author: Dickman, J.

text:
    Insurance Company v. McDonnell.
    A married woman mortgaged lier separate property to secure tlie note of her husband given for the purpose of raising money to pay the debt of a lumber company of which he was president. The money was raised by loan from'an insurance companj^ on the note of the lumber company at one year, with the mortgage as collateral thereto — the insurance company having knowledge that the mortgaged property was designed by the mortgagor to serve as surety for the payment of tho loan. Without the mortgagor’s knowledge or Consent, the note of the lumber company at the end of the year was renewed, and soon thereafter surrendered, cancelled, and mai'ked “ paid ” upon the hooks of the insurance company, and a new note with other and different parties was substituted in its place. Held: That the mortgage was released.
    Ekrob, to the District Court of Hamilton county.
    The original action was commenced in the court of common pleas of Hamilton county by the People’s Insurance Company of Pittsburgh, Pennsylvania, against Agnes McDonnell, et al., minor children and heirs of Mary A. McDonnell and their guardian, Carter Gazlay, and the administrators de bonis non of John N. McDonnell and his wife, the said Mary A. McDonnell. The suit was begun after the death of said John N. McDonnell and his wife, to foreclose a mortgage dated June 1, 1870, upon a certain tract of land in Hamilton county, the separate property of said Mary A. McDonnell. The mortgage was executed and delivered by the said John N. McDonnell and Mary A. McDonnell to one Andrew F. Baum," and contained a clause of defeasance as follows:
    “Provided, nevertheless, that if the said John N. McDonnell shall pay or cause to be paid to said Andrew F. Baum, or order, his certain promissory note of even date herewith for the sum of six thousand dollars, made and dated, Cincinnati, Ohio, June 1,1870, and payable to the order of said Andrew F. Baum, two years after date, at the Merchants National Bank, Cincinnati, Ohio, and bearing interest at the rate of eight per cent, per annum, interest payable annually, then these presents to be void.”
    The plaintiff claimed to recover upon the mortgage, on the ground that John N. McDonnell and his wife, in order to enable said Andrew F. Baum to raise money for them, executed and delivered to him the note and mortgage set forth in the plaintiff’s petition ; and that plaintiff loaned to said Baum for the use and benefit of said McDonnell and his wife the sum of $6,000, which money said Baum paid to them. ■
    Several defenses were set up in behalf of the minor children, heirs of said Mary A. McDonnell and by her administrator, and the plaintiff filed a reply denying all the defenses. The court of common pleas rendered a decree in favor of the defendants, and the plaintiff appealed to the district court, where the cause was heard on the pleadings and evidence, and upon request of the plaintiff that the conclusions of fact be stated separately from its conclusions of law, the court, among its conclusions of fact, found as follows:
    “That this suit is brought to foreclose a mortgage executed by Mary A. McDonnell and John N. McDonnell, her husband, on the 1st day of June, 1870, on the separate property of Mary A. McDonnell, the wife, but referred to in the mortgage as the same property conveyed to John N. McDonnell by deed recorded in book 338, page 523, of Plamiltou County, Ohio, Records, being a tract of land in Hamilton county, to secure the payment of the note of John N. McDonnell, the husband, for $6,000, payable two years after date to the order of A. F. Baum, at the Merchants National Bank of Cincinnati.
    “ That plaintiff was and is duly incorporated under the laws of the State of Pennsylvania.
    “ That plaintiff has power to-buy notes and mortgages as well for loans, or for collateral security for loans, disconnected from the business of insurance, and had the corporate power to take the title to the note and mortgage.described in the petition, and the taking of the same was in no wise in contravention of the statute of Ohio regulating foreign insurance companies doing' business in this state.
    “ That John N. McDonnell and Mary A. McDonnell were, at the time of the bringing of this suit, both deceased, the said Mary A. McDonnell having died in January, 1874, and the said John N. in February, 1874, and that the said Mary A. McDonnell was, at the time of the execution of said mortgage and had been for along time previously an invalid confined to her bed, and largely under the influence of her husband; that she was induced to execute the said mortgage upon representations made to her that it was necessary for the benefit of her husband, who was president of the Cincinnati Lumber Company, to raise money upon said note secured by her mortgage upon her separate property to pay for a mortgage incumbrance upon the Cincinnati Lumber Company’s property, which was then due, amounting to the sum of fifty-four hundred dollars, and that the representations were made to her by one Carter Gazlay, the secretary of the lumber company, and her husband, who was president of the lumber company, that the Cincinnati Lumber Company was doing a flourishing business and in good credit, and that it would not do for the money required to be raised upon any notes or note of the Cincinnati Lumber Company, as it might affect the credit of said company to put its note upon the market or to use its note commercially to raise said money. Under these circumstances and representations, Mary A. McDonnell executed the said mortgage; no pecuniary consideration was ever paid to her. Immediately after the execution of said mortgage, it was taken by the said Carter Gazlay and kept in his safe locked up until the 22d day of June following, when it was presented for record in the recorder’s office of Hamilton county, Ohio. The debt of the mortgage upon the lumber company’s property was paid by said Carter Gazlay in two installments, one of $3,000 in cash on the 10th of June, 1870, and the other by the check of said Carter Gazlay upon a Cincinnati bank for the $2,400, which was held by the owner of said mortgage on the lumber company’s property for six days until June 16th; that $5,400 of said money was paid to Carter Gazlay, who obtained it from A. F. Baum.
    “ That on the 8th day of June, 1870, Andrew F. Baum, who was largely interested in the Cincinnati Lumber Company, as a person who sold lumber to it (but hot proven to be with the knowledge and consent of Mary A. McDonnell), borrowéd from the plaintiff at Pittsburgh, upon a note of that date, executed by the Cincinnati Lumber Company for the sum of $6,000, which note was indorsed by said A. F. Baum, and was then discounted by the plaintiff for said Baum, to whom the plaintiff paid the money, $5,400, and which was given by A. F. Baum with which to pay the note of Carter Gazlay, held by John K. Green.
    “That at the time of the discounting of said Cincinnati Lumber Company note by the plaintiff the said A. F. Baum (not proven to be with the knowledge and consent of said Mary A. McDonnell), and without the delivery of the said mortgage, executed by her, executed a memorandum to the plaintiff of which the following is a copy:
    ‘“For value received, I, A. F. Baum, hereby assign, transfer, and set over unto the People’s Insurance Companj'-, of Pittsburgh, and its successors and assigns, all my right, title and interest and claim in a mortgage of John N. McDonnell and Mary A. McDonnell, of Hamilton county, Ohio, as collateral security on a note held by said insurance company, drawn by the Cincinnati Lumber Company to the order of John N. McDonnell and Matthew Hall. And indorsed, Carrier & Baum, at one year from June 8th, 1870, for $6,000, the said insurance company agreeing to cancel and surrender this transfer and mortgage to me on the payment of said note.
    “‘(Signed), A. F. Baum.’
    “ That on the 24th of June, 1871, that note was given to John Carrier, and another note of Carrier & Baum, indorsed by Robert Campbell, taken in its stead, and the following memorandum taken by plaintiff on the bottom of the above paper:
    “ ‘ Pittsburgh, June 24=th, 1871.
    1 “ ‘ The note above described has this day been surrendered tome and a note for $6,000, drawn by Carrier Baum, indorsed by Robert Campbell, at one year, June 8th, 1871, given in place of same.
    “ ‘ (Signed), John Carrier.’
    “That on the 8th of June, 1871, the said note of 8th of June, 1870, of the Cincinnati Lumber Company, was surrendered, and a new note signed by the Cincinnati Lumber Company taken in its place, payable in one year, indorsed by said A. E. Baum, and interest received thereon by the plaintiff, at ten per cent, for the said year (not proven to be with the knowledge and consent of said Mary A. McDonnell), which note was -held only by the plaintiff, until the 24th day of June, 1871, when it was surrendered as above set forth, cancelled, and marked paid in red ink upon the books of the plaintiff. Upon the same day a new note was executed to the plaintiff signed by Carrier & Baum, and indorsed by Robert Campbell, dated June 8, 1871, and payable one year from date (all not proven to be with the knowledge and consent of said Mary A. McDonnell), which said note is the one referred to in the said paper writing at the foot thereof, and which was allowed to run by the plaintiff until October, 1872, when a new note of Carrier & Baum was executed to the plaintiff with said Robert Campbell, as indorser and payable eight months after date, which was allowed to run until June 10th, 1873, by the payment pf interest to the plaintiff at ten per cent., and surrendered, when a new note of said Carrier & Baum was executed to the plaintiff, indorsed by said Robert Campbell, payable in five (5) months (all not proven to be with the knowledge and consent of said Mary A. McDonnell), and the said last note signed b}r said Carrier & Baum, and indorsed by said Robert Campbell, was extended by the payment of interest at ten per cent, up to June 19, 1875.
    “ That after said mortgage had been recorded, on the 22d of June, 1870, it was sent by said Carter Gazlay to said A. ‘ F. Baum, and (no proof that it was with the knowledge and consent of said Mary A. McDonnell), said Baum then delivered said mortgage to said plaintiff, and on June 18, 1873, he executed a formal transfer thereof in writing to the plaintiff.
    “That on or about the — day of-, 1871, said Cincinnati Lumber Company failed and became insolvent, and the said Andrew F. Baum and Carrier & Baum, of which firm Baum was a member, were large creditors thereof; that for a valuable consideration the said Baum then agreed to return the said mortgage of Mary A. McDonnell, and cancel the same of record, but he never carried out said agreement. That again, on the — day of-, 1872, the said John N. McDonnell executed to the said Carrier & Baum another mortgage upon the property of said John N. McDonnell, in the city of Cincinnati, in which his said wife joined in the release of dower for the sum of $9,118,05 with the distinct understanding and agreement made with the said Baum, that the mortgage of the said Mary A. McDonnell should be surrendered up and cancelled, as he had previousl}' agreed to do, and which formed the principal consideration for the execution of said new mortgage of $9,118.05, but that the said Andrew F. Baum never did so.
    “That at the time the said first note of the Cincinnati Lumber Company was surrendered to Carrier and cancelled, and marked paid in red ink by the plaintiff, the lumber company had failed and made an assignment to said Carrier for the benefit of its creditors; that Carrier & Baum, and said Robert Campbell were all residents of Pittsburgh, known to the plaintiff, and its officers doing business there, and were of undoubted credit, and said Carrier & Baum were then reputed to be worth over a half million of dollars, and this was known to the plaintiffs.
    “ That the character of Mary A. McDonnell, as surety, was known to A. F. Baum, and all said surrenders, renewals, extensions, and changes (were not proven to have been made with her knowledge and consent), and the said mortgage executed b3r her was not actually assigned in itself to the plaintiffs until more than three years after its execution, except by the memorandum hereinbefore referred to.
    “ That the plaintiff, some time in 1875, (said Mary A. McDonnell and her husband both being dead), after the last extension of the said note, signed b3r said Carrier & Baum, and indorsed by said Robert Campbell, brought suit upon the same in the city of Pittsburgh, where the parties then resided, and recovered a judgment against said Carrier & Baum and Robert Campbell for the amount of said note, and interest, and having obtained said judgment, caused a transcript thereof to be taken and filed in the county of Pocahontas, West Virginia, and levied the same upon the real estate then belonging to said Andrew F. Baum and Robert Campbell in equal, undivided portions; that said real estate was then worth at least $20,000, but that the collection of said judgment as against said Baum was restrained (he having gone into bankruptcy) by his assignee in bankruptcy, but no evidence was presented by the plaintiff why their judgment lien was not enforced as against Campbell, whose interest in said real estate was at least $10,000.
    “ That after the said original note executed by the Cincinnati Lumber Company was surrendered by the plaintiff, and marked upon its books in red ink, paid, plaintiff never made any claim, either on the Cincinnati Lumber Company or its assignee upon it, or upon any other obligation against it, nor was any claim ever presented by the plaintiff to the said John N. or Mary A. McDonnell during their lives upon said mortgage or note, which it secured, nor was there any claim presented by the plaintiff to their administrator after their .death.”
    The district court adjudged and decreed that said mortgage in the petition named, be ordered, cancelled and held for naught, and that said real estate be released from the operation thereof, and that the petition of the plaintiff be dismissed.
    The plaintiff thereupon filed a motion to set aside the judgment of the district court, and to grant a new trial. The court having overruled said motion for a new trial, the plaintiff excepted thereto and to the said judgment rendered, and a bill of exceptions was taken embodying all the evidence offered by either party in the case.
    To reverse the judgment of the district court this proceeding is prosecuted.

      J. H. Bates and Rufus B. Smith for plaintiff in error.
    Long, Avery, Kramer & Kramer for defendants in error.
   Dickman, J.

Upon the organization of the Cincinnati Lumber Company, it purchased for the purposes of its business, certain' mill property, and assumed the payment of an incumbrance thereon, which, on the 1st of June, 1870, amounted to about' six thousand dollars. At the last named date, John N. McDonnell was president of the company, Carter Gazlay its secretary, and Andrew F. Baum, of the firm of Carrier & Baum, was largely interested in the company as a creditor, and though not appearing on the books as a stockholder, was the owner of stock which was held by his partner. The incumbrancer on the mill property pressed the payment of his claim, and Gazlay, acting for all parties in interest, applied to Mary A. McDonnell, the wife of John N. McDonnell, to induce her to give a mortgage on her separate real estate, for the purpose of raising the required sum. Mrs. McDonnell was, at the time, in very feeble health, and easily influenced by her husband, and it being represented to her by him and by'Gazlay, that it would injure the credit of the- Lumber Company to put its name on any more paper to be circulated in the market commercially, and that it was necessary for her husband’s benefit to mortgage her separate property to pay off the company’s debt, she was prevailed upon to join with her husband in executing a mortgage upon her real estate, to secure the payment of a note for six thousand dollars, bearing date June 1st, 1870, and made payable in two years after date to the order of Andrew F. Baum.

No pecuniary consideration was ever paid to Mrs. McDonnell, and no money was advanced by the payee to the maker of the note. The note and mortgage were both made solely for the accommodation of the Lumber Company; and it was the design of the parties to the instruments, that Mrs. McDonnell’s real estate should occupy the position of a surety only, for such amount as might be'raised by means of the note and mortgage to pay off the incumbrance on the company’s property. Although it was represented to Mrs. .McDonnell, that the credit of the Lumber Company might be impaired by putting its paper upon the market,we do not find that she imposed it as a condition, that her mortgage should be used or negotiated only in a specified manner. We think that the main object to be subserved was, to furnish a surety for the amount that might be obtained for the benefit of the company, whether Baum advanced the money himself, or sold the note and mortgage, or lodged them as collateral security for a loan to be made directly to the company. Such seems certainly to have been the understanding of Baum, as evidenced by his action and dealing in reference to the McDonnell mortgage ; for, on the 8th of June, 1870, the Lumber Company having drawn its note for six thousand dollars, payable to the order of John N. McDonnell and Matthew Hall, in one year from date, and indorsed by Baum himself, he procured the same to be discounted by the Peoples’ Insurance Company of Pittsburgh, transferred to that company the McDonnell note and mortgage as collateral security, and applied the proceeds realized, to wit, $5,400, in discharge of the incumbrance on the Lumber Company’s property.

There can be no dispute as to the relation of suretyship which Mrs. McDonnell’s property bore to the note made by her husband to Andrew F. Baum. It was competent for her to pledge or mortgage her separate property for her husband’s debt, and upon doing so, such property, became a surety or guarantor, and was subject to be discharged by anything that would discharge a surety or guarantor who was personally liable. And it has been held, that the fact that a mortgagee has no actual knowledge of the wife’s ownership of the mortgaged premises, and of the resulting relationship of principal and surety between the husband and wife, is immaterial, where the title is on record, as he thereby becomes chargeable with both knowledge of the title and the legal consequences resulting therefrom. Bank of Albion v. Burns, 46 N. Y., 170. But, we are satisfied from the conclusions of fact found by the district court, and from an examination of the testimony embodied in the bill of exceptions, that the insurance company at the time it made the loan to the Lumber Company, knew the true relation of all the parties to the transaction, and the nature of the understanding between them. The Insurance Company, we think, when it took the McDonnell note and mortgage as collateral security to a note for the same amount, dated only a few days thereafter, and drawn by the Lumber Company to the order of McDonnell its president, and Hall one of its members, was cognizant of the fact, that the note and mortgage were designed by the parties thereto for the accommodation of the Lumber Company, and to serve as surety for the amount which it was proposed to raise by loan for the benefit of that company. In reference therefore to the indebtedness of that company to the Insurance Company, the separate property of Mrs. McDonnell should hold the position of a surety, and be entitled to'the benefit of the rules protecting the surety from prejudice through the creditor’s dealing with the principal debtor.

Applying the well established rules for the protection of the rights of sureties, the conduct of the Insurance Company released the property of Mrs. McDonnell from the operation of her mortgage. Without the knowledge or consent of Mrs. McDonnell to the substitution, renewals and extensions hereinafter mentioned, when the note of the Cincinnati Lumber Company of the 8th of June, 1870, payable in one year, matured, it was surrendered, and a new note, at one year, signed by the company and indorsed by Baum, was taken in its place. This last note was held until June 24th, 1871, when it was surrendered, cancelled and marked “ paid ” in red ink, upon the books of the Insurance Company. On the same day, a new note, substituted for and in extinguishment of the obligation of the Lumber Company, dated June 8th, 1871, and payable in one year, was executed to the Insurance Company by Carrier & Baum and indorsed by Robert Campbell; and this note, after being twice renewed was, by a binding agreement between creditor and principal, extended to June 19th, 1875. Conceding to Mrs. McDonnell and those claiming under her, the rights of a surety, when the Lumber Company’s note was cancelled and marked “paid,” and a new note substituted in its stead, the mortgage executed by her was discharged. The evidence, in our judgment, shows that the note of Carrier & Baum was given in satisfaction of the original obligation, and that the surety was thereby released. After the surrender of the note of the Lumber Company, the Insurance Company never preferred any claim upon it or any note given in its stead, against the Lumber Company or its assignee; nor against John N. or Mary A. McDonnell upon the note and mortgage in litigation ; and presented no claim to their administrator after their decease. Letcher v. Bank of the Commonwealth, 1 Dana, 82 ; Castleman v. Holmes, 4 J. J. Marsh., 1; Bell v. Martin, 3 Harrison, 167; Farmers & Mechanics Bank v. Kercheval, 2 Mich., 504. When Carrier & Baum took upon themselves the liability of the principal debtor, and the Insurance Company, with knowledge of that fact, agreed to accept them as debtors, and cancelled the obligation of the Lumber Company, a novation resulted, which operated to release the McDonnell mortgage. Burge on Suretyship, b. 2, c. 5; 2 Pars, on Contr., 18; Sneed v. White, 3 J. J. Marsh., 525.

The McDonnell mortgage having subserved its intended purpose — known to the Insurance Company — of raising money for the use of the Lumber Company, it should have been surrendered when the Carrier & Baum note was accepted in satisfaction of the original obligation. And as between Mrs. McDonnell and Andrew F. Baum, the mortgage should have been cancelled, and her property released from its operation. In the year 1871, when the Lumber Company became insolvent, Baum, for a valuable consideration, agreed to return and cancel the mortgage. And in the year 1872, when John N. McDonnell executed to Carrier &' Baum a mortgage on his own property — his wife joining in a release of dower — in settlement of his pro rata share of the Lumber Company’s liabilities, there was an express understanding and agreement with Baum, that the mortgage by Mrs. McDonnell should be delivered up and cancelled according to his previous agreement. Though not delivered up and cancelled, we are of opinion, that the mortgage was fully settled and satisfied by John N. McDonnell during his life, in the final settlement of the affairs of the Cincinnati Lumber Company, and that neither Andrew F. Baum nor the Peoples’ Insurance Company have now any interest or claim in that mortgage.

It follows, therefore, that the judgment of the district court must be affirmed.

Judgment accordingly.


source: Caselaw Access Project

license: Public Domain

text:
    Hilliard vs. The New York and Cleveland Gas Coal Company.
    The lessee of a room in a block, covenanted to keep the premises in good and constant repair, but if the premises were destroyed, the lease was to become void and the rent to cease. A building was thereafter erected on an adjoining vacant lot by the owners thereof — not the lessors— ■whereby the demised premises were, to a great extent, cut off from light and ventilation, and were also rendered damp and unhealthy, but were capable of being made tenantable by repairs. Held: That the lessee was not authorized to abandon the lease and refuse payment of the accruing rent.
    Error to the District Court of Cuyahoga County.
    This was a ease agreed upon and submitted without action, in the Court of Common Pleas of Cuyahoga county. Laura W. Hilliard and Mary H. Sterling claimed to recover of the New York and Cleveland Gas Coal Company the sum of $627.09, with interest, and said company resisted the claim. The facts on which the controversy depended are contained in the agreed statement, of which the following is a copy:
    “On the 1st day of April, 1876, the plaintiffs leased to the defendant two rooms of a block owned by them, by the lease hereto annexed under which defendant entered and .occupied up to about July 1, 1878. At the time the lease ■was made, there was no building on the lot tying next northerly, and the offices were lighted by windows on that side except the rear office, which in addition to a window on the northerly side, had two windows on its easterly side. In the spring of 1878, the owners of the adjoining lot on the northerly side, constructed a building, the southerly wall of which was within a foot of the northerly wall of the block which cut off the light and ventilation from that side, so that one room had neither light nor ventilation, and the other very little, for the reason that. the light from the windows on the east side were obstructed by a building within seven or eight 'feet. The plaintiffs, with the consent of the defendant and tenants occupying rooms next westerly, which would also be darkened, took a space of about twelve feet in width in part from the defendant’s front office and in part from the office adjoining, for an area which was opened up to the roof and lighted by a skylight and glass partitions put up for the purpose of affording light and ventilation to the rooms on both sides of it. During the time this was being done, the defendant occupied the rooms, but at the same time insisted that if, on- the completion of the work, the offices were not sufficiently lighted and ventilated, and a fair reduction of rent made to cover interruption and loss of part of room surrendered, they would abandon the lease. On completion of the work, April 1, 1878, the question arose with regard to the adjustment of rent on account of reducing the size of the office, and the-plaintiff consented to reduce the amount of rental which should be paid from $700 per year to $550 per year for the remainder of the term, which agreement was iu writing and signed by the agent of the plaintiffs,' and assented to by the defendant. During the quarter between April 1st and July 1st, after the use of fire in the rooms had been discontinued, it was found that the walls of the rooms were so damp that in places on the north wall of the rear office the paper became moist and mildewed, and dropped off in spots. The other walls were also damp to such an extent that the varnished surface was moist, and moisture appeared on tbe surface of oil paintings hanging on the wall. The defendant went to great expense to paper said rooms and make them habitable, and in a short time the paper had in spots on the north wall of the rear office discolored and decayed, rendering the rooms danger, ous to health in such a degree that they were pronounced by physicians an unfit place for the agent of the company, who was suffering from rheumatism, supposed to have been brought on by the damp and unhealthy condition of the rooms.
    “ The defendant notified the plaintiffs that they should abandon the lease on account of the condition of the rooms, and thereupon they did abandon and surrender said rooms, although the plaintiffs offered to try and have the walls so constructed that the dampness should be avoided. Defend-, ant had informed plaintiffs, prior to their election, that the rooms were in a condition which rendered them untenantable, yet the plaintiffs up to the time of said election had not bettered their condition, but after the defendants had notified plaintiffs of their intention to leave said offices and offered to surrender said lease, the plaintiffs offered to make said offices tenantable if they would continue, but defendants decided to stand by their election, and from the time of their abandoning possession shortly thereafter, and on 1st of July, 1878, neither occupied nor in any manner exercised any control over said offices. The plaintiffs thereupon entered upon said premises and made repairs, and afterwards, on the 1st day of March, 1879, leased the same for the sum of $425 per year for the remainder of the term of said lease, being the best lease which they could effect of the premises, but in entering on said premises, making said repairs and lease, it was mutually agreed between the plaintiffs and defendant, that the plaintiffs should not thereby discharge the defendant from any legal liability they might be under, except to discharge them to extent of rent to be received on new lease.
    “ The defendants claim to have had the right to abandon the lease on account of the premises not being tenantable, and. plaintiffs claim rent under the lease to the time of making the new lease and difference of rent for balance of time.
    “ It is agreed, that if defendants are found liable, liabilitjr for full term shall be fixed in like manner, as if same had expired, except that proper discount may be made to cover any amount to be paid before its proper maturity.”
    The lease referred to in said agreed statement, among other covenants, contains the following:
    “ An.d the said lessee doth, for itself and assigns, covenant and agree to and with said lessors, their heirs, executors, administrators and assigns.....that said premises and all plumbing therein are in good repair at the commencement of this term, and they shall be kept in good and constant repair by and at the expense of the second party, and shall be delivered up and surrendered to the first party at the expiration of the term aforesaid in as good condition and repair as the same shall be at its commencement, the natural decay and wear and loss by fire not resulting from the carelessness, willful or negligent acts of the lessee, its agents or employees, only excepted; that if said premises are destroyed, this lease shall become void and determine, and all rent thereon shall cease......The party of the first part, their heirs, executors, representatives and assigns, shall have the privilege of entering said premises at proper times to view and inspect the same.”
    The parties waived the intervention of a jury, and submitted the case to the court upon the agreed statement of facts, which was made part of proof, and filed with _ the pleadings in the case. The court found for the plaintiffs. The defendant excepted to the finding of the court, filed its motion for a new trial, which motion was overruled, the ruling excepted to, and the court rendered .judgment in favor of the plaintiffs.
    A bill of exceptions was taken, and on petition in error the district court reversed the judgment of the court of common pleas.

      To reverse the judgment of the district court this proceeding is prosecuted.

      Henderson, Kline & Tolles, for plaintiffs in error

      Marvin, Laird & Norton, for defendant in error.
   Dickman, J.

If the demised premises had been destroyed during the term of the lease, the lessee — the Gas Coal Company — would doubtless have been discharged from the payment of rent. It was one of the covenants in the lease itself, that it should become void and determine, and all rent thereon should cease, in the event of a destruction of the premises. And independently of the written contract between the parties, as only two rooms in the building passed to the lessee, and no interest in the land, the subject of the demise would have been extinguished by the destruction of the building, and the liability to pay rent would thereby have terminated. There would have remained nothing upon which the demise could operate. Winton v. Cornish, 5 Ohio, 477; Womak v. McQuarry, 28 Ind., 103; Kerr v. Merchant's Exchange Co., 3 Ed. Ch., 315; Graves v. Berdan, 26 N. Y., 498.

In the ease at bar, although the demised premises were not destroyed, it is contended, that they were so injured as to become unfit for occupancy, and that therefore there was no longer any obligation to pay rent to the lessors. There was no covenant by the lessors to repair, but the lessee covenanted to keep the premises in good and constant repair at its own expense, and at the expiration of the term, to surrender them to the lessors in as good condition as the same were at the commencement of the lease, the natural decay and wear and loss by fire, only excepted. It is to be presumed that the parties made their contract in contemplation of the ordinary action of the elements, and of the situation and condition of the demised premises as patent to the ordinary observer. It would naturally be expected, that a building might be erected at any time upon the adjoining vacant lot, fronting on a prominent business street, and thus cut off light and ventilation from that side. But obvious as the contingency was, the lessee did not see fit to make provision for an abatement of rent or termination of the lease, in case the owner of the vacant lot should construct a building thereon. The exclusion of light and air must have been foreseen as not improbable, and the lessee covenanted to pay rent, in full view of the existing and prospective state of things. Having thus covenanted to pay rent, except only in the event of the destruction of the premises, the lessee was bound by its agreement, notwithstanding the subsequent change in the condition of the leased premises by the erection of the adjoining building. Linn v. Ross, 10 Ohio, 412. It was well said by the court in Brown v. Curran, 53 How. Pr., 303, “Building is not necessarily a cause of damage to an adjoining owner. And tenants themselves should take notice and be prepared for such contingencies of constant occurrence, and make their arrangements accordingly.”

■ If the lessors had conveyed 'to the lessee a right to the unobstructed enjoyment of light and air over the vacant lot, for and during its term, they would have been answerable for that right in case of disturbance. But there was no such grant. And the vacant lot not belonging to the lessors at the time of leasing, it cannot be urged with any force of reason, that an easement by implication in the passage of light and air followed a demise of the premises to the lessee. It is true, as said by Judge Story in U. S. v. Appleton, 1 Sumner, 492, that “the general rule of law is, that when a house or store is conveyed by the owner thereof, everything then belonging to, and in use for, the house or store, as an incident or appurtenance, passes by the grant.” But, it was never incident or appurtenant to the lessors’ building, that the adjoining lot should always remain vacant, for the purpose of furnishing light and ventilation to the lessors’ tenants.

There is no evidence that the lessors, at the time of the demise, had any more knowledge than the lessee, of the intention of the owner of the adjoining land, to put a building thereon. It is not claimed that there was ever any act amounting to an eviction on the part of the lessors; nor are they chargeable with any wrongful act which precluded the tenant from the beneficial enjoyment of the leasehold. As a matter of fact, the leased apartments, instead of being rendered permanently unfit for occupancy by the proximity of the walls of the adjoining building, were made tenant-able by repairs, and were occupied by other tenants after their abandonment by the lessee.

Among numerous adjudged cases in the same class with the ease at bar, it was held in Johnson v. Oppenheim, 55 N. Y., 280, that the mere building upon or other improvement of the adjoining lot, by which the demised premises were rendered less commodious of occupation or less suitable to the uses of the tenant, did not affect the right of the landlord to his rent, or authorize the tenant to terminate the lease and abandon the premises. And in Hazlett v. Powell, 30 Pa. St., 293, it was held, that where a lessor demised a building in which were sundry windows opening on the ground of an adjoining owner, the erection of a party wall by such adjoining owner by which the windows were closed up, is not an eviction by the lessor, nor any defense to the payment of the accruing rent. See also Palmer v. Wetmore, 2 Sandf., 316 ; Myers v. Gemmel, 10 Barb., 537.

It is contended, however, in behalf of the defendant in error, that the lessee was released from liability to pay rent, and was authorized to surrender the possession of the premises, by virtue of the act of March 30,1868 (65 Ohio Laws, 35). That act, which is the same as section 4113 of the Revised Statutes, reads as follows :

“ That the lessee of any building which shall, without any fault or neglect on his part, be destroyed, or be so injured by the elements, or other eause, as to be unfit for occupancy, shall not be liable to pay rent to the lessor or owner thereof, after such destruction or injury, unless otherwise expressly provided by written agreement or covenant, and the lessee shall thereupon surrender possession of the premises so-leased.” The act is substantially a transcript of the New York statute in pari materia, and the adjudged cases in that state serve as reliable aids in its interpretation. Without determining whether the Gas Coal Company, as lessee of only two rooms instead of the entire building, would come within the classification of persons entitled to the benefit of the statute, we are of opinion, that the lessee ■was not injured to the extent, nor was its injury of the kind contemplated by the statute. The evident design of the act was, to relieve the ignorant and inadvertent who might fail to protect themselves by special provision in their lease, against the evil and mischief of the common law, which held the tenant liable for rent although the demised premises were destroyed by fire, flood, tempest or otherwise, unless he was exempt from liability by some express covenant in his lease. The destruction or injury within the purview of the statute, is not that gradual decay which results from the ordinary action of the elements nor injury resulting from the ordinary action of human agencies, which a lessee is supposed to have in view when he enters into his contract. The statute is designed rather to protect the lessee against an unexpected and unusual action of the elements or of human forces, causing a total destruction of the demised premises or an injury thereto only short of a total destruction, which the parties ignorantly or inadvertently failed to anticipate and provide against when the demise was made. In construing the New York statute, the court, in Suydam v. Jackson, 54 N. Y., 450, say, “ The statute provides for two alternatives, when the premises are ‘destroyed’ or‘injured.’ The first alternative, evidently, has reference to a sudden and total destruction by the elements, acting with unusual power, or by human agency. The latter has reference to a case of injury to the premises, short of a total destruction, occasioned in the same way. If the legislature had intended to provide that the tenant should cease to be liable for rent when the premises from any cause became so damaged or out of repair as to be untenantable, it would have been easy to have expressed the intent in apt and proper language.” The alleged damage to the apartments leased to the defendant1 in error, was such as might have been expected to result naturally and ordinarily from the construction of the building upon the adjoining vacant lot. And the structure itself must have been anticipated as one of the probabilities of the future. Its walls necessarily excluded light and air, and caused more or less dampness in the lessee’s apartments, but the consequential damage was not the same as that contemplated by the statute under consideration.

The judgment of the district court we think should be reversed, and that of the court of common pleas affirmed.

Judgment accordingly.


author: Granger, C. J.

text:
    City of Cleveland v. Heisley.
    A village was annexed to a city in A. d. 1872, pursuant to chapter 57, Municipal Code, (66 Ohio Laws, 267). The “terms and conditions of such annexation” authorized the city (in order to pay certain bonds theretofore issued by the village, under ordinances that contemplated their payment by taxes upon its general duplicate), to collect the money “in the manner and from the property specified or contemplated in ” the said village ordinances. The village territory formed two wards of the city. The city council levied a tax upon the general duplicate of those wards alone, to pay said bonds. This, when added to the other taxes on said duplicates, exceeded the authorized limit of eleven (11) mills. Held:

    1. The levy of said tax upon the village territory alone, pursuant to the “ terms and conditions of such annexation,” is not forbidden by Article XII,' Constitution of 1851.
    2. The tax as actually levied was illegal because the statutory limit was exceeded.
    Tu A. D. 1872, the village of East Cleveland was annexed to the city of Cleveland. The “ terms and conditions of such annexation” included (with others,) the following stipulations:
    “ 1. That the territory comprised within the limits of East Cleveland shall, until otherwise ordained by the city counoil, constitute two wards of the city of Cleveland ; so much of said territory as lies south of Euclid street shall be designated and known as the ‘Sixteenth ward,’ and so much as lies north of said street shall be designated and known as the “ Seventeenth ward.’
    “ 3. All rights and property of every description whatever, belonging to either of said corporations, shall become the rights and property of the city of Cleveland, and all existing legal liabilities of each of said corporations shall be assumed by the city of Cleveland; Provided, however, that all assessments made or bonds issued for street or other improvements, under the authority of existing ordinances, shall be collected at the times and in the manner and from the property specified or contemplated in such ordinances respectively, except the sum of ten thousand dollars of the indebtedness of East Cleveland, the estimated cost of paving street intersections, which is to be assumed and paid for by the city of Cleveland.
    “ 6. As soon as practicable after such annexation is consummated, the city council shall pass all such ordinances as may be necessary and proper to carry into effect all the terms and conditions in this agreement of annexation mentioned and set forth.”
    In A. D. 1870, the council of the village duly ordered an improvement of a part of Euclid avenue, and resolved “ That the cost and expense of making said improvement, except at street crossings and one half in front of school-house in District No. 2, be defrayed by assessing the whole cost of said grading and one third of said paving on the lands abutting on said improvement by the foot front, and the balance be defrayed by a tax to be levied on the general duplicate of property, both real and personal, in this village.”
    Similar action had been taken as to other street improvements. In anticipation of levies, and assessments, the village had issued its bonds. All the bonds based upon assessments were paid by assessments. Of the other bonds the city paid $10,000 (the estimated cost of the street intersections), with moneys raised by a general tax on the city duplicate. In A. D. 1873, the city levied, a tax, upon the general duplicate of the two wards, to pay said remaining village bonds, and $45,000 was collected. No tax-payer of said wards made any objection.
    In A. D. 1879, the city made a similar levy. John W. Heisley and others, acting for themselves and other taxpayers of said wards, sued' out an injunction against this tax. At a final hearing, the common pleas court dissolved the injunction and gave judgment for the city. On appeal the district court made a decree perpetually enjoining the collection of said tax. The city and the county treasurer (the defendants below), ask a reversal of this decree.
    Kain, Sherwood & Bunts, for plaintiff in error.

      C. C. Baldwin & E. J. Estep, for defendants in error.
   Granger, C. J.

We are satisfied that the third stipulation, in “ the terms and conditions of such annexation,” authorized the city to collect, by a tax levied upon the general duplicate of the two wards, enough money to pay the bonds theretofore issued by the village, for so much of the cost of said street improvements, as exceeded the aggregate formed by the sums assessable under the original ordinances upon the abutting lots, and the $10,000, estimated cost of street intersections.

Sec. 590, Municipal Code, (66 Ohio Laws, 249,) was then in force. The entire cost of the improvement of street intersections was a debt of the village, payable out of the proceeds of a tax “ upon the general duplicate of all the real and personal property subject to taxation within the limits of the ” village.

The express exception of this cost, out of the bonds that the city was authorized to pay by collections from villagers’ property, necessarily implies that the power granted to the city, by the stipulation itself, included the power to levy and collect a tax, upon the general duplicate of the two wards alone, to pay bonds of the same character as those theretofore issued by the village for the cost of the improvement of street intersections. If the intent was to give power to assess abutting lots only, the exception has no meaning whatever. Neither city, nor village, had, or by agreement could confer, power to assess upon the abutting lots any part of the estimated cost of the street intersection improvements. The record shows no attempt by the village to make any such assessment. It is true that the ordinance to grade and improve Madison avenue, from Euclid avenue to the north line of the village, provided that the entire cost and expense of that improvement should be levied and assessed upon the abutting lots and lands. But it does not appear that any street intersection was included in said improvement. None of the bonds, about which the parties here contend, were issued for Madison avenue. The $10,000, estimated cost of street intersections, was made up of $6,476.45 for Euclid avenue ; $2,378.47 for Cedar street, and $1,145.08 for Fairmount street. The ordinances, as to those streets, imposed only two thirds of the entire expenses of the respective improvements upon the abutting lots, and charged the general duplicate with much more than the entire cost of said street intersections.

It seems plain that the ordinances, as to those streets, contemplated” the payment of at least one third of the bonds issued for said improvements, by the proceeds of taxes to be levied upon the general duplicate of the village. If no annexation had been made, such bonds could be paid in no other way. When the council had before it the question of making the improvement, and providing for a distribution of its cost, and, by ordinance or resolution, decided to charge only two thirds of the cost upon the abutting lots, and made the improvement under such ordinance, it had no power to, afterwards, re-distribute the burden, and increase the share to be assessed upon the lots.

The conduct of the parties to the stipulation, soon after the annexation, indicates that they both understood the intent to be precisely what we hold it was. The annexation was completed in 1872. The terms were agreed upon on August 3, 1872. In 1873, the city, by a tax limited to the two wards, collected $45,000, to pay bonds of the same class as those for which the tax before us was levied. Some of the men, who acted for the village in making the stipulation, were tax-payers then, as now. No tax-payer, in anjr manner, objected to the tax of 1873. The fair presumption is, that it was quietly paid, because it was understood that the terms of annexation granted to the city the power to levy and collect it.

But it is urged that the stipulation, so construed, was ineffective, because section 2, of Article XII, of the State Constitution, requires that all taxes shall, by a uniform rule, rest upon all taxable property within the municipality.

So long as East Cleveland continued its separate existence, its council could levy taxes on its duplicate to pay' these bonds.

The two municipalities were by statute given power to fix any terms, not conflicting with existing laws. Sec. 705 Municipal Code, (66 Ohio Laws, 268,) provided that, “such annexation shall not affect, or in anywise impair, any rights, or liabilities, existing at the time of the annexation, either, in favor of, or against, said corporations; and suits, founded upon such rights and liabilities, may be commenced, * * and carried to -final judgment and execution, the same as though such annexation had not taken place.”

If such annexation had not taken place, the holder of one' of these bonds, after default, could obtain judgment against-the village; and, through a proper court, compel the levy of a tax upon the village duplicate to pay it.

The annexation having taken place, the rights of such a bond holder remain the same, but the order for the levy of the .tax, to pay his judgment, can- only be enforced through the city council.

The effect of the statute was, to continue so much of the existence of the village, as is necessary to secure the' payment of its debts. The effect of the stipulation before.us was, to continue the existence of these bonds, as debts of the village' as between'the city and village. As between bond bolder and village, they of course remained obligations of the village.

In levying the tax, the city does no more, than the bond holder could enforce through a court. If this were the only objection to the tax as levied, we feel sure that a court should not, at the instance of a tax-payer, enjoin the.voluntary doing of the very act, that, at the suit of a judgment creditor of the village, it would order to be done.

As already said, the effect of the statute and the stipulation, taken together, is to continue the existence of the village, so far as is necessary to legalize a tax, upon its duplicate, to pay a village debt, which, as between city and village, still remains a village debt. We think that the levy, of the tax in question, is not forbidden by Article XII, of the Constitution. It is simply a levy upon all taxable property within East Cleveland, to pay East Cleveland’s debt; to pay a debt that, that property is legally bound to pay in that way.

But it is urged that the city was, by the statute in force, forbidden to levy a greater aggregate tax than eleven mills, in addition to the tax for school and school-house purposes, and such further rate as was necessary to pay the interest on its public debt, and for cemetery purposes; and that the levy actually made, exclusive of the tax complained of; aggregated lO^ mills. The tax complained of was 3^ mills, making the aggregate in the two wards 13|-|- mills.

A village aggregate might be eight mills.

It is plain, that the village could not confer upon the city power to exceed the village aggregate. The city had and retained, full power to tax, up to its own aggregate. Its power to tax was given by the statute. Hence it could not legally pass the statutory limit.. If the village limit had been greater, for the year of the levy, than that of the city, under the doctrines hereinbefore stated, the city could, within the two wards, for the purpose before us, tax up to said village limit.

In making the levy complained of, the city.exceeded both limits. An ordinance levying a tax, on the two wards, which, when added to the other taxes, computable in fixing the aggregate that could lawfully be imposed, did not exceed eleven mills, would have been valid. The levy actually made was ivholly void, because it made an aggregate greater than eleven mills. No part of it is sustained by valid action of the council. Ohio v. Humphries, 25 Ohio St., 520; Cummings v. Fitch, 40 Id., 56.

The city claims that the levy complained of is not a tax computable as part of the eleven mills, but is a special assessment upon specified property.

Sec. 581, Municipal Code, (66 Ohio Laws, 248,) reads thus:

“ If, in the opinion of the council, it would be equitable, the whole, or a proportion, of the cost of the improvement, as may be fixed by the council, * * may be raised- by the levy and assessment, by the council, of a tax upon the general duplicate of all the real and personal property subject to taxation within the limits of the corporation.” If the village had continued to exist, the levy to pay these bonds would have been a tax under this section. As already stated, the village, having .once exhausted its power to determine the distribution-of the cost of the improvement, could not, afterwards, increase the burden upon the abutting lots. That distribution finally determined how the respective shares of the cost should be paid. In levying such tax, the city council acts instead of the village council,. and can make no change in the nature of the levy. In the words of Judge White (The State v. Strader, 25 Ohio St., 536), “ we see no just ground on which taxes raised by general levy, for the improvement of streets, can be excluded from the aggregate amount of taxes, to the levying of which corporations-áre restricted.”

As already said this - is a tax levied upon the general duplicate of East Cleveland. It must be counted as part of the aggregate levy for the two wards.

This conclusion may make it difficult for the city to enjoy the full benefit of Stipulation 3, but no court can help it. The legislature of course has power to raise the limit of taxation for municipalities. Whatever that limit may be at the time of making a levy, the city can go to it, but not beyond it.

Therefore the district court did not err in enjoining the collection of the tax and its action in so doing is

Affirmed.


author: By the Court.

text:
    Mary Van Ausdal v. Isaac R. Potterf.
    Error to the District Court of Preble county.

      J). A. Haynes, for plaintiff in error.

      Foos Fisher, for defendant in error.
   By the Court.

Suit was brought by the executors of M. C. on three promissory notes. The maker’s answer averred that he had borrowed certain sums of money of J. C., giving him five notes, and had paid to him usurious interest thereon, stating sums and dates; that J. C. died intestate, leaving M. C., his widow and sole heir; that no administrator was appointed; that she took possession of all the personal estate, including said notes, and settled J. C.’s debts; that she desired the maker to pay said notes, or renew them to her in her own name; that computation was made, without deducting usury; that he paid all the interest and a small part of the principal, and gave her the notes sued on simply as a renewal of the old indebtedness; that she paid no consideration for them, and parted with no right whatever on account of said renewal. The answer asked that the usurious payments should be credited on the notes, and judgment rendered for the balance only.

The common pleas sustained a demurrer to this answer, and gave judgment in favor of M. C.’s executors for their entire claim. The district court reversed this judgment and overruled the demurrer.

Held, this was right. If a qualified administrator had receipted to P. for the amount of notes and interest, taking M. C.’s receipt for the proceeds as só much of her distributive share of the estate, while P. made his notes payable to her, the debt to the estate would have been extinguished. But the answer showed her acting in the matter as the representative of the estate, accepting notes in renewal of its claim, and bound to account to it for so much of them, if any, as should be required to settle its liabilities. Hence, the maker may make the same defense as to usury that he could have made against a renewal note given to the intestate or to his legal representative.

Judgment affirmed.


text:
    Samuel N. Misner v. Martha J. Misner.

      W. H. Enocks, for plaintiff in error.
    Error to the District Court of Jackson County.
   By the Court.

At October Term, a. d. 1867, of -Jackson common pleas, M. recovered judgment against S. for $500 and costs. This became dormant. On February 3, A. D. 1876, M. filed in said court a petition to revive said judgment. This was done under the act of April 16, 1867 (S. & S., 562), amending section 417 of the Code of Civil Procedure. Summons was issued to the sheriff of Lawrence count}', who, on February 8, 1876, personally served S. and made due return. S. made default. On March 13, 1876, the court entered an order reviving the judgment “for the amount which the court” found “to remain due and unsatisfied” thereon, being $750, and costs, and awarded execution therefor. S. filed a petition in error in the district court which affirmed the order.

Held, this was right. The petition and summons did not make a new action; they were additional proceedings in the original action. The defendant was entitled to notice thereof, and got it, as authorized by said amended section 417. Having jurisdiction of the original action, the court could issue summons to any county in the state, in order to effect a revivor.

Judgment affirmed,.


text:
    Mary Ann Wise v. George Willard.
    Error to the District Court of Lawrence county. Motion for a re-hearing.

      W. H. Enochs and W. J. Gilmore, for the motion.

      O. F. Moore and John S. George, contra.
   By the Court.

Wise needed money to pay judgments that were pressing him. Willard agreed to indorse his note to S. for $2,700, at four months, if Wise and wife would make to him (Willard) their note for $3,000, at four months, secured by mortgage on the wife’s land ; he to hold and use said mortgage to protect himself against loss and expense because of said indorsement. Neither note was paid at maturity. The mortgage note was never extended, but the other note was renewed by agreement of the parties to it for a valuable consideration. It remained unpaid, and Willard sued Wise and wife on the mortgage note. She set up the extension of the $2,700 note as a release of her property.

Held, as Willard made no extension of the mortgage note he did not lose his right to enforce the mortgage for his indemnity. The extension of the $2,700 note did not affect the right of the wife to pay the $3,000 note and enforce reimbursement by her husband.

Motion overruled.


author: McCauley, J.

text:
    Board of Education vs. Board of Education.
    The board of education of a township established a central or high school under the provisions of the act of March 14, 1853, S. & G., 1346, as amended May 14, 1S68, S. & S., 712; and erected a building in a sub-district of the township for the use of the school, and the building was used, by agreement between the board of education and the local directors of the sub-district, for the central or high school and the school of the sub-district. The territory comprised in the sub-district after the establishment of the central or high school, and before the act of May 1, 1873, (70 Ohio Laws, 195), was formed into an incorporated village. Held :

    That the property of the central or high school and the management of the school did not by virtue of said last mentioned Act, pass to the board of education of the incorporated village.
    Error to the District Court of Trumbull county.
    The board of education of Hubbard township, Trumbull county, in June, 1868, commenced proceedings under section 21 of the act of March 14, 1853,'to provide for the reorganization, supervision and maintenance of common schools, S. & C., 1346, as amended May 14th, 1868, S. &. S., 712, to establish in that township a central or high school. Their proceedings resulted in the establishment of such school and the location of a building for that purpose in sub-district number 5 in the township. In 1870, the building being completed, by agreement between the board of education of' the township and the local directors of sub-district number 5, the rooms in the second story of the building were used for the central or high school, and the rooms in the first story were used for the school in sub-district number 5. After the schools had been in operation for some time in this way, the territory comprised in sub-district number 5 was formed into an incorporated village. This occurred some time prior to the passage of the act of May 1st, 1873. The action in the common pleas was by the board of education of the village against the board of education of the township and the object of it was to enjoin the defendants from exercising any control or direction over, the school-house or over the school held therein, and to prevent them by injunction, from interfering with the sole use, direction and control of the school by the board of education of the village. The district court upon a trial on appeal found and decreed for the plaintiffs. It is now sought to reverse this decree.

      Dio Rogers, Volney Rogers and C. A. Harrington, for plaintiffs in error.
   McCauley, J.

The board of education of the township legally established a central or high school, and located the building for it in sub-district number 5 of the township. The building must have been located in some one of the sub-districts of the township. It is claimed by the board of education of the village that because the territory within sub-district number 5 was formed into an incorporated village after this central or high school was established, and prior to the passage of the act of May 1st, 1878, 70 Ohio Laws, 195, the 39th section of that act vested the board of education of the village with jurisdiction and control of all school property within the district. Section 4 of that act, now section 3888 Rev. Stats., provides: “ That each village, including the territory attached to it for school purposes, and excluding the territory within its corporate limits detached for school purposes, shall constitute a school district, to be styled a village district.” Section 39 of the same act, now section 3972 Rev. Stats., provides: “That all property, real or personal, which has heretofore vested, and is now held by any board of education, or the council of any municipal corporation, for the use of public or common schools in any district, is hereby vested in the board of education provided for in this title, having under this title jurisdiction and control of the schools in such district.” The act of May 1st, 1873, repealed all provisions relating to central or high schools, existing at the time of its passage ; but it provided for the establishment of such schools, and provided also that obligations or liabilities incurred, and rights acquired under the provisions of any oí the acts repealed by it, should be in no wise altered or affected, but be enforced as if the act had not been passed. 70 Ohio Laws, 240. The township board of education had established a central or high school according to the statutes in force at the time the school was established. The act of May 1st, 1878, gave the board of education of the village control of all school property within the village district, and at the same time saved all rights which had accrued under former statutes. The right of the township board to the school property, and to the control and management of the central or high school, had accrued before the act of May 1st, 1873, and the rights of this board were, therefore, not affected by this act.

Judgment reversed.


text:
    Williamson v. Gerlach.
    The holder of a second mortgage in an action to foreclose, made all lien-holders parties, prior and subsequent, and moved for the appointment of a receiver to collect rents and income of the mortgaged lands pend-, ingthe action. The appointment of a receiver was refused. Afterwards a junior mortgagee commenced an action to foreclose making all lien-holders parties, and upon his motion a receiver was appointed. But the receivership was not limited to any party or lien. Held :

    That the fund collected by the receiver was applicable to the liens on the property in the order of their priority.
    Error to the district court of Cuyahoga county.

      S. JS1. ■ Williamson, for plaintiff in error.

      M. D. Graulder, for defendant in error.
   McCauley, J.

The plaintiff in error, Williamson, who held a mortgage on certain lands, which was the second mortgage in priority on the lands, commenced an action to foreclose, and made all other mortgagees and lienholders parties. He made his motion for the appointment of a receiver to collect the rents and income of the lands. The motion was overruled and the appointment refused. At the same term at which this appointment was refused, a receiver was appointed for the same purpose in another action commenced by a junior mortgagee for a foreclosure to which action he made all lienholders parties.

The receiver was appointed generally to take charge of and connrol the lands, collect rents and income and hold the same subject to the further order of the court. When the lands carne to be sold the proceeds of the sale were not sufficient to pay the liens prior to the lien of the mortgagee on whose motion the receiver was appointed. The prior lienholders claimed that the fund in the hands of the receiver should be distributed and paid upon the liens in the order of their priority; and the subsequent lienholder on whose motion the receiver was appointed, claimed the fund in the hands of the receiver should be applied upon his lien, for the reason that his superior diligence-had produced the fund.

It is to be noticed that there were two actions here, to each of which all lienholders were parties. The court refused the appointment of a receiver on the application of the second lienholder who was plaintiff in the first action and granted it to the holder of a junior lien who was plaintiff in the second action. After an appointment was made in the case and not limited to any party or li$n and it afterward appeared that the appointment was in fact necessary for both lienholders, the fund collected by the receiver should have been treated as a part of the general security of the mortgages and be controlled by their priorities. If the receiver had been appointed on the motion and for the benefit of a particular lienholder, the receivership might have been extended to other liens; but when it was not limited it was of no consequence upon whose application the appointment was made. The fund collected by the receiver under such an appointment was not appropriated to any particular lien.

In Washington Ins. Co. v. Fleischauer, 17 N. Y. Sup. Ct., 117, a junior mortgagee had the rents of the property applied to his mortgage to the exclusion of prior mortgagees. But the appointment of a receiver in the case was made for the benefit of this lienholder only, and no other lienholder asked to have the receivership extended to any other lien. In Sowell v. Ripley, 10 Paige, ch. 48, a junior mortgagee filed his bill to foreclose and had a receiver appointed. Afterwards a prior mortgagee filed his bill for the same purpose and had a receiver appointed also. It was there held that the prior mortgagee was only entitled to the rents and profits due at the time of the appointment of the receiver in his suit, and to such as accrued thereafter, and that the junior mortgagee was entitled to all the rents and profits in the possession of the receiver in his suit, at the time the receiver in the suit of the prior mortgagee was appointed. The same rule was applied in Post v. Dorr, 4 Edw. Ch., 412. Where an incumbrancer has a receiver appointed for his benefit, and other parties .to the action who may be entitled to have the receivership extended to their liens take no steps to have the receivership thus extended, the party procuring the appointment will be entitled to the fund produced thereby, because of his superior diligence. The cases in which a junior mortgagee has had rents and profits collected by a receiver and applied to his lien are those in -which, either the senior mortgagee was not a party to the action or the receiver was appointed for the benefit of the junior mortgagee and the receivership was not extended to the other liens. In this case the receiver was appointed generally without reference to the liens, on the motion of the junior mortgagee, after the appointment had been refused in the other action to the holder of a prior lien. Where the appointment is intended to be for the benefit of the party only, on whose motion it is made it should be limited to the lien of such party.

Judgment reversed.


text:
    Ramsey v. Jones.
    R. the owner, having sold land and taken a mortgage thereon from the vendee to secure the payment of the purchase money, executed a release of the mortgage and took a second mortgage on the premises from tire vendee, 'f<jr the balance of the purchase money then unpaid. The release and second mortgage were entrusted by R. to the vendee to be by the latter entered for record. The vendee caused the release to be immediately recorded, but failed to deliver the second mortgage for record. After the release was recorded, the vendee made his notes to L. and executed to him a mortgage on the premises to secure the same, without consideration therefor, which mortgage was within a few days recorded and thereafter, on the 17th of January 1879, the notes were before maturity indorsed and delivered, and the mortgage was assigned by 1. to J. — a bona fide purchaser for a valuable consideration, without notice. After the mortgage to L. had been recorded, the vendee returned the unrecorded mortgage to R. who filed it for record on the 21st of April, 1879. Held:

    That the mortgage of J. is the first and best lien on the premises.
    Error to the District Court of Hancock County.

      Dunn & Conine, for plaintiff in error.

      J. F. Busket, for defendant in error.
   Dickman, J.

Samuel Ramsey, plaintiff in error, sold and conveyed to Lafayette Hull, a defendant in error, eighty acres of land in Hancock county, and took from him his promissory notes for the entire purchase money, the payment of which was secured by a mortgage on the premises from the vendee. The notes were not paid at maturity, and the vendee desiring further time for payment, the vendor executed a release of the mortgage, and took new notes from the vendee secured by a new mortgage on the premises. The release and new mortgage were entrusted by the vendor to the vendee, to be by the latter entered fbr record. The vendee caused the release to be immediately recorded, but failed to deliver the new mortgage for record. The release being thus recorded, Hull, without any consideration therefor, made his two certain negotiable promissory notes to B. F. Lynn, a defendant in error, and to secure the payment thereof, executed to him also a 'mortgage on the premises, which was left with the recorder for record on the 26th of November, 1878. On the 17th of January, 1879, Lynn, before maturity, indorsed and, delivered the notes and assigned the mortgage to the defendant in error, Elijah P. Jones, who purchased the same in good faith, for a valuable consideration, and without notice of any defense thereto by way of vendor’s lien, mortgage lien or otherwise. Hull retained in his possession the unrecorded mortgage entrusted to him by Ramsey, until after the mortgage to Lynn had been recorded, when he returned the same to Ramsey, who filed it for record on the 21st of April, 1879.

Upon the non-payment at its maturity of one of the notes indorsed to him, Jones brought suit in the court of common pleas of Hancock 'county, making Hull and his wife and Lynn and Ramsey parties defendant, and praying for judgment on the note, and for a foreclosure of the mortgage and sale of the real estate, and for the application of the proceeds to the payment of liens in the order of their priority. The cause was' heard by the court — a jury, not having been demanded — and subject to the payment of taxes and costs, the mortgage of the plaintiff was adjudged and decreed to be the first and best lien on the premises. The district court affirmed the judgment of the common pleas, and this proceeding is instituted to reverse the judgments of those courts.

Upon the foregoing state of facts, as disclosed by the record, the question arises, what are the rights of Jones as a lienholder, and what his claim as to priority ? No defense is made by Lynn or Hull to the mortgage sought to be foreclosed. In the original action, neither of them demurred or answered to the petition of the plaintiff, and neither of them derSurred or replied to the answer of Ramsey, setting up his claim as a mortgagee. The issue, therefore, is solely between Jones and Ramsey as to precedency of lien.

As against his vendee, Ramsey did not trust for security to a vendor’s lien alone, but took from the purchaser a mortgage for the purchase money. By recording the mortgage, his equity as a vendor became clothed with the legal estate, and as long as the mortgage remained unsatisfied, no question could arise as to the priority of his lien over any junior equity or legal estate acquired by a subsequent purchaser or mortgagee. But by executing and putting upon record a release of his mortgage, he virtually represented to the world that the property was free from incumbrance so far as he was concerned. It was equivalent to a notice to Jones, who had bought the notes and mortgage for a valuable consideration, that the purchase money had been paid in full by the vendee, and that he, the vendor, no longer asserted any lien or claim upon the premises. Having placed the muniments of title in the hands of his vendee, and put him in possession of the premises, and afterwards by release of the purchase money mortgage, clothed the vendee, to all appearance, with absolute ownership, Ramsey should be estopped from denying the binding force of the release, and from asserting his unrecorded mortgage in defense against one who had confided in the record, and parted with his money upon the faith of the vendor’s acts.

In the leading case of Pickard v. Sears, 6 Ad. & E., 469, it was enunciated as a clear rule of law, by Lord Denman, in delivering judgment, that where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time. When Ramsey caused the mortgage for the purchase money to be recorded, no responsibility could arise from his failure to take further steps to warn subsequent purchasers. They might fairly be presumed, to take the means pointed out by law, for acquiring all the knowledge as to the state of the title which it would be important for them to have. And so, when he released the same mortgage and caused the release to be recorded, he gave notice to subsequent purchasers and mortgagees that was equally effective and binding, that his mortgage lien was extinguished, and that they might deal with his grantee in safety.

In Swartz v. Leist, 13 Ohio St., 419, the court in passing' upon the rights of a mortgagee who, retaining the legal interest in the mortgage subsequently entered satisfaction and discharge upon the record of the mortgage, say, “ So far as respects the lien of the mortgage, the mortgagee is clearly estopped by his recorded release, from denying, as against subsequent purchasers in good faith, the payment thus evidenced by his own act.” It is true that there was a second mortgage made to Ramsey by Hull, but it was not filed with tire recorder until several months after the mortgage by Hull to Lynn was executed, delivered and recorded, and subsequently assigned to Jones. It is urged, however, that a fraud was practiced by Hull upon his vendor in retaining the second-mortgage in his possession until the mortgage to Lynn might gain priority of record. Doubtless there was great laches on the part of Hull, if not a betrayal of the trust reposed in him by his vendor. But he was the agent of Ramsey, charged by him with the duty of causing the release and mortgage to be duly recorded. If he neglected his duty and was unfaithful to his trust, his, principal should suffer, and not a subsequent purchaser in good faith without notice.’ The settled rule must govern, that whenever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it. Bigelow v. Comegys, 5 Ohio St., 256; Selser v. Brock, 3 Id., 302.

In the case of Resor v. The O. & M. R. R. Co., 17 Ohio St., 139, where a vendor put his vendee into possession, and executed and placed in his hands a deed of conveyance for the land sold, with an understanding between them that the deed should not be considered as delivered, or become effectual, until the purchase money should be paid; and the vendee subsequently put the deed upon record, and, without paying the purchase money, mortgaged the land to bond fide mortagees for value, and without notice ; it was held, that such vendor is estopped, as between him and the mortgagees, from denying the delivery of the deed, or asserting any claim to the land. In the case at bar, Ramsey by his carelessness or undue confidence in his vendee, was the means of Jones being deceived in the purchase of the notes and mortgage, and he should therefore bear the loss rather than the innocent purchaser.

In the view which we take of the case at bar, although the notes and mortgage were executed to Lynn without consideration, that fact should not prejudice the rights of Jones, as no knowledge of it was brought to him before or at the time of his purchase, and as he was in all respects a bona fide purchaser without notice. The lien of the plaintiff in error under his second mortgage, we think, should be postponed to that of Jones under the Lynn mortgage, and that the judgments of the court of common pleas and district court should be affirmed.

Judgment accordingly.


author: Nash, J.

text:
    The Gambrinus Stock Company v. Weber et al.
    In the making of tbe statement of the mortgagee required on a chattel mortgage, the agent of the corporation omitted to affix his name thereto. Underneath the statement was a certificate by a notary public duly signed and sealed which in effect stated that the statement was sworn to by the mortgagee before him. Held:

    That this verification is sufficient prima facie and can only be overcome by evidence that the statement was not in fact sworn to by a proper agent of the corporation.
    Error to the District Court of Hamilton County.

      Von Seggern, Phares & Dewald, for plaintiff in error.

      Frank Bruner and J. D. Breed, for defendants in error.
   Nash, J.

This litigation was caused by the careless and imperfect manner in which the verified statement of the amount due on a chattel mortgage was placed thereon. In 1879 the instrument under consideration was executed and delivered to the Grambrinus Stock Company by M. L. Rotfcger and two others. The statement of the mortgagee thereon was as follows:

“ Statement oe Claim.
The State of Ohio, ) gg Hamilton County, [
“ Mortgagee, named in this mortgage being duly sworn, makes oath and says that claim against mortgagors, of which a true'statement is hereto annexed, amounts to the sum of one thousand dollars ($1,000), and that said claim is just and unpaid.
“ Sworn to and subscribed before me, a notary public, in and for said county, this 25th day of April, A. D., 1879.
“ Chas. Phares,
[seal.] Nótary Public, Hamilton county, Ohio.”

This statement is imperfect in that it is not signed by the agent of the corporation making it. We are of the opinion that this fault}r statement is sufficient prima facie, and that the mortgage is good as against subsequent judgment creditors, unless they are able to show that the statement was not in fact verified by a proper agent of the company. The words of the statute requiring the mortgagee to place a verified statement on a chattel mortgage are as follows:

* * * “ that the mortgagee, his agent or attorney, before the filing of such instrument with the township clerk, or in the office of the recorder of the county as contemplated by said act, shall, in case the said instrument shall have been given to secure the payment of a sum of money only, enter thereon a true statement in dollars and cents of the amount of his claim, and that it is just and unpaid, * * * which statement shall be verified before some justice of the peace or other officer authorized to administer oaths.”

The' object sought to be attained in having a chattel mortgage filed, as is required in our state, is to give notice to the world of the condition of the mortgaged property. So also the object of the statute in requiring the mortgagee to enter a statement of the amount of his claim, verified before a proper officer upon the chattel mortgage before filing, is to notify the public of the amount of the lien. Although defective, the statement in this case shows the amount of the debt secured by the mortgage, and when read in connection with the certificate of the notary public shows that it was sworn to by the mortgagee. As the mortgagee was a corporation it follows that the verification was by an agent. There was nothing in the statement and certificate that would mislead any one, and it was a substantial compliance with the statute. This is all that seems to have been required by the supreme court in the cases Ashley v. Wright, 19 Ohio St., 291, and Gardner v. Parmelee, 31 Id., 551.

Judgment reversed-


text:
    Engle v. Sohn & Co.
    A person who purchases and slaughters hogs, for the purpose of adding to the value thereof by certain processes and combination with other materials — whereby they are converted into bacon, lard and cured meats, — with a view of malting a gain or profit thereby, is a manufacturer and taxable, as such, under Section 2742 of the Revised Statutes.
    Error to the District Court of Butler County.

      John F. Neilan and Thomas Millikin, for plaintiff in, error.

      Slaylack & Shaffer, for defendants in error.
   Dickman, J.

During the years 1879 and 1880, John W. Sohn & Co. were a firm engaged in the business of purchasing and slaughtering hogs, and packing pork, in the city of Hamilton, Butler county. They bought and slaughtered hogs, and subjected the same to certain processes and combination with other materials, requiring the application of skill, labor and capital, and converted them into lard and cured meats, for the purpose of adding to the value thereof, with the view of making gain or profit. It required about forty men to carry on the business, which was conducted under several departments, each requiring the supervision of a foreman possessed of skill and experience. In rendering lard, curing sides and shoulders, curing, smoking and canvasing hams, and packing pork, it became necessary to use other raw material of various kinds, such as salt, saltpetre, saleratus, sugar, molasses, .flour, chrome yellow, linseed oil, canvas, wood, paper, barrels, tierces and kegs, and also to use various tools, implements, and mechanical devices. The process of curing hams required about three months. They were then ready for smoking, which occupied from six to eight days, when they, were wrapped, canvased, and dipped in a mixture, to render them air-tight and proof against atmospheric influences and insects. The different branches of the business were carried on together in one building. Sohn & Co. cured all their own meats, and did not deal in meats cured by others. In former years, those that slaughtered were not in the packing business, and packers did not slaughter; but for several years the two branches of business had been, as now, combined.

In listing their property for taxation for the year ending on the day preceding the second Monday of April, 1880, Sohn & Co. took the greatest valúe of raw material which they had on hand on any day in each month of the next preceding year, and adding those sums together and dividing the aggregate by twelve, listed the quotient, $5,130, as their average stock of manufactures for that year — such raw material being articles purchased, received or otherwise held, for the purpose of being used in their packing business. At the time of listing they did not have on hand any articles which had been by them manufactured or changed in any way, either by combination or adding thereto, one year or more previous to such listing. Subsequently to making their return to the assessor, the special board of equalization of the city of Hamilton added to the return the sum of $16,067.90, as an addition “ to the monthly average value of pork on hand from time to time during the year,” — thus treating the article as personal property, purchased in its then existing shape, with a view of being sold at an advanced price or profit, and thereby compelling Sohn & Co. to list as merchants. Sohn & Co. filed their petition in the court of common pleas of Butler county, against the county treasurer, to enjoin the collection of taxes upon such addition to their return, on the ground that they should be taxed as manufacturers, and not as merchants; and a perpetual injunction was thereupon granted. On appeal by the county treasurer the district court rendered a like decree as in the court below, and this proceeding is prosecuted to reverse the judgment of the district court.

The question for our consideration is, whether upon the facts in the case at bar the defendants in error were taxable as merchants or manufacturers. If taxable as manufacturers only, they were required to return for taxation — as they did — the monthly average value of the raw material which they had on hand during the preceding year, in the same condition in which it was purchased, received or otherwise held for the purpose of being used by them in their manufacturing business. But they were not required to list for taxation such material in a manufactured or partly manufactured state — unless manufactured one year or more previous thereto — as it was not the intention of the legislature to tax the labor, skill and capital which, when in combination with the raw material, produced the manufactured article. Sebastian v. Ohio Candle Co., 27 Ohio St., 459.

The question therefore recurs, were Sohn & Co., for purposes of taxation, merchants under section 2740, or manufacturers under section 2742 of the Revised Statutes. By Sec. 2740. Every person who shall own or have in his possession, or subject to his control, any personal property within this state, with authority to sell the same, which shall have been purchased either in or out of this state, with a view to being sold at an advanced price or profit, or which shall have been consigned, to him, from any place out of this state, for the purpose of being sold at any place within this state, shall be held to be a merchant.”

And under “Sec. 2742. Every person who shall purchase, receive, or hold personal property of any description, for the purpose of adding to the value thereof by any process of manufacturing, refining, rectifying, or by the combination of different materials, with a view of making a gain or profit by so doing, shall be held to be a manufacturer.”

In both definitions there is the common element of purchasing personal property, with a view of making a gain or profit. But the definition of a manufacturer contemplates the attainment of such object by adding to the value of the property after purchase, by some process or combination with other materials, while the merchant is supposed to get his advanced price or profit by selling the article as it is, without subjecting it to any change by hand, by machinery, or by art. The material entering into the manufactured article may be modified, more or less, in its identity, as it passes through the several stages of a manufacturing process ; but the merchant deals in the manufactured article itself, or its constituents, by buying and selling them in the same condition’in which he purchases them. His business is that of exchanges, and not of making or fabricating from raw materials.

The occupation of the defendants in error was, we think, essentially that of manufacturers. By the use of tools, implements, and mechanical devices; by subjecting the slaughtered animals, to divers processes, running- — some of them — through several months; hj a combination with various materials and ingredients requiring skill, care and attention, products were obtained in the form of pork, lard and cured ■ meats, to which may appropriately be applied the term “ manufactured articles.” The original substance, though not destroyed, was so transformed through art and labor that without previous knowledge it could not have been recognised in the new shape it assumed, or in the new uses to which it was applied. One who produces such results may as correctly be designated a manufacturer as he who buys lumber, and planes, tongues, grooves, or otherwise dresses the same ; or as he who by a simple process makes sheets of batting from cotton; or as he who buys fruit and preserves the same by canning — all of whom have been held to be manufacturers, and taxed as such, under the internal revenue laws of the United States. 9 Internal Revenue Record, 193; 5 Id., 180; Internal Revenue Decisions, 117, No. 171. And as to the article of ice, to which reference has been made in argument, he is not inappropriately termed a manufacturer who produces artificial ice by the method of vaporization and expansion. The dressed lumber, cotton batting, canned fruits, and artificial ice, though but slightly changed from the original material, could not, we think, be properly classified, as unmanufactured goods. Indeed, the term manufacture has been extended to include every object upon which art or skill can be exercised, so as to afford products fabricated by the hand o£ man, or by the labor which he directs. Curtis on Pat., § 74.

During the past forty years the business of slaughtering iind meat packing, from a small beginning, has grown to such magnitude that it is now ranked as one of the great industries of the eountiy. It is placed in our Federal Census among the mechanical and manufacturing industries of our large cities. In its different departments the aid of science, and art, and inventive talent has been invoked, and new and improved methods have been devised for facilitating and perfecting its various processes. The perfection of manufacturing,” it has been said, “ consists in the being able to effect the wished-for changes in the raw material, with the least expenditure of labor or at the least cost.” With such a test alone there would be no hesitation in ranking this industry, in its present advanced state, among our most effective branches of manufacture.

These views, it may be urged, are in conflict with the decision of the court in Jackson v. The State, 15 Ohio, 652. The facts in that case appear to be meagerly reported. The appellant, who was a citizen of the state of Pennsylvania, “ engaged in the business of purchasing, slaughtering and packing pork for transportation and sale,” at Columbus, Ohio. Hitchcock, J., was “ not prepared to say,” that a person so engaged was a manufacturer within the meaning of the statute. We are, however, satisfied, that if the facts had been the same as in the case at bar, if there had been in the year 1846 the same perfection in the art of packing and curing meats which has since been reached and now exists, Jackson would have been held to be a manufacturer and not a merchant.

The conclusion to which we have arrived is, that Sohn & Co. were manufacturers; that, as such, they made proper return to the assessor of the personal property of the firm subject to taxation; that the addition to their return by the board of equalization was illegal; and that the district court did not err in rendering judgment, that the county treasurer be perpetually enjoined from collecting any tax upon the addition so made by that board.

Judgment affirmed.