author: Shearer, C. J.

text:
    (Second Circuit, Franklin Co., O., Circuit Court,
    Jan. Term, 1897.)
    Before Shearer, C. J., and Summers and Wilson. JJ.
    REMINGTON & SON v. THE CENTRAL PRESS ASSOCIATION COMPANY.

      Conditional Sales — Section 1913-12 R. S. construed.

    Appeal from the Court of Common Pleas of Franklin county.
    The plaintiff brought suit in the court below against The Central Press Association Company and others to enforce certain judgment and chattel mortgage liens against the property of said company.
    Subsequently Parsons & Company, the owners of a judgment against said company, were made parties defendant to said action,and filed an answer and cross petition,praying that said chattel mortgage be declared void as having been made with the intent to hinder, delay and defraud the creditors of said company, and published the notice provided for in section 6344 of the Revised Statutes. Thereupon R. Hoe & Company,creditors of the said The Central Press Association Company, came in, gave security for their pro rata share of the costs and expenses of the action, and filed an answer and cross-petition setting up a claim against said company for a balance due upon the purchase price .of a certain printing press and fixtures, sold and delivered to them by said company, under a written contract, which provided, among other things, that the title to the said press and fixtures should remain in R. Hoe & Co., until the whole of said purchase price should be paid. It was further alleged in their answer that on the first day of September, A. D. 1888,' at three o’clock, P. M., said R. Hoe & Co. filed with the recorder of Franklin county, a copy of the contract for the sale of said press, etc., signed by one Wendell, who was the president of said The Central Press Association Company, containing the condition that the title to said property should remain in the said R. Hoe & Co. until full payment for said property should be made, together with a statement, under oath, by the attorney of said R. Hoe & Co. of the amount of their claim, with an affidavit that the same was a true copy of said contract of sale, in accordance with the statute in such cases made and provided. Prayer for the sale of said property and the application of the proceeds to the satisfaction of their claim.
    Annexed to said pleading is a copy of said contract and of the affidavit thereto, which affidavit reads as follows: “State of Ohio, Franklin county, ss:
    “James Watson, being sworn, says he is the attorney of the within named R. Hoe & Co., duly authorized in the premises; that the witbin is a true copy of the contract of sale by the said R. Hoe & Co., to the within named Ferd J. Wendell, of the within described machine and appliances; that the said R. Hoe & Oo. have a valid and subsisting debt and claim under said contract against said Ferd J. Wendell, amounting to the sum of six thousand (6,000) dollars, with interest thereon from the twenty-fourth day of August, 1888, at the rate of six per cent, per annum. (Signed,) James Watson.
    “Sworn to before me and subscribed in my presence by the said James Watson, this first day of September, 1888. (Signed,) William T. McClure, Notary Public. (Seal.)’’
    The validity of said lien was put in issue by the plaintiff and other creditors; and issues were made up generally in the cause, which was referred to a master commissioner to take the testimony and report his findings of fact and conclusions of law to the court.
    ■ Upon the incoming of his report, which, among other things, was in favor of the claim of said R. Hoe & Co., exceptions were filed thereto by divers other creditors, all of which were sustained. Whereupon R. Hoe & Co. perfected a separate appeal to this court, and the cause is submitted to us upon the testimony taken in the court below.
   Shearer, C. J.

The validity of the lien of R. Hoe & Co., there being no dispute as to the facts, must be determined by the construction of section 7913 — 72, of the Revised Statutes, which provides:

“Section 1. That in all cases where any personal property shall be sold to any person, to be paid for, in whole or in part, in installments, * * on condition that the same shall belong to the person purchasing * * the same, whenever the amount paid shall be * * the value of such property, the title to the same shall remain in the vendor * * of the same, until .the value of such property * * shall have been paid, such condition, in regard to the title so remaining until such payment, shall be void as to all subsequent purchasers and mortgagees in good 'faith, and creditors, unless such condition shall be evidenced by writing, signed by the purchasers * * of the same,and also a statement thereon, under oath, made by the person so selling * * • any property as herein provided, his agent or attorney, of the amount of the claim, or a true copy thereof, with an affidavit that the same is a copy, deposited with the clerk of the township where the person signing the instrument resides at the time of the execution thereof, if a resident of the state, and if not such resident, then with the clerk of the township in which such property * * is situated at the time of the execution of the instrument; but when the person executing the instrument is a resident of a township in which the office of county recorder is kept, or when he is a non-resident of the state and the property is within such township, the instrument shall be filed with the county recorder, ” etc.

The court below held this statute to require the seller, in order to preserve his title to the property against subsequent purchasers, lienholders or creditors, to deposit with the proper officer, either the original writing evidencing the “condition” and the original verified statement indorsed upon it, or to deposit a true copy of the original writing, statement and affidavit, verified as such. But the absurd and inconvenient consequences of such a construction raises a doubt that the legislature intended.any such requirement. In such cases resort must be had to these rules of construction, and that construction of the statute adopted, as will obviate these consequences.

Undoubtedly, under the statute, the original “condition, ” with a statement of the claim under oath, may be deposited and the rights of the vendor secured; but we are unable to see any reason for the verification of the copy which the court below regarded as indispensable. The meaning of the statute under consideration is not so clear and unmistakable that we feel bound to say, Ha lex scripta est, and that the only remedy is by appeal to the legislature to remove the unreasonable requirements of the law by amendment. The general object of the statute is, we think, sufficiently manifest, namely, the prevention of fraud and the protection of creditors and bona fide purchasers of personal property; and by the application of well known rules of construction the enactment can be made clear, reasonable and just, the intention of the general assembly ascertained, and the object of the law effectuated.

In'the construction of a statute,like this, courts are authorized, in order to ascertain the intention of the legislature, to transpose the language of the act; and it is their duty, in the interpretation of statutes, unless restrained by the letter, to adopt that view which will, avoid absurd consequences, injustice or great inconvenience, as none of these can be presumed to have been within the legislative intent. Moore v. Given, 39 Ohio St., 661.

In the case of the State ex rel. v. The Z. & M. Turnpike Co., 16 Ohio St., 308, 319, the supreme court, in construing the act under consideration in that case, transferred the last clause of section two of the act to, and made it the concluding clause of, the first section of the act.

So, where a section of an act referred to a previous section 13, which made nonsense, but would carry out the law had it referred to section 14, it was read as referring to section 14. Collier v. Johnson, 7 Ohio R. pt., 1, 235, 237; and see, also, Lucky v. Brandon, 1 Ohio, 49, 59; Kent v. Bierce, 6 Ohio, 336, 349; also Endlich on the Interpretation of Statutes, section 316 and notes; Bank v. Brown, 11 O. C. C. R., 77, 80.

And so in the case at bar, if we transpose the following language of the section, viz: “or a true copy thereof with an affidavit that the same is a copy,” so that it will follow the words, “unless such condition shall be evidenced by writing signed by the purchaser, lessor, renter, hirer, or receiver of the same,” the law is made clear and conforms to what must have been the legislative intent.

The provision of the section under consideration as to what shall render such “condition” void, would then read: “Such condition in regard to the title so remaining until such payment, shall be void as to all subsequent purchasers and mortgagees in good faith, and creditors, unless such condition shall be evidenced by writing signed by the purchaser, lessor, renter, hirer, or receiver of the same, or a true copy thereof, with an affidavit tfia-t the same is a copy, and also a statement thereon under oath, made by the person so selling, leasing or delivering any property, as herein provided, his agent or attorney, of the amount of the claim, and deposited with the clerk of the township,” etc.,

Thus rendering the statute reasonable and just, and relieving it of the absurd requirement, certainly not intended, that where a copy is filed it must contain a copy of the affidavit attached to the original, with an affidavit that the paper filed is, not only a copy of the condition, but of the affidavit thereto as well.

What.object could there be in requiring an affidavit to be attached to the original, when only a copy of the contract is filed? Who would be benefited or protected, or what possible purpose could be subserved, by appending an affidavit to a paper which is not placed on record or on file in any public office, but is consigned to the oblivion of the creditor’s pigeon-holes? >

Watson, Burr & Idvesay, for R. Hoe & Co.

F. F. D. Albery, for Parsons & Go.

J. T. Holmes, for the Watertown Paper Co.

We think the condition filed by R. Hoe & Co. was in conformity to the true intent and meaning of the statute, and is valid.

Judgment accordingly.


source: Caselaw Access Project

author: King, J.

license: Public Domain

text:
    (Sixth Circuit — Lucas Co., Ohio, Circuit Court
    Jan. Term, 1897.)
    Before Haynes, Scribner and King, JJ.
    THOMAS J. KUHN, JOHN ARBUCKLE, WILLIAM V. R. SMITH, JAMES N. JARVIE AND WILLIAM A. JAMISON v. THE WOOLSON SPICE COMPANY, THE AMERICAN SUGAR REFINING COMPANY, ALVIN M. WOOLSON, WILLIAM A. BRIGHAM, GRAFF M. ACKLIN, JOHN BERDAN, JAMES SECOR, LAWRENCE NEWMAN, JOHN B. KETCHUM, RUDOLPH A. BARILEY AND FRANK WILLIAMS.

      Competing companies in same line of business — One cutting price below cost will not be restrained at suit or in interest of a competing company.

    Where two companies are competing in the same line of business, and one company lowers the price of its goods below what is considered the cost price thereof, members of the other company, having acquired some of the shares of stock of such competing company, can not come into a court of equity and ask for an injunction to restrain the managers and directors of such competing company form selling their goods at such a low price, on the ground that such company is thereby losing money and the value of their stock destroyed.

      Suit by one stock-holder, for all others, tot restrain illegal act of directors — Presumption of consent of other stock-holders — When not admissible.

    Prima facie, every share-holder in a corporation may come into court as representing all the share-holders, to prevent an illegal act of its directors and managers, and the court does not require any evidence that the remaining share-holders have concurred in the filing of the bill, because, if the act be illegal, it is presumed to be for the benefit of all that it should be stopped. But not so when it appears that the plaintiff is not moving in his own behalf, but is set in motion by some one who undertakes to pay the costs,and to indemnify him against all risk; then the action can no longer be considered as under the direction of the plaintiff, but another person whose interests may be utterly adverse to those of the company, is in a position to control proceedings. The question is: Is the suit bona fide the plaintiff’s own suit, or is he merely the hand by whiph some one else acts? And there is no ingredient entitled to greater weight, in arriving at a conclusion on this point than the^question, who is responsible for the costs of the suit.

      Evidence — Conversations eta. between parties upon one side of controversy — Admissibility.
    It is a rule of evidence, that conversations between parties"interested upon one side of a controversy, at which the other party was not present and which it had no means of knowing, are not competent to show the actions or intention of an opposite party — yet in a case like the present, declarations and letters between certain of the defendants could be offered and used for such purposes as might be competent, upon a full and final consideration of the case.

      Executory contract of stockholder for sale of his stock — No disqualification for serving as director until transfer of stock.

    Parties who hold one share of stock in a corporation may serve as directors thereof, although they are parties to an outstanding executory contract providing that they shall, at the option of the purchaser named therein, sell their single shares of stock at a price therein named,so long as that option has not yet been exercised, and the stock is still theirs.

      Cutting price below cost for sake of competition — Interference of eourt in interest of competing company.

    A court will not interfere at the suit of a competitor in business in which such competitor owns stock, to restrain the directors of a corporation from exercising their judgment in the matter of prices. The reduction, in price may be a temporary expedient, having for its purpose an enlarge ment of the trade and business, and may, ultimately, result in increased profits. That question is one in the control of the directors, and a court of equity cannot interfere with their discretion unless the proof clearly shows an abuse of it.
    Error to the Court of Common Pleas of Lucas county.
   King, J.

This case is presented to us on a motion to suspend an order made by the court of common pleas dissolving a temporary injunction allowed in the case upon the filing of the petition in the court of common pleas. That petition was' filed there on the 13th day of January, 1897; and upon the filing of it there was allowed,by LindleyW. Morris, a judge of the court of common pleas, an injunction as prayed for, to remain until the further ordei of the court, upon the plaintiff’s giving bond conditioned according to law, with sureties to the satisfaction of the clerk, in the sum of ten thousand dollars.

The injunction prayed for is set forth in the first, second, third and seventh paragraphs of the prayer, and reads as follows:

“Plaintiffs therefore pray:
“1st, That an inquiry and accounting may be had as to the loss and damage suffered by the Woolson Spice Company by reason of the reductions in the price of its product, and hat said company and said defendants controlling its said policy may be enjoined from selling its said coffee at such prices as to entail a loss upon said company and its shareholders.
“2nd. That the defendants, Alvin M. Woolson, William A. Brigham, Lawrence Newman, James Secór, John B. Ketchum, Rudolph A. Bartley, Graff M. Acklin, John Berdan and Frank Williams, may be restrained from acting in any way as directors of said The Woolson Spice Company.
“3rd. That said The Woolson Spice Company be restrained from registering any transfer of said seventeen hundred and thirty-nine shares of said stock so as aforesaid purchased by said The American Sugar Refining Company, until the further order of this court, and until such time as the court can pass upon and adjudge the ownership of said stock; or if such transfer has been registered,then that such registry be decreed to be null and void.”

There is a fourth prayer asked, which is to enjoin the American Sugar Refining Company; but, as no service was ever had upon that company, there is no injunction against them,

“7th. That the defendants and each of them be enjoined and restrained from refusing to allow plaintiffs and their attorneys to inspect the books and records of The Woolson Spice Company at any reasonable hours.”

On the hearing of a motion to dissolve this injunction, the court of common pleas, on March 22nd, dissolved it; and an appeal was'taken from the order of dissolution, and the court of common pleas suspended the operation of that order for a period of ten days, which period was afterwards extended by this court until the- motion to suspend could be heard. This motion has been heard and submitted to this court, upon the affidavits which were filed in the court of common pleas, upon the transcript of certain oral evidence there taken, and upon additional affidavits filed in this court. It makes a large volume of evidence; and the questions involved in the motion have been argued by counsel upon either side, with ability, and a good deal of attention has been devoted to the citation of authorities and to the argument of the facts involved in the case.

The view that we have taken of this case will not require us to review particularly the evidence offered. The arguments upon the facts related mainly to the question whether the evidence showed, upon the hearing of this motion, that certain stock belonging to individuals, who, at the time, owned it — stock of the Woolson Spice Company — had been sold by them and purchased by The American Sugar Refining Company.

The injunction was dissolved by the court of common pleas, it seems, mainly upon the ground that the evidence failed to show that The American Sugar Refining Company were the purchasers of this stock. We have not read the evidence carefully, for the purpose of determining that, question. As advised of what the evidence is, we would be unwilling on this motion to hold that the American Sugar Refining Company were not purchasers of the stock, or that, if not purchasers, at least they were not beneficially interested in its purchase. But we think that the question which should determine this motion lies back of that; and therefore we have not found it necessary, as I have said, to review the evidence and make a finding upon that question, and hence it will be unnecessary for us to pass upon certain objections which were urged to testimony that was offered, evidently with a view to 'show that The American Sugar Refining Company were the purchasers and holders of this stock. I may briefly say, upon a hearing of the motion to dissolve, it would be very difficult to say just exactly what evidence would be competent, until the whole matter had been .investigated. It is probably true, as a rule of evidence, that conversations between parties interested upon one side of a controversy, at which the other party was not present and had no means of knowing it, would not be competent to show the actions or intention of an opposite party — and a great deal of this evidence is conversations, declarations, some letters and telegrams between certain of the defendants who sold their stock; yet it is not worth while to say that it was incompetent; it could be offered ana used for such purposes as might be competent,- upon a full and final consideration of the case.

The question, however, which we have thought it necessary first to consider, and upon which we have determined this motion, is: Whether or not the plaintiffs, by their petition, and by the evidence they offer in support of it, show themselves entitled to an injunction; that is, on the matters which they have prayed for?

The plaintiffs in their petition set forth (and we may say that those allegations are either admitted or substantially proved), that they, the plaintiffs, naming all of them, except the plaintiff Kuhn:

“Are partners doing business in the city and state of New York, under the name of Arbuckle Brothers; that said co-partnership is engaged in the business of roasting and selling,coffee on a large scale in substantially the same manner as The Woolson Spice Company; that a principal feature of the business of said Arbuckle Brothers consists in the sale of coffee in packages ready for distribution under-the trade mark or brand of ‘Ariosa’; that by reason of the similarity of the business of said Arbuckle Brothers to that of the Woolson Spice Company, and the magnitude of the business of said parties, they have for some time past been engaged in active competition for the coffee trade in the United States. Said Arbuckle Brothers have for several years past been also engaged in the business of selling sugar in two-pound packages, ready for distribution in all parts of the United States, buying said sugar in barrels from the defendant the American Sugar Refining Company, or Sugar Trust, as it is usually known,
“Plaintiffs further say that said Arbuckle Brothers, in the early part of the year 1896, having found that there was little or no profit in said branch of their business by reason of the expense of handling said sugar, determined to engage in the business of manufacturing and refining sugar, and to that end purchased land and commenced to plan for the erection and equipment of a certain mill refinery in the city of Brooklyn, in the state of New York, which was, about the'first day of December, 1896, and still is in process of construction. That the carrying out of said intention on the part of said Arbuckle Brothers would necessarily bring them into competition with the said TheAmercian Sugar Refining Company, in the sugar trade throughout the United States.
“That thereupon the said The American Sugar Refining Company, having learned of said intention on the part of said Arbuckle Brothers, for the sole purpose of inducing and forcing said Arbuckle Brothers to abandon their said plan of engaging in said sugar business, and thereby procure, foster and maintain a monopoly of said sugar business throughout the United States, determined to go into the coffee business upon a very large scale with the intention of so thereby injuring the coffee business of said Arbuckle Brothers as to compel them to give up their project of engaging in said sugar trade as aforesaid, and thereupon and in furtherance of its said scheme began to equip one of their idle refineries in the city of Brooklyn, with machinery for roasting coffee; but upon learning that the principal feature of the coffee business of said Arbuckle Brothers was the marketing as aforesaid of coffee in packages under a trade name, and that it would be impossible to carry our their purpose aforesaid without acquiring the right to sell coffee in a similar way, under a well-established trade-mark or name, which could not be built up independently in a short time, said The American Sugar Refining Company, for said reasons alone, determined to and did, on or about the 16th day of December, 1896, purchase of the defendants Alvin M. Woolson, William A. Brigham, John Berdan, Lawrence Newman, James Secor, Graff M. Acklin, John B. Ketcham, Rudolph A. Bartley, Frank Williams and others, (the owners of all the stock of said The Woolson Spice Company, except the sixty-one shares so as aforesaid owned by said plaintiffs), a part of the stock of the said The Woolson Spice Company then owned by said parties, and that thereafter and prior to December 26, 1896, said The American Sugar Refining.Company did purchase of the owners thereof all the remaining shares of the said stock of said The Woolson Spice Company, except the sixty-one shares aforesaid; that •the purchases of said The American Sugar Refining Company aggregated seventeen hundred and thirty-nine shares ■(1739) out of a total of eighteen hundred (1800) -shares; that as said plaintiffs are informed, said shares of stock were transferred to the said The American Sugar Refining Company by a simple endorsement in blank of the names of the ■several owners thereof on the back of said certificates, and the plaintiffs say that the said The American Sugar Refining Company was not authorized by its charter or by the laws ■of the states of New Jersey or Ohio, to purchase said shares ■of stock of The Woolson Spice Company; that said purchase of stock was made with the sole end and • aim of procuring ■and maintaining a monopoly of the sugar trade throughout the United States; and that said purchase of stock of The Woolson Spice Company, by said The American Sugar Refining Company, was and is wholly illegal and void.”
“That immediately after the purchase of said stock said The American Sugar Refining Company openly and notoriously announced that said The Woolson Spice Company was to be, thereafter, managed solely in the interest of said The American Sugar Refining Company, for the purpose of .carrying out their plan of injuring the trade of said Arbuckle Brothers as aforesaid, and without regard to the interests of said The Woolson Spice Company, or the shareholders of said last-named company, other than said The American Sugar Refining Company.”

• Omitting, then, a part of the petition, the seventh para.graph is:

“That after the consummation of said sale of said shares to said The American Shgar Refining Company, the defendant, Alva M. Woolson, was employed, according to the direction of said The American Sugar Refining Company, ■as the general manager of said The'Woolson Spice Company, ■and the defendant William A. Brigham, as secretary of said company and assistant to the general manager; that thereafter, on or about the 17th day of December, .1896, the said The American Sugar Refining Company ordered and directed «aid Alvin M. Woolson and William A. Brigham to reduce the price of coffee manufactured and sold by The Woolson Spice Company, one-half cent per pound, which said Wool-son and said Brigham, in accordance with said orders and directions, did, without the advice, counsel or direction of any Board of Directors of said The Woolson Spice Company, and thereafter, on or about the 21st day of December, 1896, the price of the coffee of said company was again reduced one-half cent per pound in the same manner, solely under the order and direction of said The American Sugar Refining Company. That said Arbuckle Brothers did not reduce the price of said coffee sold by them, as aforesaid, in order to meet the reduction of said The Woolson-Spice Company until the first day of January, 1897, at which time said Arbuckle Brothers reduced the price of the coffee sold by them to meet that of the said The Woolson Spice Company, to-wit: one cent below the price existing on the 16th day of December, 1896. That on the following day, the second day of January, 1897, and in the morning thereof, the said Woolson and Brigham, in the same manner, and solely at the order and direction of said The American Sugar Refining Company, made a further reduction in the price of their said coffee of one-half cent per pound, making a total reduction of one and one-half cents per pound since the 16th of December, 1896.
“Plaintiffs further say that said Woolson and Brigham: did, on the 11th day of January, 1897, in the same manner, and solely at the order and direction of said The American Sugar Refining Company, make a further reduction in the price of the said coffee of The Woolson Spice Company of one-half cent per pound, making a total reduction two cents per pound since the 16th day of December, 1896.”
“These plaintiffs say that said reductions were not made-in good faith, by or at the direction of the Board of Directors of said The Woolson Spice Company; but on the contrary, the same were entirely unnecessary, and were not warranted by any condition of affairs existing in the coffee trade. That during the time when said reductions were made there was no reduction in the price of the raw material used by said company in its said business; but on the contrary there was an advancing market. That said reductions were not made by the Board of Directors of said company, but were made solely by virtue of the orders and - direction of said The American Sugar Refining Company, and were not made in the interest of said The Woolson Spice Company or its stockholders, but were made solely for the purposes above stated, to-wit: to frustrate the plans of said Arbuckle Brothers, and to force them to abandon their intention of engaging in the business of refining sugar.
“Plaintiffs further say that the price of the said coffee of the Woolson Spice Company is now fixed by said parties who are controlling the policy of The Woolson Spice Company, and the sales of their said coffee are made at an actual heavy daily loss, caused by said unnecessary reductions in the price; that the losses to the said The Woolson Spice Company and its stockholders by reason of the same is from five hundred to one thousand-dollars- a day, and if said prices are continued, and especially if further reductions are made as said The American Sugar Refining Company gives out and threaten they will be made, and as these plaintiffs have reason t.o believe and fear they will be made, unless this court shall come to their relief, the value of the stock in said company owned by them, will be entirely frittered away and destroyed.”

That is all I care to read of the petition.

In saying that these allegations are either admitted or that the proof sustains them, I mean substantially so. There are certain allegations in there that are probably disproved; but the petition upon its face and stating the case which the plaintiffs come into this court to make, raises the question whether these plaintiffs are entitled to ask for an injunction.

They aver, in a part of the petition which I have not read, that Kuhn, the plaintiff, has one share of stock, standing in his name upon the books of The Woolson Spice Company, but that it actually belongs to the Arbuckle Brothers; and the persons, whose names I have read, aver that they after-wards, in the latter part of December, 1896, purchased sixty shares of stock, making their total holding sixty-one shares. The petition then stands before us as if Arbuckle Brothers had brought this action in the name of only the partners interested, and Kuhn may be dropped out from any further consideration. We have, then, Arbuckle Brothers, an old and well-established firm in the business of selling package coffee, asking a court of equity to enjoin the Woolson Spice Company and its directors and officers from managing their own business according to their own best judgment. They also ask to enjoin these directors from acting in their office, because they say they are not legal directors, having sold all their stock Upon this point it is only necessary to say that the proof clearly shows that the defendants who are thus attacked are each of them the owner of one share of stock in the company. It is true that they are parties to an outstanding executory contract, providing that they shall, at the option of the purchaser named therein, sell these several shares of stock at a price therein named, but the option has not yet been exercised,and the stock is still theirs. It was urged in argument that the original agreement provided for the sale of all the stock. This is-true, but equally true is it that a subsequent and supplementary agreement was entered into by the parties to the original agreement, by which the sellers, directors of the Woolson. Spice Company, were to retain each one share of this stock, and they were therefore competent to act in that office. But the basis of the injunction sought in this case is that the defendants selling the products of this company at a less price than they can be profitably produced, is injuring the stock and depreciating its value. This complaint and appeal to a court of equity to protect the Woolson stock from depreciation and the Woolson Company from loss, is made by persons who aver and who, it is conceded, are conducting the largest competing business in the United States. The plaintiffs say that they did not cut their prices until they were compelled to by the Woolson Company, but it is difficult to see what merit can be found in this assertion. The interest of plaintiffs, though owners of sixty-one shares of stock in the Woolson Company, is plainly not in preserving the value of the Woolson Company’s stock; and that the plaintiff did not so understand it, is made apparent by the prayer of their petition, which does not stop with asking an injunction, but asks forjthe appointment of a Receiver winding up the business of the corporation,' the sale of its property and the division of the proceeds among its stockholders, If the. court, when it comes to determine that branch of the case, can grant the prayer of the petition, it would thus wipe out a leading competitor, and leave the trade entirely, or practically so, to^the plaintiffs. However, our concern is not with the receiver at present. We are to inquire whether they are entitled to an injunction. Whether they come forward in good faith, representing interests that are in jeopardy, and rightfully asking to enjoin illegal acts on the part of the directors and managers of the Woolson Company.

I desire here to refer to a few authorities which wiU better express the situation, both in fact and law, of the plaintiffs, than anything I can say.

In a case which is cited by counsel for both parties,in 52 Barbour's Reports, Belmont v. Erie Railway Company, reading from page 662, the court say:

“Prima facie, every shareholder has a right to come here, as representing all the shareholders, to prevent an act of this description” (that is, of. the description set forth in this bill), “and the'court does not require any evidence that the remaining shareholders, or any of them, have concurred in the filing of the bill, because, if the act be illegal, it is presumed to be for the benefit of all that it should be stopped; but if it be made to appear, and the attention of the court is called to the fact, that the plaintiff is not moving in his own behalf, but is set in motion by some one else who undertakes to pay the costs, and to indemnify him against all risk, the whole aspect of the case is at once materially altered, because the suit is no longer under the direction of the plaintiff, but another person whose interests may be utterly adverse to those of the company, is in a position to control the proceedings. What the court looks to is this: Is the suit bona fide the plaintiff’s own suit, or is he merely .the hand by which some one else acts? And there is no ingredient entitled to greater weight, in arriving at a conclusion on this point, than the question, who is responsible for the costs of the suit. * * * Nor are we without authority to the same point in our own state. The court, in 50 Barb., 157, said: ‘In the answer it is alleged with great distinctness, on the information and belief of the defendants, that the plaintiff is not the real party in interest, but that the suit is presented wholly at the instigation and in the interest of the rival express companies, which are the real and actual plaintiffs in the controversy. An illusory suit in the name of the shareholder, but really prosecuted by and in the interest of a rival and competing company, cannot be maintained for the purpose of dissolving or restraining another association or company, of which the nominal plaintiff may be a member.”

That opinion cites another case, which has also been cited here several times, and, as it is an important one, I will refer to it. It is the case of Forest v. Manchester, etc., Ry. Co., 4 DeGex,Fisher & Jones Rep., 125. In that case the plaintiff, on behalf of himself, and other shareholders, sought an injunction to restrain the company from running steam vessels in a manner alleged to be ultra vires, but he admitted, on cross-examination, that he was a shareholder in a rival company, and instituted the suit by direction of the latter company, who indemnified him against costs. I will read a little from, page 129, which I think is very profitable reading:

‘‘But the ground upon which I proceed is entirely that of personal exception to the character of the plaintiff, and the foundation of my decision is contained in this passage of the plaintiff’s own examination, not attempted to be qualified or questioned. He says in that examination: ‘The directors of the packet company directed the institution of this suit and indemnify me against costs.’ It is not that they persuaded him to institute the suit, not that they instigated the suit, but that the directors of the other company have ‘directed the suit’ andaré to indemnify the plaintiff against the costs of it. To use a familiar expression, the plaintiff is the puppet of that company. It has been a very wholesome doctrine of this court that one shareholder having in view the legitimate purposes of the company, may be permitted in this court to maintain a suit on behalf of himself and the other shareholders of the company, but the principle upon which that constructive representation of the shareholders is permitted,indisputably requires that the suit shall be a bona fide one, faithfully, truthfully, sincerely, directed to the benefit and the interests of those shareholders whom the plaintiff claims a right to represent. But can I permit a man who is the puppet of another company to represent the shareholders of the company against whom he desires to establish the interest and benefits of a rival scheme? That would be entirely contrary to the principle upon which this constructive representation has been permitted to be founded. When the plaintiff sues in that capacity, any personal exception to the plaintiff remains, and it would be a direct contradiction of every principle of -truth and justice if I permitted a man to come here clothed in the garb of a shareholder of Company “A,” but who is in reality.a shareholder in Company “B,” and has no sympathy whatever with, no real purpose of promoting the interests of the other company? Such a thing would be so much at variance with the principles of a court of equity that it would be impossible for it to entertain a suit of that description, which is a mere mockery, a mere illusory proceeding.”

These authorities come nearer to the question at issue thamany others that have been cited. The only distinction which can be pointed out'between the reported cases and the one at bar is that the former w_ere brought by an individual, who it is asserted had been procured to institute the action by an agreement to indemnify as to costs, while in the latter, the plaintiff, partnership, has brought the suit directly. The distinction is not important. The reasoning in both cases referred to rests upon the fact that the real instigator of the suit was a rival business concern. We have so far failed to find any reported case furnishing an exact parallel to the one before us; perhaps because no business house, m its own name, has hitherto sought the aid of a court of equity to enjoin a competitor from managing its own business. In the cases cited that was the real attempt, but they gracefully put another’s name foreward as plaintiff. We fail to observe any distinction of importance, and the reasoning of the decisions is entirely applicable to the case before us. The plaintiffs here frankly allege that having been a long time establishing a large and profitable business in the coffee line, it occurred to them that they would become competitors of the American Sugar Refining Company in the sugar line, and they started out to erect a refinery; that thereupon,they say, The American Sugar Refining Company, to off-set this attempt at competition in the sugar business and to drive plaintiffs out of it, have embarked in the coffee business, and in this latter attempt the hand of the court should be laid heavy upon them. We do not think that the plaintiffs are in a position to ask a court of equity to interfere in this matter. There is nothing shown indicating anything different in the conduct of the Woolson Company’s business than might be anticipated or expected at any time from the managers of a. similar concern. It will not do for a court of equity to take charge of this plant, undertake to control it by injunction, substituting the judgment of the court for the discretion of its directors. If, as alleged, the management of the Woolson Company are selling its product for less than cost, they had only recently entered upon that policy, and it may be the part of the wisest business sense that has prompted its management to reduce the prices of its products.

A. L. Smith,^John Kumler and E. J. Marshall, for •Plaintiff. Doyle & Lewis, for Defendants.

It is claimed that defendants should be enjoined from selling their products at such unprofitable price. We are not satisfied from the evidence that they are making such sales. The evidence taken after the business had been operated under its new management for about three months, tends to show that the corporation is doing business at a profit; but if it were not, for the reasons already given, the court will not interfere at the suit of a competitor in business to restrain the directors from exercising their judgment in the matter of prices. For aught that appears the reduction in price is a temporary expedient, having for its purpose an enlargement of the trade and business, and may, if it does not airead}', ultimately result in increased profits. However, that question is one in the control of the directors, and a court of equity cannot interfere with their discretion unless the proof clearly shows an abuse of it.

For these reasons the court are of opinion that tüe motion to suspend the order dissolving the injunction should be and it is overruled.


author: Haynes, J.

text:
    (Sixth Circuit — Lucas Co., O., Circuit Court,
    Jan. Term, 1895.)
    Before Haynes, Scribner and King, JJ.
    THE SECOND NATIONAL BANK OF TOLEDO v. SECOND NATIONAL BANK. ISAAC N. WALKER et al. v. CHARLES R. MESSINGERet et al. R. MEIER & CO., etc. v. CHARLES R. MESSINGER et al.
    No. 785.
    No. 788.
    No. 789.

      Partnership — What toitt constitute a partnership, defined — Authorities reviewed—

    1. Where M., who carries on business under the firm name of M. & Co.,enters into an arrangement with B., whereby B. was to let him have $10,000 in money, receiving therefor M.’s notes, payable to B., with eight per cent, interest per annum, part of the consideration being that B. was to receive one fourth of the net profits of the business, provided that if the net profits should not exceed the amount of eight per cent, on the money loaned, M was to pay eight per cent, on the notes; M. to receive a certain amount for his services in the business, and B. agreeing to endorse paper for the firm to a further amount; Held, that this arrangement constituted B. a partner of M. in the business, and made him liable as such for the firm debts
    Error to the Court of Common Pleas of Luoas County.
   Haynes, J.

These cases have Been heard ‘úpon petitions in error and upon the arguments of counsel; and the principal decision of the cases, in the main, all turns upon the same state of facts. The actions in the court of oommon pleas were brought 'by the Second National Bank, by Isaac N. Walker & Co., and R. Meier & Co., in separate suits, each claiming to'hold 'Calvin Bronson, then in full life, liable upon certain claims that each held originally against the firm of Charles R. Messinger & Company, but which claims had been compromised in the year 1884, at a time when Mr. Messinger practically failed and compromised with his creditors, seeking to set aside that compromise and to hold Calvin Bronson liable, for the reason that this partnership had been concealed and had not been made-known to the creditors at the time of the settlement, or at any other time, and averring that they had brought a suit as soon as they had ascertained that there 'was a liability on the part of Bronson.

The facts of the case, somewhat in detail, are these: Mes-singer & Company at one time carried on business in the city of Toledo, in the cutting and manufacture of leaf tobacco-into smoking tobacco and other brands, and in that firm Calvin Bronson had been a member. That firm, however, was dissolved, and for some years Charles R. Messinger carried on the business alone, under the firm name of C. R. Messinger & Company. Finally, in the year 1878, an arrangement was made between Bronson and Mr. Messinger, as the testimony discloses, whereby Bronson was to let. Messinger have about $10,000 in money. He did let him. have that money at different times and in different sums, and received from Messinger certain notes, payable to Bronson! with interest at eight per cent, per annum. Messinger testifies that at the time this arrangement was made, at the-time he received this money, and at as part of the consideration for receiving it, it was further agreed that Bronson should receive one-fourth of the net profits of the business-which was then being carried on; and the agreement further provided that if the profits should not exceed the amount of eight per cent, interest on the notes, that Messinger was to. pay eight per cent, interest on the notes in that event. It was further agreed, as Mr. Messinger testifies, that Messinger was to receive during that time a certain sum per year for his. services in the business — $1,500 a year, I think, at first, and then $2,000 a year. And it was further stated by Mr. Mes-singer that Mr. Bronson had agreed at the same time to also-indorse paper at the bank for Messinger for a certain amount. The testimony discloses that Bronson did, from time to time,, indorse notes at the Second National Bank for Mr. Messinger,. Messinger having received the money, and the business proceeded, and at the end of the first year (this having occurred,. I think, in the fall of 1878), upon the first of January, when he took an inventory and the profits were ascertained, Mr. Messinger gave to Mr. Bronson, as he testifies, a note-representing one-fouvth the amount of the net profits from the time the arrangement was made down to the first of January; and he did so during the year 1879; and in the-year 1880 the profits were not visible. The business, evidently, was running behind, for some reason, and in the summer of 1880 Mr. Bronson, as Messinger testifies, notified him that on the 1st of January, 1881, the arrangement between them would terminate and end. And accordingly, at the end of that time, it did, as he testifies, end and cease. The notes which were given for the profits were paid'after-wards by C. R. Messinger.

Messinger continued in business from 1881 to 1884, in June sometime, when he found himself in a failing condition. The business waB insolvent. 'Thereupon a schedule of debts was made out — a statement made out to be submitted to his creditors, and upon that exhibit Mr. Bronson was represented as a creditor of C. R. Messinger & Company to the full amount of the notes which had been taken for the original $10,000,and in some sums in addition,for which he was held as indorser, and in the compromise which was made, whereby the creditors were to receive 25'per cent, on the dollar, he participated with the other creditors. The testimony of Mr. Almon Hall has also been given in the case, in which it is stated by him that a short time prior to the making of this settlement he, acting thea for Mr. Messinger, and in fact drawing up the articles of compromise afterwards — and perhaps the assignment,! don’t remember about that — sent for Mr. Bronson to call at his'office, and there,in the presence ■of Mr. Messinger, they had a conversation, in which Mr. Hall stated to Mr. Bronson that he had learned of this arrangement, and stated to him the leading facts in regard to it, and stated to him further,- that that being true, he would be liable to be held as a partner, and Mr. Hall states that Mr. Bronson replied that he had been so advised by his counsel. Upon his examination, Mr. Messinger’s attention was called to this conversation, but he denied having heard it. Also, later on in the trial, he was called to the stand on behalf of defendant, and then stated that he didn’t Bear it.

Now, these are the leading facts in regard to the. oral testimony. There is some negative testimony, or, rather, there is testimony that should bear upon this subject. The books of the concern are not iñ'existence. Sometime subsequent to the failure, Mr. O. R. Messinger sold them to the paper dealers. There was a memorandum book, which, it was stated, would throw some light upon this subject, which has been lost and cannot be found. The original notes themselves are lost, and the indorsements which were made upon them. The testimony of Mr. Messinger is that whenever he' made these notes for profits, he at the same time indorsed upon the back of the original notes which had been given by him to Mr. Bronson the words “interestpaid”' — ■ and perhaps the testimony is that the majority of them were so endorsed by Mr. Bronson himself.

Now, I believe, in outline, these are the leading points in the case, and the controversy here is whether, upon these facts, Mr. Bronson can be held as a member of the firm of C. R. Messinger & Company, not whether he can as between himself and Mr. C. R. Messinger, but whether he can by the creditors be held as a member of the firm, for the firm debts.

Preliminary to this, and before proceeding further, the question is made as to whether the Second National Bank can recover upon the claims updn which it bases its right to recover finally — for this reason, and growing out of the state of facts: The notes which were originally sued upon were notes which were executed after 1881. Upon its transpiring upon the trial that upon the 1st of January, 1881, this arrangement terminated, it obtained leave of the court of common pleas to amend its pleadings, in which it set up chat the original indebtedness — the money loaned — was loaned some time prior to 1881, by the bank to Messinger & Company, and during the time that this arrangement existed, it is claimed, between Messinger aüd Bronson. And a controversy then arose as between the bank and the de' fendants as to whether there had been a renewal of these notes from time to time, or whether the notes had in fact been paid off and gone out of existence and new notes given to the bank by Bronson and Messinger, in which case there would be no liability, because the indebtedness had accrued after 1881, We think, after discussing the matter, that the testimony shows that there was a line of discounts and an agreement for discounts, by the bank to Messinger & Co., of which he availed himself, and which was carried forward from time to time, of the original loans by renewal notes from time to time down to the time that the last notes were given. It may be that they were not always given at the same moment, or even perhaps the same day, but they were given under the same arrangement. It is true, perhaps, that at the time the notes were paid, that is to say, the business was transacted, by a new note being given, or by a check being given by Messinger & Company, to take up the old note,and the new note put in the bank; sometimes the new note, perhaps, was not put in the bank for twenty-four hours after the old note was taken up. It was said that at times Messinger would have more than money enough in the bank to pay that particular note, and upon that there was some testimony given; but we are clearly of the opinion that within the rules which should govern the renewal of notes and the continuation of a debt, that there was such a renewal of the notes and continuation of the debt that the plaintiff would have a right to sue.

Coming back tó the question as to whether there was in fact a partnership, or whether there was such an interest that the plaintiff should have a right to hold Bronson as a partner in the firm of Messinger & Company, we will say that we have listened with attention to the able arguments of counsel, and we have endeavored to read carefully the leading cases cited by them.

On the part of the plaintiff in error in the first case, defendants below — the Bronson estate — the cases cited are: 28 Ohio St. 319; 13 Rhode Island, 27; 97 N. Y. 159; 71 Ill 148; and the case of Cox v. Hickman, a leading casein England, which may be found in various reports, but.I have it here as found in the House of Lords’ Cases, vol. 8, page 267.

Counsel for defendant in error have cited 7 Ohio St. 172, and quite a number of text books. They have also referred the court to all the cases m the Ohio State Reports touching the question of liability upon partnership agreements. However, upon an examination of the cases, the leading cases are cited in 7 Ohio St., and 28 Ohio St., and the other cases which have been cited.

It would be very interesting and even instructive, to discuss these various cases and to see the manner in which the decisions of law seem to grow and expand and become rules. The law of Ohio was at one time supposed to be settled in the case of Wood & Oliver v. Henry Valette and Harry Lewis, 7 Ohio St. 172, where, in the third division of the syllabus, it is stated: __

“That a contract between parties to share in the net profits of a business, to the carrying on of which they respectively contribute, necessarily makes them partners as to third persons dealing with the firm.”

Afterwards, in the 28 Ohio St., the Supreme Court Commission, in the case of Harvey v. Childs & Potter, p. 319, give these as syllabi in the case:

“The liability of one partner for'the contracts of another, when not estopped from denying the liability, is founded on the relation they sustaiirof being each principal and agent in the joint business. This relation is, therefore, the true test of partnership, and the liability rests on the ground that it was incurred on the express or implied authority of the party sought to be charged.
“Participation in the profits of-a business, though cogent evidence of a partnership, is not necessarily decisive of the question. The evidence must shew that the persons taking the profits, shared them as principals in a joint business, in which each has an express or implied authority to bind the other.”

While the first rule is a very simple one, the last rule is inclined to make a man think some before he arrives at a conclusion. What I mean by that is that in my judgment, it leaves the question as to whether there is a partnership one that will necessarily always be in a good deal of doubt, unless it can be shown definitely that there was an express agreement that the parties should become partners; or, perhaps, a better way of stating it would be, that they should so agree as to what would be done that it would show that they had contributed either capital or labor specifically to carry on the business, with the further agreement that they would be sharers in the profits and losses of the business, which would make an express contract of partnership.

The case in 28 Ohio St. refers to this case of Cox v. Hickman as having changéd the rule in regard to sharing thepofits and losses doctrine, as it is called. We have given that case very careful attention, and while it has gone so far into history as to be old enough to establish that doctrine, nevertheless, when it was originally decided, the decision of the House of Lords, in our judgment, did not establish any such doctrine. That case, I may say, was this: Smith •& Son, carrying on the business of manufacturing iron in England, had become involved, perhaps insolvent, and, rather than go into bankruptcy, they made an arrangement whereby* they conveyed to trustees all of their property with the agreement that the property should be sold down to four thousand pounds, and that about four thousand pounds of their property should be left in the business, and then that the business should be carried on by the trustees, and from time to time the net profits of the business should be divided among the various creditors by the trustees until the whole of the creditors were paid, and then the business and all the property remaining should be conveyed by the trustees to Smith & Son. The business had been a profitable one, the good will of the concern, evidently, was deemed to be very valuable, and the creditors seemed to be very desirous to carry* out the arrngement, and, of course, Smith & Son were desirous to do so. There was an understanding by the trust agreement whereby the creditors might from time to time be called together in a meeting, and that meeting to decide at any time whether the business should proceed, os whether it should be stopped and wound up, or closed out. Those are the leading facts in the case. The business went forward, but did not prove as profitable as was expected, and certain drafts had been drawn upon the trustees and accepted by the parties, and suit was brought against certain of the creditors and the trustees, alleging that they were co-partners in the carrying on of this business because they were sharers in the-profits; that the trustees_ were liable because they had given the acceptances, and the creditors liable because they were made sharers in the profits; and the court of common pleas held the creditors liable. In the Exchequer Chamber, of six justices,' they stoo.d_three to three. Thefeupon it went to the House of Lords. And thereupon the House of Lords propounded the.question to the twelve judges, and they stood six to six, and each of them rendered a loqg opinion, and thereupon it was held that there was no liability on the part of the creditors. They did not, in terms,- overrule the celebrated case of Waugh v. Carver, foundin Smith’s Leading Cases, with which we are all familiar; but they held — and that was the substance of the issue joined there— that this was practically the. carrying on of the business of Smith & Son through these trustees for the purpose of making money out of the assets and keeping the good will of the business, and that they should make dividends from time to time purely for the purpose of paying the creditors; in short, that it was only a method-adopted by Smith & Son for the purpose of carrying out their desire to have the business pay off the creditors and have something left for themselves. They discuss the auestion of the profit doctrine, it is true, and they expressed some individual opinions in regard to it: but, so far as the case itself is concerned, it will be found, by carefully reading the case, that that was the basis upon which they rendered their final decision. Of course, during all of -this. discussion by so many learned judges, there are a great many things said and a great many points made which are instructive, but time will not permit us to go through more of the case.

In the Law Reports, Chancery Division, vol. 7, p. 511,may be found the case of Delhasse in re Megevand, in which the question came up, and in which the statement is made by Chief Justice Bacon, as follows:

“No doubt at one time it might have been said that the law on the subject had been questioned (the ground of sharing the net profits); but the criticisms -which have been passed on the case of Waugh v. Carver, have thrown such light upon it that it is not worth while to go back to the case of participation in profits in test of partnership, because the case of Cox v. Hickman has completely settled the law, and the judgment in that case goes principally on the ground that the relation of principal and agent must be established before the dormant partner or the person lending his money, can be held to be liable for the debts contracted in the business. ”

And the judges of the court proceed to discuss the case and deliver opinions seriatim, and Lord Thesiger, who, I believe, is the author of Pollock on Contracts, also discusses the question. He concurred in reversing the Cox v. Hickman case. He speaks of an act which had been passed, and says:

“Now, apart from the act, the law applicable to this case has been laid down in tolerably distinct terms by the House .of Lords in Cox v. Hickman, and it is perfectly true that the House of Lords, in that case, laid it down that the proposition that a participation in profits constitutes an invariable test of partnership is not one which can be maintained. Lord Cranworth gives as the test that which, no doubt, must now be taken as the proper test to be applied to all these cases, namely,, that the real ground of liability as a partner is that the trade has been carried on by persons acting on behalf of the person whom it is attempted to make liable as a partner. But, in the very same page in which these words occur, Lord Cranworth also says that the participation in profits is, in general, a sufficiently accurate test, and that the right of participation in profits affords cogent, often conclusive, evidence of a partnership. If that be so, It follows as a logical consequence that if, in addition to participation in profits, the arrngement provides for a participation in losses, and also contains stipulations tantamount to the ordinary stipulations which one would expect to find in the' case of a dormant partner, it is an a fortiori reasoning-in such a case in favor of a partnership, and Lord Cranworth’swords “cogent and often conclusive”must be changed into the words “still more cogent and often more conclusive evidence of such a partnership. ”

And then are disclosed some of the facts in that case, or an agreement which was entered into by those parties. Again, he says, and I read from page 580:

“And I observe that Mr, Justice Lundley, in his book on Partnership,' in speaking of the different propositions which may be deduced from the decision in Cox v. Hickman, says, among other things, that prima facie the relation of principal and agent is constituted by an agreement entitling one person to share the profits made by another to an indefinite extent. ”

And the judge remarks:

“That appears to'me to be an accurate expression of the law as evolved from Cox v. Hickman.”

Coming back to Ohio, to the case in 7 Ohio St., we find that case decided upon a contract. Henry Vallette, who .was evidently constructing the White W-atei Valley canal in the state of Iowa', entered into an "agreement with one ■ Harry Lewis, at Cincinnati, whereby he agreed to make a loan to Lewis .in the sum of $1,000 and draw for the same'in merchandise as he would want it. He further agreed to use his influence in "getting his contractors to patronize Lewis’ store and buy their goods of him. In consideration of the foregoing, Lewis agreed to pay Vallette in merchandise, half the profits made in his store or in any other store that he might establish on the line of the canal within the next twelve months. Lewis agreed to keep the books so as to" be able to arrive at the exact amount of the profits. And it was further provided that Vallette should not be responsible for any loss connected with . the concern more than the profits, and that nothing in the agreement should be construd to make a partnership between Lewis and Vallette. Now, it was very evident that Vallette was intending to make all the profits out of the business that he could, as he was going to have half of the profits, and he put in the money and was going to take it out in goods from time to time. The court held in that case, following Waugh v. Carver, that a participation in the profits constituted Vallette a partner, and he was held liable for the debts. That case, to-day, is law in Ohio; it has -not .been disturbed in any court so far as we know; that is to say, it has not been overruled in any form.

Now, the case of Harvey v. Childs & Potter is this — and they refer to the case of Wood v. Vallette, and also to the case of Leggett v. Hyde, 58 N. Y. 272, to establish the same doctrine, and, as I understand it, refer to it as having decided that the original case was proper.

Potter was purchasing hogs from time to time, at any rate, he desired to purchase some hogs for shipment, 'and he went to Childs and asked him to loan him the money to make the purchase; he asked Childs to advance the money and take an interest in the hogs, which he refused. Potter then proposed that if Childs would let him have the money to pay for some hogs that he had bought and also some others that he wished to buy, sufficient to make two carloads, that he, Childs, should take possession of the hogs when delivered at Loudonville, and take them to Pitts-burg, and sell them and take his pay out of the proceeds and that he” might have one-half the net profits of the transaction. Childs accepted the proposition, and advanced to Potter, $2,500. Afterwards, without the knowledge of Childs, Potter bought the hogs of Harvey on his own credit, and they constituted a part of the two car-loads referred to. Childs sold the hogs in Pittsburg, and appropriated the proceeds to reimburse himself for the money he had advanced. No profits were made. The avails of the sale were insufficient to pay the amount advanced by Childs, and Potter paid the deficiency to him. Harvey brought suit against Childs and Potter, claiming that they were co-partners in the transaction. The case was carried to the Supreme Court of the State,and the syllabus of that decision I have already read. In deciding the case the court referred-to the case .of Cox v. Hickman, and also to the case of Eastman v. Clark, 53 N. H. 276; that is, it commences on page 276 and is very lengthy. Speaking of the case of Wood v. Valette, they say:

“In the absence of any known stipulation to the contrary, every party of a trading firm within the scope of the joint business, in contemplation of law, is clothed with implied authority to enter into simple contracts on behalf of the firm in furtherance of the business of the partnership, and thereby bind each member of the firm. Where therefore, as in the case of Wood v. Vallette, 7 Ohio St. 172, and the case of Leggett v. Hyde, 58 N. Y. 272., money is advanced, to be used in a trading busjness, and returned in a year with a share of the profits made during that time, it may well be implied that the business was conducted on behalf and by the authority of the person advancing the money and sharing the profits, for i't is to the continuing trade, in the ordinary way, that he looks for his profits.
“But such cases are plainly distinguishable from one where money is advanced, to be embarked in a single transaction, where no credit is contemplated. In such case there is no ground for the implied authority to incur debts, such as exists in regard to a general trading business.”

And thereupon he proceeds to discuss the facts of this particular case between Childs and Potter, and holds that there was no contemplation that the parties would carry on a general business — it was simply to be a purchase of two car-loads. There was no opportunity given to buy on credit. The money for the purchase of the whole two car-loads was supposed to be in the hands of Potter, by Childs, and the two carloads were to be purchased with that money. The court holds that there was no general liability; that is to say, Childs was not liable as a partner.

Now, coming back to the case before us, we, after a very full and careful discussion of the matter, think that under these two decisions in Ohio — the 7th and 28th Ohio St. — that upon the facts of the case we ought to confirm the mdgment of the Court of Common Pleas. It seems to us distinctly evident that the mone^ which was advanced by Mr. Bronson was advanced with the expectation that it was to be used in the busin iss of O. B. Messinger & Co. That was a growing business. It was the expectation of the parties that it would be carried forward in the usual and ordinary manner of carrying forward a commercial business of that kind; that leaf tobacco would be purchased to be manufactured into cut tobacco, and that the tobacco would be sold under the expectation that profits would be realized, and Bronson was to have one-fourth of them. In order to carry forward that business, he was not only willing to advance this $10,000, but he was willing also to become security to the Bank to the further extent of $10,000 — giving his credit to the concern. It was further provided, that Messinger was to have a certain sum of money for giving his active attention to the business; and that, certainly, would not have been necessary had it been Messinger’s business only and exclusively, because it seems to us that he would have been entitled to carry on his own business without any arrangement of that kind. It is true that it might be claimed that that was simply done to reduce the amount of profits in some form, but that is not the,natural view to take of it. The natural view, we think, to be taken is, that Messinger had to give his active attention to the business, and as between him and Bronson, he was to be allowed some $2,000 a year for his services as active manager of the concern. Now, it seems to us that on that state of facts there was a community of interests in that concern; it. seems to us certain that there was an authority granted there by Mr. Bronson that this money might be used in the concern, and that Mr. Messinger might go forward and contract debts, for the benefit of the concern, and out of the contracting of these debts, might ultimately expect to make a profit; so that, trying the tests that are laid down by the authorities for testing the question as to whether there was a partnership or not, so far as third parties, a least, are concerned, we think that the weight of authority — we think that under the Ohio rules and the decisions of the Supreme Court as laid down in 7 Ohio St., that our duty is to affirm the judgment. We therefore hold that the judgment of the court of common pleas should be affirmed, and the costs in error will be paid'by the plaintiff in error, and reasonable cause will be certified for the filing of the petition in error,so that there will be no penalty.

In the case of Isaac N. Walker v. C. R. Messinger et al., and the case of R. Meier & Company v. Charles R. Messinger et al., in both oases, it is found by the court that the debts accrued subsequent to the 1st of January, 1881. It being shown that this agreement had terminated at that time, the court below' held that there was no liability on the part of Bronson during his life time, or of his estate after-wards, to Walker or to Meier &Co., and in those cases judgment w'as rendered in the court below for Bronson, and in each of those cases the judgment of the court of common pleas will be affirmed at the costs of the plaintiffs in error.

James H.. Southard and Guy W. Kinney, for Bronson estate. .

Almon Hall,, and Pratt & Wilson, for creditors.


text:
    (Sixth Circuit---Lucas Co., O., Circuit Court Court---January
    January Term, 1896.)
    Before Haynes, Scribner and King, JJ.
    GEORGE K. DETWILER v. THE CITY OF TOLEDO.

      ■Error in boundary line by mutual mistake of parties — No estoppel. When a-property owner accepts the boundary line as pointed out to
    ■ him by the owner of the adjoining property, which turns out to be.erroneous, this is a mutual mistake rather than an agreement between the parties, and such adjoining property owner will not be estopped from afterwards claiming the true line, the question of adverse possession for twenty-one years not intervening.

      Same — Evidence—Notes of deceased, surveyor.

    Boobs and papers and the field note of a surveyor who made the original survey,.but since deceased, are competent evidence to establish the true boundary line.
    Error to the Court of Common Pleas of Lucas county.
   King, J.

This is a proceeding to reverse the judgment of the court of common pleas in a case of the same title, brought in that court. The action was brought by the plaintiff to recover the possession of certain real property from the city-, which he-claims it had taken possession of. The property described ás the property of the plaintiff, was leased to the plaintiff’s graritor by the state of Ohio, and the controversy arises over the boundary line. The-description set forth in the petition is this:

“Beginning at a point 2 feet at right angles from the mrth face of the chamber of Lock No. 2, Toledo side cut, and opposite the foot of said lock; thence north 6-|-degrees east to the bank of Swan creek; thence westwardly up Swan creek to a point from whence a line drawn south 6$ degrees west to its intersection with a line drawn from the point of beginning north 88$ degrees, west will include 4-100 of an acre. ”

74-100 is said to be a mistake, and that 75-100 would be correct.

The defendant answers the petition and avers that it is in the possession of certain property under a certain lease to it, being the property that was leased by the state to another party previously, and it alleges in its amended answer that the property leased is a piece of property lying next west of and adjoining the property which the plaintiff claims to own. So that, as I say, the only question is as to the boundary line between the property which the plaintiff claims to hold under a lease from the state, and that of the city, holding its property under a similar lease from the state.

This property which the plaintiff claims to own was first leased to James Myers, in 1859. That lease, in 1868, was transferred to Augustine Pilliod. The transfer of that lease was then recorded. I should say that that lease was for a period of thirteen years, and, in 1872, the lease was renewed to said Pilliod for a period of thirty years. Pilliod went into possession in 1869, and soon after built a mill upon the premises which he had taken under his lease, and continued to occupy the premises from that time up until about 1880. Sometime in 1864, the state leased to a man by the name of Lind, the property next west described in the answer, and described as being next west of the property leased to Pilliod; and in 1879 this property was again leased to the city of Toledo, and it is described as being situated next west of the property leased to Pilliod. The description in Pilliod’s lease is as follows:

“All that certain piece or parcel of land situate between lock No. 2, Toledo side cut, and the acqueduct crossing Swan creek, but bounded and described as follows: Beginning at a point 72 feet at right angles from the north face of the chamber of lock 2, Toledo side cut, and opposite the foot of said lock; thence north 6$ degrees, east to the foot of the bank of Swan creek; thence westwardly up Swan creek to a point from which a line drawn south 6$ degrees, west to its intersection with a line drawn from the point of beginning north 83$ degrees, west, which included 75-100 of an acre.”

That property was acquired by the state of Ohio, the property included in the lease to Pilliod, by a deed from C. T. Williams, September 17, 1842; and in 1851 it was surveyed in connection with other property, by Thomas Clark, then a surveyor and civil engineer living in the city of Toledo, and he surveyed and described the property as follows:

“A lot at lock No. 2, beginning at a point 72 feet at right angles from the north face of the lock at its foot; thence north 6J degrees, east to Swan creek; thence up Swan creek far enough to contain 75-100 acres by running south degrees west, to intersection with a line running north 88£ degrees west from the place of beginning.

Now, that description made.by the survey of Thomas Clark first in 1851 is the same description incorporated in the lease .to Pilliod, save and except that the first line in the lease to Pilliod is described as running to the foot of the bank of Swan creek; whereas in the survey it is described as running to the creek. Besides that, the descriptions are alike. In 1852, another survey was made to find out the quantity of land next west, and described as situate next west, and that survey refers to the lines run in this survey. Now, then, we think from the testimony in the case, that the description of this land put into the lease to Pilliod was intended to be the description of the land as surveyed by Clark, and was the first piece of property that the state acquired at that point. At the time that the city came into possession of this lease, in 1879, they erected a fence on the supposed boundary, and the arrangement seems to have been this: The superintendent of the work-house went out there and wanted to have a line, as it was necessary to put a fence around their property, and he went to Mr. Pilliod, who was then in possession of his piece, and Mr. Pilliod says he pointed out to him where the stake was which had been set before he came there — by whom he does not testify — but he supposed to indicate the southwest corner of his property, and that that was the line, and a line drawn from there to the creek would furnish the west line of his property, and the east line of the city’s property. He testifies that he saw that stake there in 1868, and he lost sight of the stake, and he don’t think it was seen after that time. In 1879 he pointed out the place where he then understood and supposed the stake had stood; but he is not very clear in his testimony whether that was the place, or not, since no mark or monument existed by which he could locate the stake. That was all the testimony offered on the part of the defense as to where the stake stood when the city located its fence, and -that stake seems to be the monument which was necessary to determine the line between these two adjoining properties. We have looked this testimony over very'carefully,and come to the conclusion that the position of the stake could have been ascertained when the city went there to occupy, and that it was very readily ascertainable at the commencement of this suit.. One witness, Mr. Marston,a surveyor, testified that he went out there and followed up the survey of Mr. Clark; that he had in his possession Mr. Clark’s field notes; he also had this plat which Mr. Clark had made, and which was filed and became a part of the records of this county. And he also had the description in this lease, and he followed the lines as indicated in these surveys of Clark, and at the point where he would suppose the corner to be he dug down and found a stake which he swears was a surveyor’s stake. Nobody has contradicted or disputed him on this point. There is some other evidence indicating that a stake stood at or about the place where Mr. Marston said he found this one.

The question is raised here that a survey made at the time of the commencement of this suit, or while it was pending, run substantially on the east line as indicated by the original survey, and to the water of Swan creek, and then back up Swan creek far enough to reach this fence, which would include within its boundary more than 75-100 of an acre. But there is also testimony tending to show that Swan creek has been filled up by piling for docks, and probably by earth and rubbish, that it had accumulated within twenty-five or thirty years, since that was first occupied, and whether the line is where it was in 1851, we are left largely to conjecture, though there is some evidence that it has been filled up some sixteen or seventeen feet. No matter how that is, it is pretty clear that the description in this lease follows Clark’s survey, and unless the parties have done something themselves to establish a different line, or are in some way estopped to dispute that line, then that survey should govern. There is no question of adverse possession ifi this case, since the city has only been in possession of this property since 1879, and it seems pretty clear to us that when that place was pointed out by Mr. Pilliod, it was to indicate where the actual line was; but no attempt was made to find the actual line, and we think that the actual line could have been readily found at that time if a surveyor had been employed and had gone there to find it, so that the line as pointed out by Mr. Pilliod and as acted upon by the city became a line established by mistake rather than by any agreement of the parties, and that having only existed since 1879, we do not think that the plaintiff, or those who preceded him are estopped from now .claiming the true line, and that line, we think the testimony all shows to have been at that stake, and that stake was fourteen or fifteen feet west of the fence; the surveyors have given the exact distance, and for that reason the verdict of the jury is not sustained by the evidence in this case.

I should say that on the trial of the case the plaintiff offered in evidence, by the witness Marston, who had in his possession the books and papers belonging to Mr. Clark, the field notes taken by Clark when he made his first survey,and from which field notes Clark had prepared the several maps which were introduced in this case. Those field notes were made in 1851, and Mr. Clark is dead. We think the court should have admitted those field notes, provided they contained anything that bore upon the controversy; and it is claimed by the plaintiff that they did. I have not examined them to know whether they did or not. They contained data made by the surveyor in the line of his duty as a surveyor, and the notes indicating exactly what the survey showed, it seems to us, would have been competent evidence.

I think that this is the only exception, except one in the charge, which is not urged by the plaintiff below, and, in reading over the charge, we do not find that there was any error made in it. The court very plainly set forth the principles of law upon which the plaintiff was entitled to recover, but the jury, as it seems to us, disregarded the evidence by finding for the defendant, and for that reason the judgment of the court of common pleas will be reversed, and the case remanded to the court of common pleas for a new trial


author: Swing, J.

text:
    (First Circuit, Hamilton Co., O., Circuit Court,
    Jan. Term, 1894.)
    Before Smith, Swing and Cox, JJ.
    WALLACE v. WALD, Assignee of Laist and Hochstetter.

      Assignment for benefit of creditors — Loss on contract with assignor —When not proper claim against estate.

    1. In the ease of a contract for the sale of goods deliverable in monthly installments, if the purchaser makes an assignment for the benefit of creditors, and the seller, without first making an offer to perform to the assignee, sells the goods, he cannot prove against the assignee a claim for the loss arising from the difference between the contract price and the price realized on his resale of the goods.

      On appealfrom the Court of Common Pleas of Hamilton County!
    Prior to January 26th, 1891, Laist & Hochstetter had made contracts with plaintiffs for the purchase of glycerine to be shipped from France in equal monthly installments during the months from December 1890, to March 1891Jin-clusive, to be delivered free on board at New York on arrival, and to be paid for by giving notes for sixty days, after arrival.
    . On January 26, 1891, the firm of Laist & Hochstetter made an assignment to defendant for the benefit of creditors._
    ; .On January 29, 1891, the plaintiffs, without knowledge of the assignment, by letter notified Laist & Hochstetter that the first shipment from France had arrived, and that they would forward them by B. & O. R. R. Co. as soon as landed. The next day plaintiffs he'ard a rumor of suspension of Laist & Hochstetter, and telegraped them: “What shall we do with 88 drums of glycerine on dock here now. Please wire instructions.”
    On January 80, 1891, Laist & Hochstetter answered by telegraph: “We have suspended payment and shall not resume. ’
    Thereafter various letters passed between plaintiffs and Laist & Hochstetter. Plaintiffs claiming to be in ignorance of the assignment to defendant until August, 1891, never communicated with the assignee, and the assignee was in ignorance of the existence of the contracts and of the correspondence between plaintiffs and Laist & Hochstetter until August, 1891. Meantime plaintiffs, without any offer of performance of delivery of glycerine to the defendant assignee, and without notice, sold .the glycerine in the open market, and in August, 1891, presented to the assignee for allowance a claim for the difference between the contract price and the price that they had been able to realize. This claim having been rejected by the. assignee, the plaintiffs within proper time brought this-suit to compel its allowance.
   Swing, J.

The action in the court of common pleas was by plaintiffs against defendant, asking that he be compelled to allow the claim of plaintiffs against his insolvent estate.

We think the judgment of this court should be for the defendant. The decision oi Judge Sayler, in the court of common pleas, is before us. The facts are stated therein, and we approve his decision, desiring to add thereto simply the following:

When plaintiffs and the assignors entered into the contracts in question, reciprocal rights and obligations were created; when the assignors assigned to defendant, their rights and obligations were transferred to their assignee, and the assignors could in no way bind the assignee after that time. As to these contracts, the evidence shows that the assignee had no knowledge of these contracts, and no communication was had between the plaintiffs and defendant until after the resale of the goods, when plaintiffs presented their claim against the estate.

Upon the assignment to Wald, it is clear, upon principle and the authorities cited by both parties, particularly the case cited by plaintiffs,in 27 Bull. 120, that Wald succeeded to the rights of the assignors, and could have enforced this contract. Before the plaintiffs were in a condition to perform the contract, or offered to perform on their part, they had notice that the assignors had no further interest in the contract, but that the same had been assigned to another. This, of course, gave them the right to rescind the contract, unless the assignee had come forward and offered to perform in the place of the assignors. We are unable to see why the defendant, on principle, can be deprived of his right, which, in this case, was the right to enforce the contracts made by the assignors, and at the same time be held liable on the contracts when he was not at fault, he never having had any opportunity given him to perform. Suppose the assignors had not made an assignment in insolvency, but had assigned the contracts for value to A, of which fact the plaintiffs had notice. Could plaintiffs have held A without offering to perform to A? This is the case here, except that the assignors became insolvent.

But that insolvency simply gave the right to plaintiffs to rescind the contract as to the assignors, with the right to enforce it or not, as to their assignee, as they might see fit. And,as to the assigee,in this case,they saw fit to abandon it and resell the goods without giving him an opportunity to perform. The principle here, we think, is distinguished from the case in 43 Ohio St. 346, in this, that in that case there was no assignment of any right or chose in action to the assignee. The obligation of the assignor was fixed. When he endorsed the note, he became liable to pay when the note was dishonored, and under fixed rules of law he was notified— ndt his assignee. The assignee had no interest in the note, and took none by the assignment. _It became a debt against the estate when the parties complied with the fixed rules of law applicable to promissory notes.

Otto Pfleger, for Plaintiffs.

Wilby & Walct, contra.

But then, the assignee took an interest in these contracts which he could have enforced if plaintiffs had given him the opportunity; but they chose not to do so, and by so doing we are unable to see why they should hold him responsible, not having placed themselves in a position with regard to him showing their readiness and ability to perform.

(Affirmed by Supreme Court without report April 28,1896.)