author: "WILDMAN, J.

text:
    INTEREST AND USURY — PARTNERSHIP.
    [Lucas (6th) Circuit Court,
    June 27, 1907.]
    Haynes, Parker and Wildman, JJ.
    George B. Boone v. Peter L. Andrews et al.
    1. Burden and Sufficiency of Proof as to Usuby.
    Where usury is pleaded as a defense to a written instrument in contradiction to the terms of such instrument, the burden is on the party so asserting it, and the plea must be supported by clear and satisfactory evidence.
    [For other cases in point, see 5 Cyc. Dig., “Interest and Usury,” §§ 508-‘510. — Ed.]
    25. Usury Law not Applicable to Contract fob Advancing and Hazarding Money in Business.
    Where one person hazards, in a business to be conducted by himself and others jointly, or by such others for his benefit, money which is by agreement subjected to the risks of the business, the law as to usury does not apply.
    [For other cases in point, see 5 Cyc. Dig., “Interest and Usury,” §§ 402-411. — Ed.]
    3. Advancements foe Joint Venture not Usurious Although Profits are Liquidated.
    An agreement whereby the first party thereto advances sums of money to be used fey the second parties on conducting a business of making usurious loans and purchasing time certificates of wage earners, the profits and losses of such business to be divided and borne equally fey such parties, is not usurious and is not made so by subsequent amendment whereby the first party promises to accept a stated per cent on the moneys so advanced, as liquidated profits, or in lien of profits. The original agreement as to apportionment of losses remained unchanged.
    [Syllabus by the court]
    Appeal from Lucas common pleas court.
    J. A. Barber, for plaintiff!.
    Clarence Brown, D. C. Mitchell and L. T. Williams, for defendants.
   "WILDMAN, J.

This case involves tbe construction of a written contract entered into by and between tbe plaintiff, George B. Boone, upon tbe one part, .and Peter L. Andrews and bis wife, Clara L. Andrews, on tbe other part, together with certain amendments to said contract and an oral arrangement subsequently entered into, all read in tbe light of the circumstances and tbe acts of tbe parties thereunder. Briefly stated, in tbe year 1899 Peter L. Andrews and bis wife were engaged in the business of loaning money, at large rates of interest, and buying the time of wage earners, upon which business they were realizing large sums of money and profits. On February 28 of that year the principal ■contract involved in this ease was entered into. The writing before me which embodies this contract and the subsequent amendments, except the oral arrangement to which I have already referred, reads, with •said amendments, as follows: ■

‘ ‘ Toledo, Ohio, February —, 1899.
“This memorandum of agreement, entered into this twenty-eighth day of February, 1899, by and between Geo; B. Boone, of the first part, and Peter L. Andrews and Clara L. Andrews of the second part wit-.nesseth:
‘ ‘ The first party agrees to advance to the second parties the sum of four thousand dollars ($4,000), if he shall deem it necessary or advisable, and as much more as he may deem advisable, said sum to be used by said second parties in their business as money lenders and purchasers of time orders, said moneys so advanced to be and remain at .all times the money of the first party.
“Said second parties agree to take said money and keep it invested as aforesaid for said first party, and if any of said money shall be lost, the second parties agree to pay to said first party one-half of the amount lost, and a loan which is not paid, or the interest not paid for two months, shall be deemed and treated as a loss, but all so-called losses ■and interest shall be returned, one-half to first party and one-half to .second party, when collected; and said second parties agree to pay to said first party the one-half of said losses determined as aforesaid at the time of each monthly settlement provided for herein.
“The first party agrees to allow to the second parties as compensation for their services herein the one-half of whatever is made as interest or profits on the use of said money and the additional sum of twenty-five dollars ($25) per month in full payment of every and all ■expenses. v
“It is further agreed that said second parties shall make a full ¡statement and such showing as the first party may require not later than the first of each month, beginning with the month of April, 1899,. and at such other times as first party may request, and shall pay to said, first party on said first of each month, one-half the interest or profits for the preceding month, and the one-half of the losses ascertained as¡ aforesaid, less the twenty-five dollars allowed as expenses.
“It is further agreed that all losses that may arise on loans made-prior to March 1, 1899, shall be paid by the second parties.
“It is further agreed that the amount of money advanced by first party on this agreement shall be evidenced by notes given by second parties to first party.
“This agreement may be terminated at any time at the option of the first party.
“(Signed)
“George B. BooNe,
“Clara L. Andrews)
“P. L. ANDREWS.”
“In consideration of the payment by said second parties to the-first party on the first of each month of an amount of money equal to-3 per cent of the amount invested by said first party under above agreement at date of such payment, the first party agrees to release all claim-to any share in the profits of said business for the month immediately preceding such payment.
“(Signed)
“GeoRGE B. Boone,
“CdaRA L. Andrews,
“Peter L. Andrews.”
“4-1, 1899.
“Toledo, Ohio, March 1, 1904.
‘‘ The first party agrees to waive all claim to profits under the foregoing agreement for one year from this date, in consideration that said second parties pay to said first party such an amount as they reasonably can on the first of each month, and first party agrees to surrender to said second parties notes of the second parties or either of them, held by the first party, in the order of their dates, commencing with the oldest note, to the amount of the payments made hereunder. Said payments shall aggregate six thousand dollars for the year.
“ (Signed)
“ George B. Boone,
“Clara L. Andrews,
“P. L. Andrews.”
“Toledo, Ohio, November 1, 1905.
“The first party agrees to waive all claim to profits under the foregoing original agreement as long as the following payments shall be made to him by the second parties, viz.: The second parties shall pay to the first party on the first of each month after date an amount of money equal to 6 per cent on the money invested in the business mentioned in said agreement at the time of such payment, and also such further sum on the first of each month, so that the aggregate of such payments for any one year after date, excluding said interest payments, shall not be less than $1,800 and said last mentioned payments shall be credited upon the amount invested in said business by first party.
“In case of default by said second parties in either or any of said payments, then this agreement shall terminate and the said original agreement shall become and be in full force.
“(Signed)
“George B. Boone,
“ClaRA L. Andrews,
“P. L. Andrews.”

The contention of the plaintiff, George B. Boone, is, that this arrangement between him and Mr. Andrews and wife constituted one of three things: . First, a partnership; second, a joint venture of money and skill, or third, a trusteeship or agency; and that whichever one of these three alternative constructions be adopted, the plaintiff is entitled to an accounting from the defendants, Andrews, for the moneys placed in their hands by him under the terms of the contract.

On the other hand, it is insisted by the defendants, Andrews, that the arrangement was merely a loan of $4,000 at or about the time of the entering into this arrangement and of various sums at subsequent dates, without any hazard to Boone as to the return of - the money so loaned, except perhaps such hazard as may attach to any loan, as to the personal responsibility of the borrower, and that Boone was to receive as consideration for the use of this money, usurious interest. It is further contended by these defendants that Boone has been repaid the entire amount of such loans or advances, with interest at the leg'al rate, far in excess of that to which he is entitled. The plaintiff has brought an action not only for an accounting, but for the appointment of a receiver and for an injunction to restrain the transfer or other disposition of any of the assets of the claimed partnership or trust, now in the hands of the defendants, Andrews. The court below appointed a receiver, who took into his possession the property claimed by the plaintiff to belong to the alleged partnership, or trustees, or agents, •and also a referee to try tbe issues of fact and law involved in the controversy. The referee reported adversely to the claims of the plaintiff; the receivership, upon motion, was terminated and the receiver discharged and a temporary injunction which had been allowed was dissolved, and, on final decree, the court enjoined the plaintiff from attempting to collect certain notes which had been given him by the defendants, Andrews, under the terms of said contract. From these various orders, so far as they were embodied in the final decree, plaintiff ■appealed to this court and the case has been submitted to us upon the pleadings, upon all the evidence taken before the referee and some supplementary evidence orally heard by this court.

It is not of very much consequence, in our judgment, by what name we denominate the condition which arose upon the execution of this contract of February 28, 1899. It is of importance tó ascertain the true intent and spirit of that contract as determining just what was the arrangement in contemplation of the parties when the paper was signed. It appears that some years prior to this date the parties had been engaged in a joint business, though they may not have called it a partnership; but it is not disputed by the defendants here through their counsel that they were at this prior time engaged in^ business together; and while we are not informed with precision as to the date when that earlier arrangement began, it appears that in June or July, 1898, — if we are to rely upon the testimony of Mr. Boone in this regard — there was a termination of that arrangement, when one Rowland seems to have taken the place of Mr. Boone in the business conducted by Mr. Andrews and wife. Some sort of a settlement was made with Mr. Boone •at that time and he was partly paid an agreed indebtedness then existing in his favor. The residue, however, of a considerable indebtedness was unpaid at the time of the execution of the contract of February 28, 1899.

Much stress is laid by counsel for the defendants upon the fact that there is no mention, in terms, of a partnership, nor is the word '“partner” used in this contract which is the particular subject of ■contention and construction; and in the opinion of the referee, or perhaps in his report, some emphasis is placed upon the fact that there had been no talk, so far as appeared by the evidence, of a partnership, so denominated. Our search of the evidence discloses the statement made by Mr. Boone, in cross-examination, I think, that he ■did not recall that in- the conversations between him and Mr. or Mrs. Andrews anything was said about a “partnership.” It is urged upon ns with much earnestness and some plausibility, perhaps, that as Mr. Boone was a lawyer and familiar with the law pertaining to partnerships, if he had designed to enter into the relation of partner \yith these defendants, that fact would have been expressed with elear•ness in the contract, which was written by him. A further examination, however, of this somewhat voluminous record discloses among numerous exhibits an earlier writing, signed by these same parties and written by Boone, which seems to have been made the basis of the original arrangement between them, not the one under which operations were conducted after February 28, 1899, but in the period which terminated with June or July, 1898. This contract is known as Exhibit 24 and is attached to the other evidence offered to the referee. It is brief and, I will read it:

“This memorandum of agreement entered into between Geo. B. Boone of the first part and Peter L. Andrews and Clara L. Andrews of the second part witnesseth: The first party agrees to advance to the second parties so much money as he may deem advisable, said money to be invested in loans and time certificates, by the second parties. The second parties agree to give to the first party as evidence of said sums •of money so advanced their promissory notes, said notes to be payable at any time either of the parties hereto shall so elect. The second parties further agree to keep said money invested in loans and time certificates, also to furnish to said first party a monthly statement of the .amount of such loans and time certificates, and to pay to said first party his proportion of the profits shown by said statements. It is further .agreed by the parties hereto that the first and second parties shall bear in equal proportions the gain and the loss on the investments of the •second parties. It is further agreed that the title to said investments shall be and remain in the first party but shall be made in the name of Clara L. Andrews, trustee, or other proper party.
“ (Signed)
“Geo. B. BooNE,
“CliARA L. ANDREWS,
‘ ‘ Peter 'L. ANDREWS. ’ ’

The similarity of several of the phrases used in this contract to ■those adopted in the contract of February, 1899, cannot be overlooked. In one part of the testimony of Mr. Boone he is asked what form he used in the drawing of the contract of February 28, 1899. It is in the line of cross-examination, wherein counsel were seeking to emphasize their claim that he would have been likely to adopt the term ■“partnership” if the contract had been intended to embody an agreement to enter into such a relation. In answer to one of these inquiries —the inquiry I have referred to — as to what form, if any, he adopted, he said, substantially, — I have not his precise words before me at the moment — that he had the contract which they had used before, or under which they had carried on business before, the implication being that he had used that, not perhaps entirely as a form from which to draw a new contract, but as suggestive of some of the phrases in it- — -and that it was clearly suggestive of some of these phrases, we have no doubt. This earlier contract bears no date, but it was made at any rate some time prior to June or July, 1898, when, according to the testimony of Mr. Boone, the first arrangement terminated. It was, perhaps, not far from the date when Mr. Boone leased certain property on South Erie street to Andrews, or to Andrews and wife, to enable them to carry on the business in which he was at that time engaged with them or into which he at that time entered, and this was, I think, three or four years prior to 1898.

This contract, Exhibit 24, provides that the title to the investments shall be in the first party, that is, Mr. Boone, although the investments should be made in the name of Clara L. Andrews, as trustee, or some other proper party. For some reason, Mr. Boone did not care, apparently, to have his name used in connection with the business; whether he did not wish to become liable in connection with it, or whether he did not care to have his name associated with it because of its effect in some other way, it is not necessary to inquire. There is no hint that it was a usurious contract; there is nothing in the contract to indicate it; there is nothing tending to show anything of the kind; there is no claim by counsel in behalf of Mr. or Mrs. Andrews that there was any usurious contract made at the beginning of that earlier arrangement. The contract provides expressly that there shall be, not only a community of profits, but a community of losses. They are to share alike and equally in the losses as well as the profits, and, in our judgment, this transaction can have amounted to nothing more and nothing less than a partnership, under well-settled rules — I am speaking now, of course, of this earlier arrangement, evidenced by the testimony of witnesses and by Exhibit 24. The same exhibit uses various other phrases, identical or almost identical, with those embodied in tlm contract of February 28, 1899, and one of them, of much importance, perhaps, or deemed of much importance in the contract of 1899, is found embodied in the contract of the earlier date, as follows: “The second parties agree to give to the first party as evidence of said sums of money so advanced their promissory notes” # * *. It was not then deemed inconsistent with the sharing of losses that the defendants, Andrews, should give tbeir promissory notes to Boone. In the contract of February 28, 1899, we have the phrase:

“It is further agreed that the amount of money advanced by first party on this agreement shall be evidenced by notes given by second parties to first party.”

In the later contract, it is not stated when those, notes should be made payable, whether or not they should be negotiable or what should be their other terms, but in the earlier contract the stipulation was, that they were to be payable “at any time either of the parties hereto shall so elect.”

■We are inclined to think, or, at least it is my judgment, that the construction of the contract of February 28, 1899, would amount to dhe same result as that which is embodied and expressed in the earlier contract; that is to say, when the contract provides that the amount of money advanced shall be evidenced by notes given by the second parties to the first party, as no time of payment is given, it is left open to future -arrangement between them as to when they shall be made payable. That is perhaps not precisely the arrangement which was made in the earlier contract, but it is near enough to it, so far as the purposes of. this case are concerned. The important thing — and which I repeat for the purpose of emphasis — is that in the earlier contract which is unquestionably a contract in which the parties, were to share losses, and under which Mr. Boone might never receive back the moneys loaned or advanced by him, it was not deemed inconsistent with that arrangement that notes ■should be given as evidence of the amount which he so advanced or placed in the hands of Mr. Andrews and his wife. If that was true when that arrangement or contract was made, we may fairly infer that it was the intent of the parties in the second contract that they were to divide the profits and losses, if that contract in other respects will reasonably bear that interpretation.

The contract of February 28, 1899, does not expressly say that the first and second parties shall bear in equal proportion the gain and the losses, but it is provided that:

‘ ‘ Said second parties agree to take said money and keep it invested as aforesaid for said first party, and if any of said money shall be lost, the second parties agree to pay to said first party one-half of the, amount lost * * *.”

I tarry there for a moment. By the terms of the notes the second parties would obligate themselves to pay back the entire amount of money received; but here is a provision that if any part of it be lost, they shall pay to the first party one-half of the amount so lost, the implication being, as we think, that they would not be required to pay back the other one-half — in other words, that as between Mr. Andrews, and his wife on the one side and Mr. Boone on the other, thefce would be an equal division of such loss; that is to say, that they would make' good to him the money which he had let them have, though lost, to the-extent of one-half of it. If all the money should be lost in the venture-—a contingency which, unquestionably, they did not contemplate- — they would be required to give to Mr. Boone one-half of the amount.

There is a further provision in the contract, however, which I will read: “and a loan which is not paid, or the interest not paid for two-months, shall be deemed and treated as a loss, but all so-called losses” (and I invite attention to the phrase ‘so-called’) “and interest shall be-returned, one-half to the first party and one-half to the second party, when collected; * * ” In other words, at the time of the monthly settlements, as subsequently provided, if there was a default as to either-principal or interest, it would be treated, provisionally as a “loss,” and,, if subsequently collected, then the matter would be corrected in a subsequent accounting. It has been argued to us with very much earnestness that the fact that notes were given is the controlling fact; that the money was to be repaid to Boone at all events, that is, the principal, and that they were talking about a loss of interest only when they spoke-about a default for two months and then of the .payment by the second parties to the first party of only one-half of the amounts as to which there have been such defaults and which they call “so-called losses.”' But one trouble with this claimed construction is, that a loan which is-not paid or the interest not paid for two months shall be deemed and-treated as a loss. ” It is not simply the interest. They evidently had in contemplation a possible loss of some portion of the investment and it would be difficult to see how they could shut their eyes to such a possibility, in view of the kind of business that was being conducted.

Now these circumstances, and perhaps some others to which I might refer, aid us in the construction of this contract and weigh more forcibly with us than could have done the use of the term “partner” or-“partnership” in this contract or does the drawing of a subsequent contract in which one Sherer was a partaker, in which there was an express provision for a partnership. That is a circumstance bearing upon the likelihood of Mr. Boone’s drawing a contract with the intent, to enter into a relation analogous to that of partner with Mr. and Mrs. Andrews, and omitting all reference, in terms, to a partnership; but it is not more cogent than the making of another contract at a prior date-in which a partnership was created with a like omission in terms. A. like omission occurs in another contract, which I will not stop to read, attached to these papers and marked Exhibit 23, an agreement which was entered into in 1896, between Mr. Boone on the one side and Mr. and Mrs. Andrews on the other, and in another writing drafted by Mr. Boone in March, 1904, known as Exhibit 25, in which Mr. Boone tendered a sort of readjustment of the affairs created by the facts I have-already recited. While he is evidently claiming the relationship to be-that equivalent to a partnership, he nowhere refers to it as such,, in terms. This may not be an important item of evidence, but it is one-of the circumstances to be considered in its bearing upon the probabilities of .the one construction or the other as to the intent of these parties..

We have considered another question of equal importance, indeed possibly of vital importance to the ease, and that is, whether, assuming that the contract of February 28, .1899, was not a mere usurious-loan, but was one which would be sustained as establishing either a trust or a partnership, the status so created may not have been terminated by the written contract of April 1, 1899, which reads as follows:

“In consideration of the payment by said second parties to the-first party on the first of each month of an amount of money equal to-3 per cent of the amount invested by said first party under above agreement at date of such payment, the first party agrees to release all claim to any share in the profits of said business for the month immediately-preceding such payment.”
“ (Signed)
“George B. BooNe,
“Clara L. ANDrbws, ' “Peter L. ANdrews.”
“April 1, 1899.”

If there was a termination of a relation which the law would protect and if the parties entered into a new contract for the' retention of moneys theretofore placed by Boone in the hands of Mr. Andrews and his wife, with an agreement that they should be returned absolutely and that Mr. Boone should receive as compensation for their use 3 per cent a. month, that would be such a contract as would not be protected. It would be treated as one for usurious interest and the law would allow Mr. Boone, under such circumstances, on all the moneys which he permitted to remain in the hands of Mr. and Mrs. Andrews, interest at the rate-of 6 per cent per annum and no more.

Let us analyze this amendment, which has been called the first addendum to the original contract: It is not stated that Mr. Boone makes. a certain promise, in consideration of a promise on the part of Mr. and Mrs. Andrews; it does not say — to be more specific — that, in consideration of a promise on the part of the second parties that they will pay, the ■first of each month, 3 per cent or an amount equal to 3 per cent on the ■amount invested; the first party will receive such per' cent in lieu of all profits on the money. It is not recited that what Mr. Boone agrees to do is in consideration of any promise whatever by Mr. or Mrs. Andrews; but it is only in consideration of payment that he will receive such payments, we take it, as liquidated profits, and there is no agreement on their part that the liquidated profits shall amount to 3 per cent. In other words, it is a contract all in favor of Mr. and Mrs. Andrews, and there was no occasion for their signing it. They did sign it and, contemporaneously with it, paid him $120, which was 3 per cent on $4,000 which had been theretofore advanced, but we think no implication arises of a promise on their part that they will continue to do that. It seems, to be a sort of a promise on his part that, as the months go by, if they will pay him 3 per cent upon the total amount of money which they shall at such times have in their hands, he will compound with them.

But what was it that he really released? What is it that he says he will release ? Why, he says he will release all claim to any share in the profits of said business for the month immediately preceding said payment. He does not say that he will forego the return of the principal or that he will forego that part of the principal to which he is ■entitled under the arrangement originally made, to wit, the principal, less one-half the reduction or impairment by loss. It may be contended that in arriving at the.profit which he was to receive in each month, account was to be taken of one-half of the losses, that is, the provisional losses — the so-called losses, or losses arrived at by ascertaining what default had been made in principal or interest — and that such losses were to be taken into account before determining what should be his profit and that he was to receive 3 per cent in lieu of such profit. And I am not sure but that contention would be right; in fact I am inclined to think we may carry along that same idea of provisional profits and' provisional losses in the monthly settlements- under the contract made April 1, 1899, as under the one made February 28. But, under that view, there is no provision that they shall be released from their agreement to make good to him in their subsequent settlements whatever has been treated as a loss but which has turned out not to be so.

Now, in the year 1902 at some time there was an oral arrangement by which the parties agreed upon 2 per cent interest instead of 3 per cent as expressed in the contract of April 1, 1899, and, for a time, settlements were made upon tbat basis as tbe settlements had been made on the basis of 3 per cent. Those payments seem finally to have stopped, s>and, on March 1, 1904, they signed another addendum to the contract, reading: “The first party a'grees to waive all claims to profits under the foregoing agreement for one year from this date.” He seems to have become worried about his getting anything more out of the contract, or as to what he may get out of it, and he agrees to forego all profits for a year “in consideration that said second parties pay to said first party such an amount as they reasonably can on the first of each month, and the first party agrees to surrender to said second parties notes of the second parties or either of them, held by the first party in the order of their dates, commencing with the oldest note, to the amount of the payments made hereunder. Said payments shall aggregate $6,000 for the year.” This was signed by the parties. This is an agreement that he will relinquish profits if they do what he stipulates' here shall be a consideration for such an agreement. It is not contended that in the period of one year from March 1, 1904, they did make payments aggregating $6,000 upon these claims, so that there was no satisfaction, if this was an accord. It was not accord in the sense that it was to be a settlement of the entire claims of Mr. Boone, but it was to be a relinquishment of his profits if they would make payments upon the principal to the aggregate amount of $6,000 in that year. On November 1, 1905, the final amendment was made to the contract, in which it is said:

‘ ‘ The first party agrees to waive all claim to profits under the foregoing original agreement as long as the following payments shall be made to him by the second parties; viz.: The second parties shall pay to the first party on the first of each month after date an amount of money equal to 6 per cent on the money invested in the business mentioned in said agreement at the time of. such payment, and also such further sum on the first of each month, so that the aggregate of such payments for any one year after date, excluding said interest payments shall not be less than $1,800 and said last mentioned payments shall be credited upon the amount invested in said business by first party. In case of default by second parties in either or any of said payments, then this agreement shall terminate and the said original agreement shall become and be in full force. ’ ’

This is also signed by all the parties, and the words: “and said last-mentioned payments shall be credited upon the amount invested in said business,” should be, to some extent, emphasized in arriving at the understanding which the parties had as to the transaction at that-comparatively late date.

I will not attempt to review many of the authorities cited by coun-4 sel, but our conclusion is, that the contention of plaintiff that if the money is in any .sense placed or invested in the business of Mr. Andrews- and his wife, so as to hazard it in the business, then no matter what per cent is agreed upon as a basis for compensation for the use and hazard of such money, the usury laws will not apply, is well founded. We think that that contention is supported by the authorities. We need not travel very far away from the authorities of our own state. The decision in the case of Cunningham v. Green, 23 Ohio St. 296, 298, holds:

“The statute, [Rev. Stat. 3179; Lan. 5095], limiting the rate of interest does not apply to an agreement of copartnership, which provides for allowing a partner, who is to bear his share of the loss, interest on the money he invests in the firm.”

If this is true as to a partnership, it is equally true as to money placed in the hands of another as an agent or trustee. There can be no escape from the conclusion that the principle which will apply to the one situation applies to the other; whether it be a relation of trust which is created, or a partnership, or a joint venture, by whatever name we may call it — for there is no magic in words — the principle is precisely the same.

The decision, Second Nat. Bank v. Bank, 6 Circ. Dec. 197 (13 R. 561), is, perhaps, not in all respects applicable, because that was a case in which the rights of creditors were involved, and sometimes courts will hold parties to obligations as partners, when, inter se, they might not be such. We have here a contest between the parties who entered into the arrangement which, on the one side is claimed to have constituted a partnership and on the other side is claimed to have created the relation of debtor and creditor. The case cited, Cunningham v. Green, supra, however, the syllabus of which I have just read, is a case between partners, and the decision of the court is clear, and, as we believe, is the undoubted law, that where one person hazards, in a business to be conducted by himself and another, jointly, or conducted by that other foi* his benefit, money which may not be returned to him but which is subjected to the risks of the business, then the law as to usury does not apply.

There remains, however, the consideration of an argument which must not be forgotten, and that is, that whatever may be the proper construction of this contract, if we are to treat it as meaning what it says, tbe law will not protect parties from the consequences of illegal' contracts, no matter what form they may make their arrangements as--sume. In other words, we have the claim asserted, not only in argument but also in the answer of the defendants, Andrews, that this was a mere colorable contract and that it was placed in an ingenious form or phraseology to avoid the consequences of the law as to usury. This is an affirmative claim on the part of defendants and the burden rests upon them to substantiate it. We have no decision in Ohio as to the amount or degree of proof required to sustain such a claim as this. ' In Jones], Mortgages Sec. 643, we have this language:

“The burden of proof that the mortgage is usurious is upon the mortgagor. ’ ’

This is a work on mortgages and the statement of course relates' to mortgages but is equally applicable to other instruments.

“He is impeaching his own obligation formally executed under" seal, and must establish the facts to constitute usury beyond a reasonable doubt. An even .balance,of testimony is not sufficient; there must be a clear preponderance. It is a defense not favored in equity; and" especially when the consequence is to forfeit the whole debt, the defense is considered unconscientious. When the penalty is a forfeiture1 of the illegal interest, or of all the interest, even although the defense-is not considered unconscientious, the rule of evidence, that the defense" must be clearly made out, is applied both at law and equity. ’ ’

In our state there is no forfeiture of a debt or of all the interest,, but there is a forfeiture of the illegal interest, so that the language used' by Mr. Jones, if applicable at all to mere demands on notes or loans,, has application here.

In the ease of White v. Benjamin, 138 N. Y. 623 [33 N. E. Rep. 1037], the court held:

“Where usury is pleaded as a defense to an obligation to pay money, as the presumption is against such a violation of law, the defendant must establish it by clear and satisfáctory evidence; all the facts constituting the usury must be proved with reasonable certainty; they cannot be established by mere surmise and conjecture, or by inferences entirely uncertain.”

Perhaps this decision is robbed of some of its force by the fact that the law of New York is not precisely the same as in our state as to the result of usurious contracts; but still the suggestion made, that the parties will not be presumed to have intended to do something contrary to law, is just as applicable to the laws of Ohio as of New York or any other state. It is true that no such penalty attached as to make-it a crime, either felony or misdemeanor, but it is an illegal contract so that it becomes invalid and the whole contract as to the usury is so tainted that the law will not permit it; it is considered contrary to the policy of the state, and I see no reason why, upon general principles, ait may not be said that a party would hardly be presumed to violate (such a law or settled policy of the state.

In the ease of Morris v. Taylor, 22 N. J. Eq. 438, it was held:

“To support the defense of usury, the evidence must be clear and cogent. ’ ’

In the case of Conover v. Van Mater, 18 N. J. Eq. 481, it was held:

“The burthen of proof is on the party setting up the.defense of usury. He must establish the facts necessary to constitute it, beyond reasonable doubt, and by a clear preponderance of testimony. ’ ’

In Ohio, we have had the rule pretty well established, that, in impeaching instruments solemnly entered into by parties to evidence their arrangements, the proof must be clear. We have it in the case that en-grafts a parol trust upon an absolute deed and in the ease of reformation of a written instrument. In these and some other instances to which I might refer, the courts have established the rule that the proof must be clear and convincing. The parties are permitted to rely upon the obligations which they have deliberately placed upon paper, and not only will there be no presumption of something different from and antagonistic to, that which they have so written, but the proofs must be reasonably clear to (establish the claim of a party that something ■different was intended. Upon this question we have not a word that I recall from Mr. or Mrs. Andrews, to the effect that it was arranged that this contract should take the form which it was made to take in order to avoid the statute as to usury. It is true, Mr. Andrews says that he was borrowing money from Boone, that Boone was merely loaning it, and he endeavors to make it appear that there was no such arrangement as that which was embodied in the contract. Mr. Boone, ■on the other hand, claims that the contract was one, as he understood it, of partnership; that he was to share in the losses as well as in the profits, and he repudiates entirely the idea that it was a mere loan. Mrs. Andrews, to a certain extent, corrbborates her husband, but there is much in the testimony of both that makes us think, not, perhaps, that they were deliberately fabricating a story, but that their recollection at least, is unreliable as to the transactions on or about February 28 and March 1, 1899. It is their claim that after that written contract, was presented to Mr. Andrews, Mr. Andrews signed it, although, -as he asserted, it was not in accordance with the arrangement which had been entered into between' bim and Boone. Yet be says that before he signed it Mr. Boone banded over $4,000 to Mrs Andrews and then allowed the contract to go unsigned until April 1, 1899. He makes no reasonable or adequate explanation of the fact that be finally signed a contract which be says was not in accordance with the verbal arrangement which had been made. He says that after he and his wife had signed the addendum which bore the date of April 1, 1899, then Boone said he might as well sign the contract of February 28, and almost without argument or objection, he then signed it. There is no adequate explanation of this fact.

There is another pregnant circumstance testified ,to by Mr. Boone and hardly contradicted by Mrs. Andrews or by her husband, which is not explainable upon any hypothesis that Mr. Boone was intending merely to loan these various sums of money and to receive pretended profits, but really usurious interest, and that fact is this: That, upon the suggestion of Mrs. Andrews, as he was a partner in the business, owning a part of the furniture which was used in it, he readily assented to pay and paid over $40 as the owner of one-half of such furniture. He is corroborated in his statement by the testimony of Mr. Sherer, that Mr. and Mrs. Andrews admitted that Mr. Boone had paid for one-half of the furniture. If he was merely loaning the money, it is hard to explain why he should be asked to pay for any part of the furniture which belonged to them and was used in the business.

One suggestion, made by the referee below, is worthy of notice. He says, in substance, that no accounts were made of losses from month to month. A sufficient answer to that is, that we have no evidence that there were losses which necessitated the making of such showing from month to month. On the other hand, Mrs. Andrews, who was a sort of bookkeeper for her husband, or for the concern, did make repeated statements as to the condition of the business and amounts of loans, and the testimony clearly indicates that even if there were losses, there were no net losses — there were net profits. The moneys were loaned, according to the evidence, at 10 per cent a month, so that after taking an account of any losses by reason of bad debts, after taking account of any expenditures for the business and after paying over to Mr. Boone his 3 per cent, or 2 per cent, as the case might He, as liquidated profits, there still remained a large profit to the defendants, Andrews.

I do not know that it is worth while to dwell further upon the diverse aspects of this controversy. Doubtless I have omitted the con; sideration of many items which, in courtesy to the attorneys and to the court below, might be mentioned; but sufficient at least has been said to indicate the strong conviction o'f this court that the plaintiff should succeed in his claims as asserted in his petition. We think that the evidence does not support the claim of the defendants that the parties to this instrument intended it to amount only to a loan. We think that the evidence does not sustain the other contention of the defendants, that the contract was a shift or device, a mere colorable contract, to ;avoid the consequences of the statute against usury. Perhaps if the defendants could maintain their claims in this regard, they might defeat ;the action of the plaintiff, and yet it is difficult for us not to say that the (defense of usury does not come with the utmost grace from parties 'whose main business seems to have been the taking of usurious interest -upon contracts. Our view of the whole controversy is, that the prayer ..of the plaintiff’s petition should be granted. The judgment will be -for the plaintiff. We have not attempted to make an accounting; we -understand that the parties can either agree upon that and embody the result in the journal entry or, if they are unable to agree, a reference ,may be had.

Haynes and Parker, JJ., concur.


source: Caselaw Access Project

author: WILDMAN, J.

license: Public Domain

text:
    ^RELIGIOUS SOCIETIES — INJUNCTION—PARTIES—PLEADING.
    [Fulton (6th) Circuit Court,
    May 11, 1907.]
    Haynes, Parker and Wildman, JJ.
    Silas Munsel et al. v. D. S. Boyd et al.
    1. Affairs or Religious Society are Subject to Equitable Interference.
    There is jurisdiction in a court of equity to determine the rights of the parties to an action for injunction, where the plaintiffs claim to he legally elected trustees of an incorporated church, and ask that the defendants, who also claim to he trustees and one of them to he the pastor of the church, he restrained from interfering with their control of the church property or their use of it for purposes of worship.
    [For other cases in point, see 5 Cyc. Dig., “Injunction,” §§ 585-589; 7 Cye.
    Dig., “Religious Societies,” §§ 108-110, 126-129. — Ed.]
    2. Joinder of Trustees and Members of Church as Plaintiffs.
    The fact that the plaintiffs sue as trustees and also as members of said church and in hehalf of other members thereof, does not present a case of misjoinder, notwithstanding they are perhaps asserting rights in two capacities.
    .3. Church may Terminate the Tenure of a Trustee.
    The office of trustee of a church is not one coupled with such an interest that the church body in its corporate capacity may not, at a meeting of its members duly called and held, terminate the tenure of such office.

      4. When Chukch mat not Expel its Membebs.
    The fact that members of a church have become dissatisfied with the pastor, and disapprove of the control into which the church has fallen and cease to attend its services, does not afford ground, without some rule or law of the church therefor, for their dismissal or expulsion without notice or an opportunity to appear and defend; and a vote of expulsion under such circumstances does not terminate membership.
    [Syllabus approved by the court.]
    Appeal from Fulton common pleas court.
    Ray & Cordill, J. C. Cloon and J. C. Paxson, for plaintiffs.
    John Schlatter, for defendants.
   WILDMAN, J.

The ease of Silas Munsel and others, claiming to be trustees of the First Baptist Church of Swanton, Ohio, against D. S. Boyd and others, is an unfortunate controversy which has grown up among persons •claiming certain rights and interests in the association mentioned in the caption of the petition, the First Baptist Church of Swanton, Ohio.

The case of the plaintiffs is presented by a petition addressed to ‘the equitable jurisdiction of the court and asking for an injunction to restrain the defendants from doing certain acts and interfering with the plaintiffs in the exercise of claimed rights and- duties and the control ■of the church property belonging to said association.

The ease was heard in the court below and appealed to this court. It was first submitted to us upon demurrer to the petition, setting out ••several grounds under Rev. Stat. 5061 (Lan. 8576) — indeed nearly all the grounds specified in the section for demurrer: a lack of jurisdiction; incapacity in the plaintiffs to sue; defect of parties plaintiff; defect of parties defendant; that the petition does not state facts sufficient to constitute a cause of action; that there is a misjoinder of parties plaintiff and a misjoinder of parties defendant.

The plaintiffs allege that they sue as trustees and also as members •of the church society named and in behalf of a large number, to wit, twenty other members of said church.

We have had some trouble over the question of misjoinder, but have •concluded that there is no misjoinder of either parties plaintiff or parties defendants. It is true that the plaintiffs are asserting rights in perhaps two capacities. They allege that they are both trustees and members, and that they are asking relief in behalf of other members, but after all the result sought is one, and it is a result which might with propriety be sought by the plaintiffs acting in either capacity, as trustees of the corporation or as members thereof, provided that they have the right to sue at all in a court of chancery.

The case of Bartholomew v. Lutheran Congregation, 35 Ohio St. 567, is one in which the trustees, or alleged trustees, of a church sued as such; and the defendants were sued as persons claiming to be trustees and alleged to be usurping the powers and duties of such. No especial question seems to have arisen in that case as to whether suit was brought in the proper right or not — that is, as to whether they should have sued in their representative capacity or whether in their capacity as members-of an association — but the relief sought and granted was such as might, perhaps, have been, at least in part, granted them as members of the association if they had sued as such.

The suit here seeks not only to enjoin the defendants from exercising control as claimed trustees over the property of the church, but also from interfering with the plaintiffs in the exercise of such control. To that extent it is, perhaps, a controversy as to a right of trustees to control property entrusted to the trustees as such. But the petition further asks for an injunction to restrain the defendants from interfering with the plaintiffs in worshiping in said church or otherwise entering into it as members. I am not attempting to recite the precise phraseology of the petition or its prayer, but am giving merely the-substance.

Without tarrying long upon the matters presented by the demurrer,, it suffices to say that it is our conclusion that the demurrer should not be sustained.

I should, before leaving the subject, however, pay brief attention to the claim made by counsel for defendants that the court has no jurisdiction in equity to determine the rights of these parties at all. The contention is, that the allegations of the petition, if conceded to be true, make a case for quo warranto rather than for equitable relief by injunction, and that so far as possession of the property is concerned, the-plaintiffs might have an adequate remedy at law by ejectment'or something of that kind. Our judgment, however, is, that a court of equity has jurisdiction, although the validity of the election of persons as trustees or the question of authority of one of the defendants to act as pastor may be incidentally considered to some extent in the consideration of the ease.

The object of the suit, at least the proper object of the suit, is not. exactly to determine the rights of claimants to office, but rather to restrain persons from interference with the control and possession of' property; or with the use of the property to the extent to which trustees. or members of a religious association may use the property of such, association.

The defendants, as the petition declares, claimed to be trustees andi are in possession and control of the property and keep the plaintiffs out.

The plaintiffs claim that they are- the legal trustees. They assert that one D. S. Boyd claims to be pastor of the church, and in substance that he is not; that although formerly pastor of the church’ he was deposed by the plaintiffs, and that he is no longer entitled to-exercise the duties or powers or functions of that office.

There are eases, of course, in which the rights of claimants to act as officials of one kind or another are to be determined only by proceedings in the nature of qtio warranto, but Bartholomew v. Lutheran Congregation, supra, is sufficient authority, we think, for entertaining jurisdiction upon the averments of this petition, and as a court of equity.

The answer admits an averment found in the petition, that this-church is an independent organization subject to no control from the' outside by any other church or organization. It seems to have been, although an incorporated body, a sort of law unto itself, excepting so-far as it is governed by the teachings of the Scriptures and general customs, perhaps, of the Baptist church or Baptist churches and customs which may have grown up in its own body.

The evidence which has been introduced upon the hearing for the-ease has been heard by us upon evidence, pending our examination of the questions and conclusions thereon arising on the demurrer, discloses; that said D. S. Boyd became the pastor of this church society some time-in the year 1891 and that he has continued to act as such, claiming to be-still pastor up to the rendition of the decree by the court of common pleas in the present suit.

, On May 18, 1905, the plaintiffs and others claiming to be members of the association held a meeting at which they elected a new board of' trustees consisting of five members. It may be said in passing that while no regulations appear to have been drafted or adopted by this society, the number of trustees has been usually, if not always during its history, five. There may have been vacancies at one time or another, but wq are satisfied from the evidence that by common consent or otherwise the number of five has been adopted as a proper number for the board of trustees. At this meeting of May 18, 1905,- the persons acting- and electing that board of trustees had no power so to act unless they were, in fact, members of this corporate body, and upon the question-as to whether they were or were not members on that day centers ar large part of the present controversy. ,,

We will not attempt to review the evidence in detail. It is manifest that not many years after the induction of Mr. Boyd into the pas-borate dissatisfaction arose among members of the organization, and ■that suggestions were made that he be retired or that he be asked to resign from the pastorate. At one time, as is claimed, he tendered a .resignation which was not accepted. He does not seem to have tendered ■a resignation at any time which was accepted, and he was never formally deposed unless by the action of the meeting of the members held but a ■short time before the beginning of the suit in the court of common pleas; and the deposition at that time was by the plaintiffs and those associated with them, claiming to be members of the corporate body. 'This claim was disputed by Mr. Boyd and his friends and associates in the church upon the ground that although many of these claimed members had been such at one time they had been dropped from the roll of the church and by reason of one cause and another had been expelled or dismissed from the church, so that they had no longer any power to act as members. It appears according to this claim that, although at the coming of Mr. Boyd to the church in 1891 the church had .■something more than one hundred members, this number had been reduced year by year until at about the beginning of 1896 there remained but a corporal’s guard, consisting for the most part of Mr. Boyd, his •■sons and those who were either akin to him or related by marriage. It ■appears also that the persons claiming to act as trustees of the church •at that time and who have been brought into court as defendants, and who concede that they are acting and 'claiming as such trustees, are •either of his own kin — his own sons or immediate relatives by blood— •or that they are related to him by marriage.

Many of the expulsions to which I have referred, or attempted expulsions of members of the church, were had without any previous notice to the persons so sought to be expelled so as to enable them to resist or defend against the attempted expulsion if they saw fit. At one time nineteen members were so dismissed from the church or dropped from the rolls and at another, twenty, without any apparent notice to them •of the intention of the corporate body to dismiss them from membership. We think this could not be done, and we find no authority either in the book called the “Star Book” which has been offered in evidence •or in the New Testament passages quoted and cited by Mr. Boyd in his testimony or by any customs of the church which will justify the severing of the relations of the members in this way. It is true that most of them had ceased to attend upon his ministrations; they were dissatisfied with him; they did not approve of the management and control into which the church had fallen, and so remained away. We do not, however, deem that this was a relinquishment of their rights as members, ■and our judgment is, that except as to such members as had previous notice of an intention to pass upon their membership by investigation •and dismissal, if necessary, or as to such as were present when their cases were investigated and had knowledge at the time of such expulsion, the membership was not terminated, and that the persons so attempted to be expelled remained members of the association up to the present time. We think also that more than a quorum of the legal members gathered at the meeting of May 18, 1905, and that proper notice of that meeting had been given to all persons concerned. It appears to us that Mr. Boyd and the faction supporting him knew of this contemplated meeting; that they might have attended it if they had seen fit. There is no claim in this petition that Mr. Boyd and his sons and others associated with him are not members of the association; and it is not claimed on the other hand that there was any interference with their being present at the meeting referred to.

It is agreed that five members óf the church constitute a quorum to transact business at any meeting properly called. We think then that this meeting of May 18 was a legal meeting, and that it had authority to do any proper acts or transact any proper business which might come before it, connected with the affairs of the church organization.

Now, it is insisted that, 'although the board attempted to elect, five trustees at this meeting of May 18, 1905, there were still three trustees who had been elected for three-year terms and that those terms would not expire until a date subsequent to May 18, 1905. This seems to be true. And it is insisted that because of this fact the members at the meeting of May 18, 1905, had no power to elect a board of five members. It has occurred to us that this question might be disposed of upon either of two grounds. While by custom the board of trustees of this church consisted of five members, there is no regulation and no statute that prevented them from at any time increasing that number, so that it would not necessarily -follow that even if there were three legal trustees already holding office on May 18, 1905, the members of the church at a valid meeting could not add to that number five more so as to make eight trustees instead of five. We are inclined, however, to place our decision upon another ground, and that is, that the trusteeship is not an office coupled with such an interest that the church as a whole, the church as a body in its corporate capacity and power, at a meeting of its members duly called and held, may not terminate the tenure of any trustee. We think that they had such power under all the circumstances of this case, considering the situation that had arisen, the attempts made by Mr. Boyd and those associated with him to control all the-affairs of the church, to beep its functions, its powers, its property in their own hands and to expel from membership and exclude from power the plaintiffs and all others associated with them, who had theretofore-been members of the association and, as we think, were still. We believe these facts justified the election of a full board, and we are satisfied that it was the intention, although not expressed upon the record of these proceedings, to elect a board of five which should constitute the-whole board of the church, and that so many as were necessary should take the places of the three members who had been previously elected, and were still in office.

Our judgment then is, that not only are the persons claiming here as. plaintiffs members of the association and that a large number of others who have been treated as expelled members still retain their membership in the association, but also that the plaintiffs constitute the board of trustees of the association and that they are entitled to such control and management and direction of the affairs of the church as legitimately belong to any legal board of such body.

If this is true, they are clearly entitled to at least a part of the-relief which is sought here. We are not inclined to believe from the facts-disclosed to us that there is any present intention on the part of the-defendants to incumber or dispose of the church property, and we doubt very much their ability to place any troublesome cloud upon its title under the present circumstances. The property is air eddy mortgaged, as appears, to the extent of $500, which might stand somewhat in the way of their disposition of it; but in addition to that, with this decree of the court at which we are arriving and under the manifest, conditions which have been disclosed, it is hardly likely that any persons would be induced to attempt to make an investment in this church property, receiving title -from Mr. Boyd and his adherents.

Nor are we inclined to think that there is any disposition on the part of the defendants to prevent the plaintiffs from entering the church during the hours of open session for religious worship or'otherwise to-take part in the public meetings to the extent that members of a congregation not members of a church would be permitted to take part.

We do not think then that plaintiffs need all the relief for which they ask. We do think, however, that they are entitled to an injunction restraining the defendants from interfering with them, the plaintiffs, in the control of the church property. We think that they are entitled to an injunction restraining the defendants from attempting to exercise-•control over it, except in so far as tbe defendants, as individual members, may take part in tbe meetings or other affairs of tbe association.

There is apother matter to which the petition invites the attention •of the court, and that is the status of Mr. D. S. Boyd in the church. The petition alleges and the answer admits that he is one of the trustees. The answer is verified by Mr. D. S. Boyd with others, but it appears upon the trial that he ceased to be a trustee at some time — whether before ■or after the beginning of the suit, I do not know. He insists, however, that he is still pastor of the church. It becomes essential to inquire .as to whether he is justified in this claim.

After the meeting of May 18, 1905, to which I have referred, to wit, •on January 24, 1906, the recommendation was made by the board of trustees, as appears by the record of the society that the pastorate be •declared vacant and that the Rev. D. S. Boyd, the so-called pastor, be informed that his relationship as such cease with the date last mentioned.

On the same day the society met in the evening at 7:30 o ’clock and we find this record of the proceedings, so far as relate to the question which we are now considering:

“Brother Vaughan then attempted to read a. recommendation of the trustees of the church, but Mr. Boyd and a few others made such disturbance that he waited for silence. On motion of Brother M. G. Will, seconded by Sister E. J. Crissey, it was voted to adjourn to Sister E. J. Crissey’s home. A few minutes later the First Regular Baptist Church of Swanton, Ohio, met pursuant to its adjournment as above .stated in the home of Sister E. J. Crissey. Brother J. C. Vaughan was appointed chairman. As the clerk had left, the minutes of the last business meeting was waived. The board of trustees submitted the following report and on motion of Brother David Kelsey and seconded by Brother M. G. Will the church unanimously voted to adopt the report •and instructed the clerk to send a copy of the recommendation to Mr. D. S. Boyd. On motion it was voted that Brother J. C. Vaughan, David Kelsey, Silas Munsel, Sister C. A. Fairchild and Charlotte Munsel be the pulpit committee to look afer the matter of pulpit supplies and a pastor. ’ ’

It was then voted that the church hold a business meeting in three weeks, etc.

The reference to the report or recommendation which it is stated followed, has evident reference, we think, to a copy of the recommendation found on the page immediately preceding instead of following the minutes of this meeting. There is no other record and the witnesses so' inform us.

Our conclusion on this branch of our inquiry is, that the relation of Mr. Boyd to the church as its pastor terminated on January 24, 1906 that the will of the members unanimously expressed at this meeting was. one which they were authorized to make, and that the meeting was. regularly called.

There are many facts connected with the entire history of this association that show an inexperience in the matter of rules and records, and proceedings generally; but we should look to the substance of things and endeavor to ascertain just what parties are entitled to ask and just what they have at times sought to accomplish and what their relations are to one another, as shown by the transactions when analyzed and thoroughly examined.

This case has been a most unfortunate controversy and it has developed into one of those bitter feuds that we sometimes discover in bodies which should especially exemplify to the world that living Christian spirit which was inculcated by the Master. It is a kind of case which the courts dislike to approach; we have no disposition or wish to interfere in the affairs of religious organizations, and we have commented upon the transactions only in so far as a full consideration of the questions arising in law and submitted to us, require.

I have sufficiently indicated how far the decree of the court should go and the journal entry will be drawn accordingly.

Judge Parker. I think, in looking through the “Star Book” that the pastor’s relations could not be terminated short of three months; the pastor is entitled to three months’ notice.

Judge Wildman. Then instead of its being January 24, it should be April 24. What I said in relation to his pastorate’s terminating should be changed so that the date, instead of being January 24, will be April 24 — three months from the time of the action of the church body as required by the custom or rule disclosed to us.

Haynes and Parker, JJ„ concur,


author: LAUBIE, J.

text:
    SHERIFF — OFFICE AND OFFICERS.
    [Mahoning (7th) Circuit Court,
    October Term, 1907.]
    Burrows, Laubie and Cook, JJ.
    State ex rel. Frank L. Denormandie v. Commissioners of Mahoning Co.
    Expenses Allowed Sheriff.
    Laning Rev. Stat. 2740s ,(B. 1296-29) which makes an allowance to sheriffs-for “all expense of maintaining horses and vehicles necessary to the proper administration of the duties of his office,” the word '“maintaining,” is used in its ordinary meaning and only expenses incurred in supporting, sustaining and supplying horses with the necessaries of life and in keeping them and their vehicles in good condition can be allowed, as it does-not mean that they may purchase at the county expense the necessary horses and vehicles.
    [For other cases in point, see 6 Cyc. Dig., “Office and Officers,” §§ 318-325 — Ed.] ■
    [Syllabus by the court.]
    Error to Mahoning common- pleas court.
    E. H. Moore, for plaintiff.
    W. R. Graham, prosecuting attorney, for defendants.
   LAUBIE, J.

The relator, sheriff of this county, asks this court to issue a writ of mandamus to compel the commissioners to approve his bills of expense in purchasing two buggies and a double set of harness alleged to be necessary in the performance of the duties of his office, and to pay the same out of the county funds; claiming that they are required to do so by the provisions of act 98 O. L. 89, 96, Sec. 19 (Lan. Rev. Stat. 2740s; B. 1296-29).

That section provides that “The county commissioners shall, in addition to the compensation and salary herein provided, make allowances quarterly to every sheriff for keeping and feeding prisoners under section 1235 [Lan. 2610] of the Revised Statutes, and shall allow his actual and necessary expenses incurred or expended in pursuing or transporting persons accused or convicted of crimes and offenses, * * * and all expense of maintaining horses and vehicles necessary to the proper administration of the duties of his office. Every sheriff shall file under oath with the quarterly report herein provided for, a full, accurate and itemized account of all his actual and necessary expenses, mentioned in this section, before the same shall be allowed by the county commissioners.”

The whole question depends upon the construction of the words '“all expense of maintaining,” as used in this section; and counsel for the relator contends that they mean, and should be construed to mean, •all money expended in the purchase of such horses and vehicles.

For this construction he relies largely upon the opinion of Attorney-general Ellis rendered upon this question, and published in 52 Bull. 64, which is as follows:

“In my opinion the word ‘maintaining’ as used in this section ■should be so construed as to authorize the county commissioners to furnish at the county expense the necessary horses and vehicles for the use of the sheriff in the discharge of his duties, or, if the sheriff owns a sufficient number of horses and vehicles, to allow the expense of maintaining them.”

We do not quarrel with the idea that such word should be so construed, if possible, at least in some instances, as a sheriff’s compensation now, by the statute is made to depend upon the population of his county; but that is not the question before the court. The question here is, can such word legally be so construed — legally bear such a construction in determining the sense in which the legislature used and intended it.

As we view it, there is nothing in the section which indicates an intention on the part of the legislature in the use of the word “maintaining,” of using it in, or giving to it, any other than its ordinary meaning. On the contrary every word in the section indicates otherwise.

There is no provision in it for the allowance of expenses in the purchase of any articles by name, but feed; and all other intended arti-lles can be ascertained only by implication. Public officers can be allowed ■only such compensation, or fees, as are provided for in express terms, or by necessary implication from the terms used, and the words “expense of maintaining,” as applied to horses and vehicles, cannot, by implication, include, or refer to, the expense of their purchase. If the legislature intended to have county commissioners supply sheriffs with horses, vehicles and harness, or to allow them the expense necessarily incurred in their purchase, it certainly would have so provided in unambiguous terms. Simple words only were needed to make such a provision.

What, then, is the definition' — the ordinary meaning — of the word ‘“maintaining,” especially when applied to animals and vehicles?

All lexicographers define maintenance as “Maintaining; supporting; upholding; keeping up; sustenance; supply of the necessaries of life; subsistence”; and the word maintain, “To bold or keep up in any particular state or condition; to support; to sustain; to keep up. ’ ’ So 'that tbe meaning of the word “maintaining” as used in this section in reference to horses and vehicles, means supporting; sustaining; keeping up; supplying with the necessaries of life; and the legislature therefore in this provision only meant and intended that sheriffs should be ■allowed the necessary expenses incurred in supporting, sustaining and ¡supplying their horses with the necessaries of life, and in keeping their vehicles in good condition, and not in the purchase of them.

The opinion of the attorney-general is peculiar, in that it seems to ■put a double -and inconsistent meaning 'to the word “maintaining.” First, that it should be construed to mean that the commissioners should furnish the necessary horses and vehicles; and second, but if the sheriff ■owns a sufficient number of horses and vehicles the commissioners :should only pay the expenses of maintaining them. So that if two horses were necessary to the discharge of the duties of his office and the sheriff bought two for such purpose, he could not be allowed the expenses of ‘■the purchase, under such construction, if he then owned two horses.

"We are not able to see how such a double construction can be placed upon the word in question, as used in this section.

As we view the question, we cannot grant the relief asked for and “the demurrer is sustained and the proceeding is dismissed at the costs •of the relator.

Burrows and Cóok, JJ., concur.


author: HENRY, J.

text:
    COUNTIES — MUNICIPAL CORPORATIONS — PRISONS AND REFORMATORIES.
    [Cuyahoga (8th) Circuit Court,
    November 6, 1907.]
    Winch, Henry and Marvin, JJ.
    Cleveland (City) v. Cuyahoga Co. (Comrs.).
    JIevisbd Statutes 2099 (Lan. 3430; B. 1536-369) now Governs Cost of Maintaining Workhouse Prisoners.
    A city cannot recover from the county in which it is located the agreed price for the maintenance in the city workhouse of prisoners committed thereto by magistrates’ or police courts for the violation of state statutes, as was previously the case under Sec. 2104 Rev. Stat.; but the apportionment of the expense of maintaining prisoners violating state statutes and municipal ordinances is now governed by Rev. Stat. 2099 (Lan. 3430; B. 1536-369), and the possibility of an over-lapping of benefits or expenses as between the taxpayers of a city and the taxpayers of outlying municipalities and townships in the same county is so trifling that the maxim de minimus non curat lex is applicable.
    [Syllabus approved by the court.]
    ERROR to Cuyahoga common pleas court.
    N. D. Baker, city solicitor, for plaintiff in error.
    J. L. Cannon, for defendant in error.
   HENRY, J.

The sole question involved in this proceeding in error is the sufficiency of the petition. The action below was brought by the city to* recover from the county the agreed price for maintenance in the city workhouse of prisoners committed thereto for violation of state statutes. The theory of the city is that the county is ultimately liable for such maintenance in all cases where the offense is statutory, and that, the city’s ultimate liability for such maintenance is confined to cases, of violations of city ordinances. The petition alleges four causes of action differentiated according to the committing tribunals, viz.: the Cuyahoga common pleas court, justices of the peace throughout the county, the mayor of Berea, and the Cleveland police court.

The correctness of the city’s claim as to the first cause of action is substantially conceded, except that the contract price was not lawfully agreed upon between the parties in compliance with Rev. Stat. 3821b (Lan. 6151), in that the county auditor made no proper certificate as to the funds in the treasury.

This contention is, we think, without merit in view of the petition’s averment that the contract was “duly” made, and also because the liability asserted is not essentially contractual, but is derived rather from the mandatory requirements of Rev. Stat. 2099 (Lan. 3430; B. 1536-369).

The agreement as to the forty cents per diem price for maintaining each prisoner should, under the allegations of the petition, and in the absence of any averment to the contrary, be treated as an accord, respecting the actual cost of such compulsory maintenance.

So far, therefore, as the first cause of action is concerned, the judgment of the court of common pleas is affirmed.

Respecting the remaining three causes of action, Sec. 2104 Rev. Stat., repealed’ when the municipal code (96 O. L. 96) was enacted in October, 1902, would, were it still in force, have settled the whole controversy favorably to the city’s contentions. And the city contends that' the policy of the state, as reflected in past legislation and in the manifest equity of the matter, is still such that counties are the appointed agencies, constituted by the state, for maintaining those incarcerated in local penal institutions, for violation of its general laws, but that municipal corporations are made chargeable only with the maintenance of those incarcerated for violation of their own ordinances. Various analogies of other expenses thus apportioned between counties- and municipalities are cited in support of this contention.

Revised Statutes 2099 (Lan. 3430; B. 1536-369), is the municipal' code provision now applying to this subject, and it seems to be both explicit and comprehensive, so as to exclude the interpolation of any supposed but unexpressed policy of the state regarding the distribution of expense of maintaining these two classes of prisoners. It reads:'

“When a person over sixteen years of age is convicted of ara offense, under the law of the state or an ordinance of a municipal corporation, and the tribunal before which the conviction is had is directed1 by law to commit the offender to the county jail or corporation prison, the court, mayor, or justice of the peace, as the ease may be, shall sentence the offender to the workhouse, if there is such house in the county; provided, that when a commitment is made from a city, village, or township in the county, other than in the municipality containing such workhouse, the council of such city or village, or the trustees of such township, shall transmit with the mittimus a sum of" money equal to forty cents per day for the time of such commitment^ to be placed in the hands of the superintendent of such workhouse, foe" the care and maintenance of such prisoner. ’

This section seems, moreover, to be in exact accord with the provisions of law in that behalf made by the municipal code of 1869, 66 O. L. 195, subsections 275 and 280, as modified by 73 O. L. 211.

It was not until the enactment of Sec. 2104 Rev. Stat. (repealed 96 O. L. 96), March 11, 1884, that the policy asserted by the city was; given legislative expression, and then only as to a part of the state. Without reviewing in detail here the history of legislation upon this-subject, it is enough to say that our examination thereof fails to reveal the fixing by the general assembly of any such definite or continnoray policy as the city declares to have been established.

If it be contended that a literal enforcement of' Rev. Stat. 2099 (Lan. 3430; B. 1536-369) would saddle the city with the expense of maintaining some prisoners convicted by its own police court or before-justices of the peace elected and sitting within its boundaries of stats? offenses committed outside its corporate limits, it may be answered that such tribunals are presumed to be clothed with and to exercise their" extra-municipal jurisdiction for the benefit of the community within and for which they act* just as similar tribunals in outlying townships of the same county may in certain like cases, and with equal propriety* charge their own communities in respect of offenses committed in such city. Concerning the possibility of a trifling over-lapping of benefits? cr expenses as between the taxpayers of a city and the taxpayers oi cutlying municipalities and townships in the same county, the maxim tde minimis non curat lex is peculiarly applicable.

■ We have followed the interesting discussion in the city solicitor’s brief of the statutes permitting contracts to be made for the maintenance of prisoners from foreign counties without perceiving that they involve any irreconcilable conflict with our construction of the laws «applicable to the subject more immediately before us.

The judgment of the court below having followed the principles 'thus defined, is affirmed.

Winch and Marvin, JJ., concur.


author: DONAHUE, J.

text:
    INSURANCE — ESTOPPEL.
    [Stark (5th) Circuit Court,
    1907.]
    Donahue, McCarty and Taggart, JJ.
    Thomas F. Williams v. Aetna Fire Assn. (Recr.).
    Insured not Estopped by Accepting Policy, when.
    A mutual fire insurance company issuing a policy without the word “mutual"' conspicuously printed therein, as provided by Rev. Stat. 3653 (Lan. 5864). and inducing its acceptance by falsely and fraudulently representing that there would be no contingent liability thereon, acts unlawfully and commits a fraud .upon persons induced thereby to enter into an agreement with the company. Hence, where the insured informed the agent of a company that he would not accept a policy in a mutual company, or in a company wherein there was such contingent liability for future assessments and there was sent him through said agent, a paper writing, in form and appearance like unto a standard cash policy of insurance, which was received by him after paying the sum specified therein as the cash premium, and placed with other like papers without critical inspection, where it remained until he received notice to pay an assessment thereunder, several months later, he did not enter into an undertaking to ac-eept such policy, nor is he estopped from denying liability thereunder.
    [Syllabus approved by the court.]
    Error to Stark common pleas court.
    Webber & Turner, for plaintiff in error.
    Shields & Pomerene, for defendant in error.
   DONAHUE, J.

This proceeding in error is prosecuted to reverse a judgment rendered against the plaintiff in error in the court of common pleas of this county.

The case was submitted to the court, without the intervention of a jury, and after hearing the testimony, a judgment was rendered against plaintiff in error, which is now sought to be reversed.

The record discloses that the plaintiff in error was solicited by the agent of the defendant in error to take- insurance in the defendant company. It is claimed on his behalf that he distinctly refused to take any insurance in any mutual association, or any company in which there was a contingent liability for future assessments.

This agent then represented that the Aetna Fire Association was a strictly cash company; that it issued a policy for a sum named therein as premium, and that there was no contingent liability for future assessments.

The record further shows that the plaintiff in error informed the agent of the company that he would not accept a policy in a mutual sampany, or a company wherein there was such contingent liability for fixture assessment. This, in substance, is the record of what transpired Isetween the agent of the company and the plaintiff in error at the time lie agreed that a policy of the kind that was represented to him, might I» issued, and that he would accept and pay for the same.

The record further shows that some time thereafter there was sent -to him through said agent, a paper writing in form and appearance like unto a -standard cash policy of insurance, which was received by him, the sum specified therein as the cash premium, was thereupon paid by Aim, and he placed the same with his other papers in the desk, without -giving it a critical' and minute examination.

The record further shows that within a year, upon a notice of assessment being sent to him, he appealed to the agent soliciting the insurance, and was informed that he, the .agent, as well as the plaintiff in error, had Seen deceived in respect to the character of the instrument or policy <so- delivered to him, and that he, the agent, had canceled said policy, and thereupon the plaintiff in error substituted other insurance for the insur-;anee that was supposed to be covered by the policy in question.

It is now claimed by the plaintiff in error that the inducements, representations and statements of the agent of the company were false .-and fraudulent in respect to the kind and character of policy which the •company issued.

It is further claimed that the company was not authorized, under its charter, to issue a policy such as was issued to the plaintiff in error herein; that by failing to comply with the statute, Rev. Stat. 3653 (Lan. 5864), in having printed conspicuously upon the policy the word “mu--faal,” or having the word “mutual” printed in the policy, the act of issuing such contracts of insurance and inducing their acceptance, was unlawful, and a fraud upon persons induced thereby to enter into an -engagement with’this company; that by omitting the word “mutual,” and by permitting these representations to be held out, persons were induced to accept contracts of insurance that they otherwise would not Ixave accepted.

On the other hand, it is contended that the plaintiff in error ac-■eepted this instrument with an opportunity to investigate, retained the :®sm.e for so long a time that he is now estopped from denying liability thereunder, and is concluded by the recitals contained in the same.

With the conclusions of the trial court in this case we are not in .accord. We think, first, that the plaintiff in error negotiated with the agent for a cash policy, and the record distinctly shows that he engaged to enter into a contract wherein he would become insured in a company issuing, a policy, the premium on which was for a fixed sum, and under which there would be no contingent liability. So that he never entered into any engagement or undertaking to receive and accept a policy of the kind or character that was thereafter delivered to him.

This brings us to the second consideration: Does the mere fact ■of accepting a policy or instrument of this kind and retaining it for the time indicated in this record, estop him now from denying that he was a member of said company, or that he had accepted and thereby impliedly was bound to pay such sums as might be assessed thereafter under and by virtue of its provisions ?

We think there is enough shown in this record, calculated and intended to mislead, that this company cannot now say that the plaintiff in error was estopped.

It is conceded that the defendant here did not sign the constitution and by-laws of this company, but it is claimed, under authority of Richards v. Lipp Co. 69 Ohio St. 359 [69 N. E. Rep. 616; 100 Am. St. Rep. 679], that having accepted the policy and held the same for a •considerable length of time he cannot avaii himself of this defense, and that would be true if he accepted the policy with knowledge of its true character and the provisions contained therein, or accepted it under such conditions that he would be required as a matter of law to know its contents, but if he was deceived by the representations of the agent as to the kind and character of the policy that was to be issued to him, and these false representations were followed by the ■delivery of the policy, which upon its face is calculated to deceive and •defraud the purchaser of insurance and induce him to believe that it is to all intents and purposes the contract of insurance that he has •agreed to purchase, then a' very different question arises. Must he be required, under any and all circumstances fully to advise himself of each and every covenant in the written contract presented to him, or may he be permitted to rely upon the representations of the agent of the company and those portions of the written policy made prominent and conspicuous therein in such a form as would be, and as we believe were in fact made, for the purpose of deceiving.

This policy purports on its face to insure the defendant’s property for one year from its date for a sum fixed and certain. True, it is re-' •cited, also, that the other conditions and covenants written therein shall obtain, but that is true of every standard policy written for cash premiums- and without any contingent liability for future assessments, so that there was nothing extraordinary to call his attention to the fact that the policy was not the character of contract he had made with the agent. In fact, no more clever method could have been devised for misleading the average business man and preventing him from reading the entire policy than by the adoption of what is known as the standard policy, with the sole exception of writing into it a contract of contingent liability, and to our minds it sufficiently excuses the defendant from searching through all the labyrinth of covenants to discover the contingent obligation hidden therein, and this case, by no means, measures, up with the doctrine of estoppel in Ohio, for the very first requisite of such estoppel is either actual knowledge on the part of the individual sought to be estopped, or such conduct and negligence on his part as would preclude him from claiming that he had no such knowledge, and again it is true that such negligence must not be induced by the fraud or representations of the other contracting party, and if so, it will be of no avail.

True, it is contended that the rights of third persons have intervened. This record fails to disclose, as we take it, that there was anyone who became a member of this association, who incurred any rights, or-who are entitled to recover in consequence of their reliance upon this-plaintiff in error’s being a member of said association, or of holding this policy the length of time which he did hold it, and in consequence-thereof became a creditor or obtained any rights against this company.

Neither does the record show, as we have examined it, that anyone became a member of this association after the date of the delivery of this policy to the plaintiff in error. If they became members of this association before, then they could not rely upon the plaintiff in error, nor could the rights of any third persons have intervened.

We think that to hold the plaintiff in error herein, must be upon the ground of estoppel, — and the petition is based upon that ground,— that the plaintiff in error received and accepted this policy of insurance and became bound by its terms; that there must have been rights, which accrued in favor of persons in consequence of the conduct of the plaintiff in error, which we think this'record does not show; that the plaintiff in error must, with knowledge, or with such facts as now in good faith preclude him from denying that he had- knowledge of the-contents of said instrument, have accepted the same, and thereafter retained the same for so long a time that he cannot now be heard to-. say that he was deceived thereby. We do not think that the evidence in this ease contains or has probative force enough to meet these conditions; and as it appeals to us, we think the judgment of the court of common pleas was manifestly against the weight of the' evidence, and was contrary to the evidence and to the law of the case.

Upon this ground it is the judgment" of this court that a new trial should have been granted, and there was error in the court in overruling the same.

The judgment of the court of common pleas will be reversed on the ground indicated, and the cause remanded for further proceedings according to law. Exceptions will be noted on behalf of the defendant in error.

McCarty and'Taggart, JJ., concur,