they were associated, appointed themselves as the officers and directors of the Ft. Smith Company, and have since continued in the control of the latter company, and that in August, 1879, the Ft. Smith Company, at the instance of the Atchison Company, mortgaged the railroad built and to be built under the charter of the Ft. Smith Company, in the sum of $798,000, to two persons who were officers and stockholders in the Atchison Company, who thereafter received from the sale of the bonds their face value, which was in amount equal to $8,000 for each mile of the road built. It is then alleged that the Ft. Smith Company sold the municipal bonds received from the counties of Sumner and Cowley, and received therefor the sum of $300,600, which, with the amount received from the sale of the mortgaged bonds, was wrongfully turned over, and placed in the treasury of the Atchison Company. It is alleged that the cost of the road constructed by the Atchison Company for the Ft. Smith Railroad Company, including all of the track, buildings, bridges, etc., did not exceed the sum of $5,000 per mile, or a total cost of $480,000. It is next alleged that the officers and directors of the Ft. Smith Company executed and delivered to the Atchison Company 11,994 shares of its capital stock, without any real consideration having been paid therefor, and that the Atchison Company has never paid, nor given anything of value, for the stock so transferred to it. The transfer is alleged to have been made in order to enable the Atchison Company to manage and control, for its own benefit, the business and affairs of the Ft. Smith Company. It is further alleged that the bonds and stock so paid over and transferred to the Atchison Company were transferred under a pretended contract made with the treasurer of the Atchison Company, whereby the Atchison Company subscribed for the capital stock of the Ft. Smith Company upon the agreement to build and construct the road of the Ft. Smith Company in consideration of receiving the aforementioned mortgage bonds, municipal bonds, and capital stock. It is alleged that the contract is void for the reason that it was unjust; was made by persons who were stockholders and officers of each of the contracting parties; was entered into in order that the Atchison Company might absorb the receipts and earnings of the Ft. Smith Company to the exclusion of the bona fide stockholders of Sumner and Cowley counties. It is next alleged that on September 6, 1882, the Ft. Smith Company, the Atchison Company, the Wichita & Southwestern Railroad Company, and the Harvey County Railroad Company, without the consent of the county of Sumner, entered into an agreement of consolida tion under the name of the Wichita & Southwestern Railway Company, which agreement was approved and ratified by two-thirds of the capital stock of the com

panies; but it is averred that the consolida tion was unlawful and invalid because the officers, directors, and stockholders of the Atchison Company owned and controlled the stock in the several companies consolidated, and that it was entered into for its own benefit. It is next alleged that on October 20, 1885, the Wichita & Southwestern Railway Company leased the railroad, lands, buildings, and other property of the consolidated company to the Atchison Company from 1883 to 1979. It is stated that the lease was made at the instance and for the benefit of the Atchison Company, and that the officers of one company held similar positions in the other; and for that reason, as well as others, it is alleged that the lease was invalid, and, further, that the county of Sumner had never ratified or consented to the lease, and had no notice of the making of the same until about the time of the commencement of this action. It is further averred that in October, 1885, the Atchison Company, without the consent of the county of Sumner, obtained possession of the certificates or shares of the capital stock owned by the county in the Ft. Smith Company, and after the Atchison Company had been notified that the county of Sumner would not ratify the consolidation, and would not surrender its stock, but that it neglects and refuses to surrender and turn over to the county the certificates so wrongfully obtained and held. It is then averred that the counties of Sumner and Cowley are the only stockholders in the Ft. Smith Company which are bona fide, and have paid in full for the stock issued by that company, and, further, that the Ft. Smith Company, the consolidated company, and the Atchison Company, which has received the receipts and earnings of the Ft. Smith Company, which are large, and greatly in excess of the outlays and necessary expenses, have neglected and refused to declare any dividends upon the capital stock owned by the county of Sumner, and that there are in the hards of the Atchison Company large sums of money which it is using for its own benefit to the exclusion of the county of Sumner as a stockholder, and that the latter company refuses to make any accounting whatever with the county as a stockholder. It is next alleged that the county of Sumner, being a bona fide and fully paid-up stockholder in the Ft. Smith Company, is entitled to an accounting of all the earnings and profits of the Ft. Smith Company, and also to the complete and full possession of the railroad built and constructed under and by virtue of the charter of that company for the benefit of its bona fide stockholders, and that the issuing and delivery to the Atchison Company of the capital stock of the Ft. Smith Company, and the consolidation of the companies, as has been stated, as well as the leasing of the consolidated roads to the Atchison Company, and the obtaining

of the certificates of capital stock in the Ft. Smith Company owned by the county of Sumner, were acts done in pursuance of a conspiracy and combination on the part of the Atchison Company and its officers, directors, and stockholders for the purpose of enriching the Atchison Company at the expense and injury of the county of Sumner, and to defeat the county from obtaining any benefit or value by reason of its investment in the stock of the Ft. Smith Company. The prayer of the petition is that the Atchison Company be compelled to account for all moneys received by it, as earnings, profits, or otherwise, from the Ft. Smith Company, since the organization of that company, and, next, that the Atchison Company and Ft. Smith Company be compelled to account for all moneys received from the sale of the mortgage bonds issued by the Ft. Smith Company, and, further, that it account for all the capital stock of the Ft. Smith Company actually sold, and for full consideration therefor at the time of the sale thereof, and, further, that the Atchison Company be compelled to deliver into court for cancellation all the certificates or shares of the capital stock of the Ft. Smith Company issued to it without consideration paid therefor, and, further, that a judgment be rendered against the Wichita & Southwestern Railroad Company, the Harvey County Railroad Company, and the Wichita & Southwestern Railway Company, decreeing and declaring the articles of consolidation to be null and void so far as the road constructed under the Ft. Smith Company is concerned, and, further, that judgment be rendered against the Wichita & Southwestern Railway Company and the Atchison Company, decreeing and declaring the lease made between these companies to be null and void, and, finally, that the Atchison Company be compelled to deliver the complete possession of the railroad built under the charter of the Ft. Smith Company, and all property belonging to that company, to the county of Sumner.

The motion to separately state and number the several causes of action contained in the petition should have been allowed, and the plaintiff below should have been required to state more definitely and fully some of the matters attempted to be set out. As will readily appear, several causes of action are grouped and blended together in the petition, some of which are not well pleaded. The plaintiff below first asks that the Atchison Company be compelled to account for the proceeds of the mortgage and municipal bonds which, it is alleged, were wrongfully paid over to the Atchison Company. Another cause of action is to recover from the Atchison Company the rents, profits, and earnings of the Ft. Smith Railroad from the time it was built until the commencement of the action. Another cause of action against the Atchison Company is stated, where they ask

the cancellation of 11,994 shares of the capital stock of the Ft. Smith Company, which, it is alleged, were issued and delivered to the Atchison Company without consideration. The foregoing causes of action are against the Atchison Company, and primarily in favor of the Ft. Smith Company. The county of Sumner seeks relief on the ground that it is a stockholder in the Ft. Smith Company, and before it can maintain an action in its own name it must appear from the aver ments of the petition that it has in good faith, but without success, attempted to secure action by the officers of the corporation, or that a demand for their action would be unavailing. There is no allegation that a demand was made upon the officers of the corporation, nor any facts stated as an excuse for omitting such demand. The next cause of action is to set aside the consolidation effected by the union of the Harvey County Railroad Company, the Wichita & Southwestern Railroad Company, and the Ft. Smith Railroad Company under the name of the Wichita & Southwestern Railway Company. In this cause of action no relief is sought against the Atchison Company, but only against the consolidated companies which entered into the consolidation, some of which have not been served, or otherwise brought into court. Another distinct cause of action is in favor of the plaintiff below, and against the consolidated company and the Atchison Company, to cancel the lease of the consolidated road to the Atchison Company for a term of years. Another ground of relief is asked against the Atchison Company, in recovering the certificates of stock in the Ft. Smith Company belonging to the county, which it is alleged were wrongfully obtained and withheld by the Atchison Company. And finally it is asked that the railroad constructed under the charter of the Ft. Smith Company, and all of the property connected with that road, be delivered into the possession of the county of Sumner. Most of these causes of action are distinct from each other, and, under the requirements of the Code, should have been separately stated and numbered. They are not only separate and distinct as to the subject-matter set out, and the relief sought, but some of the parties named as defendants, and who are interested in one or more of the causes of action, have no interest or concern whatever in others. Neither the Harvey County Railroad Company nor the Wichita & Southwestern Railroad Company is interested in the causes stated for the cancellation of the stock in the Ft. Smith Company alleged to have been wrongfully obtained by the Atchison Company; nor have they any interest in the branch of the case in which the plaintiff asks to recover the proceeds of the municipal and mortgage bonds alleged to have been wrongfully paid to the Atchison Company; and they have no interest in the action for the r very of the earnings of the Ft. Smith road from its construc

tion until the time of the consolidation. Several of the parties are not interested in the demand for the recovery of the certificates of stock in the Ft. Smith Company belonging to the county, which it is charged were wrongfully obtained, and are now withheld by the Atchison Company. The Atchison Company is not one of the consolidating companies, and that company is not interested in the cause of action to secure the annulment of the consolidation.

Treating the allegations of the petition as though they had been separately stated and numbered, as we may, (Steward v. Balderston, 10 Kan. 131,) we will examine the first ground of demurrer insisted upon, namely, that several causes of action are improperly joined. Those in favor of the Ft. Smith Company against the Atchison Company cannot be properly united with causes in favor of Sumner county against the consolidated company, and the companies from which it was formed. Neither can the cause in favor of the county against the Atchison Company and the consolidated company to annul the lease be joined with the one to declare void the consolidation. We have seen that some of these causes affect parties that are not concerned in other causes which have been stated, and, as said in Lindh v. Crowley, 26 Kan. 47, it will not do to unite in one pleading a cause of action against two or more, with a cause of action against a part of the defendants only." See, also, Haskell County Bank v. Bank of Santa Fe, (Kan.) 32 Pac. Rep. 624. Indeed, it would seem from what is shown in the record that the action to annul the consolidation should be brought by the attorney general in the name of the state. In some of the allegations and arguments in behalf of the county the continued existence of the Ft. Smith Company is claimed, while in others the extinguishment of the corporation by the organization of the consolidation is assumed. If consolidation has been successfully accomplished the Ft. Smith and other constituent companies no longer exist, and the plaintiff below must obtain its rights as a stockholder against the consolidated company. Even if the proceedings were irregular or wrongful in some respects, the intelligent acquiescence or ratification of the stockholders in such a consolidation would make it good, and bind the stockholders. It would seem that the first and most important step in this litigation should have been the determination of the validity of the consolidation, and, if it is set aside, then some of the relief sought by the plaintiff below might be obtained. On the other hand, if it should be upheld as against the complaining stockholders, they would be concluded on several of the matters that are the subjects of complaint. Ordinarily the original or consolidated charter of a corporation should be attacked only at the instance of a public officer, and in the name of the state. Cases may arise where such an action

can be maintained at the instance of a constituent company, or a stockholder of the same, where the consolidation is void, and the officer whose province it is to bring such an action refuses to act; but it is not charged that the attorney general or county attorney had refused to institute an action to establish the invalidity or nonexistence of the corporation attempted to be created by the consolidation. It is conceded that the forms prescribed by the statute for the consolidation of railway companies have been observed in organizing the consolidated company. The articles of agreement have been filed with the secretary of state, and ever since that time, and for more than 10 years, the companies so organized have been exercising corporate powers, and had been assuming to be and to act as a corporation for more than five years before the amended petition was filed. In such a case a proceeding to inquire into the validity of the consolidation, and have it annulled, should be brought in the name of the state, by e proper prosecuting officer. Chicago, K. & W. R. Co. v. Board of Com'rs, 36 Kan. 128, 12 Pac. Rep. 593; In re Short, 47 Kan. 250, 27 Pac. Rep. 1005, and cases cited; Bell v. Railroad Co., (N. J. Ch.) 10 Atl. Rep. 741; Terhune v. Potts, 47 N. J. Law, 218; Rice v. Bank, 126 Mass. 303.

Several other questions are suggested in the briefs of counsel, but they cannot be properly or satisfactorily determined until the petition and pleadings have been reformed and corrected. For the reasons stated the judgment of the district court will be reversed, and the cause remanded for further proceedings. All the justices concurring.

SCHRAM, Sheriff, v. TAYLOR. (Supreme Court of Kansas. June 10, 1893.) FRAUDULENT CONVEYANCES--WHAT CONSTITUTESEVIDENCE-INSTRUCTIONS.

1. A creditor who obtains a transfer to himself of all the property of his insolvent debtor, not for the honest purpose of securing payment of a debt, but to aid the debtor in covering up his property and defeating other creditors, will not be protected, nor will the transfer be upheld by merely showing that his debt was bona fide.

2. A creditor who in good faith takes the property of his debtor, at a fair valuation, in payment of an honest debt, is not guilty of defrauding any one; and the fact that the payment of his debt in this manner may absorb the entire property of the debtor is no evidence of bad faith on the part of the creditor, and does not necessarily taint the transaction with fraud.

3. In such a case it should appear that the property transferred bears a just proportion to the amount of the debt sought to be paid by the transfer, and the failure of the trial court to include this principle in an instruction upon such a transfer is held to be material er

ror.

(Syllabus by the Court.)

Error from district court, Butler county; C. A. Leland, Judge.

Replevin by H. H. Taylor against Charles Schram, sheriff. Plaintiff had judgment, and defendant brings error. Reversed.

Redden & Schumacher, for plaintiff in error. Hamilton & Leydig and J. K. Cubbison, for defendant in error.

JOHNSTON, J. This was an action brought by H. H. Taylor to recover from Charles Schram, sheriff of Butler county, the possession of 1,210 head of sheep and 300 lambs, all of the alleged value of $5,065. The sheep were seized by the sheriff, as the property of J. C. Taylor, the father of the plaintiff below, to satisfy a judgment against the father. It appears that after J. C. Taylor had become financially embarrassed he sold, or claimed to sell and transfer, the sheep to his son, for a consideration of about $2,400, which was in the form of an incumbrance upon the sheep, and it is stated that the agreement was that the son should pay and discharge the debt and incumbrance which stood against the sheep. When the sheep had been turned over to the son the father had little, if any, property remaining to satisfy a large indebtedness that existed against him. The cause was tried with a jury, and some of the testimony submitted tended to show that the father was indebted to the son and the sheep were given to him in part payment of the indebtedness. It was claimed that the father owed the son $225 for work and labor; a one-fifth interest in a payment of $500 which had been made by the mother of J. C. Taylor to his five children, which, with interest for 10 years, amounted to about $200; also, a legacy of $255 left to H. H. Taylor by his grandmother, together with interest thereon; and also $375 upon a wheat crop raised by H. H. Taylor and his father while the former was a minor. Counsel for plaintiff in error challenges the validity of this indebtedness, and further insists that there was no bona fide sale of the sheep, nor anything paid upon them, but that they were simply taken subject to a mortgage much less in amount than the value of the sheep; that there was no actual change of possession; and that the sale and transfer were made with the intention to hinder, delay, and defraud the creditors of J. C. Taylor; and, further, that H. H. Taylor was aware of such purpose, and assisted in carrying it out. On the other hand, H. H. Taylor contends that the transfer was bona fide; that there was a complete and continued change of possession from the time of sale; and that the consideration paid by him for the sheep was the full value of the same. It is shown that he paid $1,100 of the indebtedness existing against the sheep, and gave his personal note and mortgage to secure the balance that was due upon them. H. H. Taylor now contends that he tried the case upon the theory that his father had paid to

him what was due prior to the purchase of the sheep, and that the sole consideration of the purchase was the assumption and agreement to pay the amount of the mortgage indebtedness, which was then a lien upon them. The plaintiff in error tried the case upon the theory that H. H. Taylor pretended to be a creditor of his father, and had taken the sheep on his pretended claim of indebtedness, but that the value of the sheep greatly exceeded the amount of the indebtedness and incumbrance, and the transfer was in bad faith, and that the value of the goods did not bear a just proportion to the amount of the indebtedness.

There was testimony that justified the court in instructing upon both theories, and the principal error complained of is an instruction given to the jury, which reads as follows: "That when a person purchases goods with a knowledge that his vendor intends by the sale to defraud his creditors, or hinder or delay them in the collection of their debts, such purchaser will not be affected if he takes the goods, in good faith, in payment of his honest debt. A creditor vlo lates no rule of law when he takes payment of his debt, though he knows that other creditors are thereby deprived of all means of obtaining satisfaction of their own equally meritorious claims." One criticism upon the instruction is that it justified the jury in holding that the creditor or purchaser who knowingly assists a debtor to commit a fraud upon his creditors will be protected, and the transaction upheld. The language of the instruction is confused, inconsistent, and to some extent misleading. A purchaser who joins with a vendor in an attempt to defraud his creditors cannot be said to act in good faith. However, a purchaser who in good faith takes the property of his debtor, at a fair valuation, in payment of his honest debt, is not guilty of fraud against any one. The fact that the payment of his claim in this manner may absorb the entire property of the debtor is no evidence of bad faith, and does not necessarily taint the transaction with fraud. The most serious objection to this instruction, however, is the omission to state that the goods taken should bear a just proportion to the amount of the debt sought to be paid by the transaction. This court has repeatedly sustained transactions whereby bona fide creditors obtained a preference over other creditors by taking the property or security on the same, but it has never been held that he may take property greatly in excess of the amount of the debt. So it has been said that "a debtor in failing circumstances may prefer one creditor to another, although that creditor should be his wife, and he may in good faith transfer his property, at a fair price, to her, in payment of her bona fide claim." Bank v. Croco, 46 Kan. 631, 26 Pac. Rep. 942. In the case of Bank v. Ridenour, 46 Kan. 721,

;

27 Pac. Rep. 150, cited by defendant in error, the right of a creditor to a preference was sustained, providing the transfer was made in good faith to pay a bona fide debt, and the value of the property taken was not in excess of the debt which was actually due. Many cases are cited which, it is stated, show "that where the conveyance to a creditor having a bona fide claim is in excess of the actual debt, or is given to favor the debtor, or merely to cover up the property from other creditors, or to prevent a fair sale of the property, then the transaction, sale, or conveyance so fraudulently made to the creditor having the honest debt is void, at least as to the creditors not preferred." See, also, Lewis v. Hughes, 49 Kan. 23, 30 Pac. Rep. 177; Dodson v. Cooper, 50 Kan. 32 Pac. Rep. 370. Counsel for Taylor recognizes the same principle where he states in his brief that "a creditor has the right to purchase, for a man always has the right to protect himself; and the creditor has a right to purchase property sufficient to pay his debt, provided his debt is just, and he only purchases enough property to pay his debt, and he purchases at a fair value." In this case it was claimed that the value of the sheep greatly exceeded the incumbrances against them, and there was a dispute in regard to the amount of the mortgages which constituted liens upon the sheep. On one side it was claimed that the mortgages amounted to about $2,300, and that the sheep were not, at the time of the transfer, worth more than $2 per head. The plaintiff in error insists, however, that the liens upon the sheep did not amount to $2,000, and that the sheep were actually worth nearly double the amount of the incumbrances. Whether the sheep, which constituted about all the property of the insolvent debtor, were taken at a fair value, was a material question in the case, and a proper instruction with regard to it was important. If it had been specially found that the amount of the liens and the value of the sheep were substantially the same, it might be said that no prejudice had resulted from the misdirection of the jury; but no special findings were made, and we are unable to find anything in the record to cure the vice of the instruction. In the general verdict returned in favor of Taylor it is found that the sheep were of the value of $3,200 at the commencement of the action, but what their value was at the time of the transfer cannot be stated with any degree of certainty.

The sufficiency of the evidence is presented by a demurrer which was filed, but we cannot say that there was error in overruling it. If the case had been properly submitted to the jury, with a result similar to what was obtained, we would feel compelled to say that all questions respecting the honesty of the debt, the fairness of the price, and the good faith of Taylor, had been set

The Cimarron Land Company entered into a written bond or contract with Mrs. Belle Barton, as follows: "Know all men by these presents, that the Cimarron Land Company, a corporation duly organized under the laws of the state of Kansas, acknowledges that the said Cimarron Land Company is indebted to Mrs. Belle Barton, of the town of Cimarron, Kansas, in the sum of $5,000, the payment of which we bind said corporation to well and truly pay as hereinafter provided. H. H. Unland, Vice President. Attest: C. H. Beery, Secretary. [Corporate seal.]" The written bond or contract was conditioned that the company would purchase block 43, in the Cimarron addition to the city of Cimarron, and convey the same by warranty deed to Mrs. Barton on or before January 1, 1888, upon the payment of $100. Held, that the amount stated in the bond or contract was nothing more than a penalty. For a breach of such bond or contract, the recovery must be limited to the actual damages proved.

(Syllabus by the Court.)

Error from district court, Gray county; A. J. Abbott, Judge.

Action on a bond by Belle Barton against the Cimarron Land Company. Plaintiff had judgment, and defendant brings error. Reversed.

The other facts fully appear in the following statement by HORTON, C. J.:

On the 6th day of August, 1888, Mrs. Belle Barton commenced her action against the Cimarron Land Company to recover the sum or $5,000, upon the following written bond:

"Know all men by these presents, that the Cimarron Land Company, a corporation duly organized under the laws of the state of Kansas, acknowledges that the said Cimarron Land Company is indebted to Mrs. Belle Barton, of the town of Cimarron, Kansas, in the sum of $5,000, the payment of which we bind said corporation to well and truly pay as hereinafter provided. H. H. Unland, Vice President. Attest: C. H. Beery, Secretary. [Corporate seal.]"

"The condition of the above obligation is as follows, to wit: Whereas, the Cimarron Land Company did on the 30th day of November, 1885, sell and convey, by warranty deed, block 44, in the Cimarron Land Company's addition to the city of Cimarron, Kansas, to Mrs. Belle Barton, of Cimarron, Kansas; and whereas, the Cimarron Land Company was mistaken as to the boundaries of the said block 44, and represented to the said Mrs. Belle Barton that block 43 was included