Where, by express language, the statute of the state had declared that an unrecorded transfer should not be valid for any purpose whatever until recorded, or that a transfer of the stock could only be made by certain formalities, among which was that of having it recorded in the transfer book, the courts were no doubt justified in holding that until such record had been made there had been no transfer at all, even as between the parties; or where the language as to the transfer and record thereof was similar to ours, but the statute contained an additional provision that the record book of such transfers should be open to the inspection of any person, it has been well held that such statutes, construed as a whole, made the transfer book a public record, and that an entry thereon of a transfer was as necessary to sustain the title of the transferee as the recording | of a chattel mortgage or bill of sale to sustain it when such record is made a necessary requisite to the perfection of the title of the holder thereunder. But none of these cases are of any value under a statute like ours, and we can see no reason whatever for holding that by reason thereof there has been any change made in the general rule as to what interest of a debtor is reached by a sale on execution against him.

It is not necessary that we should say much as to the second question above stated. It is proper, however, to observe in regard thereto that among the few courts which have, under statutes similar to ours, held the title of the purchaser at the execution sale good as against an unrecorded transfer, are those of the state of California, in which state it has been expressly held that if, at the date of the sale, the purchaser had notice of the equities of the transferee, he would take subject thereto, so that, if we were to adopt the California rule, it would not aid the contention of the respondent. It will be seen from the above that, in our opinion, a transferee takes a good title, but, even if he did not, it is clear to us that under the provisions of section 2432, above cited, a pledgee's interest could not be divested by an execution sale. Said section seems to clearly intend that a stockholder may pledge his stock, and yet to all intents and purposes, as between himself and the company and his fellow stockholders, be treated as the owner thereof. This could not be if the pledgee, in order to protect himself, was compelled to have the assignment regularly made to him, and a transfer thereof recorded in the books of the corporation, for so soon as that was done he would become, as between himself and the corporation, the owner of the stock.

The suggestion of the respondent that the transfer thus to be recorded might be a conditional one, setting out the facts, does not meet with our approval, for the reason that it would so complicate the question of the title to the stock, as between the corporation

and its stockholders, as to seriously interfere with the business of the corporation. A great deal might be said in favor of the construction which we have above given to our statute growing out of the history of the growth of transactions in the stock of corporations. It is a matter of common knowledge that shares of stock in corporations of all kinds are treated as personal property, transferable by indorsement and delivery, and from the very necessities of the business of a corporation, in the manner in which all corporations are now conducted, that rule which will most encourage the transfer of their stock, and give to certificates as much as possible the character of commercial paper, will best subserve the public interests. We do not feel, however, called upon to enter upon any elaboration of this subject. We think that the application of well-settled rules of construction, when applied to our statute, will warrant the conclusion to which we have arrived. The judgment must be reversed, and the cause remanded, with instructions to dismiss the action.

In an action on a note purporting to have been made by defendant corporation, where it appears that all the business of defendant, including the making of numerous similar notes, had for a long time been transacted by its president and secretary, who executed the note, and that their actions had always been informally ratified by paying the notes, and otherwise, defendant is estopped to deny the authority of such officers to execute the note.

Appeal from superior court, Skagit county; E. C. Million, Judge.

Action on a promissory note by F. M. Duggan against the Pacific Boom Company and Adolph Behrens. Plaintiff had judgment, and defendants appeal. Affirmed.

Dunning, Richards, Murray & Pratt, for appellants. Million & Houser and D. H. Hartson, for respondent.

HOYT, J. This action was brought to recover an amount alleged to be due upon a note purporting to be that of the appellant the Pacific Boom Company. It was signed in its name by its president and secretary and treasurer. The defense of the appellant was that the officers of the company who executed the note were not authorized so to do by any formal action on the part of the board of trustees, nor had there been a ratification of their action by the company, and, further, that at the time such note was given the company was not indebted to the plaintiff, and that there was no considera

tion therefor. Upon the question as to the authorization of the officers to execute the note, it appeared from the undisputed proofs in the record that there was no express authorization or ratification of such action on the part of the company. It, however, appeared that all the business of the company, including the making of numerous notes of the kind in question, had been for a long time transacted by said officers, and informally ratified by the company, by its action thereon in paying the same, and in other respects. The record shows that not only had this been occasionally done, but that such was the universal course of business with the company. From such proofs it appears that, to all intents and purposes, the business of the company had been transacted by the two officers who signed the note in question, and that, although this course of business had been continued for a long period, no fault had ever been found with the action of these officers in so conducting the business. Under these circumstances, we think that the jury were justified in finding that the company was estopped from asserting the fact that the officers, in executing the note in question, acted outside of their authority as such; and in our opinion the instruction of the court upon this subject fairly submitted this question to the jury, for, while it is true that there seems to be no affirmative proof to justify the court in saying that the company would be estopped, under the circumstances shown by the record, if the plaintiff relied upon such practice and custom, yet we think that under the circumstances proven there arose from the course of practice a presumption that all who dealt with the company relied thereon, and that for that reason that part of the instruction had a foundation in the proofs; and, if it did have, it is conceded by the appellant that the law of the case was fairly expressed therein.

There are two other exceptions which it is necessary to notice, and they may well be considered together. The court instructed the jury as follows: "Now, I instruct you, as a matter of law, the taking of a note from a third person-as, in this instance, the taking of the note of Mr. Behrens by Mr. Duggan at the time of delivering up the first note is not in itself a payment of the debt; but the fact that the plaintiff had a note of the company, and delivered that up, and took Mr. Behrens' note, is a circumstance which you can take into consideration in arriving at the question of whether Mr. Duggan released the boom company, and took Mr. Behrens for the debt; and it is for you to determine, gentlemen of the jury, under all the evidence and the instructions given you by the court, whether Mr. Duggan accepted Mr. Behrens, and released the boom company from this obligation. If Mr. Duggan, in accepting the note of Mr. Behrens, did not release the boom com

pany, as I have instructed you before, it is not a payment of the debt, and consequently the boom company would be liable upon the note, if you find, under the evidence and the instructions of the court, that this note has been legally executed.” To the giving of this instruction the appellant excepted. The court also refused to give the following instruction asked for by the appellant: "The taking of Behrens' note and surrendering the company note was presumptive evidence of payment and extinguishment of the original debt between plaintiff and the Pacific Boom Company. If you believe from the evidence that the note sued upon was given in payment or exchange for the private debt of A. Behrens, then you are instructed that such a transaction was unlawful, so far as this company was concerned, and your verdict should be for the defendant Pacific Boom Company." The instruction given, when fairly construed, and taken altogether, does not so misstate the law as to lead us to believe that the jury were misled thereby. It is true that the clause, "the taking of the note of Mr. Behrens by Mr. Duggan at the time of delivering up the first note is not in itself a payment of the debt," if unexplained, would be erroneous; but such language, when taken in connection with that of the remainder of the instruction, fairly conveyed to the jury the idea of the court that such fact alone did not conclusively show a payment of the original debt, and, thus interpreted, it stated the law of the case. There are a few cases going to the extent of holding that the taking of a note of a third person from a debtor is conclusive evidence of the payment of the debt, when such debtor does not indorse the note of such third person; but the weight of authority is in favor of the proposition that the intent of the parties at the time of the transaction must govern, and if it appears that, at the time such note was taken, it was not the intent of the parties that it should be received as an absolute payment of the existing indebtedness, then, in case of the nonpayment of such note, the payment of the original indebtedness could be enforced. Taking the whole instruction under consideration together, we think the jury were sufficiently informed of this rule of law. If the appellant had desired that the instruction should be more definite as to any particular point, it should have requested a proper instruction in regard thereto. This it attempted to do as to one particular point in the request above set out, and, had it been content with asking the court to give the first clause of such instruction, it would have probably been entitled to have had the same given to the jury, as the giving thereof would have made more certain the intention of the court in the instruction which we have been considering. Appellant, however, saw fit to couple this clause with another, which, in our opinion, it was not entitled to have

given to the jury, and embody both clauses in a single instruction; and, having done so, it cannot now avail itself of an exception to the refusal of the court to give such instruction as a whole. The latter part of the instruction so requested ignores the fact that a proper consideration might have moved at the time of the execution of the new note from Behrens to the company, and that for that reason the note be given not for the accommodation of Behrens, but for the accommodation of the company, and in the prosecution of its own business in the manner in which the proofs show it had been accustomed to do it. We find no error in the record, of sufficient magnitude to justify a reversal of the judgment, and it must therefore be affirmed.

DUNBAR, C. J., and STILES, ANDERS, and SCOTT, JJ., concur.

(6 Wash. 605)

SHEPARD et al. v. HILL et al. (Supreme Court of Washington. July 6, 1893.) REAL-ESTATE BROKERS-ACTING FOR TWO PARTIES -FORFEITURE OF COMMISSIONS.

In an action for commissions on a sale of land, it appeared that plaintiffs were employed by an intending purchaser to procure a tract such as he wanted, whereupon they applied to defendants, who were agents for the owner of a tract which was afterwards, sold to such intending purchaser, and it was agreed to divide commissions if a sale could be ef fected. Plaintiffs submitted the land and the price to such purchaser, and did what they could to effect a sale to him without revealing his name to defendants. Held, that plaintiffs, having been in the secret employ of both purchaser and seller, could not recover commissions.

Appeal from superior court, King county; T. J. Humes, Judge.

Action by D. B. Shepard and J. D. Moody against A. P. Hill and J. Loring Whittington. From a judgment for plaintiffs, defendants appeal. Reversed.

Bausman, Kelleher & Emory, for appellants. Thompson, Edsen & Humphries, for respondents.

DUNBAR, C. J. In discussing this case, we shall proceed on the theory that Shepard and Moody are proper parties plaintiff in this action. The action was originally begun by Shepard, but appellants answered, averring the fact to be that Moody had an interest in the controversy, and that Shepard was not the sole party in interest. Upon this suggestion in the answer, and after consultation with Moody, the fact was conceded by the respondent, and an amended complaint was filed, in which Moody was made a party to the action, and appellants will not now be heard to raise the objection that Moody is not a party in interest. Besides, the testimony shows that Shepard and Moody were to share alike in the benefits flowing from the business.

We will not enter into any discussion of the question as to whether the land sold was actually sold to Hawley or to Elliott. If sold to Elliott, then, of course, it follows, and is conceded by the respondents, that this case must fail; but that question was submitted to the jury, the testimony is conflicting, and the jury evidently believed that the sale was made to Hawley. There is sufficient testimony to sustain this finding, and this court will not disturb it. But, conceding that the sale was made to Hawley, it seems to us that it is not only shown by the whole testimony, but that it is conclusively shown by the testimony of the plaintiffs, that this is a case of a broker obtaining a commission from two employers, whose interests are antagonistic, and that the plaintiffs, by their own showing, prove themselves the agents both of Hawley, who desired to purchase, and of Hill & Whittington, who desired to sell, and are therefore guilty of constructive fraud. We think there can be no controversy about the correctness of the proposition that a broker who is in the secret employ of both parties cannot obtain a commission from either. This rule is based upon the principle governing agency, viz. that an agent owes his whole duty to his principal; and it is easy to realize the fact that he cannot exercise his whole duty to two principals, whose interests in the subject-matter of the agency are conflicting. If plaintiffs were employed by Hawley to purchase land for him they became his agents for that purpose, and, if they were employed by defendants to sell the same land, they also became their agents: and, plainly, they could not do their whole duty to either of their principals. It makes no difference in principle that the defendants did not own the land, but that they were employed by the owners to sell it. Their chances of selling would naturally be diminished if the purchaser, in addition to the price asked by them, had to pay a percentage to their agent. In this case the land to Hawley was 5 per cent. higher than it would have been if plaintiffs had not been employed by him. The chance of his purchasing was lessened in that proportion. Hence, the plaintiffs did not do their duty to their principals, the de fendants. So, too, on the other hand, they failed to do their whole duty to their other principal, Hawley. They became in fact both purchasers and sellers, dual capacities, which the policy of the law condemns. When a man is intrusted with the business of another, he will not be allowed to prejudice his employer's interest by so representing the business that he will realize something out of it for himself outside of the remuneration of the employment. Or, as was more forcibly expressed in 8 Tomlins' Brown, Parl. Cas. 63: "The ground on which the disqualification rests is no other than that principle which dictates that a

man cannot be both judge and party. No man can serve two masters. He that is intrusted with the interests of others cannot be allowed to make the business an object of interest to himself, because, from a frailty of nature, one who has the power will be too readily seized with inclination to use the opportunity for serving his own interest at the expense of those for whom he is intrusted. The danger of temptation from the facility and advantage for wrongdoing which a particular situation affords does, out of the mere necessity, work a disqualification." It is unnecessary, however, to enlarge on this principle, or to quote authorities in support of it, as it is conceded by the respondents that such is the law governing the case, where a property owner employs a broker to sell real estate for him, and where the broker secretly takes employment from the person to whom he is going to sell real estate, and thereby serves two masters for the purpose of doubling his commission; but they insist that this case is easily distinguished from that kind of a case, and that this is simply the kind of a case where one is employed to introduce the buyer and seller, in which case it is undoubtedly the law that the middleman is entitled to receive a remuneration from both buyer and seller. Several cases are cited by respondents in support of this doctrine, but, as we understand the evidence in this case, neither the facts nor the reasoning of those authorities will apply to the case at bar. From the plaintiffs' own testimony, they did have something else to do than to introduce the buyer or seller, or bring them together. They plainly undertook with one party to buy, and with the other party to sell. Indeed, we should judge from the complaint itself that the action was brought on the theory that plaintiffs were land brokers, and were employed to sell the land in question. Certain it is that the testimony of the plaintiffs, not taking into account the testimony of the defendants, conclusively shows that they understood the fact thoroughly, that they did do something else than to introduce the buyer and seller. They submitted the land to Hawley, and submitted the price to him, and did everything they could to make a sale. They boldly testify that they did not intend to reveal the name of the purchaser until they knew whether he intended to purchase. There is nothing in the testimony to distinguish their actions from the actions of the ordinary land broker who is employed to sell, excepting that their direct employers did not own the land, which, as we have before said, does not change the principle governing this

case.

Defendants' motion for a nonsuit should have been granted, for there was sufficient uncontradicted testimony to show that plaintiffs were secretly in the employ of both buyer and seller, and, if the jury had been

properly instructed concerning the law governing such cases, the verdict should have been for the defendants in this case. This case would have to be reversed in any event, for the instructions complained of by appellants are palpably erroneous; and we think the exceptions taken by the appellants were as definite as the manner in which the instructions were given by the court would allow, and inasmuch as the facts testified to by the plaintiffs, in our judgment, preclude them from a recovery, the nonsuit should have been granted. The judgment is therefore reversed, and the cause remanded, with instructions to grant the nonsuit asked by the defendants.

STILES, ANDERS, HOYT, and SCOTT, JJ., concur.

(6 Wash. 621) WELLS et al. v. COLUMBIA NAT. BANK OF NEW WHATCOM. (Supreme Court of Washington. July 11, 1893.) ATTACHMENT-LABOR CLAIM NOTICES-DISMISSAL.

An attaching creditor may dismiss his action and release the attachment before sale without being liable to laborers who have served labor claim notices therein, under 1 Hill's Code, § 3124, allowing laborers, in all cases of attachment, execution, and similar writs, having claims against defendant, to give notice thereof at any time before actual sale of the property, declaring them preferred claims, and providing that the officer shall pay them out of the proceeds of the sale, and providing, further, in case the claims are disputed, for actions, in which case the officer is required to retain sufficient of the proceeds to await their determination.

Appeal from superior court, Whatcom county; John R. Winn, Judge. Wells Action by Edward and others against the Columbia National Bank of New Whatcom. From a judgment for plaintiff's defendant appeals. Reversed.

Black & Leaming, for appellant. I. N. Maxwell, for respondents.

SCOTT, J. Appellant commenced a suit against one Foster, and caused a writ of attachment to be issued therein against his property, under which the sheriff seized certain of his chattels. The respondents here then served labor claim notices, under section 3124, vol. 1, of Hill's Code.1 Subse

*

11 Hill's Code, § 3124, provides: "In cases of executions, attachments, and writs of similar nature, except for claims for labor done, any *** laborers who have claims against the defendant for labor done, may give notice of their claims, ** * at any time before the actual sale of property levied on, and * * such officer must pay to such person, out of the proceeds of the sale, the amount each is entitled to receive for services rendered within 60 days next preceding the levy of the writ. The section further provides for an action in case a claim is disputed, and requires the officer to retain sufficient proceeds of the sale until the action is determined, the claims of laborers being declared preferred claims.

**

quently, and before judgment, appellant dismissed said action, and the property attached was released by the sheriff, and delivered to Foster, whereupon Foster executed a chattel mortgage upon said property to appellant. The mortgage was subsequently foreclosed, and the proceeds arising from a sale of the property were applied upon the mortgage debt, but were insufficient to satisfy it. spondents brought this action against appellant to recover the amount of their several labor claims, and, obtaining judgment therefor, an appeal was taken.

Re

In our opinion, there was no foundation for such an action. The service of the notice provided for by the statute aforesaid does not create a lien upon the property, nor make the plaintiff in the action responsible for the amount of such labor claims. Said statute provides that such claims shall be first paid out of the proceeds of the property, when sold. No obligation rests upon the plaintiff in such action to prosecute the same to a judgment, and a sale of the property seized, even though the result of a failure to do so may be to prevent the claimants under the notices from collecting their claims therein. The statute seems to be inefficient and defective for the purpose of creating and preserving a lien, unless the property is actually sold. However, as to whether the court could, upon an application therefor, have taken any steps to preserve and enforce such claims in said original suit, we are not called upon to decide, for it was not asked to take any. This case is brought upon the theory that it was incumbent on the plaintiff to proceed with such suit after the service of the notices, which is not well founded. No fraud is charged against appellant, in any way, but a legal liability is urged as resting upon it to pay such labor claims, under the facts stated. Reversed.

DUNBAR, C. J., and HOYT, ANDERS, and STILES, JJ., concur.

(6 Wash. 615)

v.34P.no.1-11

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tne

The goods sought to be recovered in this case were originally sold, together with other goods, by plaintiff to one W. C. Reicheneker, a merchant, who never paid for the same. The other goods were disposed of by Reicheneker, and, on his becoming financially embarassed, he made an arrangement with plaintiff by which goods in controversy were transferred to it in payment of its claim against him; plaintiff sending Reicheneker a credit bill, showing a full settlement of the claim, and Reicheneker charging back the amount of the claim on his books. The goods were not delivered to plaintiff, but it merely instructed Reicheneker to act as its agent, and sell the goods on its account, and remit the proceeds. Afterwards the goods were attached by other creditors of Reicheneker, and defendant was appointed receiver. It was claimed by defendant that the transaction was a sale by Reicheneker to plaintiff, and that it was void as against his other creditors, because no bill of sale was recorded, as required by Gen. St. § 1454. That section provides that "no bill of sale for the transfer of personal property shall be valid as against existing creditors or innocent purchasers where the property is left in the possession of the vendor, unless said bill of sale be recorded," etc. Wiley & Bostwick, for appellant. Frank A. Steele, for respondent.

HOYT, J. The only reasonable construction of section 1454, Gen. St.,1 is that thereunder no sale of personal property is valid as against existing creditors or innocent purchasers where the property is left in the possession of the vendor, unless such sale be evidenced by a memorandum in writing, and such memorandum be recorded in the auditor's office of the county in which the property is situated within 10 days after such sale shall have been made. The construction of said section contended for by the appellant would

'Gen. St. § 1454, is as follows: "No bill of sale for the transfer of personal property shall be valid as against existing creditors or innocent purchasers where the property is left in the possession of the vendor, unless said bill of sale be recorded in the auditor's office of the county in which the property is situated within ten days after such sale shall be made."