text:
    Hulett v. Fairbanks.
    1. Competent parties may make “ time ” of the “ essence of the contract,” and enforce a forfeiture, as stipulated, in case of a default; but when • a failure to perform is occasioned by erroneous information on a ma7 terial matter given by the agent of tlie party not in default, relief against tlic forfeiture should be granted.

      2. Joint purchasers of land intended to he disposed of for their joint profit, are partners in the venture.
    8. If by such contract of purchase a failure to pay their joint and several note for a part of the purchase money by a day certain will work a forfeiture of their rights, eacli is bound in good faith to punctually pay his share to the extent of his ability.
    4. If two of such co-obligors having the means to promptly pay their sha're of such a note (without notice to their co-partners of an intent to not pay said share), in order to force the forfeiture, place said sum, (and more), in the hands of a third party to enable him to take advantage of the forfeiture and purchase the rights so forfeited, they commit a fraud upon their co-obligors.
    5. If a third party, with knowledge of the contract of purchase, of the relations of said co-obligors and of the, facts as to said money, receives the same and uses it to carry the plan into effect, he is so far a party to the fraud that he cannot hold the rights so purchased against the co-obligors so defrauded.
    Error to the District Court of Lake County.
    On the 9fch of June, A. D. 1874, by a writing of that date, Thaddeus, Horace and Franklin Fairbanks, of St. Johnsbury, Vt., agreed to sell and convey to William E. Hulett; George H. Hulett, John Cunningham, all of Lake county, Ohio, and Albert Cunningham, of Milwaukee, Wisconsin, several thousand acres of pine lands, situate in the county of Manistee, in the state of Michigan, for $65,698. The purchasers agreed to pay said sum in installments as follows, viz.: cash on day of contract, $10,000; on October 1, 1874, $11,899; on October 1, 1875, $14,599.61; on October 1,1876, $14,599.61; and on October 1,1877, $14,599.61. For the deferred payments they gave their joint and several notes, payable to order of E. & T. Fairbanks & Co., (a firm composed of the vendors,) in current funds, at the Importers and Traders Bank, New York, “with interest annually at 7 per cent.” The first note read, “ with interest at seven per cent, per annum.” The purchasers were to pay all taxes on the lands falling due after date of contract, but were not to cut, or permit to be cut and carried away, any timber from the land, without having, beforehand, obtained the written consent of the vendors. To do so without such consent would work a forfeiture of the rights of the purchasers. The deed was to be made when the payment of the purchase money was completed. The contract contained a stipulation reading thus:

      Third. — That the parties of the second part shall pay each and every of the said promissory notes at the time they severally become due and payable, according to the tenor and effect thereof. And it is expressly stipulated and agreed that the time of the payment of said notes is of the essence of this agreement, and that if default in the payment of either of said notes at maturity shall be made, the said parties of the first part may, at their option, at any time after the happening of such default, and before receiving another payment, declare a forfeiture of the rights of the parties of the second part under this agreement, either by notice to be given to the parties of the second part, or to any person who may be found in the possession or occupancy of said premises, or any part thereof, or by written notice to be deposited in the post-office at St. Johnsbury, Vermont, directed to the said parties of the second part, each individual separateljq at Unionville, in the county of Lake, and state of Ohio, and to Charles F. Ruggles, at the city of Manistee, in the county of Manistee, and state of Michigan; and thirty days after the time of giving or making such notice, all the rights of the parties of the second part, under this agreement, either at law or in equity, shall wholly and forever cease and determine (unless they shall in the meantime have paid all arrears, that may then be due) ; and thereupon such of said notes as remain unpaid, shall (excepting as is hereinafter provided) be void, and shall be delivered up to the parties of the second part on demand made by them therefor, at the office of the'paxties of the first part in St. Johnsbury, Vermont, where the same are made payable; but the party of the first part shall not be bound to refund any moneys which may have been paid upon this agreement, or upon said notes.
    This purchase was made for the purpose of jointly selling again at a profit, and dividing the proceeds. To further this object, on June 12, 1874, by another writing, said purchasers associated with themselves one Charles F. Ruggles, who resided in said county of Manistee, and had experience in such land speculations. Under certain circumstances he was to gain a right to one-half of the profits. This contract gave to Ruggles a right, in case the others should fail, or neglect, to pay'any of said notes at the exact time when it should fall due, to pay such note and receive an extended interest in said lands proportionate to such payment. Ruggles also agreed as follows:
    1st. That he will bear one-half of the expenses arising from the care of above-mentioned lands, or the sale of the timber therefrom, or the collecting therefor, or the book-« keeping arising from a sale of a part or the whole of said timber, and that he will, at his own and sole expense, do all the bookkeeping connected with the lands, aside from a sale of the timber as above."
    2d. That he will endeavor to make a sale of the above-mentioned lands and the timber thereon, at the largest advancement possible upon the price paid therefor, and should he receive an offer therefor, he will communicate the same, to the parties of the first part; and should a sale be made of the whole or any part thereof, he will draw the contract or contracts therefor, and that he will, if desired, superintend the collecting therefor, and any bookkeeping necessary in the above transaction. Further, that he will, if desired, have the books-kept in his office in Manistee, Michigan, by one of his bookkeepers, and that for the same the actual cost shall be by him received.
    3d. That should there- be a loss upon the above investment, he will stand one-half of the said loss. '
    The Huletts and’ Cunninghams punctually made all the payments that fell due prior to October 1, 1876, including interest to October 1, 1875, on the remaining notes, the Huletts paying the half of all that was so paid.
    In July, 1876, George H. Hulett visited the lands, and learned facts that caused him to believe that Ruggles was not fulfilling* his duties under their contract; that he'and. Albert Cunningham had united in speculations in other lands, and were pushing those separate interests to the prejudice of the common venture. Said John Cunningham was Albert’s father. Ruggles had put no money into the venture. George Hulett, on his return to Ohio, reported his discoveries to John Cunningham, who told him that Albert could not break with Ruggles. Hulett then urged that Ruggles ought to put in money so as to secure his faithful attention to the common interest; declared that they (the Huletts) would not pay any more money to the Fairbanks until the firm property was in charge of a' receiver, and that they would begin suit for that purpose. John Cunningham urged that such a course would cause loss to them all, and remonstrated against it, but finally said that if the Huletts would not apply for a receiver he (John) would pay one-half of the sum to fall due October 1, 1876, and Ruggles and Albert would provide.for the other half. The Huletts did not sue; John Cunningham deposited $8,326.03 at the Importers and Traders National Bank, New York, in readiness to pay one-lialf of the sum then due, but as the Huletts furnished no money the note was protested. On November 2, 1876, D. P. Hall, agent for the Fairbanks, presented the note to the several makers at their homes in Ohio, and, payment being refused, he served all of them and Ruggles with the contract notice, and unless payment should be made on or before December 2, 1876, the forfeiture under stipulation “third” would take effect. On the morning of November 2,1876, George Hulett, in Ruggles’s presence, told Hall that they (the Huletts) did not intend to pay any part of the principal and interest then due, but afterwards, on the- same day, fully informed Hall of their wish to induce Ruggles and the Cunninghams to pay that note for the reasons herein-before stated, and that they (the Huletts) did not intend to let the default become complete: that they had the means to pay, and would pay, if necessary to prevent the forfeiture. He also, in the same conversation, asked Hall to inform him of any new move, or change, that should occur in the matter, which Hall promised him he would do.

      Hall then entered the east-bound train at Unionville, in Lake county. Ruggles got on the same train at Geneva, and at Buffalo they executed a contract reading thus:
    “ Buffalo, N. Y., Nov. 2, 1876.
    “This agreement, made this day between Charles F. Ruggles on the part and for Harvey J. Nettleton, of Ashtabula, Ohio, of the one part, and D. P. Hall on the part and for E. & T. Fairbanks & Go., of St. Johnsbury, Vermont, of the other part, witnesseth: That whereas, on the 9th day of June, 1874, the said Fairbanks & Co. executed a land contract for the sale of certain pine lands in the county of Manistee and state of Michigan, to William E. Hulett and George Hulett and John Cunningham, all of Unionville, Ohio, and Albert Cunningham, of Milwaukee, Wisconsin. Reference is hereby had to said land contract for full and particular description of the same. And, whereas, said Huletts and Cunninghams have let one of their notes be protested,' contrary to the terms and tenor of said contract, and the same now remains unpaid and overdue more than one month; and, whereas, it is distinctly stated and understood that if the parties do not make their payments promptly when due, that they forfeit all former payments made upon said contract, in thirty days from the time the said Fairbanks & Co. shall give them a written notice to that effect; and, whereas, by the terms of said contract, thirty days is granted to said parties to make said pay: ments, with the interest, costs and expenses attending the same; and, whereas, if said payments are not made, said bond will be cancelled and the said property revert to the said E. & T. Fairbanks & Co.; now, it is hereby agreed- by the parties to this contract, that if the said Harvey J. Nettleton shall deposit to the credit of Fairbanks & Co., of New York city, in the Importers’ and Traders’ National Bank, in the city of New York, on or before the 10th day of November, 1876, the sum of sixteen thousand eight hundred and forty-eight and dollars, and shall also, on or before the 10th day.of December, 1876, give to the said E. & T. Fairbanks & Co., his promissory note payable October 1st, 1877, for’ the sum of fourteen thousand five hundred ninety-nine and dollars, and interest at 7 per cent., from October 1st, 1876. Then, in the event said Huletts’ and Cunninghams’ notes are not paid within thirty days, as before stated, the said E. & T. Fairbanks & Co. agree to deed, with good and valid title, said lands described in said contract, to said Nettleton, or his order, on condition that he secures to them, the said E. & T. Fairbanks & Co., the note herein described by mortgage on said lands, reserving the right to cut and remove not more than one-third of the pine timber from said land until said note and interest is .paid. Should said Huletts and Cunninghams pay the overdue note and interest within thirty days now given them by written notice, then, and in that case the said Fairbanks & Co. are to refund and deposit in said Importers’ and Traders’ National Bank, to the credit of the said Nettleton, or his order, all of said deposit made by him (except seventy-five and dollars, which is for the time and expenses of said Hall in this business), together with the interest on the same at 7 per cent., and upon such deposit being made, this agreement is to be returned free of expense to said Hall, and be null and void.
    “ D. P. Hall, for E. & T. Fairbanks & Co.
    “Charles F. Ruggles, for II. J. Nettleton.
    “Dated at Buffalo, Nov. 2, 1876.”
    Nettleton was the father-in-law of Albert Cunningham. Ruggles and Albert were visiting at his house, and while Nettleton and Ruggles were at the barn harnessing a team for Albert and Ruggles to use, Nettleton “told Mr. Ruggles that if the lands went back to the Fairbanks he might buy them for (him) me if he could buy them for $40,000 or less.” This occurred before Ruggles and Hall had met George Hulett. On November 3, Ruggles handed the Buffalo contract to Nettleton, at the home of the latter, and went awaju Nettleton showed the contract to Albert, who asked how much money he needed. Nettleton said he had $4,000, and Albert “ said he would go up to his father’s and see what they could do about raising it,” and returning, “said they had concluded to let me (Nettleton) have what money they had, and could get the rest at the Geneva Bank.” On November 4, 1876, Nettleton remitted to the Importers’ and Traders’ National Bank, New York, $16,848.64 to credit of “Fairbanks & Co.” 6f this sum the Cunninghams furnished $12,600. Half of it was by a transfer of .the $8,326.08, which Nettleton knew was on deposit to meet their half of the October payment to Fairbanks & Co. John Cunningham had borrowed the $12,600 from the bank at Geneva, Ohio, getting the $8,826.03 at the beginning of October, and the remainder on November-4. Nettleton gave his note to John and Albert for the $12,600, dated November 4, 1876, payable at any time within live years, with interest at ten per cent. On November 13, Hall (the agent of the Fairbanks) wrote to the Iluletts as follows:
    Linden, Yt., Nov. 13, 1876.

      Or. II. Hulett and Bro., TJnionville, Ohio :

    Gents : I have been informed from the Importers’ and Traders’ Bank, through Fairbanks & Co., that Mr. Cunningham has withdrawn his money from the bank. I write you that you can see him and make arrangements to meet the notes on or before the 2d day of December, in order to save your land. I thought it would be well for you to know it, and not be disappointed when the day comes.
    Yours truly, ' D. P. II.
    You will please let this be confidential between us.
    The Iluletts complied with Hall’s request to keep said information “confidential,” but asked John Cunningham (about November 18) what they (the Cunninghams and Ruggles) were going to do as to the payment required by December 2, and were told that they (the C.’s and R.) had paid it.
    ■ On December 2, 1876, during banking hours, George Hulett, having enough currency and drafts to pay either the whole (as he testified) or the half (as the defendants claim) of the required payment at said New York bank, said to the cashier “ that it was the last day on which payment could be made,” and asked “whether a remittance had been sent from Ohio to pay the note. The cashier informed him “that a remittance of $16,848.64 had been received by us (the bank) from Harvey J. Nettleton, for the credit of Fairbanks & Co.,” of New York, and the cashier suggested that he call 'on that firm. (It consisted of the vendors of the land and a Mr. Hatch.) Hulett called there, and Hatch told him that “ Messrs. E. & T. Fairbanks, or the First National Bank of St. Johnsbury, had received the money from another source for the amount of the note and interest, and that his (Hatch') impression was that the money was received from the Cunninghams.”
    There was yet time (after the talk with Hatch) to make payment at the bank, but as this information satisfied Hulett that the Cunninghams had paid the note, he made no payment. Later on the Huletts learned the facts about the Nettleton contract, and brought an action in Lake county common pleas against the Fairbanks, the Cunning-hams and Nettleton; having beforehand tendered to Nettle-ton the full sum paid by him to the Fairbanks, with the interest thereon .to the day of tender; and to the Fairbanks the balance due them under the original contract’; and asked a decree for a conveyance according to the contract of June 9, 1874, and other relief, all in due form. Their petition charged Nettleton and the Cunninghams with conspiring to effect and effecting a pretended forfeiture by fraudulent statements and acts, so as to acquire for their benefit the Huletts’ share of the land, aud added other averments that we need not notice. Nettleton’s answer denied all fraud, and claimed a fair purchase by him for his own use. John Cunningham, by answer, denied the averments affecting him, and averred due forfeiture of the contract and a valid purchase by Nettleton. Albert Cunningham did not answer. The Huletts’ reply denied all new matter in Nettleton’s answer. The answer of the Fairbanks claimed a valid forfeiture, but brought into court two deeds — one to Nettleton — the other to the original purchasers, and offered to deliver either as the court should order, upon payment of the balance due to them.
    A trial in the common pleas resulted in a decree for the plaintiffs. The defendant Nettleton appealed, and the district court made a decree in his favor. The Huletts ask a reversal of said decree, assigning for cause error in excluding evidence, and that the findings and judgment were not supported by the evidence and against the law.

      W. W. Boynton, A. L. Tinker and Alvord § Alvord, for plaintiffs in error.
    1. Forfeitures are never favored in law. There are no presumptions in favor of him who asserts a right or title bjr forfeiture. Smith v. Whitbeck, 13 Ohio St., 477; West et al. v. Ins. Co., 27 Ohio St., 13; Hartford Ins. Co. v. Walsh, 54 111., 164; Home Ins. Co. v. Pierce, 75 111., 426; Palmer v. Ford, 70 111., 369; Button v. Schroyer, 5 Wis., 598; Bogan v. Walker, 2 Finney (Wis.), 463; Clarke v. Brake, 3 Pinney, 228; Fay v. Lovejoy, 20 Wis., 424.
    2. Where a party seeks to work a forfeiture of a contract or an estate, whether it be created by will, deed, contract, or lease, for the non-performancé of a condition upon which it is held, or the non-payment of money due, there must be a demand for the performance of the condition or a demand for the payment of the precise sum due, or it will not cause a forfeiture of the estate. Smith v. Whitbeck, 13 Ohio St., 471; Benton v. White, 26 Wis., 679-685; Bradstreet v. Clark, 21 Pick., 384-396; 24 Wendell, 106; Sargeant Williams’ notes to 1 Saunders, 286, (note 16); 1 American Law Register, new series, 353 to 362; Lessee of Boyd v. Talbot, 12 Ohio Rep., 214; Carner v. Bradley and wife, 1 Howard (U. S.), 211, top paging, 574; Jackson v. Harrison, 17 Johnson, 66; Van Bensalaer v. Jewett, 2 Comstock, 141; 3 Wait’s Actions and Defenses, page 54; Boe v. Bavis, 7 East, 363; Jackson v. Kipp, 3 Wendell, 230; McCormick v. Cornell, 6 Serg. and Ravvle, 151; Prout v. Roly, 15 WaR lace, 471; Cage v. Bates, 40 California Rep., 384; Hosford v. Bullard, 39 N. Y., 147; People ex. rel. v. Dudley, 58 N. Y., 323; Woods’ Landlord and Tenant, 743-745, (note 2); Coke’s Littleton, 201; Taylor’s Landlord and Tenant, § 493, (note 6); Doe ex. dem., Wheeldon v. Paul, 3 Carrington & Payne, 613.
    4. When a forfeiture is the result of accident or mistake of -facts, especially when the mistake arises from false appearances created by the party seeking to avail hims.elf of the right of forfeiture, or 'in case a vendee is prevented from performing by the fault of the vendor, a court of . equity will excuse performance and will relieve against the forfeiture. Potter v. Tuttle, 22 Conn., 512; Pomeroy on Contracts, § 337; Snyder v. Spaulding, 57 111., 480, 487; Savage v. Bocksapp, 18 Vesey, 335; 2 Addison on Contracts, 1194, bottom paging, 798, Abbot’s Edition, 1883; United States v. Peck, 102 U. S., 64; Fleming v. Cillert, 3 Johnson’s Report, 527; Dearborn v. Cross, 7 Cowen, 48; 1 Wheaton on Contracts, § 312, 603 and 604; Pollock’s Principles of Contracts, 371; Pomeroy on Specific Performance, §§ 405 and 406; Fry on Spe. Per., § 740; Minert v. Eme-, rick, 6 Wis., 354; Kugler v. Wiseman, 20 Ohio', 361; Dowry v. Barelli, 21 Ohio St., 324; Henry v. Tupper, 29 Vermont, 358; Livingstone v. Tompkins, 4 Johns’ Chan., 431; Rolfe v. Harris, 2 Price, 207; Bracebridge v. Buckley, 2 Price, 200; 2 Strong Eq. Jur., § 1323; Borden v. Borden, 5 Mass., 67 ; navigation Co. v. Wilcox, 7 Jones (N. C.), 481; Jones y.-Walker, 13' B. Monroe, 163.

      Estep, Dickey f Squire, and Theo. Hall, for defendants in error.
    We may admit that the contract is strict, but claim that such contracts are common in the United States, and have, frequently been adjudicated upon. We claim that at law,. the time of. performance is a material part of a contract. ■ Non-performance at the very day, is always to be .held as a breach. There is no other rule applicable except the one-named in the contract. In equity the same rule applies» •where in the agreement the parties have contemplated that time would be material, and it influenced their action or interests. In the present case, the parties were not only looking'to the possibility of the non-performance according to the letter of the agreement, but they made an express agreement providing for that contingency; they did not leave the law to determine the consequence of a default, but made a law for themselves, on that subject, by an express provision in the body of their agreement. Instead of providing that the performance might be made at a future date, and compensation made in damages for the delay, the parties provided that in case of default in making payments,-Fairbanks might avoid the contract or elect to avoid it. Stenson v. Dawson, 20 Howard, 461; Ilansboro v. Peek, 5 Wall, 497; Ketchum, v. Diversion, 13 Johns., 358; Truesdell v. Ward, 24 Mich., 118; Miller v. Phillips, 31 Pa. St., 218; Wells v. Smith, 2 Edwards, ch. 78; Christman v. Miller, 21 111., 227; Campbell v. Sicks, 19 Ohio St., 433; 7 Ohio, pt. 2, p. 97; Curby v. Sarrison, 2 Ohio St., 326; 21 Wallace, 303; 11 How. Pr., 279; 43 Cal., 359; 22 Conn., 572; Pomeroy on Sp. Per., §§ 399, 401.
   Granger, C. J.

Many questions have been ably argued by counsel, but we think the application of well settled principles of equity to facts about which there is little or no conflict in the evidence, furnishes a plain solution of the case.

The Huletts and Cunninghams were partners in the venture in the Manistee land. They bought jointly for the purpose of jointly selling and dividing the profits. While there was no complete copartnership, the nature of their venture was such that they owed to each other and to the business the same obligations as partners in an ordinary firm. For convenience, I may occasionally use the words “firm” and “partnership,” in referring to them.

Notwithstanding some suspicions and differences, and the refusal of the Huletts to pay their half of the money due to the Fairbanks on October 1st, 1876, the Cunninghams in no manner notified tbe Pluletts of any purpose, by them, to terminate their said relations under the contract, or that they (the Cunninghams) would not, on or before December 2, 1876, pay their half of the sum required to prevent a forfeiture. If the Huletts were in fault in their complaints against Albert Cunningham and Ruggles, and in their refusal to pay their share of the October dues, the Cunninghams had a right to give notice that they refused to longer hold their contract relation towards -them, and would make no further payments on the contract, and to act accordingly.

But they did not so refuse. They gave no notice to the Huletts of any purpose to omit the payment of their share of the sum required to prevent the forfeiture. The relation of partners in the venture continued, and with it their obligation to make said payment if they had the means. Their money was actually on deposit at the place of payment; hence their ability was undoubted. Substantially the facts show two partners who secretly resolved to omit a payment that their contract (as between them and their copartners) bound them to make, and actively aided a third party to purchase the partnership property at a great loss to the partnership. In substance, their arrangement .with Nettle-ton was an agreement by them to so act, as to force a forfeiture of the joint interest in the Manistee lands, and to place in his hands the money that it was their duty to pay upon the joint debt, so that with it he could buy the lands comprising their joint venture without any consideration paid to or for the partnership. Plainly, such action by the Cunninghams was a fraud upon the Huletts. If the declarations of John Cunningham were in evidence it would seem that he represented to the Huletts, first, that the money would be paid, and afterwards that it had been paid. But we arrive at our conclusions without treating these declarations as evidence against Nettleton, and leaving their admissibility undetermined.

Nettleton knew the terms of the contract of June-9, 1874; the' partnership relation of the parties, and that the money loaned to him by the Cunninghams was in the New York bank for the purpose of paying the Cunninghams’ share of the sum due. He of course knew that by lending it to him the Cunninghams joined him in an effort to force the forfeiture. We think there can be no doubt that he was, in effect, conspiring with the two Cunninghams to defraud their associates in the venture. Whether he was to enjoy all the fruit of the fraud, or to share it with them, is immaterial. Equity will not permit him to hold the fruit against the defrauded parties. As against him the Huletts are entitled to a decree restoring their lands upon payment of the unpaid purchase money and interest.

It remains to consider the case as against the Messrs. Fairbanks. Under the contract they had a right to enforce a forfeiture in ease of a default. On November 2, 1876, by their agent Hall, they served the notice under which, unless the sum due should be paid on or before December 2,1876, the purchasers’ rights in the land would end. Several matters are urged against the validity of the forfeiture, but we will notice only one. Hall, the agent, on Nove’mber 2, was told by Hulett that he intended to pay in time to prevent a forfeiture; that he wished to induce the Cunninghams and Ruggles to make the payment, but if they did not he and his brother would. Having fully informed Hall as to his plans, he asked him, in case of any new move or change, to inform him of it. This Hall promised to do.

Knowing that the Huletts hoped to cause the Cunning ■ hams and Ruggles to pay $16,848.64 at the Importers and Traders Bank, in New York city, to the credit of the Fairbanks, on the October note, &e., Hall secretly so arranged that precisely that sum was paid at said bank to the credit of said Fairbanks early in November. Instead of reporting this to Hulett, he wrote the letter of November 18, stating only that the money was withdrawn, and requesting Hulett to treat the intelligence as confidential. When Hulett called at the bank the cashier told him that $16,848.64 had been remitted by Nettleton and credited to the Fairbanks on November 10, 1876, and referred him to the New York firm of “Fairbanks & Co.” for full information, Hulett followed up the reference, and was told by Hatch that “ the Messrs. E. & T. Fairbanks & Co., or the First National Bank of St. Johnsbury, had received the money from another source for the amount of the note aqd interest.” Hatch added, that it was his impression that the money was received from the Cunninghams.

Being wholly ignorant of the Nettleton contract Hulett naturally believed that the note had been paid through the Cunninghams, as he desired, and he therefore did not pay it.

The cashier represented the Fairbanks. As he referred Hulett to the firm of which Hatch was a member, the information given by Hatch was, in effect, given by the cashier. As Hall knew Hulett’s plans and had full re§son to expect such inquiry by Hulett at the bank, these occurrences may have been anticipated by him. They were the work of Hall and the cashier, each of whom represented the Messrs. Fairbanks. Through them erroneous information on a material matter was given to Hulett. Because of it, he made no payment. Recognizing their contract right to enforce a forfeiture in a proper case, a court having equity powers should not hesitate to relieve against it where they so contributed to occasion the default.

Judgment of the district court reversed, and decree for plaintiffs.


source: Caselaw Access Project

author: By the Court.

license: Public Domain

text:
    Upington v. May.
    Ekbob to the District Court of Summit County.

      Green Robinson, and N. I). Tibbals, for plaintiff in error.

      Kohler $ Sadler, and U. L. Marvin, for defendant in error.
   By the Court.

At the January term, 1878, of the court of common pleas of Summit county, there was pending therein the case of Eleanor G. May v. J. H. Kramer and Philip Upington. It was founded upon a promissory note of which Kramer was maker, and to which Upington had attached his name as surety. A motion to the petition had been filed by an attorney who purported to represent both defendants, but who, in fact, had no authority to represent Upington. -.The motion was argued at the January term. Thereupon the attorneys of Kramer, purporting also to represent Upington, entered into an agreement with May’s attorney by which it was agreed that judgment might at once be taken, and the issue of execution stayed until May 1,1878. This arrangement was carried out.

. 'Vjjas this such an extension of time as discharged Upington, the surety? We think not. May had not obtained a judgment, and it does not appear that she could have obtained one, without this agreement, prior to May 1, 1878. It does not, therefore, affirmatively appear that an extension of time was given.

Judgment of district court affirmed.


author: Granger, C. J.

text:
    Cook v. Courtright.
    1. Under the act of May 4, 1S69 (66 Ohio L., 91), a promissory note stipulating for the payment of the principal at a future time “ with interest thereon at eight per centum per annum, payable semi-annually until paid,” is not usurious.
    2. The semi-annual interest bears interest at six per cent, per annum from the day it became due until paid, but forms no part of the interest ■ stipulated for “upon the amount of such note.”
    Error to the District .Court o.f Richland County.

      Jenner Tracy, for plaintiffs in error.

      Carpenter f Davis, for defendant in error.
   Granger, C. J.

Clarissa M. Courtright sued in Rich-land common pleas upon a note reading as fellows:

“$8,000.
“ One year after date we, or either of us, promise to pay Clarissa M. Courtright or order, eight thousand dollars, with interest from March 1st, 1871, at eight per cent, per annum, payable semi-annually on the 1st day of September aud March each, until paid for value received. March 20, 1871. “ Henry Cook,
“Cyrus W. Cook.”

And also upon a mortgage securing the same. The Cooks by answer averred that the note was by its terms usurious, and was written by the plaintiff to evade the usury laws of the state; that the3r had paid on said note the entire principal, and interest thereon at six per cent, payable annually, and therefore owed the plaintiff nothing. She demurred to this defence. The common pleas overruled her demurrer, and the case proceeded to a final judgment dismissing the action at her costs. On her petition in error, the district court held her demurrer good, reversed the judgment and remanded the cause. The Cooks here ask a reversal of the judgment rendered b3r the district court.

Was the note-usurious? The act of May 4, 1869 (66 Ohio L., 91), was in force when it was delivered. The' first section reads thus: “ That the parties to any * * * promissory note * * * for the forbearance or payment of mone3T at any future time, may stipulate therein for the pa3rment of interest upon the amount of such * * * note * * * at any rate not exceeding eight per centum per annum, payable annually.”

If the words “pa3',able annually” were absent, the meaning would be plain. Being present, what is their effect?

Did the' legislature intend that no contract for a rate greater than six per cent, should be legal unless it contained a stipulation that -the interest should be pa3rable annually? Strict^’ speaking, no such stipulation could apply to any obligations other than those payable in two, or more, years. The mass of the notes in use were then, as they now are, payable after so many days or months. To place the words “payable annually” in notes payable in thirty, sixty or ninety days, or in three, six or nine months, would postpone the right to collect the interest beyond the day fixed for payment of the principal. A like result would follow as to all notes running longer than one year if made payable within the last year of their term. Such a construction seems so unreasonable that we decline to adopt it.

But to hold the words applicable only to notes having more than one year to run would involve another difficulty. While it would erase them from the statute, so far as concerns the most numerous classes of interest bearing contracts, it would furnish a guide for all lenders to escape their effect. After a decision that these words do not apply to contracts for, less than one year, all notes to bear interest at a greater rate than six per cent, would be so written as to mature in less time than one year. Six months notes at eight per cent, per annum would be used. Although collectible after six months, the parties, on payment of the interest, could extend them, either by express contracts for successive half years, or by sufferance. In holding that the first section of the act of 1869 does not require, in all contracts under it, a stipulation that the interest must be “payable annually,” we follow Marietta Iron Works v. Lottimer, 25 Ohio St., 621.

Do the words “payable annually” form part of a phrase intended to guide the contracting parties in computing the legal rate on contracts made under the first section of this act? If so, such rates as 7.8887, 7.8888, 7.8889, 7.8899, would become common. Only skilled mathematicians could determine with precision the proper figures for the decimal part of the rate. Instead of a single rata per annum applicable to all contracts, there would fee different rates <per annum for notes at thirty, sixty and ninety days; or for three, six and nine months. It is improbable that the legislature contemplated any such rates: any differences in the rate based upon the running time of the principal.

Moreover, the section provides that the interest that may be “ stipulated ” for .may be “ at a rate not exceeding eight per centum per annum upon the amount of such note.” The words “ amount of such note ” refer to the sum loaned, the original principal. Under a contract to pay eight per centum per annum, payable semi-annually, upon a given principal, the interest to be paid, upon that principal, is precisely the same as under a ’ contract to pay “ eight per centum per annum payable annually,” upon the same principal. If the installment of interest falling due at the end of six months should not be paid, and the law would permit interest to run upon it at six per cent, until paid, no part of that six per cent, interest would be interest upon the principal named in the note. And such interest upon interest, if collectible, would not form any part of the interest “ stipulated for.” If collectible at all it would be because of the other sections of the same statute.

The third section applies to “ all cases other than those provided for in the first and second sections of this act.” The first section we have quoted in full. The second applies to judgments, decrees and orders rendered upon any contract made under the first section. As the first section relates only to contracts for interest upon the principal, a suit for interest upon overdue interest may be considered a case “other than” those provided for by said section, and is therefore collectible under said third section. And, if separately sued for, the judgment obtained would draw interest under the fourth section.

But whether collectible, or not, such interest on interest clearly formed no part of the interest “ stipulated for,” and no part of the interest “upon the amount of such note.”

It is difficult to determine with a satisfied mind what the writer of this act intended by the words “payable annually.” Perhaps his idea was that no interest should be paid until it was earned by actual use of the principal on which it was to be computed, and he used the words “ payable annually ” in the sense of “ payable during the year.” Perhaps he thought to forbid agreements for the actual payment of interest only at the end of the 37ear, swelled to a sum in excess of eight per centum per annum, by stipulations in the note making the interest upon the principal payable quarterly, semi-annually and the like, accompanied b3' express stipulations for interest upon each installment of interest from the day of its maturity; and relied upon a belief that the phraseology of the third section would not give statutory authority, for collecting such interest upon interest.

If we should deem either of these, conjectures sufficiently plausible to justify a construction of the statute in accordance with it, the note before us is not usurious, because it does not “ stipulate ” for interest upon overdue interest during any part of the year, and the interest was made payable as earned. The Revised Statutes having substantially adopted its provisions, we may say that this law has been in force almost fifteen years. As soon as its passage was known, the people understood it as a substantial re-enactment of the law of 1850, with the rate at eight instead of ten per cent. They have given it a practical construction, and based their transactions upon it.

If it were clear that their construction is wrong in any point affecting the note before us, it would be our duty to so pronounce, and to decide the true meaning. A careful consideration has satisfied us that no other construction that has been suggested by counsel, or that has occurred to us, applicable to this note, is less doubtful than the practical one adopted by the business community. Instances of the presence in a statute of words to which effect cannot be given have occurred heretofore. Some of us are inclined to look upon this as an instance of the kind. However that may be, we hold that the note before us is not usurious.

Judgment affirmed.


author: By the Coubt.

text:
    Village of Shelby v. Boenau.
    Eeboe to the District- Court of Richland County.

      T. H. Wiggins, for plaintiff in error.

      ■Sidles Sidles, for defendant in error.
   By the Coubt.

B., after conviction and sentence under a village ordinance, duly filed a petition in error in the common pleas. That court reversed the judgment of the mayor. The village carried the ease on error to the district court, which held that it had no jurisdiction, and dismissed the ease.

Ji"eld: Where a defendant in a criminal action, institutes proceedings in error and obtains, in a court above the trial court, a judgment of reversal, the prosecutor may properly seek, in a still higher court, a reversal of that judgment.

Although the district court erred in holding that it did not have jurisdiction of the case, an inspection of the record shows that the judgment of the court of common pleas was right. The effect of the judgment now complained of being an affirmance of the common pleas, we decline to reverse it.

Judgment of the common pleas court affirmed.


author: Mabtin, J.

text:
    Sparrow v. Hosack.
    The owner of land incumbered by a judgment lien may recover from the judgment creditor an excess over the balance due on the judgment, received by the latter on a sale under a vendi; notwithstanding the judgment creditor was the purchaser and the owner was not a party to the judgment.
    Eebob to the District Court, of Franklin County.

      On. May 1st, 1868, certain land in Delaware county belonging to one Polly Adams, was levied on to satisfy execution issued on a judgment for $1,557 and costs, rendered in the preceding month in the Franklin common pleas against her and others" and in favor of one Jaeger. Soon after the levy, the sum of $816.61 and costs was made and paid on the judgment, and the fact stated on the court journal.
    Sparrow became owner of the judgment, with full knowledge of the payment made and the balance due. Hosack by deed of general warranty became owner of the land, holding under Polly through intermediate conveyances with usual covenants of warranty. A vendi was issued for .the sale of the land to satisfy the judgment to its full original amount; no credit for or mention of the payment having been entered thereon. .
    The land was struck off to Sparrow for $1,468, who paid the sheriff the costs only, (amounting to $81.07); and the sale was confirmed in January, 1870, and deed delivered. The amount actually due from Sparrow on account of the purchase was $616.45, after deducting from his bid the balance due on the judgment with accrued costs. In his petition counting on the above facts, Hosack, who was plaintiff below, claimed that the above sum was had and received by Sparrow for the use of the plaintiff.
    The administrators of Sparrow demurred to'the petition. The common pleas sustained the demurrer and gave judgment for the defendants. The district court reversed the judgment. To reverse this judgment of reversal is the object of the present proceeding.

      F. L. S. O. Taylor and John B. Burnett, for plaintiff in error.
    The demurrer to the second amended petition should have been sustained on two distinct grounds.

      First. — It does not show that the plaintiff, Hosack, paid any thing on his contract of purchase, or that he ever agreed to pay any thing, or that he is entitled to recover from Sparrow or any one else. It is stated that on January 5th, 1870, J. B. Foss conveyed to Hosack, but it is not claimed that it was for a consideration. If he has paid nothing, he is entitled to recover nothing, and that he has paid nothing will be assumed from his failure to aver it.
    This assumption is sustained by what is averred as well as ' by what is not. See 15 Ohio St., 514.
    If Polly Ann Adams sold subject to the entire judgment lien, of which there seems to be no doubt and no averment to the contrary, then she was entitled to the amount which the makers of the note had paid. And in the absence of any order of the court, the sheriff pays to the plaintiff in execution, and after satisfying his judgment then the.statute directs him to pay the balance to the judgment debtor, which in this ease was Polly Adams. S. & C., 1080; Rev. Statutes, § 5408.

      Second. — There *is no privity of contract between Hosack and Thomas Sparrow, who purchased at sheriff’s sale.
    The sheriff was and is entitled to the purchase ihoney, and in contemplation of law it was in his hands subject to the order of the court, hie having returned the sale of the property.
    If the purchase money was not in fact paid to the sheriff, he is the party, and the only party to sue, and all other persons interested can look to him, and can enforce their claims by proceedings against him. Hosack was not a party to the sale or to the proceedings which resulted in thé sale. He is an entire stranger to the whole record. He took a conveyance while the property was advertised for sale to satisfy the judgment and levy, and only a few days before the day of sale, and is chargeable with knowledge of the lien thereon. His remedy, if he has any, is on his vendors’ covenants, and it is plain, adequate and complete.

    Under no circumstances can Hosack maintain an action against Sparrow’s administrators. If they, are liable at all it is to the sheriff only. 5 Yerger (Miss.) 66 ; 21 Barb., 17;' 11 Minn., 220; 4 Watts, 160; 29 Ohio St., 534, 535.
    In many, if-not" in all the cases cited by counsel for' defendant in error, there was an implied promise to pay. In the case at bar there was no implied promise, or any promise, on the part of Sparrow to pay Hosack.
    Sparrow made an express promise to pay the sheriff; and where there is an express promise to pay one person, there can be no implied promise to pay some one else. His only contract was with the sheriff, and this express contract the sheriff can enforce, even if Sparrow had paid the money to Hosack. Most of the eases cited by counsel for defendant are the common well settled cases, under the common law pleadings, where there was an actual receipt of money by one person which belonged to another.
    Under our code the common count for money had and received, can only be sustained by proof, that money has been actually received, by one, for the use of another. Swan’s Pleading and Practice, 178; Chitty on Con., 602.

      Charles JE. Burr, for defendant in error.
    The theory upon which plaintiff below instituted this action, and which he still believes to be correct is this, viz., that upon the facts stated, an action at law will lie against Sparrow, who by his fraud upon the officers obtained the surplus, to recover back the excess as for money had and received to Hosack’s use.
    By the assignment of the judgment, Sparrow took the place of the judgment creditor. He owned and controlled the judgment. It is true he also became the purchaser of the land, but no confusion ought to be allowed to enter the mind because he occupied this double position. Counsel on the other side assume that this suit is brought against Sparrow because he purchased the land. Not so. Such an assumption is a fatal mistake. Suppose a stranger had purchased the land, and paid the purchase money to the sheriff, and the sheriff had paid the whole to Sparrow, would we then have sued the purchaser ? Certainly not. No possible ground of action would have existed against him. Having paid the' full amount of the purchase money to the officer entitled to receive it, he discharged his whole duty. But in such case we.would have sued Sparrow just the same as we have done now. We sue him not as purchaser of the land, but as owner of the judgment, who as such owner, by an abuse of the process of the court, collected on his judgment money which had already been paid. The fact that Sparrow purchased the land cannot surely relieve him from any responsibility which he has incurred as judgment creditor in the collection of his debt. Counsel on the other side are entirely correct in saying that in contemplation of law, Sparrow actually paid the money to the sheriff. Up to that point we make no complaint. But when Sparrow, as judgment creditor, took from the sheriff the whole $1,468, knowing that $616 of it did not belong to him, but did belong to Hosaek, we think his responsibility commenced.
    See 3 Blackstone’s Com., 163; Mason v. Waite, 17 Mass., 558; Mall v. Marston, 17 Id., 579; 5 Ohio, 267; 45 Barb., 69; Anderson v. Grage, Dudley (S. C.), 319; 4 Dana, 70; 38 Cal., 372; 41 N. Y., 303; 15 Wend., 321; 5 Cowen, 488.
    Instead of Mrs. Adams being entitled to the surplus, after satisfying the judgment, she had parted with that right by the successive conveyances of the property levied upon from her to Hosaek. Freeman on Executions, 447; Herman on'Executions, 279.; Bitting f Waterman’s Appeal, 17 Pa., 211; JEvery v. Mdgerton, 7 Wend., 259.
    But has Hosaek a right of action against the sheriff? If so, on what ground? The writ was regular on its face. It issued from a court having jurisdiction. ■ The sheriff hut obeyed his writ. In such case no action lies'against the officer. Swan’s Treatise, (11th ed.), p. 501; Taylor v. Alexander, 6 Ohio, 145.
   Mabtin, J.

It must be conceded that Sparrow incurred an obligation to pay some one the excess of his bid over the amount due on his judgment. Good faith required that he pay it according to his contract to the sheriff before receiving his deed. Clearly, he paid the amount due on his judgment by the satisfaction thereof wrought in taking title as stated. This was done rightly and according to the common course in such cases. He cannot be permitted to take advantage of his own wrong in appropriating the excess to his own use and say that thereby he received from the sheriff no equivalent for money. He would doubtless have been required to pay the sum in dispute if he had truly disclosed the amount of his judgment. Instead of this, he collected more than was due him. Hosack had the right before the sale to pay off the judgment, and thus lawfully and properly retain the amount involved in this suit. And then he would have had his action for reimbursement on the covenant in his deed. Sparrow occupied a double relation. As purchaser he was bound to pay the full amount of his bid, and if he had been such merely he could not have practiced this fraud. As judgment creditor he was bound to pay only the costs, if his judgment equalled or exceeded his bid; and only because he was such creditor he was enabled to and did deceive the sheriff.

' The vendi was a means to an end. Its sole object was to provide payment of the judgment. It commanded the sheriff to make the original amount in full. And the actual transaction operated a collection to the full value of the land and the payment of the same, less costs, over to the creditor.

It was as effectually and precisely done as if Sparrow the purchaser had counted down the amount of his bid en the day of sale, and the sheriff on confirmation had counted back the same less costs to Sparrow the creditor.

In legal effect this was done; and in the transaction the sheriff followed his writ, and for aught shown in this record, is protected in so doing. It follows that Sparrow is liable to the extent of the excess as for money had and received for the use of the party entitled to it.

Is Hosack that party ? If his claim were to collect unpaid purchase money it could not be sustained. The sheriff and the purchaser are the only parties to the sale; and as a general rule such action must be prosecuted in the name of the sheriff or in his right. But as we have seen, this action is not for purchase money, but to recover money made on execution to the extent that it had been previously paid.

It is contended, however, that Hosack may not have paid a valuable consideration for the land, and further that there is no privity between him and Sparrow.

It is admitted that Hosack was owner in fee subject to a lien for the balance due on the judgment. He could not have complained, against Sparrow, of a sale to satisfy the lien. In the event of such sale he would have had his action on the covenant in the deeds. And his^land being merely a security, he would in equity have been entitled to exoneration from the judgment debtors — the principals. It is difficult to see on what theory Polly Adams is interested in the fund in controversy — she did not pay it or any part of it directly or indirectly; nor is she injured or subjected to liability in consequence of its payment. It was made exclusively out of the property of Hosack, and in equity belonged to him. True, there is no privity of contract between him and Sparrow. Nor is it essential there should be in order to maintain assumpsit.

Counsel argue, and perhaps rightly as a general rule, that under the code system the old count for money had and received can be employed only where money has been actually received by a defendant for plaintiff’s use. This may be.granted, and the allegation of the petition that the sum was had and received by Sparrow for the use of the plaintiff be rejected as a statement of a mere legal conclusion. Nevertheless a perfect statement of a cause of action remains. Not the common count for money had and received, but a recital of facts which conclusively shows that Sparrow received the equivalent of money for which in justice and honesty he should have accounted to Hosack.

It results that the demurrer was not well taken, and that the district court was right in so holding.

Judgment affirmed.


author: Dickman, J.

text:
    Insurance Company v. Carpenter.
    A Mutual Life Insurance Company loaned to B. tlie sum of $12,000, for which B. made his note payable in three years, with interest at the rate of eight per cent, per annum, payable annually in advance. The company retained out of the amount of the loan the sum of $960, as the interest thereon for the first year in advance, and at the same time took from B. his two notes for $960 each, payable respectively in one and two years after date, for the interest on said loan for the second and third years thereof respectively. Said interest notes were paid at maturity, at the beginning of said second and third years respectively.

      Held: That under the act of May 4, 1869 (66 Ohio L., 91), the above transaction was usurious.
    Error to the District Court of Athens County.
    The original action was brought in the court of common pleas of Athens county, by Frank J. Carpenter against Peter W. Boyles and others, to foreclose a mortgage on real estate executed by Boyles to Carpenter. On the 20th day of September, 1875, Boyles obtained from the Penn Mutual Insurance Company, the plaintiff in error, a loan of §12,000, and made to the company his three several promissory notes of that date, the first for §12,000, payable in three years after date, the second for §960, payable in one year after date, and the third for §960, payable in two years after date. To secure the payment of said three notes, Boyles executed to the company a mortgage on the real estate mortgaged to Carpenter. By the terms of said loan, Boyles'agreed to pay said company interest thereon at the rate of eight per cent, per annum, payable each year in advance. In pursuance of said agreement, the company retained out of said §12,000, the sum of §960, as the interest thereon for the first year in advance. The notes for §960 each, were given for the interest on said loan for the second and third years respectively, and were paid at maturity, at the beginning of said second and third years respectively.

      The plaintiff in error, as mortgagee of said Peter W. Boyles, and by way of answer and cross petition, set up its mortgage and prayed judgment of foreclosure, etc.
    The error complained of is the conclusions of law upon the facts found by the court, and'is contained in the following portion of the decree in the case entered in the court of common pleas, viz.: “ 3. The court further finds as to the plea of usury interposed by the first paragraph of the reply and answer of said Carpenter & Johnson, and the reply of the company thereto, that on the 20th September, 1875, the said company loaned to the said Peter W. Boyles the sum of $12,000, for which the said Boyles made his note payable In three years, with interest at the rate of eight per cent, per annum, payable annually in advance, and secured the same by mortgage; and that in pursuance of said agreement to pay said rate of eight per cent, interest annually in advance, the said company reserved out of the amount of said loan of $12,000 the sum of $960 as the interest for one year in advance, and at the beginning of the second year the said Boyles paid the said company the sum of $960 as the interest for said loan for the second year, and at the beginning of the third year the said Boyles paid to the said company the sum of $960 as the interest on said loan for the third year; and that no further payments either of interest or principal have been made on the said loan; and as its conclusions of the law upon the above found facts, the court finds: that there was usury in said loan, and that there is due from the said Peter W. Boyles to the said Penn Mutual Life Insurance. Company the sum of $10,426.94. with interest thereon at six per cent, from the 20th day of September, 1877, to the first day of this term, amounting in all, principal and interest, to the sum of $11,921.31. To which ruling and judgment of the court the said Penn Mutual Life Insurance Company excepts, and claims that there is due to it from the said Peter W. Boyles the sum of $12,000, with interest thereon at • the rate of eight per cent, per annum from the 20th,September, 1878, to the first day of this term, amounting in all, principal and interest, to the sum of $18,330.65, and prays judgment in its favor against the said Peter W. Boyles for that amount, which claim and prayer the court overrules, and to which ruling the said company excepts.”
    The district court affirmed the judgment of the court of common pleas, and the action comes into this court upon petition in error to reverse the judgment of the district court.

      C. B. Robertson and Brown Brown, for plaintiff in error.
    We claim that this statute fixes only the rate of interest, and that it does not fix the time of payment, and, therefore that a contract may be made for the payment of eight per centum per annum, payable annually in advance. Marietta Iron Works v. Lottimer; 25 Ohio S't., 621; 25 Ohio St., 384; 28 Ohio St., 265; 4 Cincinnati Law Bulletin, 196; 5 Id., 348; Mowry v. Bishop, 5 Paige, 98; 1 Wallace, 385; 12 Pick., 589; 4 Scammon, 21.
    Discounting a note at seven per cent, and taking the interest in advance, is not usury, either in bankers or in others. New Yorlc Fireman Insurance Co. v. iSturges, 2 Cowen, 664.
    The taking of interest in advance, or discounting a note by a company not possessing banking powers, does not render the note usurious. Utica Ins. Co. v. Bloodgood, 4 Wend., 652.
    A private individual discounts commercial paper and deducts the interest at the time of the discount; this is not usury. Parker v. Cousins, 2 Grattan, 372.
    Interest may be deducted in advance by an individual. Hawks v. Weaver, 46 Barbour, 166.
    To the same effect, see Q-oodrich v. Reynolds, 31 111., 490; Bank of Utica v. Wager, 2 Cowen, 712; Bank of Utica v. Phillips, 3 Wend., 408; Bank v. Osgood, lo Johns., 162.

      John Welch, for defendant in error.

      Every state is governed by its own statutes of usury. Authorities outside of the state, therefore, amount to very little, especially in cases where the statutes annex a penalty or forfeiture — which our statute does not — and where consequently the construction of the statutes is more strict. Admittedly, no case can be found in Ohio where the payment of the full legal rate of interest before it accrues or is earned, has been held lawful, unless in cases where such pre-payment is expressly authorized by statute. The legislative intent is sufficiently shown by the fact that in repeated instances, as in the case of banks and other corporations, express authority is given by our statutes to take or reserve interest “ in advance.” The implication arising from this is as strong and unmistakable as a positive provision, that the full rate of interest shall not be taken in advance without an express provision to that effect. Such has been our uniform course of legislation, and our practice ever since we were a state; and so well has this been understood by the people of the state, that I believe no adjudicated case can be found where an attempt has been made to sustain a taking of such interest in advance, except where it has been so expressly authorized. The right to do so has been claimed and exercised exclusively by banking institutions, or those doing a banking or discount business. It is not pretended that any of the Ohio cases cited sustain the position of plaintiff’s counsel. The cases cited simply decide that parties may stipulate for the legal rate of interest payable at periods of less than a year — that is, for the payment of interest which had accrued up to the time of payment — but not for the payment of interest to' accrue thereafter. The word “payment,” indeed, would be misapplied in such a case, for it would be an “ advancement,” a retention, or rather a “loan.” Accordingly, in Miami Exp. Oo. v. BanJc of U. iS., 5 Ohio 260, it was held that money paid on a debt before it is due stops interest on the amount paid.
    The case at bar was not a banking transaction, or in the nature of a banking transaction. It was not “a dealing in commercial paper by way of trade.” It was an investment
      —a loan for three years, secured by mortgage. No case can be found, either in England or America, where interest in advance has been allowed to be taken in such a ease, without a statute to that effect. Mr. Robertson cites no such case. The single case cited by him from Illinois (4 Scammon, 21), is no exception, because that state has a statute (Stats. Comp. 1858, Vol. 1, p. 601), by which “ discounting ” is declared not to be usury.
   Dickman, J.

The only question involved in this case is, whether under the act of May 4,1869 (66 Ohio Laws, 91), interest at the rate of eight per cent, per annum is usurious where contracted for and paid and received annually in advance. It is provided in Section I. of the act:

“ That the parties to any bond, bill, promissory note or other instrument of writing, for the forbearance or payment of money at any future time, may stipulate therein for the payment of interest on the amount of such bond, bill, note or other instrument of writing, at any rate not exceeding eight per centum per annum, payable annually.”

It is contended by the learned counsel for the plaintiff in error, that the statute fixes the rate of interest and not the time of payment, and that as a contract to pay the rate semi-annually is not usurious, there is no principle that would prevent the contract from providing for the payment of the rate semi-annually or annually in advance. This means neither more nor less, than that the borrower may be bound to pay interest at a stipulated rate of eight per cent, per annum upon money of which he has never had the usé, and yet the contract be free from usury. Interest for money is the reward or compensation which is paid by the borrower to the lender, or by the debtor to the creditor, for its use. If it is paid in advance or deducted at the time of thevloan, the principal, of which the borrower is to have the use, is reduced fro tanto, and the lender should not be compensated for the use of money which in fact he has not loaned. B, for illustration, borrows 'and gives his note for $12,000, payable in one year after date, with interest at the rate of eight per cent, per annum, and thé interest is deducted in advance. He receives only $11,040, which he uses for one year; but, as compensation therefor, pays the stipulated rate of interest on twelve thousand dollars. By computation it will be seen that he has paid interest at the rate of eight and sixty-eight one-hündredths per cent, on the amount which he has actually received. He has lost the use of the $960 held back by the lender, which he would have had, if the interest had been payable only after it had accrued or been earned. His payment of interest on the sum so deducted is without consideration, and solely for the benefit of the lender. A construction of the language of the statute as applicable to the rate of interest only, and not to the time of payment, which will permit the-payment of interest at periods shorter than the time a note has to run, furnishes, in our view, no reasonable ground for the advancement of interest before it accrues or is earned.

“The ordinary way of discounting notes and bills, by taking the interest in advance out of the sum paid, is undoubtedly usurious, in the strict sense of ,the word. For the lender receives interest on the whole for the use of but a part.” 2 Parsons on Notes and Bills, 4-21.

In Ohio, express statutory authority has been given in many instances to banks and other corporations to reserve interest in advance. But the fact that such authority has been expressly granted by statute, furnishes the strongest implication that it is denied to all others. Under the act to authorize free banking, there is granted to every company formed under the act the power “ to loan money, buy, sell, and discount bills of exchange, notes, and all other written evidences of debt,”. etc. To .discount paper, as understood in the business of banking, is only a mode of loaning money with the right of taking the interest allowed by law in advance. Niagara County Bank v. Baker et al., 15 Ohio St., 68. This right, we think, has been limited in Ohio to banking institutions, or those doing banking or discount business.

And, not only in our own state, but in other states where the reservation of interest in advance is permitted, it is mostly in cases of commercial paper discounted on short time by banks or parties doing a banking business, and not the same as cases of investment and loan secured by mortgage. Savage, Ch. J., in the Bank of Utica v. Wager (2 Cowen, 769), says“ This privilege of deducting the interest by way of discount, i apprehend, is confined to bankers, and those who deal in bills of exchange or promissory notes, by the way of trade.” The loans by banking institutions being for short periods, and the difference between discount and interest being in consequence so inconsiderable, it is not unreasonable that the legislature should discriminate between private lenders and banks and those who deal in commercial paper by way of trade. It is quite obvious, that unless the practice of deducting interest in advance is limited to short loans as by bank discounts, the usury will become greater in proportion as the period for which the usury is taken becomes longer. Thus, in a loan of one thousand dollars for twelve and a half years, at eight per cent, per annum paid in advance, the principal will be exhausted in the interest deducted, and the borrower will receive nothing.

Ea¡ch state has its own usury laws, and in the construction of our own statutes, we can derive but little assistance by resorting to the adjudications of other states. .Moreover, state statutes which provide penalties for usury, and are therefore strictly construed in favor of the honest lender, will not furnish safe analogies for guidance in construing and applying our own statutes, which enforce no severer rule as to payments of usurious interest, than to treat the excess of interest above the rate allowed by law as payments made on account of the principal.

In the case at bar, Boyles, on the 20th day of September, 1875, executed and delivered to the Penn Mutual Life Insurance Company — the plaintiff in error — his three several promissory notes of that date; the first for twelve thousand dollars secured by mortgage on real estate, and payable three years after date; the second for nine hundred and sixty dollars payable to the company in one year after date; and the third for nine hundred and sixty dollars payable to the company in two years after the date thereof. It is beyond dispute, that the note for $12,000 was given for a loan made to Boyles by the company on the 20th of September, 1875 ; that by the terms of 'the loan, Boyles agreed to pay the company thereon, eight per cent, interest per annum, payable each year in advance; that in pursuance of such agreement, the company retained out of the $12,000 the sum of $960, as the interest thereon for the first year, and paid over to Boyles at the date of the loan only $11,040; that the notes for $960 each were for the interest on the loan for the second and third jrears thereof respectively; and that such interest notes were paid at maturity, at the beginning of the second and third years respectively.

In recognition of well-established principles, we are of the opinion that the aforegoing transaction was usurious. The company should, therefore, be remitted to the legal rate of six per cent, interest upon the amount actually loaned to and received by Boyles; and should credit as payment upon the principal, all excess of interest above that rate paid at any time since the date of the notes.

The judgments of the district court and court of common pleas should be affirmed.

Judgment accordingly.


author: Nash, J.

text:
    Bramble v. Ward.
    1. If, after time lias been given to the principal by the creditor, the surety, with full knowledge of all the facts, promises to pay the note, if the principal does not, he is liable, without any new consideration for the promise.
    2. When the answer of a surety sets up that an extension of time was given to the principal, without the consent of the surety, he must make this appear by a preponderance of evidence.
    3. When the creditor admits that the extension was without the knowledge or consent of the surety, and relies upon a subsequent promise of the surety to pay if the principal docs not, the burden of proof is . . .upon the creditor.

      Error to the District Court of Hamilton County.
    On the 19th of October, 1871, A. P. and A. L. Bramble executed and delivered to J. C. Ward their promissory note due twelve months after date. A. L. Bramble was, in fact, surety for his son, A. F. Bramble, and this was known to Ward. October 19, 1872, time of payment was extended by Ward, upon payment of interest, for one year. October 19, 1878, and October 19, 1874, like extensions were again given.
    In an action founded upon this note, Deborah Bramble, as the executrix of the will of A. L. Bramble,' deceased, (February 27, 1875), answered, and among other defenses, set up that the extensions of time were made by Ward without the knowledge or consent of A. L. Bramble, the surety. The reply denied all the allegations of the answer. The evidence tended to show, that after the extensions there was a promise by A. L. Bramble to pay the note if A. F. Bramble did not.

      Alfred Tapie, for plaintiff in error.
    After the guarantor of a note is discharged by the laches of the holder, a new promise on his part will not bind him, unless there is also a new consideration. Van Berveer v. Wright, 6 Barb., 547; Bayley on Sureties and Guarantors, 291, § 29.

      Cox f Cox, for defendant in error.
    The defense by a surety, that an extension of time to the principal without his knowledge or consent, must be proved. The burden of proof is on the surety. Schmidt v. Cordes, 2 Superior Ct. Rep., 295; Abbott’s Trial Evidence, 441-445; Hubbard v. Gurney., 64 N. Y., 457; 3 So. Law Review, 439; 15 Rose. N. P., 393; Artisan Bank v. Backus, 36 N. Y., 100; Hall v. Cole, 4 Add. & E., 577; 3 Abb. Pr., N. S., 273; 31 Howard Practice, 242; 25 Ohio St., 276.
    The law is well settled by the overwhelming weight of authority, that “whenever the surety, with full knowledge of the facts, assents either by words or acts, to what has already been done, such subsequent assent will be a waiver of his discharge, without any new consideration. Brandt on Surety, 407; Byles bn Bills, - 246; Mayhew v. Curts, 2 Swanst., 185; Smith v. Winter, 4 M. & W., 467, 454; Stevens v. Lynch, 12 East, 38; 2 Camp., 332, S. C.
    The same doctrine is laid down in Brandt on Surety, 407, sec. 300. “ The promise is valid, not as the constitution of a new, but the revival of an old debt.” See authorities there cited. Also, Porter v. Rodenpuyl, 9 Mich., 11; Pilis v. JBett, 2 Stew. (Ala.), 63; First National Banlc v. Whitman, 66 Illinois, 331.
   Nash, J.

It is claimed that the court erred in using the following words- among others in the charge to the jury: “ That if the defendant's testator, having been discharged from his liability as surety upon the note sued on in this action, with a full knowledge and understanding of his, release as surety, promised the holder or payee to pay said note, if the principal did not, he thereby revived his. liability as surety, and that such subsequent promise was binding without any new consideration to support it.” '

We think there was no error in this charge. The promise of a surety, without other consideration than the extension, to pay the note, if his principal does not, made after the creditor has arranged with the principal to extend the time of payment, but with a full knowledge of all the facts, is good. Where a surety has been discharged by the extension of time, it is a personal privilege which he may waive and this he does when with a full knowledge of the facts, he renews his promise.

Brandt on Suretyship and Guaranty, sec. 300; Fowler v. Brooks, 13 N. H., 240; Porter v. Hodenpuyl, 5 Mich., 11; Bank v. Whitman et al., 66 Ill., 331; Mayhew v. Cricketts, 2 Swanst., 185; Smith v. Winter, 4 M. & W., 454; Stevens v. Lynch, 12 East, 38.

The principle announced in the syllabus in the case of Rindskopf Bros. & Co. v. Donovan et al., 28 Ohio St., 516, is applicable to this case.

The evidence embraced in this record tends to show that the extensions of time were made with the full knowledge or consent of A. L. Bramble, thé surety. It also tends to show that after the extensions were given, A. L. Bramble, with full knowledge of them, promised to pay the note if A. F. Bramble did not. If Bramble’s executrix relied upon the defense that time of payment had been extended without Bramble’s knowledge or consent, she was bound to make this appear by a preponderance of the evidence. If Ward, the creditor, admitted that the extension was given without the knowledge or consent of the surety, and relied upon the subsequent promise of the surety, to pay if the principal did not, the burden of proof was upon the creditor.

It is claimed that the judgment in the court below is against the evidence. If the jury returned their verdict upon the theory that Bramble’s executrix had failed to show that the extensions were given without the knowledge or consent of Bramble, we cannot say, after an examination of all the evidence, that this conclusion is manifestly against its weight. If the jury found the fact to be that the extensions were made without the knowledge or consent of the surety, but that Bramble afterwards, with a full knowledge of the facts, promised to pay the debt if his principal did not, this conclusion is not so manifestly against the weight of the evidence as to justify the setting aside of their verdict.

Judgment affirmed.


author: Gbang-er., O. J.

text:
    Insurance Company v. Robinson.
    A policy insuring tlie life of R. required him to p&y an annual premium of $47.85 by giving his note for $19.14 and $28.71 in cash on or before the seventh day of March in each and every year during the continuance of the policy; the first payment was to be made March 7,1871. The policy contained the following stipulations: “3. That * * * ' if the said assured shall not pay the * * * interest annually in advance on any outstanding premium notes which may be given for any portion thereof, * * * then, and in every such case, this policy shall cease and determine, and said company shall not be liable for the payment of the sum insured or any part thereof; * * * ” and also, “ 4. That if, after the receipt by this company of two or more annual premiums upon this policy, default shall be made in the payment of any subsequent premium when due, then, notwithstanding such default, this company will convert this policy into a “ paid up ” policy for as many twentieth parts of the sum originally insured as there shall have been complete annual premiums paid, when such default shall be made; * * * ” and also, *‘5. That, in every case where this policy shall cease, or be or become null] and void, all payments thereon, and all dividend credits accruing therefrom, shall be forfeited to said company. * * * ”
    On March 7, 1875, one year’s interest upon four of said premium notes was due, but no part of it was paid or tendered. Shortly after this default, R. applied for a “paid up” policy.

      Held: Under stipulations third and fifth the policy became null and void, on March 7, 1875, “all payments thereon” and “all credits accruing therefrom,” were forfeited to the company. Stipulation fourth did not apply to a default in payment of interest.
    Error to the District Court of Cuyahoga County.
    By a policy dated March 7, 1871, the company insured the life of Robinson. He was required to pay annually on March 7, during the continuance of the policy a premium of $47.85. Of this he could pay $28.71 in cash, and give his note for $19.14. The policy contained, besides other provisions not material in this case, the following stipulations :
    “Provided, always, and.it is hereby declared to be the true intent and meaning of this policy, and the same is granted by the company and accepted by the assured, upon the following express conditions and agreements: * * *
    “ Third. That this policy shall not take effect, nor become binding on the company, until the advance premium hereon shall have been actually paid during the lifetime of the insured; and no premium on this policy shall be considered as paid, unless a receipt shall be given therefor, signed by the president or secretary of the company; and that, if the said assured shall not pay the said annual premiums on or before noon of the several days hereinbefore mentioned for the payment of the same, and the interest annually in advance on any outstanding premium notes which may be given for any portion thereof, or shall not pajq at maturity, any notes or obligations given for the cash portion of any premium or part thereof, — then, and in every such case, this policy shall cease and determine, and said company shall not be liable for the payment of the sum insured or any part thereof, except as hereinafter provided.
    “ Fourth. That if, after the receipt by this company of two or more annual premiums upon this policy, default shall be made in the payment of any subsequent premium when due, then, notwithstanding such default, this company will convert this policy into a “paid up policy” for as many twentieth parts of the sum originally insured as there shall have been complete annual premiums paid, when such default shall be made; provided, that this policy shall be transmitted to and received by this company, and application made for such conversion, within one year after such default.
    “ Fifth. That, in every case where this policy shall cease, ór be or become null and void, all payments thereon, and all dividends, credits accruing therefrom, shall be forfeited to said company; except that, if the said insured shall die by his own hand during the .continuance of this policy, all premiums that shall have been received by said company hereon shall be returned to the said assured; and that, if assigned, the original instrument, or an attested copy thereof shall be sent to said company for record and acknowledgment.”
    Prior to.March 7,1875, he had, in the manner so authorized, paid four annual premiarías. On that day the company held four of his notes on which interest for one year then fell due. He failed to pay this interest, and paid none of the annual premium that also became due on that day.
    Afterwards he applied for a “ paid up ” policy under the fourth condition. The company refused to grant his application, and he sued to recover the.value of such a policy! In the common pleas the verdict and judgment were for the defendant. The district court reversed the common pleas, and the company asks a reversal of this last judgment.

      Sayler Sayler, for plaintiff in error,
    on the question of forfeiture, cited, Insurance Go. v. Bonner, 36 Ohio St., 51; 104 U. S„ 258; 82 N. Y., 172; 67 Me., 440; 3 Cent. Law Jour., 354, and cases there cited; 6 Ins. Law Jour., 426; 44 Vt., 481; 56 Miss., 512; 30 Ohio St., 240 ; 4 Daly, 512; 1 Disney, 355; 43 N. Y., 284; 100 Mass., 500; 52 Md., 28; 2 Tenn., ch. 742; Bliss on Ins., § 188.

      Foran Daivley, for the defendant in error,
    cited, 63 Howard (N. Y.), Pr., 443; 42 Mich., 10; 73 N. Y., 516; 82 Id., 548; 75 111., 426; 14 Bush, 51; 42 Mich., 19.
   Gbang-er., O. J.

If the courts should treat the conditions in the policy as mere modes of securing payment, and apply to them the rules governing the condition in a mortgage, they would deny effect to the plain intent of the parties to the contract, and impair the value of policies generally. To enable the company to promptly make payment in case of death, the insured, while living, must promptly make full payment of all dues under his contract with the company.

The “third” condition before us is plain. It clearly states that, upon a failure to pay the interest in advance, the policy should be void. The “ fifth ” adds that, in such case, “ all payments thereon and all dividends, credits accruing therefrom, shall be forfeited to the company.”

But the insured claims that the “ fourth ” condition modifies the “third.” This fourth condition makes no reference to interest, either expressly or by reasonable implication. Having failed to pay the interest due on /owrnotes he in effect was in default for a part of each of four annual premiums, besides the one that became due on March 7, 1875. This interest formed no part of the annual premium due on that day. Its punctual payment was necessary to complete the payment of tbe premiums due in the four preceding years. The fourth condition granted to an insured, who was guilty of but one default as to one annual premium, the right to receive a paid up policy, provided he made demand before a second default.

We are unwilling to so construe a stipulation, worded so plainly and with such evident care, as to make of no moment a default which the third condition declared of enough importance to destro3r the life of the p.olic3r. Therefore we are constrained to reverse the judgment of the district court and affirm that of the common pleas.

Judgment accordingly.