THE CALIFORNIA STEAM NAVIGATION COMPANY v. WRIGHT, 8 Cal. 585

Burnett, J., delivered the opinión of the Court—Terry, C. J., and Field, J., concurring. This was an action to recover a specified sum as stipulated damages. The case was before this Court in July, one thousand eight hundred and fifty-six, when the judgment of the Court below sustaining the demurrer to the complaint was reversed, and the cause remanded* for further proceedings. The defendant answered, and the plaintiff had judgment, from which the defendant appealed. The first point made by the learned counsel of appellant is that the Court erred in admitting in evidence the plaintiff’s charter.

They insist that a steamboat company cannot be incorporated under the act of one thousand eight hundred and fifty-three. But we are not permitted to examine this question, as the answer did not properly put it in issue. The answer was a simple denial of the allegations of the complaint in general terms, except as to one point. Under the provision's of the fortieth, forty-fourth and forty-fifth sections of the Practice Act, the want of capacity in the plaintiff to sue, should have been specially set up in the answer. The general issue is not sufficient. 1 Mass., 1,159; 6 N. H., 527; 197; 7 Mon. Ky. R., 4&4.

The want of legal capacity to sue is a personal disability; and if the defendant intends to set up such a defence, he should state so distinctly. The general denial relates to the other facts alleged concerning the contract. The defence,' that the plaintiff has not legal capacity to sue, goes to the entire action, constituting a full separate defence, and should be separately stated. The second point made by the defendant is “-that upon a fair and reasonable

interpretation of the contract, when Wright ceased to have any interest in, or control over the Goliah, he was not responsible for her future employment.” In the agreement, the defendant, Wright, stipulated that, he would not run, or suffer to be run, or employed, the said steamer West Point, or any other steamer in which he is now or may hereafter be interested.” It appears, from the testimony, that defendant, at the time he ' made the covenant, owned one-third of the Goliah, but that he had parted with his interest to his two sons, before the steamer was put upon the Sacramento River.

And his counsel insist that under the agreement, properly construed, “it was a,present] subsisting interest, or control, at the date of the alleged breach of the covenant, which was to determine his liability; and not an interest held before or after the act complained of.” It is true that the

interpretation making defendant liable after he had parted with his interest in the Goliah, would prevent him from selling" his interest in the vessel, except at his peril. He could, however, have protected himself by binding the 2Durchaser not to employ her in the prohibited trade. But, on the other hand, if we adopt the

interpretation of defendant's counsel, the plaintiffs’ assignor made a very foolish arrangement, for if Wright could sell the vessels in which he was then interested, and thereby absolve himself from all responsibility, then the substantial purposes of the agreement would have been defeated. The language of the agreement is too specific, definite, and certain, to be mistaken. The object of the covenant was to exclude from the trade certain vessels then belonging to defendant, in whole or in part, and also all others that might thereafter belong to him at any time within the stipulated period of three years.

And this construction is supported by the stipulation that the vessels themselves were pledged to secure the due performance of the contract on his part. The third point made by defendant’s counsel is, that at the time of the alleged breach, Chenery, the assignor of plaintiff, had ceased to be interested in steamboats, and the assignment of the agreement was made after defendant had sold his interest in the vessel.

It appears defendant sold his interest, August, 1854; Chenery ceased to have any interest in steamboats in April, 1855; the assignment of the agreement was made in August, September, or October, 1855; written notice of the assignment was given to defendant by the plaintiff, October, 9, 1855; the Goliah was put upon the Sacramento River, October 5,1855, and taken off on the middle of November, 1855.

On the nineteenth of September, 1855, Chenery wrote a letter to defendant, in which he asked defendant, as a particular favor, in case he sold his vessel, to inform him before the sale, that Chenery’s creditors might sell his stock, (which was pledged to them as collateral security,) to better advantage.

It is insisted that these facts show that Chenery, who then held the agreement, considered Wright authorized to sell, and that he would not be responsible if his vendors should put the vessel into the prohibited trade; and that defendant was misled by the acts of Chenery, and induced to take the course he did by the latter’s implied consent.

But the proof shows that defendant had sold all his interest in August, 1854, and that the agreement was in fact made by Chenery for the benefit of the company then about to be incorporated; that the seventeen thousand five hundred dollars agreed to be paid by Chenery was paid by the company in checks drawn by its officers upon its bankers, and that defendant knew these facts before he sold his interest in the vessel. It is true that Chenery, in September, 1855, told defendant he had not assigned, and would not assign the contract to any one.

There can be no doubt but that the company would be responsible for everything that Chenery was permitted to do, in his own name before the assignment, provided the defendant was ignorant of the fact that the contract was made for the benefit of the company. Osborn v. Hendrickson, January, 1857. The promise of Chenery, that he would not assign the contract to any one, was made without consideration, and did not bind him, and was in fraud of the company. The defendant had no right to receive and act upon such a promise, when he knew the facts.

The next point raised by the defendant is that the plaintiff was not competent in law to take an assignment of the contract, and enforce the same, even though its act of incorporation was conceded to be valid. The company being chartered for the purposes of navigation, it is insisted that such

an act did not come within the scope of its charter. There is certainly a great deal of force in this objection, but as it was necessarily decided by this Court on the former appeal, the question must be considered as put at rest in this case, and we are not at liberty to express any opinion in regard to it. The last point necessary to notice is, that the agreement was void, because Chenery concealed from defendant the fact that he was acting for the company then about to be organized.

If we concede, for the sake of argument, that Chenery was guilty of such fraud as would void the contract, and that the company was bound by his acts, could the defendant avail himself of such defence under the answer in this case ? We think not. Ho fraud was alleged in the answer. NTor could the defendant avail himself of such a ground, and still retain the seventeen thousand five hundred dollars received by him. He should have propeeded promptly to set aside the agreement by a direct suit for that purpose, when he discovered the fraud, and by offering to return what he had received.

The parties must be placed in statu quo. To say that Wright could keep all the money, upon the ground of fraud, and then resist the payment of the penalty upon the same ground, would be clearly unjust and illogical. If the agreement was valid for the purpose of the payment, it must be valid .for the penalty. It must be good or void for both purposes. Judgment affirmed.