The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1899-04-04
IN THE SUPREME COURT
DECISION IN THE OMAHA FIRE
INSURANCE CASE.
The Court Below Reversed and New
Trial Granted-Stephani VS.. the
Southern Pacific.

In an opinion written by Justice
Miner yesterday, and concurred in by
! Chief Justice Bartch and Justice Bas-
kin of the supreme court, in the case
! of LodoWick +. .Crofoot, receiver of the
! Omaha Fire Insurance company, APP
pellant, VS.. George w. Thatcher and
S. 7. Josselyn. it is held that the I'M
paid stock subscriptions of defendants
and respondents constituted a trust
fund against which the statute of linn
itations does not bar the maintenance
of an action to recover the amount
sued for by the receiver.
! The statement of the case shows that
on April "a, 1889, Thatcher subscribed
| for $500 worth of the Omaha Fire In
surance companys capital stock and
paid $1,250 in cash therefor, the balance
of the purchase price of his stock sub
scription being represented by prom
issory note given jointly by him and
Josselyn to the insurance company and
due on demand. On March 81, 1897, the
| insurance company became insolvent
and a receiver was appointed, who i'm
mediately thereafter sued the makers
of the note for the face of the obliga-
! ton.
Demurring, the defendants set up
that the cause of action was barred by
the Utah statute of limitations and
also by the Nebraska statute. The de-
murrer was sustained, and from the
! judgment of the First district court
| the plaintiff appealed.
The supreme courts opinion holds
that the liability of the makers of the
promissOry note is governed by the
laws of the state where the contract or
note was made, in this case in the state
of Nebraska. Notwithstanding that
the note was payable on demand, and
under the Nebraska statute was pay
able within one year and under the
/ Utah statute within six months from
! it's date, the supreme court is of the
| opinion that the cause of action did
not commence to exist until the insur-
ance company was out of funds and
necessity arose for calling in the
stockholders unpaid subscriptions to
meet the company's obligations. This
! date the opinion states to have been
Dec. 81, 1896.
The opinion also holds that the OBJ
| ject of the law and the contemplation
of the parties forming the insurance
company under the laws of the state
of Nebraska, and not the mere form
of the note, should control in determin-
I ing the due date of the note. The ap-
pellate court finds it was not intended
! to be payable forthwith without de-
mand, but only in the event of the
unpaid part of the capital stock being
required to pay the company's neces-
Sary expenses and fire losses. The rule
as to unpaid subscriptions for stock
when a corporation becomes insolvent
| is enforced by courts in requiring that
| the same be applied for the benefit of
! the creditors. So, also, courts have
falmoSt universally held that the capital
| stock is a trust fund and that the stat
ute of limitations governing negotiable
instruments has no application and
creates no bar until the creditors have
| had an opportunity to subject the un-
/ paid stock subscriptions in settlement
of their claims. The statute of limita-
lions does not commence to run until
| after there is a cause of action, and in
! this case there was no cause of action
until after demand for payment of the
note was made by the receiver.
! The supreme court holds that the
! court below, Judge Hart, erred in sus-
! tanning the demurrer dismissing the
action and decreeing that the statute
| of limitations barred the prosecution
| of the receivers action to recover on
! the note. The case is reversed and the
lower court is directed to set aside
| the judgment and to grant a new trial.
Stephan VS.. Southern Pacific.
The supreme court of the state yes
terday rendered a decision in the case
of Joseph Stephan, plaintiff and ap-
pellant, VS.. the Southern Pacific COM
pany, in which the judgment of the
Second district court, granting a nom
suit to the railroad company, was af-
firmed. The action was brought to re-
cover damages for injuries alleged to
have been received by plaintiff, a sec
ton hand, being run down by a South
ern Pacific locomotive a short distance
west of Palisades, New, on July so,
1897
In the supreme courts opinion af-
firming the judgment of the lower
court granting a non-suit to the plain
tiff, who, in obedience to the orders of
the roadmaster, was travelling on a
railroad velocipede ahead of the loco
motive, going backward, it is stated:
Had the plaintiff exercised that rea-
sonable care and caution which he was
called upon to exercise in the position
in which he was placed, it is quite
probable that he might have avoided
the injury he complains of. BY failing
to use reasonable care, it cannot be
said that he did not contribute to bring
upon himself the injury for which he
seeks redress.
Upon a careful examination of all
the decisions of the higher courts of
the country, we are impelled to con-
clude that under the facts as shown,
the plaintiff was a fellow servant of
the engineer, and that the court COM
mitted no error in directing verdict
for the defendant"
The opinion was written by Justice
Miner and concurred in by Chief JUS
tice Bartch and Justice Baskin.
HANNA HEARD FROM.