demand upon defendant for the amount of said policy, but payment was refused "on the ground that said policy was not in force at the time of the death of said assured, and plaintiff was so notified by defendant"; that plaintiff was then notified that there remained a balance in cash of $107.99 due plaintiff as the difference between the cash surrender value of said policy and the amount due on said loan at the time of said cancellation; that a check for that amount and a blank form of receipt were sent to plaintiff and still remain in her possession; that "plaintiff requested defendant to furnish her the usual form of proofs of death of said assured and the same was so furnished to plaintiff"; but that she was then informed that said proofs were furnished "upon the distinct understanding that it was without waiver upon the part of defendant that said policy of insurance had been canceled during the lifetime of the insured, and was not in force at the time of his death, and said forms of proof of death were secured by said plaintiff upon such understanding, and not otherwise."

The cause was tried by the court without a jury, and plaintiff had judgment for $107.99. Plaintiff appeals from so much of the judgment as gave her but $107.99, and claims that it should have been for the full amount claimed “or at least for the sum of $2,998.17, with interest thereon from May 27, 1903"; and appeals also from that part of the judgment awarding costs to defendant. The appeal comes up on a bill of exceptions.

It is not necessary to set out the findings specificallysuffice it to say that the averments of the answer are found to be true in all material particulars.

In certain respects the findings are challenged as unsupported by the evidence. It is claimed that the evidence was insufficient to show that the policy was canceled by defendant and also to show that its cash surrender value was as alleged by defendant. The evidence consisted in considerable part of letters between the officers and agents of the company and by them to the assured and plaintiff; also of office records and abbreviated notations on the policy which were explained. It is suggested by plaintiff that these mention the "surrender" of the policy and not its "cancellation." But the surrender spoken of was explained to have been made

under the loan agreement, and it was further shown that the surrender of the policy was in effect its cancellation. It sufficiently appeared that so far as the company could do so it canceled the policy and so treated it. Whether it had a right so to do is a question of law rather than of fact. The evidence was also sufficient to show that the cash surrender value of the policy at the date of its cancellation was as claimed by defendant and as credited on the loan. The finding "nor was the right of said defendant to cancel said policy ever changed or altered except in reference to said due date," is challenged as unsupported by evidence. This refers to the extension of time of payment of the loan as shown above. It is claimed that as these extensions were made at the request of the insured as alleged in the answer and shown by the evidence, and not by plaintiff, and as the notice given was to William Frese that the loan would be due August 29, 1902, and was not given to plaintiff, she is not bound by what took place between her husband and the company of which she had no notice. Passing for the moment the legal effect of these extensions as affecting plaintiff's rights, it will be observed that the loan agreement expressly authorized the company, on default of payment of the loan, "without notice and without demand for payment, to cancel said policy and apply the customary cash surrender consideration . . . to the payment of the said loan."

...

The alleged errors in admitting evidence over plaintiff's objection may here be disposed of. They are five in number, to wit: (a), relating to the admission of the letter of the defendant's agent to plaintiff's husband informing him that the company had canceled the policy; (b), his reply thereto; (c), the company's reply to this letter; (d), the second letter of William Frese to the company; (e), the company's letter to plaintiff declining to pay the policy. There is nothing in any of these letters in the slightest degree harmful to plaintiff. There are no admissions or declarations of plaintiff's husband affecting the rights of plaintiff; they had some tendency to show that her husband was not mentally deranged.

The real questions presented by the appeal are questions of law, and upon these plaintiff's position is: 1. That the loan agreement is ultra vires; 2. That the right given by the agreement to cancel the policy is a provision for the forfeiture of

property subject to a lien and is in restraint of the right of redemption from a lien, and therefore void; 3. That if not void as a provision for forfeiture, it is merely an option or offer by plaintiff to sell the insurance policy within a reasonable time after August 29, 1900; 4. That plaintiff pledged her policy as a surety for money borrowed by William Frese and she was exonerated by the new agreement of August 29, 1900, whereby William Frese was given an extension of one year.

It should be stated that the loan was made to plaintiff and her husband, both joining in the execution of the agreement to repay the sum loaned and assigning the policy as collateral security; the money was paid to them by the company's check to the order of both; there was evidence that William Frese was sound of mind during all the transactions between him and the company, and although not in good health, the company, so far as appears, was not aware of his condition until he applied for a restoration of the policy after its cancellation, and upon the report of the company's medical examiner.

1. Was the agreement ultra vires? The argument of appellant is that under the act of March 28, 1874 (Stats. 1873-74, p. 777), defendant was authorized "to loan upon mortgages of real estate"; that the agreement of 1899 was prior to the enactment of section 421, subdivision 7, of the Civil Code which permits insurance corporations to loan money on their own policies, and hence there was no authority for making the loan agreement. The contention is that by the act of 1874 there was an implied prohibition to loan upon property other than real estate. Respondent, it seems to us, makes conclusive answer to this contention: That by the terms of the agreement and as alleged in the complaint, "plaintiff consented to the pledge, and did pledge, the said policy of insurance to defendant as security for said loan"; that plaintiff and the assured received consideration for the loan agreement and have not offered to repay it and are estopped from setting up the act of the corporation as ultra vires. (Grangers' Assn. v. Clark, 67 Cal. 634, [8 Pac. 445]; Camp v. Land, 122 Cal. 167, [54 Pac. 839]; Bay City Building & Loan Assn. v. Broad, 136 Cal. 525, [69 Pac. 225].) That the loan agreement was, prior to the death of the assured, fully exe

cuted by both parties, and in such a case ultra vires cannot be set up. (28 Am. & Eng. Ency. of Law, p. 50.) That the contract of a corporation is legal if not expressly prohibited, and it may loan its surplus funds in the absence of such prohibition. (Colorado Co. v. American Co., 97 Fed. 843; Civ. Code, sec. 354, subd. 8.)

2. It is contended that the loan agreement provides for the forfeiture of property the subject of a lien, and is void as in violation of section 2889, Civil Code, which reads: "All contracts for the forfeiture of property subject to a lien or satisfaction of the obligation secured thereby, and all contracts in restraint of the right of redemption from a lien are void." It is claimed that this section is declaratory of the equitable doctrine that property given as security cannot be taken in satisfaction of the obligation secured thereby, and that any provision in the instrument of security that undertakes to provide for such forfeiture or for restraint of the right of redemption is void. (Citing Bradbury v. Davenport, 114 Cal. 593, 599, [55 Am. St. Rep. 92, 46 Pac. 1062]; Lowe v. Ozmun, 3 Cal. App. 387, [86 Pac. 729].) It was sought in the early cases by virtue of this section of the Civil Code to have the court declare void a conveyance of the mortgaged premises by the mortgagor to the mortgagee. But it was held that where the sale is fair and free from undue influence, oppression or fraud and for an adequate price, it is not restrained by section 2889, Civil Code. (Phelan v. De Martini, 85 Cal. 365, [24 Pac. 725].) The case of Bradbury v. Davenport, cited by appellant, was one involving the mortgage of real estate, where the mortgagor was, by unfair advantage taken of his physical condition and financial embarrassment, induced to place a deed of the mortgaged premises to the mortgagee, in escrow, under an agreement to deliver the same to the mortgagee upon payment by him of a certain sum of money, and the holder of the escrow was authorized to discharge the mortgage and return the note secured thereby to the mortgagor. It was clearly a case of an attempt to secure unfairly a waiver of the equity of redemption by the mortgagor. In Lowe v. Ozmun, 3 Cal. App. 386, [86 Pac. 729], cited by appellant, the action was for the conversion of certain bonds of a gas company and a railway company. Embodied in the collateral note was an agreement as to the

manner of selling the bonds on default of the pledgor, either by private or public sale. The pledgee assumed to purchase the bonds himself at private sale. Speaking of this the court said: "The term 'private sale' comprehends something more than the mere taking over of the property by the pledgee at such price as he may elect to consider an offer. This is in effect but a declaration of forfeiture, an agreement for which is invalid under section 2889, Civil Code." Conceding that the first part of this section applies to cases of forfeiture of all kinds of property, the latter part of the section refers only to cases where there is a right of redemption-such as mortgages of real estate. Here there was no right of redemption, for the code expressly provides that a pledgee may sell property without right of redemption and the manner of sale may be agreed to and the notice waived by the pledgor. (Civ. Code, sec. 3000 et seq.; Williams v. Hahn, 113 Cal. 475, [45 Pac. 815].) True, section 3011 furnishes a further means by which the pledgee may obtain money from his security, and the section provides that "instead of selling property pledged, as herein before provided, a pledgee may foreclose the right of redemption by a judicial sale," but this section by no means can be said to endow pledgors of personal property with a right of redemption as is the case of a mortgage of real estate. (Farmers & Merchants' Bank v. Copsey, 134 Cal. 287, [66 Pac. 324].) Section 3006 of the Civil Code provides: "A pledgee cannot sell any evidence of debt pledged to him except the obligations of governments, states and corporations, but he may collect the same when due." Under the agreement—"and to give effect to the contract, if possible, is our duty" (Lowe v. Ozmun, 3 Cal. App. 387, [86 Pac. 729]), the defendant proceeded strictly within its terms, and in effect collected the obligation pledged to it and applied the proceeds to the debt, or, in pursuance of the contract, applied to the debt the cash surrender value of the policy, and to do this without notice to the pledgors was within its rights. (Du Brutz v. Bank of Visalia, 4 Cal. App. 201, [87 Cal. 467, 469].) It cannot be claimed as necessarily inequitable to apply the cash surrender value of a five thousand dollar paid-up policy in payment of indebtedness amounting to no more than the amount here involved. It was applied at its full cash value and had no other except