case, that the defendant did make a contract with the company to take and pay for 30 shares of its stock. The fact that he never paid for it does not make him any less a stockholder, nor relieve him from liability as such. His subscription was accepted by the company, stock passed to his name on its books, and he acted as a trustee until the company was dissolved. Here was a contract mutual between the company and himself, and one that a receiver of the company could have enforced against him for the benefit of its creditors. Wheeler v. Millar, 90 N. Y. 353; Railroad Co. v. Dudley, 14 N. Y. 336. The question submitted to the jury was therefore not an open one. Upon the facts proven, the court should have held that the defendant did become a stockholder.

It

But the defendant claims that, even though the defendant did become a stockholder, it is not disputed but that he assigned his stock before the plaintiff's debt was incurred, and hence he cannot be held liable under section 10. Section 25 of the act provides that a book shall be kept by the officers of the company, containing the names of the stockholders, etc., and that no transfer of stock shall be valid, etc., unless entered upon such book. is not claimed that the transfer by the defendant was entered upon such book, and therefore, by the well-settled law of this state, his assignment was not effectual to relieve him from the liabilities imposed by section 10. Shellington v. Howland, 53 N. Y. 372, 376. In Johnson v. Underhill, 52 N. Y. 203, 209, it is said that both the assignor and assignee are liable to creditors until the transfer has been entered on the books. The cases cited by the respondent's counsel upon this question do not conflict with the above. It has always been held that as between the parties to the transfer, and even as between the parties and the company, an assignment may be valid to transfer a good title without being entered on the books. Bank v. Colwell, 132 N. Y. 250, 30 N. E. Rep. 644; Cutting v. Damerel, 88 N. Y. 410; Isham v. Buckingham, 49 N. Y. 216. But, as against a party who does not stand in the attitude of one subrogated to the rights of the company, but is suing under a statute that creates an original liability, and renders a stockholder liable whether he is a debtor to the company or not, as does the section 10 in question, no assignment is operative until it has been entered as required by section 25. The company can waive nothing, as against a creditor so suing.

Our conclusion is that the court erred in submitting to the jury the question whether the defendant ever became a stockholder in

the company, and that the verdict of the jury on that question is not sustained by the controlling evidence in the case. The judg ment and order denying a new trial must be reversed, on the law and facts, and a new trial granted, with costs to abide the event. All concur.

HARTMAN v. TULLY PIPE-LINE CO.

(71 Hun, 367.)

(Supreme Court, General Term, Fourth Department. September 23, 1893.) TRESPASS-LAYING PIPE IN STREET-INJURY TO ADJOINING LOT-Damages.

In an action for injuries to plaintiff's premises, resulting from the leakage of salt water from a pipe laid by defendant, without authority, in the adjacent highway, in which plaintiff owned the fee, the measure of recovery is the damage sustained up to the time of the action, and evidence as to the permanent depreciation in the value of the premises because of the presence of the leaking pipe is inadmissible.

Appeal from circuit court.

Action in trespass by Augustus Hartman against the Tully Pipe-Line Company. From a judgment entered on a verdict for plaintiff, and from an order denying a new trial on the minutes, defendant appeals. Reversed.

JJ.

Argued before HARDIN, P. J., and MERWIN and PARKER,

William G. Tracy, for appellant.

George H. Sears, for respondent.

PARKER, J. The defendant laid a line of pipe in the highway opposite plaintiff's lands, through which it forced a stream of salt water. The plaintiff owned the fee of the land to the middle of the highway, and such pipe was laid underground, and upon his premises. It had been maintained and used for some two years before the commencement of this action, and was so laid without permission or right on the defendant's part. During such two years, it had leaked more or less, and discharged salt water or brine through the earth over plaintiff's premises, thereby injuring his shade trees, his shrubbery, and the annual products of his garden. This action is brought to recover damages for the trespass so committed by the defendant. So far as the questions presented by this appeal are concerned, it is conceded that the defendant is a trespasser; but it is claimed that an erroneous measure of damages was adopted by the trial court, and for that reason a reversal of the judgment is asked. The plaintiff was allowed to testify, first, as to what was the value of the premises at the time the pipe was laid. After giving that value at four or five thousand dollars, he was asked, "What were they worth at the time of the commencement of this action?" Such question evidently calls for their value with the pipe line as it then was, and the premises subjected to the constant leakage flowing therefrom.

This evidence was allowed, under an objection and exception duly taken by the defendant. Evidently, the court adopted an erroneous measure of damages. It proceeded upon the theory that such pipe line, and the constant leakage resulting therefrom, are to continue forever, and that, therefore, the plaintiff is to recover in this one action the total and permanent depreciation which it caused to the market value of his lands. But such is not the condition of affairs. Notwithstanding his recovery in this action, he might bring others for injuries subsequently suffered; so he might enjoin the defendant from using such line to his injury; and therefore it is plain that only such injuries as he had suffered at the time this action was commenced should be allowed in this action. The difference in the value of his premises with and without the pipe line in use upon them gives him much more than that, and clearly is greatly in excess of what his actual injury is. This question is thoroughly examined and settled in the Uline Case, 101 N. Y. 98, 4 N. E. Rep. 536, and a citation of further authorities is unnecessary. We do not mean to decide that the loss in the rental value of the premises prior to the commencement of this action is the only damage for which the plaintiff can recover in this action. Thus, if the salt water actually destroyed trees, shrubbery, or anything else upon the premises, or so injured them that the plaintiff had suffered a permanent loss thereby, he may recover for the loss he had so suffered at the time of the commencement of this action, as well as for the injury sustained by the depreciation in its annual use. But, for the erroneous ruling above referred to, a new trial must be granted. Judgment and order reversed on the exceptions, and a new trial granted, with costs to abide the event. All concur.

(71 Hun. 34)

HARVEY V. VAN COTT et al.

(Supreme Court, General Term, Fourth Department. September 23, 1893.) 1. LIFE INSURANCE-DISPOSAL BY WILL-RESIDUARY CLAUSE.

A policy on the life of testatrix's husband, payable to her, or, if she be not alive at the time of his death, to her children, passes by a residuary clause of her will; she being childless, and her husband surviving her. 2. SAME-SALE BY EXECUTORS.

Such policy is, like other personal property bequeathed by the residuary clause, subject to the control and disposition of the executors. 8. SAME

CHARACTER OF SALE.

To show good title in a purchaser from an executor, there being no question of good faith, it need not be shown positively that the executor assumed to sell the property as executor.

4 SAME-TRANSFER BY EXECUTORS-CONSENT OF HUSBAND.

Laws 1873, c. 821, permits a married woman, having no children, to dispose by will, before the death of her husband, of a policy on his life, and provides that the person to whom it is so transferred shall have the same rights in it as the testatrix would have had, had she survived her husband. Laws 1879, c. 248, permits her to transfer it in any manner,

even though she has children, provided her husband consent in writing thereto, and in case of her death permits it to be disposed of by her legal representative, with the written consent of her husband. Held, that where a woman without children, dying before her husband, disposes of a policy on his life by the residuary clause of her will, her executors may transfer the policy without the written consent of her husband.

5. ADMISSION OF EVIDENCE-HARMLESS ERROR.

The admission of improper evidence of a fact is not ground for reversal, where there was other sufficient evidence to establish the fact, and none to disprove it.

MERWIN, J., dissenting.

Appeal from judgment on report of referee.

Action by John P. Harvey against Ephraim G. Van Cott, executor of Edward B. Van Cott, deceased, and Estelle R. Wright, to determine the rights to a policy of life insurance. Judgment for plaintiff. Defendants appeal. Affirmed.

Argued before HARDIN, P. J., and MERWIN and PARKER, JJ. E. J. & W. D. Ball, for appellant Van Cott.

S. W. Petrie, (Charles E. Patterson, of counsel,) for appellant Wright.

C. J. Palmer, for respondent.

PARKER, J. At the time of her death, Mrs. Mary Van Cott held a policy of insurance for $2,000 upon the life of her husband, Edward B. Van Cott, payable to her, or her legal representatives, upon his death, or, if she be not then living, payable to her children, or their guardian, if under age. She died without children, and leaving her husband surviving her. She left a will, by which she gave certain portions of her "productive personal property" to her husband for life, and upon his death to her niece, now the defendant Mrs. Wright. "All the rest, residue, and remainder of my estate," by a residuary clause in her will, she gave to her said niece, and appointed such niece and her husband the executors of such will. The husband sold and delivered such policy to the plaintiff, for a certain sum of money paid him, and for a monument which the plaintiff made and erected upon the lot where the wife was buried. The plaintiff also paid the premiums upon such policy until the death of the husband. Subsequently the husband died, leaving a will in which he appointed the defendant Ephraim G. Van Cott his executor. The plaintiff thereupon demanded from the insurance company the amount of such policy, claiming that he acquired the title thereto under his contract with the husband. Mrs. Wright claimed it as a legatee under Mrs. Van Cott's will, or else as surviving executor of such will. Ephraim Van Cott claimed it as executor of the deceased husband's estate. The company paid the amount of the policy into court, and this action is now prosecuted to determine to whom, under the circumstances, such policy belonged. The referee found in favor of the plaintiff, and from his judgment both the other claimants appeal.

In order to determine the question presented on this appeal, we