text:
    Samuel Scott's Executor v. The Executor and Heirs of Levi Barber.
    Specific performance of contract for the sale of land will not be decreed, at the suit of the vendee, where he has been in default for twenty-one years or more, and no sufficient excuse for the delay.

      Tbe fact that the vendee died shortly after the default, and that the suit is prosecuted by an heir who was then an infant, will not vary the case.
    "Where partial payments have been made by the vendee, the money thus paid can not be recovered back, unless there has been some default on the part of the vendor.
    Case reserve’d in the county of Athens.
    This is a bill of review, filed for the purpose of reversing a decree of the Supreme Court, entered at the November term *of said court, in Athens county, 1841, in a case wherein the testator of the present complainant was complainant, and the executor and heirs of Levi Barber were defendants. The object of the bill was to enforce a specific performance of a contract entered into between Levi Barber, the father of the defendants, and Samuel Scott, the father of the complainant, for the sale, by the former to the latter, of a tract of land in Athens county. On hearing, the hill was dismissed, and the present bill is filed to reverse this-decree of dismissal. Since the filing of the bill of review, Samuel Scott has departed this life, and his executor now prosecutes-the suit. The facts of the case are fully stated in the opinion of the court.
    P. Tan Trump, for complainant:
    Whatever might have been the condition of the complainant’s-ancestor, he having been, till the commencement of the suit, a, minor, is entitled to the relief prayed for. Glaze v. Drayton, 1 Des. 109.
    The court of chancery is guardian of infants, and will not allow them to he prejudiced by acts in their infancy. Stock v. Stock, 1 Des. 191.
    , An infant is not bound even by the answer of his guardian, if he shows his dissent within a proper time. 4 Paige, 115.
    The court will protect the rights of infants, even though their guardian ad litem neglects to claim it on their behalf. Stephens v. Van Buren, 1 Paige, 479.
    If an appeal is dismissed on account of the neglect of a guardian, the infant is entitled to renew it when he attains his majority. 1 Kn. 85.
    From a consideration of these authorities, in connection with the facts of the case, we think the staloness of the claim will not bar a recovery. See also, as bearing strongly on the *case, Holt et ux. v. Rogers, 8 Pet. 20; Coulson v. Walton, 9 Ib. 62; Taylor v. Longworth, 15 Ib. 73.
    John WeLch, for defendants :
    The ancestor of complainant was in default at the time of his death, and none of his friends or relatives did aught to perform the contract or preserve the land for near a quarter of a century. If he seek to avail himself of the benefit of their contracts, he must also suffer the consequences of their laches. Hutchinson v. McNutt, 1 Ohio, 14; Fuller v. Perkins, 7 Ohio, 196, pt. 2; Brown v, Haines, 12 Ohio, 1.
    The equity is stale, and by analogy to the statute of limitations, it is barred. Henry v. Conn et al., 12 Ohio, 193; Howard v. Babcock, 7 Ohio, pt. 2, 73.
    The complainant has not taken the first preliminary step, without which he can not recover. To entitle him to a decree, he must tender the purchase money admitted to be duo. 8 Ohio, 39.
    If equity will not decree .a specific performance, because of the staleness of the claim, neither will it order the purchase money to be refunded. Higby v. Whitacre, 8 Ohio, 198.
   Hitchcock, J.

The facts of this case are substantially as follows : On April 3, 1816, a written contract was entered into between Levi Barber and Samuel Scott, by which Barber agreed to sell Scott 640 acres of land in Athens county, for the sum of $1,000 ; $320 to be paid in hand, $333 in one year, and $347 in two years, without interest; Scott also to pay the taxes. Upon the payment of the purchase money, *the land to be conveyed. The first payment was made, and much the largest proportion of the second; but no part of the last payment was made previous to the death of Scott, which took place in August, 1818, nor has any jiayment been made since. The complainant, Samuel Scott, was born about four months after the death of his father.

Abraham Scott, a brother of Samuel the elder, took possession ■of the land soon after the purchase, made some small improvements, and continued in possession until 1826, when he leased the .same by parcel to one Joseph Kirgan, for twelve years, at an annual rent of fifteen bushels of corn. Rirgantook possession, and ■made some additional improvements, but refused to pay the rent, •because the land belonged to Barber, who told him that Scott, had forfeited his interest. Samuel Scott himself was never in possession of the land.

On December 24, 1820, Abraham Scott, father of Samuel Scott the elder, wrote from Greene county, Pennsylvania, to Barber, that about four years before, he had left more than $500 with his son Samuel, to purchase a section of land of Barber, which was purchased at $1,000, and which, he states, he intended to divide among his sons. After stating that Samuel is dead, he requests Barber to inform him what is due for the land, and inquires whether whisky or any other produce will be received in payment, and says if it can, then he will try to mako payment. He wishes the deed made to himself, otherwise he shall have to look to Samuel’s estate for the money which he left with him, and for which he has his receipt.

On the 10th of January thereafter, Barber answered this letter. In this letter, Barber refers to a letter which he had written, in 1819, to Joseph Scott, supposed to bo a brother of Samuel, in which he had stated the terms of sale, the amount actually paid, and the balance due, and gives an extract from that letter. Ho says ho is willing to give to Abraham Scott a deed, provided he will produce the contract, and the administrators agree to it; but informs him that the balance due must be paid in money.

*On December 22, 1823, Barber again wrote to Abraham Scott, calling his attention to the subject, urging him to do something, and informing him that the business must not remain in that situation ; that the taxes had not been paid; that the land had been advertised for sale, and that he had purchased it in for the taxes of 1820, ’21, and ’22. To this letter Barber received no answer, nor is there anything to show that he heard from Abraham Scott, after the letter of December 30, 1820.

On March 5,1824, Barber wrote to the widow of Samuel Scott — • she then residing near Chillicothe. In this letter, he informs her of the sale of the land to her husband; that more than half the purobase money was paid, and urges her to have the business settled ; inquires of her whether Samuel left any heir or heirs; what are their names; whether there was any administrator on his estate, and if any, inquires the name. He informs her that if Samuel had an heir or administrator, they ought to attend to it immediately, otherwise that what had been paid would be saerifieed. It does not appear that any answer was returned to this letter.

Joseph Kirgan, a witness for coihplainan.t, states that, in 1831, he 'applied to Barber to purchase a part of the land, and that Barber refused to sell, because he understood that Scott had left an heir, but informed him that if that heir failed to redeem, when he came of age, he would then sell to him, Kirgan.

William Brown, a witness for defendants, states that Joseph Scott, uncle of complainant, and brother of Samuel the elder, in the summer of 1818, made a visit to this part of the country, and had conversation with him about this land. Joseph represented that it was bought by his father; that his father’s affairs had become so deranged that he could not pay for it, and he thought none of the sons would pay for it, unless it was Samuel, and that Samuel would. The next summer, that is, the summer of 1819, a brother of complainant’s mother came to look at the land. Witness had conversation with him. He said he was going to see the land, to determine whether it *would be for the interest of complainant, who was then an infant, to take his money and complete the payment for the land, or to put it at interest; and witness thinks that he came to the conclusion it would be best to abandon the land, and put the money at interest; but is not certain as to this. At any rate, witness thought, at the time, such course would be for the interest of complainant.

It was agreed by complainant’s counsel, that, at the time complainant commenced the suit, he was a minor, and destitute of property; that ho received none from his father’s estate, and expected none except this land; that Elmore Armstrong, who prosecuted, as next friend, expected to be liable for all costs and expenses, and for the purchase money still due; that he was to bo remunerated out of the land, according to a verbal agreement between him and the infant; but there was no writing between them.

Levi Barber paid the taxes on the land from the year 1820 to the time of his death, With the exception of the year 1831, when they were paid by^Kirgan. Those holding under him had the possession from 1826. He died in 1833. The proof shows that the land depreciated in value from' the year 1819 until 1832 or 1833, and was hardly worth the amount due upon it, with the taxes and interest. After that period, it increased in value, and at the time the original bill was filed, to wit, July 6,1839, was supposed to be worth $3,000. Since that time, it has again depreciated.

The defendants resisted a decree, on the ground that the contract had been abandoned, and on account of the staleness of the equity.

In consideration of the foregoing facts, the court dismissed the bill, and the question now raised is, whether, in so dismissing it, there was error.

In this bill of review, it is alleged, first, that the court erred in not decreeing a specific performance of the contract; second, it was not erroneous to refuse a decree for a specific performance; then the court .erred in not decreeing that , the purchase money should be refunded.

*It will be seen by the facts before stated, that the last installment to be paid for the land in controversy fell due in April, 1818, and that from that time to the filing of the bill, on July 6, 1839, a period of more than twenty-one years, no offer to pay was made. From 1820 no taxes wore paid. From 1826 no person was in possession, acknowledging any other right to the land than the right of Barber. In truth, Samuel Scott the elder was never in possession, although his brother Abraham was until 1826, but he took no steps to perform the contract; he did not even pay any tax. Under such circumstances, had Samuel Scott the elder lived, and had he filed this bill, I presume the counsel for complainant will not contend that he would have been entitled to any relief. It would at once have been admitted that the contract had been abandoned, and could not have been enforced. It would have been admitted that the lapse of time was so great that equity' could not, with propriety, interfere.

But it is claimed that, inasmuch as the complainant was an infant, circumstances ought not to operate against him. It must be remembered that the default was in the lifetime of the ancestor. Whether any administrator was ever appointed on the estate of Samuel Scott the elder, does not appear, but no guardian was appointed for complainant. Barber, after the death of Scott, corresponded with his relatives, to wit, his father and mother, urging the completion of the contract, but interference on their part is' declined. If not fully proven, yet the presumption is strong that the land was actually purchased by the money, and for the use of Abraham Scott, the father of Samuel the elder. After the death of Samuel, an uncle of the complainant, on the side of his mother, visits the neighborhood, with a view to examine the lands and form an opinion whether it would be for the interest of his infant nephew to complete the payments. Subsequent to this, and in the year 1824, Barber writes to the mother of complainant, his natural guardian, and urges upon her the necessity of having the business brought to a close, stating to her that unless it is done *tho purchase money already paid will be lost. But from December 30,1819, the date of the letter of Abraham Scott to Barber, it does not appear that the latter ever heard one word from any of the friends or connections of the complainant relative to this contract.

Under these circumstances there can be no doubt that Barber might, with propriety, have considered the contract as abandoned, and that a court of equity, on his application, would have decreed its rescission. And taking all these circumstances, in connection with the great lapse of time, into consideration, it seems, to a majority of the court, that there was no error in refusing to decree a specific performance of the contract.

The case of Henry v. Conn et al., 12 Ohio, 193, was not unlike this, and in that case the court held that; where'purchase money becomes due in the lifetime of the vendee, the infancy of his heir will not excuse delay in making payment, so as to induce the court to decree performance against the vendor after a great lapse of time.

But it is said that, although the court may not have erred in refusing a specific performance, still there was error in not decreeing the return of the purchase money. We do not see why, if lapse of time is to be considered a bar for one purpose, it should not for all purposes. It would seem to bo right and proper, in many cases, where a-man has purchased land, and made partial payments, and then fails, that the purchase money should be returned. But I know of no rule of law or equity that will compel the vendor to return it until he has first been put in default, by refusing to comply.with his contract. Now here has been no default on the part of Barber, or those representing him. No offer was made to pay the purchase money until more than twenty-one years after the same fell due. The default has ever been on the side of the vendee and his representatives. Had the vendee or his representatives, within a reasonable time, offered to forfeit the contract, and had Barber refused, then the money already paid might have been recovered back, as having been paid upon a consideration which had ^failed. But within what time? The statute of limitation answers this question. Within six years from the time the cause of action accrued. But in this case the effort is to recover back the money after a lapse of more than twenty-one years, and that, too, without having put the opposite party in default.

In the opinion of a majority of the court, it can not be done, and the bill must be dismissed.


source: Caselaw Access Project

author: Birchard, J.

license: Public Domain

text:
    Melancthon S. Wade v. Linton W. Pettibone and others.
    The auditor, in an execution, may claim the benefit of a purchase made by his attorney, especially if the whole debt is not paid; provided he assert his right in a reasonable time.
    This is a bill of review, brought to review a case decided in bank at December term, 1841, which was a bill in chancery from Delaware county. The case is reported in 11 Ohio, 57, M. S. Wade v. M. D. Pettibone.
    The facts of the case are as follows:
    In 1835, the Miami Exporting Company having been for many years a suspended institution, and being about to recommence ^business, made certain disposition of their existing claims, for the benefit of their old stockholders. By a resolution of July 13, 1835, they divided their claims into classes, rating them after the probability of making collections; and on the fourth class, which they call “ desperate" they authorized their agent to retain, as a compensation, fifty per cent, on the amount collected. They appointed the plaintiff their agent, and authorized the president to convey to him, in trust for the stockholders, all the property of every description, owned by the institution.
    Some time in 1835 or 1836, the plaintiff employed the defendant, M. D. Pettibone, who was a solicitor in chancery, to bring a suit to foreclose a mortgage on lands in Delaware county ¡ against the heirs of James Keyes, one-third of which land belonged to the Bank of the United States, and the two-thirds to the Miami Exporting Company, which claim was included in the fourth class, and therefore fiity per cent, of it belonged to the complainant.
    The suit was duly prosecuted, and the land advertised for sale on October 3, 1836. On September 7, 1836, about four weeks before the sale, Pettibone wrote a letter to Wado, advising him that the land had been appraised by the master, and of the time of sale, and inquiring if ho should bid it in for the company, if it should sell for less than the appraisement. No answer to this letter was received at the time of the'sale; and Pettibone attendeod, and bid it in,, in his own name. On the 11th of October, eight days after the purchase, Wade wrote to Pettibone, instructing him to purchase the property, and apologizing for not writing sooner, by sayijjg that his letter was mislaid.

      On November 29, 1836, Pettibone again wrote to Wade, reciting the sale and his purchase; and stating that, as he inferred from his receiving no answer to his letter, that the company did not wish to purchase, he had purchased for himself; but that, since his letter had been mislaid, he was now willing to relinquish his purchase to the company, and would ^release when he acquired a title from the master. He offered to take it at the appraisement, but if they deemed it best to retain it, he would con* vey all his interest, as soon as he got a deed from the master. And in answer to inquiries upon the subject, he said that he did not know the amount of improvements made by a tenant under an adverse tax title, but that he would find out, and see that some one fays the taxes.

    On the 9th of December, Wade replied to this proposition, that Pettibone might retain the land at two dollars per acre, and if he did not accept it on these terms, he directed Pettibone to make the deed to M. S. Wade, trustee and agent of the Miami Exporting Company.
    Pettibone, on the 27th of December, by another letter, renewed his offer to purchase; to pay $1,200 on certain payments; and repeated, that if these terms were not accepted, he would forward to Wade a deed, if he preferred it, on the return of the master.
    Wade answers this letter on the 10th of April; declines setting a price upon the land until he sees it, and expects to be up to Delaware some time in May, and offers the preference to Pettibone, if he concludes to sell. In this letter he also states that he was making arrangements with the agent of the United States Bank to make a division of the land, which would save expenses, and requested Pettibone’s opinion as to which end of the tract of land ho should let them have, if any.
    This request Pettibone never answered, and no further communication was had between them until August, 1839. In June, 1839, Pettibone visited Cincinnati, the residence of the plaintiff, whore, ho says, he sought him, but could not find him. Ho then paid to the officers of the company the purchase money, $650.89, after deducting the master’s costs and his own fees, and thenceforth claimed the lands as his own.
    Upon this case the court decided against the complainant. Since then Pettibone has died, and this bill of review is brought against his heirs and personal representatives.

      *T. W. Powell, for complainant:
    "We claim that the court erred in deciding the original case, in two particulars; first, in not decreeing a specific performance of the agreement of Pettibone, to convey the land to Wade; and, secondly in deciding that Wade’s right to call upon Pettibone to account for the purchase he had made, in his fiduciary character, was lost by lapse of time.
    As to the second point (the relation of the parties being admitted, it is needless to discuss the first), the question seems to be, from the view taken of the ease by the court, what shall be such a lapse of time as will bar the bringing of a suit to enforce the conveyance of property purchased by a trustee or other fiduciary purchaser.
    Now, in looking into the books, not a case can be found where a suit is barred by the lapse of time, in so short a period as in this case, or anything like it.
    The doctrine upon this point was very well reviewed by Judge Betts, in his opinion as vice-chancellor, in the case of Slee v. Manhattan Company, as reported in 1 Paige’s Ch. 55, who says: “ But though the cestui que trust has an election in this (the resale of property purchased), it is not ad libitum, as to time. It must be exercised within a reasonable period after he is apprised of the purchase. No general rule can be laid down with exactness, defining what shall be, in all cases, reasonable time. The numerous cases which have occurred and turned upon this point, have-been decided on their own peculiar circumstances. Various periods have accordingly been adopted, at which the courts say the cestui que trust shall be presumed to have acquiesced in the purchase, and he is held absolutely concluded from disturbing it. Bergen v. Bennett, 1 Caine’s Cases in Error, 1, was a foreclosure of a mortgage under the power, and the mortgagor was under sixteen years’ acquiescence, knowing the sale, denied the right of redemption. ^Chancellor Dessaussure refers to numerous English cases, in which relief was granted after a lapse of six, seven, twelve, fourteen, and twenty years; to which may bo added 2 Bro. P. C. 111, S. C., 15 Vin. 468, in which relief was denied after six years. The result of the cases show manifestly, that courts do not consider it a matter of course to divest the purchaser of a trust where he has acquired the formerlegal title. A proper diligence must have been indicated on the part of the cestui que

      trust. In the present case, I should deny the plaintiff relief upon this ground. He was present at the sale, and intimated no dissatisfaction with the defendant’s purchase. He considered the sale absolute, and not for his benefit, because he declined bidding, as he states, on account of embarrassed circumstances. He allows the defendants to take the estate as owners, and never intimates a claim upon them until 1825.” (The sale was in 1817, eight years beforo.) “If they were only trustees to sell, equity, under all those circumstances, would presume the trust discharged to his approbation, and hold him now concluded from disturbing the same.”
    In Powell v. Murray, 2 Edw. Ch, 644, it is said: “ In Gregory v. Gregory, Cooper, 201, a bill was filed to set aside a purchaso made by a trustee, upon the ground that the consideration for the conveyance was grossly inadequate; that the plaintiffs were ignorant at the time of the value of their interest under the will, and were in indigent circumstances, and advantage was taken of them. Eighteen years elapsed before filing the bill, and upon that ground alone it was dismissed. 1 he court would have released, if the transaction had been more recent.” 1 Jac. Ch. 631, S. C.
    The case referred to above, by Judge Betts, in which Chancellor Dessaussure reviews the cases upon the doctrine of the lapse of time, is found in 4 Dos. Ch. 706, Butler v. Haskell, in which he says, after showing the shortest time found in any case was six years : “ Thus we perceive that mere lapse of time will not bar a claim, otherwise good, unless it be so extreme as to furnish very strong presumptions against the claim; which *lhe court will attend to more readily, if some of the witnesses or the party whose acts are impeached, are dead.”
    I have looked into all the cases cited in the former case, 11 Ohio, 59, and find, it is impossible to ascertain how long it was in each of those cases between the time of the sale and the application to set it aside. The reports do not give sufficient dates to ascertain the fact; but sufficient does appear to show that relief was given after the lapse of several years. No case has been found where the lapse of time was less than six years, whoro the relief was refused.
    S. Finch, for defendants.
   Birchard, J.

This bill seeks the reversal of a decree rendered in this court at December term, 1841.

The ease is stated in 11 Ohio, 51.

It'is claimed that the deed is erroneous in two particulars: 1. In not decreeing a specific performance of the agreement to convey the land to Wade. 2. In deciding that plaintiff’s right to call upon Pettibone to surrender the purchase made in his fiduciary character, was lost by lapse of time.

The case was fully examined on the original hearing, and that decision has again been carefully re-examined. We are entirely satisfied that the orginal bill was rightly dismissed. To our own minds, the reasons then given are satisfactory.

For the satisfaction of counsel, it may be well to state more at length the objections to a deed for specific performance. One very serious obstacle in the way is, the want of a contract between the parties, based upon a sufficient consideration. On the part of Pettibone, there was a mere voluntary offer to relinquish his purchase to Wade, or keep the property at $1,200; the acceptance by Wade was a refusal to set a price upon the land, until he should see it in May, 1837, and then Pettibone was to have the preference, if he concluded to sell. This ended the negotiation. No more was heard about the agreement for two years. Pettibone was not relieved from the responsibility he had assumed. If anything could be gathered from the correspondence, showing what the intention *of Pettibone was, it is that he was willing to lot Wade have the land if ho would take it off his hands, and release him from the payment of the purchase money. Probably Wade intended at the time to do this; but he did not do it. He waited until the master required Pettibone to advance the purchase money out of his own funds, and until it had been paid into the hands of the party appearing to be entitled to it from the record. Had there been a sufficient and specific contract, in place of a mere amicable but indefinite understanding, no court of equity should decree its specific performance, after such laches, and after this change in the situation of the parties. Wade had neglected his duty; he had not been prompt where promptness was required.

This same neglect of duty is equally fatal in the other aspect of the case. The opinion of the late chief judge stands upon this basis. He does not place the decision upon the ground that a good claim had been lost by mere lapse of time, but by laches, by neglect to perform what, under the circumstances, was a positive duty, and required upon principles of fair dealing between .man and man. Bill dismissed.


author: Wood, C. J.

text:
    John Weeden, survivor of Tuttle, v. The Lake Erie and Mad River Railroad Company.
    A sale of stock by the commissioner of contracts of the Lake Brie and Mad River Railroad Company, with a secret agreement that the plaintiff may receive land of the company at a future day, and pay in the stock certificate, entitles the purchaser of stock to recover back the money advanced, ■with interest, if the company refuse to execute the agreement. *
    Such an agreement is an entire contract; and, if the company would retain the money, the land must be conveyed, on demand, according to the terms of the agreement.
    The commissioner of contracts has no authority to make such agreement, under the charter or by-laws; but if he and the plaintiff acted under a mutual mistake as to his power, the law raises an implied promise on the company to pay back the money and interest.
    On refusing to convey the land, tho money and interest may be recovered back also, on the ground that the consideration has failed.
    This cause was submitted to the jury iu the Supreme Coui't for Erie county, on the circuit, and a verdict rendered for the plaintiff *for $1,503.50, subject to the opinion of the court on tho law of the case. The action was assumpsit.
    It appeared in evidence that on October 19,1836, the defendant received, as stock, about $380,000 in real estate. This real estate was in common with Isaac Mills and Zalmon Wildman. It would not sell to advantage until partition was made. The defendant was in want of funds to be applied in the construction of the road; and, when these lands would be brought into market, it was supposed the necessities of the defendant would be relieved.
    In this state of its affairs, Samuel M. Lockwood, the commissioner of contracts of the company, set himself about raising the means necessary to enable the company to continue its operations. Lockwood applied to the plaintiffs, Weeden and Tuttle, since deceased, and others, to become subscribers of stock. The plaintiff and Tuttle took twenty shares, amounting to $1,000. This sum was afterward paid by the plaintiff and Tuttle, in cash, as the same became due.
    It was also in proof that, in order to induce the plaintiff and Tuttle to subscribe for this amount of stock, and make this advance in money, Lockwood entered into a written agreement with them, by which they were to have the privilege of the selection and purchase of any lots the defendant might own in the original town plat of Sandusky, to the amount of $5,000, the selection and purchase to be made at any time within six months after partition should be made, at a maximum not exceeding $100 per foot for water lots, and not exceeding forty-five dollars per foot for lots north of Washington street, etc. Rut if the selections should not be made within the six months, they were to be made at any time thereafter, at the prices for which lots were selling in that vicinity, with a discount of ton per centum thereon. The terms of such purchase to be one-fifth in hand, and the balance in'one, two, three, and four years from the date, with the privilege to the plaintiff and Tuttle to make payment in any certificate of stock paid in that might have been given by virtue of said agreement. This contract was the consideration on which the plaintiff and Tuttle subscribed for the *stock, and made the advance to the company, and was signed by Lockwood as commissioner of contracts.
    It was likewise in evidence that the defendant afterward became invested with the title to the land in severalty, and that the directors refused to execute the agreement, because, as they claimed, Lockwood was not authorized by the company to make any such arrangement.
    Beecher & Lane, for the defendant:
    The points which the defendant wishes to raise are these two: 1. The' contrast is Lockwood’s personal contract. 2. The contract is void for fraud.
    1. Upon the first point, the defendant only refers to the term of the contract. Lockwood had no authority, in fact, to bind the company; and it is submitted that, since the phraseology of the contract applies merely to him as the designation agent is descriptive only; and as he could lawfully stipulate that the company should make the conveyance, whether the contract was not intended to be with Lockwood alone, and that the plaintiff take his remedy against him.

      2.' The second point, admitting the authority of Lockwood, and that the company are bound by his contract, raises the question whether a contract-made with a corporation, at the time of subscribing stock, to suppress such stock, and to receive back advances, is not a fraud in law, upon the creditors of the company, upon the other stockholders, and the public ? Whether a corporation can make a lawful contract at the time of receiving a valid subscription, to suppress such stock subscribed? Whether a corporation, under any circumstances, may lawfully suppress stock, repay advancements, and release stockholders from responsibilities to creditors, for subscriptions, until dissolution and final liquidation?
    Whenever the tendency of an act, even if honest between the parties, is to deceive others, the law pronounces it fraudulent.
    ^Contracts of this character, which tend to mislead third persons, by professing one thing but doing another, are stigmatized as “ underhanded,” and the law affords a remedy, by so dealing with the contract as to constrain the party to act up to his professions, and really to carry out what he seems to have undertaken.
    The most usual example of this fraud in the text-books, and one which bears no slight resemblance to the present, is that in marriage settlements, where the parent of one party settles property upon his child, with a view of calling forth a corresponding provision from the parent of the other, but receives a contract to restore the advancement; in such cases, the law pronounces the contract invalid, from its effect upon third persons, and the chancellor will compel the parties to carry out their ostensible objects, after the spirit of the original arrangement. Jones v. Martin, Randal v. Willer, 5 Ves. Sen. 262; Verris v. Coleman, 1 Salk. 156; Redman v. Redman, 1 Vorn. 348; 9 Vern. Jr. 22, 24.
    The principle finds a corresponding illustration in the cases of compounding debtors. When a debtor arranges with his creditors for a release of their claims by paying a proportion of the debt to each, an agreement with one to pay him more or better than the others is void. 13 Pet. 199 ; Story’s Contracts, sec. 184.
    So where one ostensibly promises a release of a part of his debt, by giving security for the remainder, and agrees with the creditor, without the knowledge of the surety, to pay a further su m, such agreement is holden void. Peacock v. Bishop, 3 B. & C. 605.

      In these cases, the ground of avoiding these secondary and collateral agreements is, not because the parties are incompetent, or as between themselves, might not lawfully make them, but because they tend to lead third persons, creditors, sureties, or those standing in more confidential relations, into acts and responsibilities, by a bona fide and justifiable reliance upon their principal and apparent dealings.
    *The law of partnership affords still stronger analogies. A connection of this nature implies that the pai'tnorship interest shall be managed for the equal benefit of all the partners, according to their respective interests — a stipulation, therefore, by one partner for any private and selfish advantage, can not be permitted without a breach of good faith.
    If, therefore, one partner shall so stipulate, clandestinely, for any private advantage or benefit to himself, to the disadvantage, or in fraud of his partners, he will, in equity, be compelled to divide such gains with them. The same principle will apply to clandestine bargains for his own private advantage and benefit, made in contemplation of establishing a partnership with other persons, or as a premium for his services therein. So, if a purchase is made on partnership account by one partner, who clandestinely stipulated to receive any reward and allowance from the seller for his own private profits, he will be compelled to share the same with his partners. So where one partner obtains the renewal of a partnership lease in his own name, he will be held a trustee of the firm in the renewed lease. The samé doctrine is applied to other analogous cases — in all purchases and sales, etc. Story’s Partnership, secs. 174, 175, and cases cited.
    The case of Hickens v. Congreve may be selected, among many others, to show how steadily this doctrine is enforced. Flattery had negotiated a purchase from Congreve of certain mines for £10,000, and formed a joint stock company to hold and work them. By collusion between Flattery, Congreve, and some others, the conveyance to the trustees of the company recited, the price was £25,000, and the property was taken by them at this price. On bill filed to reclaim the difference thus withdrawn from the concern, for the benefit of the whole association, Lord Chancellor Lyndhurst says, “Upon the face of the bill, I can not help considering the transaction as fraudulent,” and a demurrer was overruled. 4 Russ. 562.

      In Card v. Hope, 2 B. & C. 661, the owner of nine-sixteenths of a general ship sold five-sixteenths to a purchaser, and *it was a part of the agreement that the purchaser should enjoy the advantage of having command while at sea, and that the sellers should have the corresponding privilege of ship’s husband while in port. This arrangement, though not illegal as between the parties, was holden to be a fraud upon others, viz., upon the other owners, and the charterers and passengers. In a long opinion of Chief Justice Abbot, heconsiders thatsuch an arrangement infringes the rights and impairs the security of each of these classes, for the judicious and profitable and safe management of the ship; and the king’s bench refused to enforce the covenant.
    It is scarcely necessary for us to point out the bearing of this doctrine upon the rights of the plaintiff. The Mad River Railroad Company, at the time of this subscription,was a lawful corporation, with a capital of $1,000,000, of which.$645,000 had been subscribed by stockholders. The company had incurred large liabilities, and much greater expenditures, and further subscriptions were contemplated and necessary to fulfill the object of its creation. A statute had been passed, granting a loan of $200,000, to be advanced in state bonds upon certain conditions — which advancement “operated as a specific pledge of the capital stock and estate” to secure the repayment. Upon this state of things the plaintiff, with others, became a stockholder, by a valid subscription, and received a valid certificate of’ ownership, which was accepted, voted on, used, and .held, and which conferred all the advantages and all the responsibilities of ownership as amply as upon any who subscribed before, after, and with him.' But if, by an underhanded agreement, one stockholder be permitted to obtain from the company advantages superior to his fellows, who is there, among the various interests connected with the company, who may not justly complain of the wrong?
    Let us look at some of these interests. Is -no wrong done to individual stockholders? Each may justly demand from every member of the company the most perfect equality — an equality of duties as well as advantages — that the burdens and profits *of the company shall belong equally to all associated. Will it be said that no wrong is done to him, when another stcickholder acquires the privilege which he has not, of withdrawing, at pleasure, his stock from the responsibilities, at ten per cent, above its value — the privilege of sharing profits, but evading the losses? If it be said that no wrong has been done to earlier subscribers, I need not stop to controvert the soundness of any doctrine which gives preference to later subscribers, although radically wrong, because this is no answer to those taking stock at, or especially after, the subscription of the plaintiff.
    ■So with the company’s creditors. The capital stock, I mean the avails of subscriptions, is the natural fund to which they look for payment, and which they have a right to have thus appropriated. Shall those who assumed to provide it, be permitted, by an underhand agreement and for selfish purposes, to withdraw it from the reach of those who trusted to it?
    These observations apply with special potency to the dealings of the state with this company. In March, 1836, the state, by special statute (Local L. 34, 571), consented to loan it $200,000. Half this sum was to be advanced, as soon as the commissioners were satisfied the company had vested sufficient capital for security, and had bona fide subscriptions of $500,000, and $250,000 actually expended ; tbe remaining half was to be advanced, when $1,000,000 was subscribed and another $250,000 paid in. The bill of exception shows the advancements under this law were made in December, 1836. Previous to the year 1836, the aggregate subscriptions were $565,000. In October 16, 1836, a subscription of $380,000 was made; on November 28, 1836, the plaintiff and others made a still further subscription. Now who is green enough not to see and know, that the whole subscriptions of 1836 were made in view of the law, and to enable the company to take advantage of its provisions. Yet the plaintiff asks the sanction of the court to withdraw stock, on the faith of which the loan was made, and which the law pledged as security for its repayment.
    *But this is not all. In the succeeding March, the noted plunder act was passed, and the company obtained another advancement. The plaintiff’s stock stood upon the books; it was regarded and taken into view for this purpose, and was sequestered, by the provisions of that act, a second time, as a pledge for the repayment of the loan.
    We are not yet quite done with these state obligations. In 1843, the state agreed to commute its debt into stock; and from thenceforth the rights, privileges, duties, and obligations of a stockholder attached to it. The relations, therefore, of the state to this company, either as creditor or stockholder, have ever been such, that the suppression of the plaintiff’s stock would operate as a fraud upon its pecuniary interests.
    There is yet a larger sense, in which the state may suffer wrong, by the withdrawal of this stock, viz., as a representative, or rather the incarnation of the public. The legislature creates a corporation with capital, privileges, and powers, adapted to, and competent for, the great public object of its creation. Every citizen profits by its well-being and success, and every citizen is injured if its powers are circumscribed, its resources abstracted, and its usefulness diminished. Chief Justice Abbot, in Card v. Hope, above cited, held the contract between a part of the partners, relating to the command of a general ship, against public policy, .because it tended to diminish the security of passengers; with much more reason will the court apply the doctrine here, where the number of passengers interested, is ono hundred-fold greater, and where the contract, by diminishing the resources of the company, impairs its means for usefulness and safety, and its responsibility for losses and injuries.
    The obligation of a corporation to the state, as the natural protector of all interests, are strikingly set forth in the opinion by Justice Story, in Wood v. Dummer, 3 Mason, 308. He announced that, upon general principles, the capital stock of banks was to be deemed a trust fund or pledge, for the payment of debts ; that the public as well as the legislature always supposed it to be thus appropriated; that it was substituted instead *of the individual liability of stockholders; that during the existence of the corporation, it could bo applied to no other purpose. “If the stock might, the next day after it was paid in, be withdrawn by the stockholders, why is its amount so studiously provided for, and its payment so diligently required ?” The same principles were asserted in two cases in Massachusetts (15 Mass. 505; 16 lb. 9), although the forms of proceeding admitted no individual redress at law.
    Now these observations fit this case, as if cut to a pattern. Tho Mad River Railroad Company, from its first organization in 1832, to the.present, has never been in a diffei’ent condition than struggling with its debts, at the verge of insolvency, notwithstanding all it could borrow and all it could beg; and now, with all its effects pledged thrice over, both by statute and by contract, and while it is again asking further facilities from the legislature, to enable it to preserve as well as complete its work, the plaintiff seeks to compel the company to release him from his engagements; yea, to repay him his advancements. Suppose the directors of a bank, having an outstanding circulation, were applying the effects to repaying to stockholders the amount advanced as stock, does it need argument to convince this court that its franchises were forfeited? Suppose a turnpike company, while struggling with embarrassment approaching insolvency, were witholding its funds from its creditors, to repay its stockholders, how soon would parties in interest demand the most active interference of this court? Yet the plaintiff is seeking to'enforce a contract, whose execution this court would adjudge to be a forfeiture of franchise, and would restrain by injunction.
    We are not without judicial authority on this point; for the annexation of such conditions to subscriptions, is not among the unattempted forms of fraud, by “operators in stocks.”
    In Reinhard v. Hovey, 13 Ohio, 304, Judge Birchard’s language is : “ It would operate as a fraud upon all those subscribers to the stock, who were ignorant of the fact that a condition was annexed to such suscriptions, if these ^conditional subscribers were to be allowed to avail themselves of the secret condition, and avoids their subscriptions.”
    The case of Taylor v. Miami Exportation Company is a not less decisive authority. This court united in overruling a demurrer to the bill, seeking to charge as stockholders.those who subscribed stock to control the institution, and afterward suppressing the stock. 5 Ohio, 167. The court likewise united in declaring this to be an act of fraud; but a majority dismissed the bill, because the application for relief was made too late to do full justice. 6 Ohio, 224.
    A recent case in the English chancery, 10 Sim. 519, embraces the whole principle of the present. It is a rule of the House of Lords, that a bill for creating a corporation shall not be entertained, unless three-fourths of the capital is subscribed. An act for the incorporation of the Grand Collier Dock Company, with a capital of £550,000, passed the House of Commons, while the subscription amounted to £22,700 only. While-pending in the House of Lords, a certain “provisional committee” made the additional subscription, required to comply with the rule, and the act was passed. But, at the time of subscription, a memorandum was made, stating that this subscription, by the provisional committee was not meant to bo individual stock, but in trust for the com. pany, and these shares were to be kept separate by special entries in the company’s books. Mangles, a bona fide subscriber, being sued for an installment, brought his bill, claiming to be roleasect from his obligation, on account of the fraud. The vice-chancellor dismissed the bill. “If,” he says, “the true effect of the memorandum was to enable the parties who subscribed to escape from their subscriptions, I think this court, as well as every other, would say that the first act was good, and the second void; and that, therefore, the parties remained bound to make good their subscriptions. My opinion is, that the gentlemen who made those subscriptions, are now compellable by law to pay up the whole of these subscriptions; and that it would be no defense for them to say they intended to commit a fraud upon the House of Lords, but would rather make the matter worse. Therefore, 3 think that, as far *as the main ground of the bill is concerned, it is quite plain it can not be supported.”
    And such, we doubt not, will be the opinion of the court, upon the present right of action. For this contract unites every feature, which renders such transactions fraudulent.
    The arrangement enabling the plaintiff to withdraw his stock, was a fraud upon the public — a fraud upon creditors — a fraud upon stockholders, and a fraud upon the state. Even if honestly or ignorantly done, it is still fraud — constructive fraud. But, when we find the plaintiff, not content with a repayment of his advances, endeavoring to obtain the property of a corporation struggling with its debts, at a price ten per cent, below its value, he manifests enough to justify a harsher name.
    Ruber & Camp, for the plaintiff:
    It is admitted that the money raised, went for the benefit of the co*mpany; that subsequently the company became invested with the legal title to the lands in severalty — that the plaintiff called upon the directors to carry out the agreement — that they refused to do so, and based their refusal on the fact that Lockwood had transcended his authority in making such a contract. In fine, it is a species of Mississippi repudiation; for the company is willing to hold on to the beneficial part of the contract, and reject all that it is for its interest to reject.
    The plaintiff had a right to suppose'that Lockwood, who was the general agent of the company in Sandusky, had power to make the contract; but if he had not, as is claimed by the company, he labored under a mistake; and since, by reason of this want of authority, he can not have the fruits of his contract, he asks that his money may be refunded to him. He asks nothing unreasonable. The jury have found the fact that the money was paid under a mistake, and now the court are asked to set aside their verdict, because the form or manner in which the ^business was done, was a fraud upon “ the state, and other stockholders, and the creditors of the company.” If there is anything wrong, it is in the form, and not in the subject matter of the agreement; for it is simply a contract for the sale of land, and nothing else.
    What was the manner of doing the business? Contemporaneous with the contract, Weeden & Tuttle put their firm name under a subscription written in a book which appears to be the property of the company, which reads as follows : ‘‘Wo, whose names are hereunto subscribed, do agree to take the number of shares of stock in the Mad River and Lake Erie Railroad Company, which wo have written opposite our names respectively, and pay the amount of the same to the treasurer of said company, or bis agent, as the same shall be called upon. Sandusky City, October 27,1836.”
    It is claimed that the subscription, being absolute on its face, any condition inconsistent with this feature of it “is a fraud upon the state and other stockholders, and the creditors of the company.”
    The question arises, can the company avoid its engagements with the plaintiff, by setting up the fact that such compliance would operate as a legal fraud upon others, when that other party is not before the court, is making no complaint, and where it is admitted that there is no fraud in fact practiced or intended. There is a class of cases where courts, of their own motion, will avoid a contract at the instance of the particeps criminis ; but, in such cases, they act as the guardians of the public morals and the protectors of the public interests.
    In the case of Gilbert v. Chadleigh, taken from a manuscript report, Lord Hardwicke holds this language : “ But the truth is that, in these eases of the violation of public policy, it is indifferent who stands before the court, if the intention of the contract be ■evident; because the court does not regard the state and condition of the parties, so much as the nature of the contract and the public good.” 9 Ves. 300, n. 4. The contract ^before his lordship was a security given as a consideration for procuring the obligor a public office. To test the question whether a contract ■comes within this rule, we must examine into the subject matter of the contract; for, if the objection arises simply out of the form of its execution, it has nothing to do with morals or the public interest. In such a case, it may be that some innocent party may be led into error; but, if such is the case in fact, and not in contemplation of law, the party who has suffered has his remedy; .and, the injury being personal, the remedy is also personal. To .authorize the interference of a court, at the instance of the particeps criminis, the contract must, in its substance and essence, bo at war with good morals, and must contravene some principle of policy which has its foundation in the public welfare. Ex turpi contractu actio non oriter. So that, when Lord Hardwicko says that relief will be given to the public through the particeps criminis, he alludes to cases where public policy requires the protection of sound morality. It is the cause of morals, in such cases, which constitutes the public policy.
    We will give counsel time to look through the 2,000 volumes of reports, which it is said now exist, to find a case which permits a by claiming that if he is held to his engagements, it will operate party to a contract, which is not against good morals, to avoid it, as a fraud upon a third person not before the court.
    In the case of Jones v. Yates, 9 B. & C., Lord Tenderden holds this language: “We are not aware of any instance in which a person has been allowed, in a court of law, to rescind his own act, on the ground that such act was a fraud upon some other person.”
    That was a case where plaintiff sought to avoid his own act, upon the ground that it was a fraud upon a third person not ber fore the court, and grew out of the negotiation of a promissory note.
    We will call the attention of the court to a class of cases whei*e the contract is against what might be termed public policy, *but which are not affected by any question of morality, and which courts refuse to set aside by permitting a party to set up his own fraud, although the contract itself is a fraud upon persons not before the court. It is the case of a deed to avoid creditors. In such cases the courts refuse to interfere between the parties, although the deed is a fraud upon third persons. Why is this ? It is against public policy to countenance such conveyances; but if the creditors do not interfere, the court will not do it for them. Having no principle of morals before them, courts, in such cases, make the parties abide by their agreements, and leave the, ■creditors to take care of themselves. If there is anything wrong in such cases, it is the wrong done to third persons; and'to permit either of the parties to take advantage of that, would be to permit them to take advantage of their own wrong, under the plea of protecting those who may not feel disposed to complain, and who in fact may have sustained no injury.
    We have contended for nothing inconsistent with the law as laid ■down in the case of Reinhard et al. v. Hovey et al., 13 Ohio, 300. In that case, some of the stockholders claimed to be conditional subscribers to the stock of the stage company, but the other stockholders who were before the court, claimed that.such conditions were a fraud upon them, the company being insolvent; and the court, at their instance, held them to be so. The law of that case was good law: but the relief was granted at the instance of the party who suffered, and not at the request of the one who committed the injury.
    We have examined with some care, all the authorities cited by the opposite counsel, and we see nothing to change our views on this branch of the case. In marriage settlements, the first class of cases cited, the parties who were affected by the secret or collateral agreement, were before the court; and so in the cases of debtors' compounding with their creditors. In such cases, public policy was called to the aid of the party injured, and to prevent one person from getting an unreasonable advantage over another. But there is one thing to be said in ^relation to this class of cases, which disposes of them at a breath. In cases of secret agreements to effect marriage settlements, and to give one creditor more than another, there is fraud in fact. There is a wicked intention to do wrong; and to carry out such agreements, would be to permit the one who did the wrong to reap the benefit. But in the case before the court, it is conceded that the contract was made in the most perfect good faith, and the jury have found such tobe the fact. The cases stand “wide as the poles apart.” The case of a secret agreement made by one partner in fraud of his co-partner, has so little to do with the case before the court, that our only surprise is, that any reference should be made to it at all. In such cases fiduciary relations exist between the parties, which the law protects with the greatest vigilance, and are never made without there being fraud in fact. Such was the case of Hickens v. Congreve, 4 Bussell, 562, cited by counsel. One partner had negotiated a purchase of certain mines for $10,000, and attempted to charge it over to his copartners at $25,000. H.e was caught at it, and was not permitted to get the advantage which he intended by overreaching his partners.' The case of Card v. Hope is the only case in the books that seems to favor the doctrine claimed by counsel, but if we look into the case itself, all difficulty is removed. The owners of nine-sixteenths of a ship, sold five-sixteenths, but in the contract of sale, reserved the right to control the ship notwithstanding. By this sale, under the law of England, they lost that control, being, after the sale, a minority in interest.
    The law of England gives to the majority in interest, the right to control a ship under certain restrictions, and the plaintiffs, by their agreement, sought to give this power to the minority.
    Abbott, C. J., says : “ It is a part of our national policy to give every encouragement to the equipment and employment of ships. Upon this consideration, the law enables a majority of the part-owners (under guards, indeed, to the intei-ost of the minority peculiar to itself), to employ their ship even ^against the will of the minority, that the ship may not remain unemployed. A power of employment vested in the majority seems to impart a power of appointing officers; and, in practice, the majority certainly exercise that power. But such a power carries with it a duty — the duty of exercising a free and impartial judgment in the choice of every person who is to be intrusted with the management of outfit and with tho navigation of the ship ut dentur digniori. And any contract which is calculated to have the effect of fettering the judgment and of binding tho party to concur in tho nomination of particular persons at the peril of an action, is in violation of that duty.” Here the very subject matter of the contract was at war with the well-established law of the land, and tho objection went to this, and nothing more. When such a case arises before this court, we shall be the last to say that the law in the case of Card v. Hope is not a good law.
    We have not been able to look into the case referred to in 10 Sim. 519, but, taking it as made by counsel, we can see nothing in it to apply to the one under consideration. It is a rule of the House of Lords, that a bill creating a corporation shall not be entertained unless three-fourths of the capital is subscribed. An attempt was made to evade this rule by a fictitious subscription to stock. Here was a fraud in fact, designed and intended to overreach an express law. Who is there who would not say that such an attempt to commit a fraud, should not be put down? We see no principle in Wood v. Dummer that can apply in this case. The capital stock of banks and all corporations is always held to bo a trust fund to pay debts and discharge their agreements with third persons. Hence it is that creditors may claim that it shall not be withdrawn to their injury or prejudice.
    What authority this class of cases affords to this defendant to repudiate its solemn contracts, we are at a loss to discover, unless the payment of its debts will impoverish it — and that seems to be the argument. Every man who has purchased lands of the com-, pany, and paid the money, but has not got a title, *would be as bad off as the plaintiff; for, if the company gives either the land or pays back the money, it reduces its means or capital just so much ; and hence it is the safest and best to hold on to both. The age for such logic has passed and gone.
    There is one other view of this case to which we call the attention of the court. The plaintiff’s subscription for stock, and the agreement for the land, was all done at the same time, and forms but one transaction. Can the defendant rescind one part of the contract and adopt the other, at its election ; and does it not follow that if it chooses to rescind and deny us the land, it must pay back the money? Can it make a new agreement, and say to the plaintiff, I will neither give you land nor money, but I will give you stock, or something else ? If the court will permit the company to split up the contract into parts, and then give it the choice, it can do so, and not without. It must either adopt the agreement entire, or abandon entire; and if the latter, it must place the other party just where he was, had no contract been made. The position assumed by the defendant is most extraordinary. If it can olaim that Lockwood had no authority to make the contract, it can get rid of giving the land ; and if it can claim that paying back the money would be a fraud on third persons, it can keep the money too. And this kind of a game is attempted to be played off on persons who contracted in good faith with it; paid their money, intending to commit no fraud nor injure any one; who trusted the company when but few persons would trust it; who relied on its honor to fulfill its agreements — and one ground taken to carry out its deliberate intention to repudiate the contract, so far as it is for its interest to repudiate is, that, in the contract itself, it had given certain privileges and advantages that it ought not to have given. There are more things in heaven and earth than are dreamed of in our philosophy, and this is one of them.
    ■But counsel seem to depend much on the loss the state sustain in case the company have to pay back the money, as a means of avoiding its’solemn engagements. If the court is ^easily frightened on this point, the plaintiff must fail. Before we come to consider this branch of the case, it is important to show that the state has no rights or immunities beyond those of an individual, except such as exist by legislation. In the case of the Bank of the United States v. Planters’ Bank of Georgia, 9 Wheat. 907, C. J. Marshall says: “It is a sound principle that when a government becomes a partner in a trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen.” With this principle in view, we are prepared to discuss the rights of the state.
    The first law on the subject of a loan to the company was passed March, 1836. By this law the state, by a special act, loaned her credit to the company to the amount of $200,000, and took a lien on its capital stock, tolls, and profits, to secure the payment of the principal and interest. The contract and subscription of Weeden and Tuttle were made some time afterward, to wit, on the 28th day of November of the same year. The next law was the plunder act of 1837, which is a general, and not a local law, and the Mad River Company was permitted to take advantage of its terms by the latter clause of section 7, which provides: “And any loans of credit to railroad companies, by special acts, shall be counted part of the aid provided for under this act.” By this provision the company came within the law of 1837, and under it the " company procured an additional credit from the state. Now this law, in the words of the act of 1836, provides that “the receipt of scrip by the company shall operate as a specific pledge of the capital stock, estates, tolls, and profits of such railroad company to-the State of Ohio, to secure the repayment of the sums advanced in pursuance of this'act. We are willing to admit, for present purposes, that when scrip was procured from the state, the stock of Weeden and Tuttle was included in the aggregate amount, and that, inasmuch as their subscription was absolute on the books of the company, it was like all other stock held as security. But this stands simply as *an admission for the sake of argument; for we hold that the rights of the state must yield to prior rights bona fide acquired, as were those of the plaintiff. As the case stood between the state and the company, they occupied toward each other the ordinary relations of debtor and creditor, and the stock of Weeden and Tuttle, with that of others, was held .as security for the debt. The company failed to pay the interest, and a case soon arose under the law, when the officers of state were authorized to take possession and dispose of the road and its effects. To take possession of the roád and lease it, was a hopeless task. To hold on to it, and apply the profits to extinguish the indebtedness, was no better; and to attempt to sell it, was as bad, if not worse than either. Railroads, just about that time, had been sold in the State of New York, under laws similar to that of 1837, and what cost hundreds of thousands was bid off for a song. What was to be doné? Like all creditors who have a bankrupt to deal with, the state thought it the best policy to compound the matter and take what she could get. The company could pay the debt by means of her stock — that was the only way it could, make payment; and, upon the recommendation of the special officer of the state, who was appointed to make a report in the premises; she consented to be satisfied with this kind of pay. Accordingly, on March 11,1843, a law was passed by which, in effect, the debt was paid, by issuing a corresponding amount of stock by the company to the state.
    After the state took the stock, the company did not owe her a single dollar; and the debt being paid, as a matter of course, the security was discharged. From that time forward the state became a stockholder in the road, with no rights as such but those which were common to all stockholders. Her sovereignty was me,rged in that of a simple corporator, and so she would stand before the court, in case she was a party to the suit. She might claim, to be sure, that having subscribed stock after, that taken by Weeden and Tuttle, she was deceived by the absolute character of that subscription; but then the plaintiff would *be free to inquire whether, in truth, such were the fact. Upon such an inquiry, it would be found that, before she became a stockholder, she had full knowledge of the rights and claims of the plaintiff. This suit was commenced and service had as early as March 31, 1842, and was pending in the common pleas on March 11, 1843; and, moreover, was pending when the auditor of state, as the special agent of the state, was engaged, at this place, in the examination of the affairs of the company, during the winter of 1842-43.
    If the state, who acts by her officers, is not bound to take notice of what is going on in one of the highest tribunals known to the constitution, then she has no notice. And what would follow, as a fact to the lamented, she never can bo charged with notice of the rights of- her citizens.
    So much for the rights of the state, if the court will, in the present proceeding, step aside from the questions between the parties in this suit, to inquire into them.
    'As to persons who took stock in the road before the date of the plaintiff’s contract with the company, they have no reason to complain. The officers of the company, who made the contract, were the agents of the stockholders, a,nd procured the plaintiff’s money, which was used for their benefit. It is impossible to separate the ideal existence of the corporation from the members themselves; but we must regard them the same, and hold them to the principle that, if the contract is rescinded in part, it must be in whole. They can no more claim to hold on to the beneficial part of the contract and reject the balance, than they could, had the contract been made directly with themselves. Persons who took stock after the ■date of the plaintiff’s contract, took it subject to all the bona fide existing engagements and undertakings of the company, and subject to all the legal rights and equities of third persons. Suck we have shown to have1 been the contract of the plaintiff. But no one took stock after this but the state and two others, -under like circumstances with that of the plaintiff, and one other, who knew all about the arrangement. We have shown that the *stata knew all about it, and the testimony shows that all others did.

      The case of creditors is out of the question. The bare possibility that they may sustain a loss, is no reason to avoid an honest, Iona fide contract with the company. The company is solvent and able to pay all its debts. At any rate, it will be time to hear them when they make their complaints.
    Courtesy requires that wo should simply notice another point taken by the counsel, and that is, that the contract is the contract of Lockwood, and not of the company. This point was discussed at the trial, and the court entertained no doubt on the subject. It was held, and such is the law, that the true question is, to whom was the credit given by the plaintiff, and who did he regard as the principal? The subject matter of the contract settles the question; for it relates to the land and stock of the company, over which Lockwood had no control but as an agent.. But as this point does not appear to be seriously relied on, we will pass it without further remark. We might say a few words on the facts of the case, as they appear in the brief of the opposite counsel. By what authority it is said that Weeden and Tuttle ever voted on the stock issued to them under the agreement, we are at a loss to determine. We are sure such never was the case, and no such fact appears in the agreed statement before the court. We prefer the case as it appears in the agreed state of facts; and, for this reason, ask the court to refer to it; for it is the law on these facts that is to determine the rights of the parties.
   Wood, C. J.

From the testimony submitted, it is clear that Lockwood, when he entered into his agreement with the plaintiff and Tuttle acted in the most perfect good faith. He did not doubt his authority, but believed himself fully authorized to make the contract. He had been a long time in the employ of the company as its active agent. The plaintiff and Tuttle supposed the powers of Lockwood, the commissioner *of contracts, were ample to bind the company by any agreement. In this, both parties were mistaken. No provision is found, either in the charter or bylaws of this corporation, to sanction the sale of stocks, or the realty of the defendant, by the commissioner of contracts. Lockwood appears to have acted in that way, which in his ow^i judgment, was best calculated to relieve the necessities and advance the interests of the company. Between him, the plaintiff and Tuttle, there was a mutual mistake, however, as to the extent of his authority, and this mistake has placed $1,000 of the money of the plaintiff and Tuttle in the hands of tho defendant. The defendant now refuses to execute the agreement, which was the entire consideration upon which this advance of money was made. Will the law sanction such gross injustice ? Wo think not; and whether we look upon the transaction as an advance of money on a consideration which has entirely failed, or as money paid through mistake, the ordinary principles of common honesty require the defendant to place the plaintiff and Tuttle in statu quo, or, otherwise, to admit and execute the agreement. It appears to us the sum allowed in money, which the defendant ought ex cequo et bone to refund; and, as such, the law raises an implied promise to repay principal and interest to the plaintiff.

It may be admitted that Lockwood, by exceeding his authority, made himself personally responsible to the plaintiff and Tuttle; and the right of recovery, in the case at bar, remains, nevertheless, unimpaired. It is the election of one of two remedies, or the plaintiff may perhaps presume both, though he can receive, but one satisfaction. As Lockwood acted honestly, it is not a well-founded complaint, that this corporation is selected as the defendant. It is, indeed, no more than abstract justice that Lockwood should be relieved from vexatious litigation, so long as the plaintiff can be made whole by a suit against the company.

It is said the contract is void on the ground of fraud. In other words, that the subscription for stock is absolute on its face, and any secret agreement inconsistent with it, operates as % fraud on the state, other stockholders, and creditors of the company. The general principle is admitted, but we can not perceive-the application .of the argument, when it is sought to be enforced upon the case at bar. The state loaned its credit to this corjDoration, before this stock was subscribed. It is said, it is true, that, while the plaintiff’s and Tuttle’s subscription was standing on tho books of the company, the state made further advances under tho act of March 24,1837, and that the stock of the plaintiff and Tut. tie was taken into view, in making such advances. The testimony on this point, however, is by no means satisfactory. These loans of credit were converted into such stock under the act of 1843) and the state then, for the first time, became a stockholder in this-corporation.

Under these circumstances, we do not perceive that the contract to purchase the lands of the company within six month's from the date, or at any indefinite period, and pay in certificates of stocky etc., can operate as a fraud, either actual or constructive, upon the rights of the state, acquired in whole or in part, on the strength of the subscription of the plaintiff and Tuttle. They were nob bound to know the state was, thereafter, to become a stockholder. It is unreasonable to require of any man to look into futurity and scan what will be the mighty wisdom of Ohio legislation. Learned judges find it difficult, not unfrequently, to declare what it is; and bold and rash, indeed, is any man who attempts to predict what it will be.

When this subscription for stock was made, the act of 1837, under which the state was authorized to make further advances, was not an embryo — nor was the act of 1843, under which the state became a stockholder. The conduct of the plaintiff and Tuttle, therefore, being perfectly honest, fair, and open, in fact can not, in our view, be considered as mala fides, in law, so far as any right of .the state is concerned. One or two other stockholders only subscribed for stock after the plaintiff and Tuttle, and he or they, with full knowledge of this agreement; and he or they are therefore not defrauded; and, as to creditors, none are shown to exist against the company. It *will be in time, however, to extend the protecting arm of this court to the state, other stockholders and creditors, when they are parties and seek such protection at our hands.

It is very clear to us, that the sale of the stock to the plaintiff and Tuttle, and the right to purchase the defendant’s lands, were designed by Lockwood, the plaintiff and Tuttle, to form one entire transaction; and it would be most unjust to permit the defendant to divide it into parts, and hold on to the money with a most deadly grasp, while the entire condition upon which it was received, is repudiated with a miser’s scorn and a usurer’s contempt.

Judgment is therefore rendered, on the verdict for the plaintiff, for both principal and interest.


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    Adam Markle v. The Town Council of Akron.
    An ordinance of the town council of Akron, to, prohibit, under a penalty, persons, not licensed tavern-keepers, or physicians, from vending and retailing, within the corporate limits, ardent spirits, or other intoxicating liquors, is consistent with the constitution aud laws of Ohio, and therefore valid. •
    On an appeal from the judgment of tho mayor, for a violation of such ordinance, the corporation may declare in debt.
    Strong beer is intoxicating liquor, within the letter and spirit of the ordinance. When the facts are submitted to the court, instead of the jury, for decision, its judgment will not be reversed on error, though unsustained by the weight ' of the evidence.
    Retailing does not necessarily import a consideration for the thing retailed.
    This is a writ of error to the court of common pleas of tho county of Summit.
    Tho facts, as they appear of record, are these:
    On June 16, A. d. 1843, one C. G-. Grillet filed his affidavit, that tho plaintiff in error, on the 10th day of the same *month, violated an ordinance passed by tho town council of Akron, by retailing and selling intoxicating liquors to one Sylvester Adams, within the corporate limits, and to be drank on the premises where sold.
    On this affidavit, the mayor of Akron issued his warrant, and such proceedings were had that the plaintiff in error was adjudged to pay a fine of $50, and costs of suit. From this judgment an appeal was taken by the plaintiff in error to the court of common pleas, where the defendant in error filed his declaration in debt, setting forth the act of incorporation in which the authority was conferred upon the defendant in error, to ordain and publish bylaws and ordinances to prohibit, within the corporate limits of said town, the retailing, vending, or selling of ardent spirits, or •other intoxicating liquors, by any person or persons, other than licensed tavern-keepers, or physicians, in the course of medical practice, and an ordinance made and published on March 11, A. D. 1843, in pursuance thereof, by which, among other things, it is provided, “ that no person or persons, other than licensed tavern-keepers, or physicians, in the course of medical practice, shall retail, vend, or sell ardent spirits, or other intoxicating liquors, •within the corporate limits of Akron, in any quantity, to be drank at the place where sold, and that any person or persons violating the provisions,” etc., “on conviction thereof before the mayor, or any justice of the peace, residing in said town, be fined in any sum not exceeding §100, nor less than §25, to be paid into the treasury of said town for the use of schools,” etc.
    It is also averred in the declaration, that the plaintiff in error, disregarding said ordinance, and in violation thereof, did, on the 16th day of June, etc., within, etc., retail, vend, and sell to one Sylvester Adams, spirituous liquor, other than ardent spirits, to wit, one half-pint of strong beer, to be drank at the place where sold, etc., the said plaintiff in error not being a licensed tavern-keeper, nor a physician, in the course of medical practice, etc., and thereby, and by foul, etc., an action hath accrued, *etc., to have and demand of, etc., the said sum of §100.
    To this declaration, the plaintiff in error plead nil debet, and at the May term of the common pleas, A. D. 1844, the intervention of a jury being waived, and the facts, as well as the law of the case, submitted to the court, judgment was given against the plaintiff in error for §25 debt, and the costs of suit. This judgment it is sought to reverse by the prosecution of this writ.
    A bill of exceptions was taken to the opinion of the court, from which it appears two witnesses were introduced by the defendant in error, on the trial, by whom it was proved the plaintiff in error, on June 15, a. d. 1843, within the corporate limits, on his own premises, delivered to said Adams, on his application therefor, made in the ordinary way, several glasses of strong beer, made of malt, which were then drank by said Adams and his companions; that Adams appeared to be intoxicated when he called for the beer, and immediately thereafter became boisterous, and the plaintiff in error compelled him to leave his premises. No money or' other consideration was paid by Adams, or any other person in his behalf, for said beer.
    It was also proved from analysis made by scientific men, that strong beer contained eight parts out of every one hundred, of alcohol, and it was admitted the plaintiff in error was neither a licensed tavern-keeper nor physician, in the course of medical practice.
    The testimony being closed, it likowiso appeared, from the bill of exceptions, that the counsel for the plaintiff in error objected to a recovery: 1. Because the ordinance contemplated the breach thereof as a criminal offense, and provided that the transgressor ■should be fined. 2. Because the action of debt could not be sustained. 3. Because strong beer is not within the ordinary acceptation of the terms “ardent spirits and other intoxicating liquors.” 4. Because there was no retailing, vending or selling, as no consideration passed for the thing delivered. 5. Because the declaration averred that the plaintiff *in error sold spirituous liquor, other than ardent spirits. 6. Because strong beer is not spirituous liquor, and the proof did not support the declaration.
    The errors specifically assigned upon the record are in substance the same as the objections urged upon the court against .a recovery in favor of the defendant in error. No argument of •counsel was submitted by either party.
    Spaulding & Bierce, for plaintiff in error.
    Otis, prosecuting attorney, for defendant in error.
   Wood, C. J.

In this case we have derived no aid from the investigations of-counsel. No brief of the points and authorities, •on which the plaintiff relies for the reversal of the judgment, has been furnished, as required by the rules of this court; and we ought, perhaps, in strict justice, to have caused the case to be stricken from the docket. The peace, quiet, and good order, however, not only of this municipal corporation, but many others in this state, have induced us, in this instance, to disregard rules of practice, and dispose of the questions raised on the record, upon the broad ground of their merits.

It appears to have been urged, against a recovery in the court below, that the ordinance under which the plaintiff in error was arrested, contemplated a criminal prosecution, and that debt was not the proper remedy. It is true, for offenses strictly criminal or infamous, punishment can only be inflicted through the medium of an indictment or presentment of the grand jury. Constitution of Ohio, art. 8, sec. 10. There are, however, many offenses, made so by statute, which are but quasi criminal, and where the legislature may direct the mode of redress, untrammeled by this constitutional provision. Such is Sabbath break- , ing, selling spirituous liquors on Sunday, and the disturbance of religious meetings, with many others. Swan’s *Stat. 255, 256. Long acquiescence in these enactments goes far to show the construction which has been placed by all on the constitution, and that there may be many offenses, though decidedly immoral and mischievous in their tendencies, that are not crimes, but at most only quasi criminal. Of such, jurisdiction may be given to a justice of the peace, or the mayor of an incorporated town. The charter of the defendant, in the case at bar, authorizes the enactment of any ordinance or by-law not inconsistent with the constitution and laws of this state, and the record shows that the ordinance in question was passed March 11, 1843. We can not perceive that it is in conflict with either the constitution or laws of the state.

If it be said, that the making of ordinances and by-laws by a town corporate, is legislation, and that, by the constitution, all legislative power is vested in the general assembly, and can be exercised by no other body, the frequent adjudications of this court, sanctioning the exercise of this power, by the cities of Cincinnati and Cleveland, overthrow the argument.

It is not, «however, the exercise of legislative power. A statute enacted bjr the general assembly prescribes a rule of action which operates upon all — the willing and unwilling. It comes from the superior, and the inferior is bound to obey it. The charter to a municipal corporation is the exercise of legislative authority. It permits the establishment of by-laws and ordinances; but these are a matter of compact and agreement among the corporators. They do not act upon others, but only upon themselves, and by mutual consent, either directly or indirectly expressed, through the city or town council. These ordinances, so made, are not the legislative power vested exclusively in the general assembly.

The proceedings before the mayor are now of no consequence, if they were such as to give the court of common pleas jurisdiction, because they were vacated by the appeal; and we do not see any reason why they were not sufficient for that purpose. In the common pleas, the action is debt, which is a *civil remedy or suit. The object of the action is the recovery of a penalty or forfeiture accruing from the violation of the ordinance by the plaintiff in error. This violation of his was, it is true, quasi criminal, decidedly immoral, and, as shown by the court, tended greatly to disturb the repose of the good people of Akron. The penalty-results from such violation. It is a sum of mony due by reason thereof, and the remedy, is strictly civil.

Is debt the proper form of the action ? If not, it is very clear thero is no remedy. Assumpsit can not be supported, for the want of a promise. Covenant will not lie, for there is no obligation under seal. Neither trespass nor care are any more appropriate. Debt is, in fact, the only form of action recognized by the principles of the common law for the recovery of fines, penalties, and forfeitures. 1 Chit. PI.101.

It was said, on the trial below, that beer was not intoxicating liquor, and therefore not within the terms of the ordinance. The evidence spread upon the record shows that it had decidedly an intoxicating effect upon the vendee; that, after drinking it, he immediately became boisterous, and the plaintiff in error was compelled to force him from his premises. But, aside from this, beer may be denominated the “ raw material ” from which alcohol is made, and science proved on the trial the parts of which it was composed, by actual analysis, and we can not differ with the court of common pleas in opinion that-it is in its very nature inebriating in its consequences, when drank to excess.

• No objection is perceived by us to the opinion of the court below, on the ground that no consideration was paid for the beer. If there was no liability to pay; the evil contemplated by the ordinance was the same. It sought to provide against the disposition of intoxicating liquors to be drank where sold. As penal laws, however, must be construed strictly; if the terms “ vend and sell,” only, wore used in the ordinance, there would be more difficulty, as those words imply a consideration; but to retail, is to dispose of in small quantities, and .may be ^either for or without a consideration. It may be a distribution of a wholo into parcels. Wal. Die.

There is another ground, however, which is decisive of the case. It will be seen that the bill of exceptions sets forth the testimony given on the trial, with' the arguments of counsel, which were submitted to the court of common pleas, and then exception is taken, not to any testimony offered, but to the judgment. In other words, it is an exception to the effect which the testimony produced on the mind of the judges.

There are several decisions of our own court, as well as others, that, when the court is substituted for the jury, and the.facts as well as the law referred to the court for decision, its judgment, on the facts, can not be reversed on a writ of error. Wright’s Sup. C. 47, 673; 4 Peb. 80.

The judgment is therefore affirmed.