author: Minshabl, J.

text:
    Brumbaugh v. Chapman.

      Contracts — Executed and executory — .Deed—Covenant as to quantity of land.

    1. A stipulation in a written agreement for the sale and conveyance of a certain tract of land, described as containing a designated number of acres at a given price per acre, is executed by the delivery of a deed from the vendor to the vendee, and its acceptance by the latter as in performance of the stipulation to sell and convey the land described in the agreement; and, in the absence of fraud or mistake, no recovery can thereafter be had upon it by the vendee of the vendor for a deficiency in the land conveyed; nor, upon the deed, unless it contains an express covenant as to the number of acres.
    2. A description, in the deed, of the land by metes and bounds, and also as containing a certain number of acres, does not constitute such a covenant, although words of estimation, as “more or less,” be omitted.
    (Decided November 1, 1887.)
    Error to the District Court of Portage County.

      F. E. Hutchins, for plaintiff in error.
    The terms of the contract and deed, both between the same parties, for the same land and upon the same consideration, were sufficient evidence to go to the jury that they related to the same subject-matter, and that the deed was on account of, and, so far as it went, the execution of the contract. Its recitals were evidence of the payment of the consideration named in both; and this, with the proof of the deficiency, and of the rejection of the claim by the administrator, made a prima facie case for the jury, if the plaintiff was entitled to recover in any event. The instruction to the jury went upon the ground that, if all were true which plaintiff’s evidence tended to show, still lie was not entitled to recover; and this because, notwithstanding the contract, the transaction Avas, in law, not a purchase by the acre, nor the deed a covenant as to quantity, but that it Avas a sale of whatever there was for a gross sum on the theory that the contract Avas merged in the deed.
    Does the deed so conclude the matter as to exclude the plain facts ?
    1. If an estate be sold at so much per acre, and there be a deficiency in the number conveyed, the purchaser Avill be entitled to compensation. Ketchum v. Stout, 20 Ohio, 453, 460; 3 Wash. Real Prop. *373.
    2. The deed itself purported to convey an exact quantity; not as matter of description or estimation, but as the exact quantity bought and paid for. The quantity was of the essence of the contract, and the purchaser Avas entitled to an abatement for the deficiency, upon the deed alone. B. P. & L. Soc. v. Smith, 54 Md. 187; Beall v. Berkhalter, 26 Ga. 564, 567; 3 Wash. Real Prop. *673; Minge v. Smith, 1 Ala. 415; Stebbins v. Eddy, 4 Mason, 414.
    3. The evidence, including the contract, deed and acts of the parties, shoAVS a purchase of an exact quantity, at so much per acre.
    4. When land is sold, stating the exact quantity, there is a presumption, unless otherAvise excluded, that the quantity is a material element, and that the price is fixed Avith reference to it; and this presumption may be used in construing the contract or deed, and in determining the character of the sale. Triplett v. Allen, 26 Gratt. 721.
    5. Even if the deed sIioavs, prima facie, a sale in gross, yet it is not conclusive against a sale by the acre, if there be other evidence of such sale. Morris v. Whitcher, 20 N. Y. 41, 47; Bigelow on Estoppel, 310 312, 315; Brinegar v. Chaffin, 3 Dev. (N. C.) 108; Hayes v. Askew, 5 Jones L. 63; 2 Par. Con. 66; Reed v. McCourt, 41 N. Y. 435; Champ. & St. L. R. Co. v. Valentine, 19 Barb. 484; Deery v. Cray, 5 Wall. 795; 1 Greenl. Ev., sec. 285.

      The presumption that a deed or other contract contains the whole agreement of the parties does not exclude a resort to other contemporaneous contracts or writings. 2 Par. Con. 66, 67; Wilson v. Randall 67 N. Y. 338; Helmholz v. Everingham, 24 Wis. 266.
    The true doctrine is that the deed extinguishes the preliminary contract so far, and so far only, as it', in fact, executes it. That such prior contract, and the rights under it, are not extinguished, and in support of some of the other views here presented, I refer to the following authorities: Vail v. McMillan, 17 Ohio St. 617; Reid v. Sycks, 27 Ohio St. 285; Burckhart v. Burckhart, 36 Ohio St. 261; Bogart v. Burkhalter, 1 Denio, 125; Murdock v. Gilchrist, 52 N. Y. 242; Wilson v. Randall, 67 N. Y. 338; Tarbell v. Bowman, 103 Mass. 341; Heyer v. Lee, 40 Mich. 353; Seager v. Cooley, 44 Mich. 14, 18; Doty v. Martin, 32 Mich. 462; Bennett v. Abrams, 41 Barb. 619; Collins v. Tillou, 26 Conn. 368; Weart v. Rose, 16 N. J. Eq. 290; Barnes v. Gregory, 1 Head (Tenn.) 130; Bond v. Jackson, 1 Hayw. (Tenn.) 160.

      M. Stuart, for defendant in error.
    The covenants in the deed relate to the seizin and right to convey. They contain no warranty of any definite number of acres. There is no covenant as to quantity. The statement of the number of acres in both the deed and the contract closes the description of the premises, and follows as part of it.
    In Rogers v. Peebles, 72 Ala. 529, the number of acres was stated exactly. One boundary was a river, as in this case, and the words “more or less” were omitted. The court say their omission was not essential. In other words, the omission of the phrase “ more or less,” will not render the statement of the exact number of acres a warranty or covenant of quantity.
    In the sale of real estate by deed, the only remedy of the purchaser for deficiency, in the absence of fraud, or election not to rescind, is“by an action on the covenants of the deed. Unless he can find, in the instrument itself, words of liability, the law will not aid him; and if the deed is a quit-claim, he has none at all; in other words, my contention is, that there must be an express warranty or covenant as to quantity in order to hold the seller, on his deed, for damages by reason of shortage, and that no such warranty or covenant is found in this case. Powell v. Clark, 5 Mass. 355; Roat v. Puff, 3 Barb. 353; Jackson v. Moore, 6 Cow. 717; Jackson v. McConnell, 19 Wend. 175; Large v. Penn, 6 Serg. & Rawle, 488; Farm. & Mec. Bank v. Galbraith, 10 Pa. St. 490; Perkins v. Webster, 2 N. H. 287; Williams v. Hathaway, 19 Pick. 387.
    The contract was merged in the deed and the rights of the parties are to be determined by the deed alone, for by that the transaction became an executed one, after the notes and mortgage were paid.
    When, in pursuance of a contract for the sale of realty, the vendor executes a warranty deed, which is accepted by the purchaser without objection, in the absence of fraud, the contract is merged in the deed as to all those matters which are necessarily settled by the deed, or are actually made apart of it; and if there is any variance between the two, the deed prevails. Rawle on Cov. Title, 612; Whitbeck v. Waine, 16 N. Y. 532; Ketchum v. Stout, 20 Ohio 453; Delaney v. McDonald, 47 Wis. 108; Huntley v. Waddell, 12 Ired. L. 32; Reid v. Sycks, 27 Ohio St. 285.
    The contract was fully executed before suit was brought and the plaintiff was precluded, in the absence of fraud, from opening it up. Kreiter v. Bomberger, 82 Pa. St. 59; McLelland v. Creswell, 13 Serg. & Rawle, 143; Haggerty v. Fagan, 2 Pen. & Watts, 533; Delaney v. McDonald, supra; Far. & Mec. Bank v. Galbraith, supra; Crotzer v. Russell, 9 Serg. & Rawle, 80; McDowell v. Cooper, 14 Serg. & Rawle, 299; Bailey v. Snyder, 13 Serg. & Rawle, 160; Lightly v. Shorb, 3 Pen. &. Watts, 447; Dagne v. King, 1 Yeates, 322; Andrews v. Rue, 34 N. J. Law, 405; Carter v. Campbell, 1 Gilm. (Va.) 159, 170; Dart Vend. & Pur. 363.
   Minshabl, J.

The plaintiff in error, Brumbaugh, who was plaintiff below, in August, 1882, commenced an action in the common pleas of the county against the defendant as administrator of H. C. Chapman, deceased, to recover a judgment for an. alleged deficiency in certain land conveyed to him by the decedent, then in life, on April 4, 1874. It is averred that the conveyance was made in pursuance of a written agreement between the parties, made January 23, 1874, to convey a precise quantity of land, 92.79 acres, at $95,00 per acre; that ti did not contain that number of acres, the deficiency being, as alleged, 3.18 acres; and that the claim had been presented to the administrator and rejected.

The sale and conveyance of the land and the rejection of the claim by the administrator were admitted by the answer, but the deficiency, as well as the agreement to convey a specific quantity of land, were denied.

The petition also contained a second cause of action for a breach of the covenant in the deed against incumbrances.

The case was tried to a jury, which rendered a verdict for the plaintiff upon the second and against him upon the first, cause of action. A motion for a new trial was made and overruled, a bill of exceptions was taken, and, the court having rendered judgment upon the verdict, this was affirmed upon error by the district court of the county; and this proceeding is now prosecuted to reverse both judgments.

It appears from the bill of exceptions that, upon the trial, the plaintiff offered in evidence a written agreement made and entered into between the plaintiff and the decedent Chapman, during his life time, on the 23d of January, 1874, by which Chapman agreed to sell and convey to Brumbaugh a certain tract of land describing it as bounded: “On the west by the Sulirt farm, on the south by the Cuyahoga river, on the east by the' land of Esler, on the north by the Munroe Palls road, containing ninety-two 79-100 acres of land”; that .the price agreed on was $95.00 per acre; and that B. agreed to pay “ for the land aforesaid ” $8,815, as follows: $3,000 on April 5, 1874, at which time, on payment of this sum, the possession was to be delivered together with a good and sufficient deed; $500 on April 15, 1874, and the balance $5,315 in seven annual payments of $759,28 each, to be secured by notes and a mortgage on the land.

The payments were made, and the deed, notes and mortgage were all made and delivered as stipulated in the agreement; and, during the life time of Chapman, the notes secured by the mortgage were all paid to him by Brumbaugh.

The deed was also offered in evidence. By it the land is described as comprised in two tracts, of each of which it gives a definite description by metes and bounds, and adds being the same lands conveyed to said Henry C. Chapman by Silas Lewis and wife, by deed of warranty, dated April 2, 1863, as recorded, etc., containing ninety-two and 79-100 acres of land in both of said above described tracts.”

The plaintiff then introduced the surveyor of the county, who testified that, in connection with the surveyor of the adjoining county, he made a survey of the land in August, 1882, and, measuring to the edge of the water which was then low, ascertained the number of acres to be 90.11-100. And, the plaintiff having rested his case, the defendant then introduced evidence that, measuring to the middle thread of the river, the tract contained 95.58-100 acres.

Upon the foregoing evidence, which is the substance of all that was offered by either party, upon the issues presented by the pleadings under the first cause of action, the court, as appears from the bill, instructed the jury to return a verdict in favor of defendant on that cause of action; and the question presented by the record is whether the court erred in so instructing the jury.

The object of the suit upon the first cause of action, was not to recover for any fraud or mistake in the transaction. There are no averments in the petition that would warrant a recovery upon either of these grounds, nor would the evidence that was introduced have supported such averments had they been made. It is entirely consistent with the case made in the petition and the evidence introduced on the trial, that Brumbaugh knew of the deficiency, or had reason to believe that it existed, at the time he made and delivered the notes and mortgage for the deferred payments of the purchase-money, or, if not then, that, at least, he knew the fact at the time he made the last payment. If this be so, then, upon principles too well settled to be questioned, he cannot now recover back the money as paid by mistake. The law affords no relief to one who, with a knowledge of the facts, makes a voluntary payment of money to one he does not owe. ' Hence the plaintiff must recover upon a breach of the terms of the written agreement, or else upon the covenants of the deed, or not at all.

Now, could a recovery be had upon the terms of the agreement? We think not, because (1) there is a question whether, by its terms, Chapman bound himself to convey a definite number of acres. The designated number may as readily be regarded as, in part, descriptive of the land to be conveyed, as a separate specific agreement to convey a designated number of acres. The stipulation is, not to sell and convey 92 acres and a fraction, but to sell and convey a certain tract in part described as containing 92.79-100 acres of land. And, in such cases, the general rule would seem to be to regard the designated number of acres as descriptive of the land to be conveyed, rather than as binding the vendor in an obligation to convey the exact number of acres so designated; so that, where all the land included in the designated boundaries is conveyed, the vendor is not liable to the vendee for a deficiency, unless so great as to suggest fraud. 3 Wash. Real Prop. 525, *673.

But (2) whatever may have been the rights of the vendee, under the agreement, for a deficiency in the land, he, as we think, has none now; for the reason, that, by the execution of the deed, the contract to sell and convey the land described in it, whether it was for a definite number of acres or not, was, so far as it embraced this particular stipulation, merged in the deed, and, to use the language of tho books, became executed by it. Farmers’ & Mechanics’ Bank v. Galbraith, 10 Pa. St. 490; Haggerty v. Fagan, 2 Pen. & Watts, 533; Williams v. Hathaway, 19 Pick. 387; Kreiter v. Bomberger, 82 Pa. St. 59; Ketchum v. Stout, 20 Ohio, 453.

The very purpose and effect of the deed, in this case, was to execute the prior agreement in this regard, if in none other. And that the execution and delivery of the deed was intended by the one, and accepted by the other, as a performance of the stipulation in the agreement to convey whatever by its terms was intended to be conveyed, appears from the further fact that the vendee at once executed and delivered to the vendor the notes and mortgage for the balance of the purchase-money according to the price previously agreed on — all of which were subsequently paid before the commencement of this suit.

The case of Reid v. Sycks, 27 Ohio St. 285, cited to us, is quite different from the one presented by the record before us, and is not in conflict with what has just been announced. It was there simply held that the deed did not execute a prior agreement of the vendee to assume and pay an existing lien upon the property, that had been assumed by the vendee as part of the purchase-money. As a rule the deed does not execute any of the stipulations of the vendee as to the consideration to be paid for the property. Its office is to execute the agreement on the part of the vendor. And the learned judge, in delivering the opinion in that case, was careful to observe this distinction, in the use of the language: The obligation to pay the purchase-money was not merged by the deed, which was only in performance on the vendor’s part. * * * The covenant to convey is performed by the conveyance; but covenants relating to other things than a mere conveyance are not thus performed.” The case of Whitbeck v. Waine, 16 N. Y. 532, is, also, plainly distinguishable from the one before us. There the previous written agreement contained an express provision for an increase or rebate of the purchase-money in proportion to any excess or deficiency which might exist in the quantity of the land. And, a portion of the purchase-money remaining unpaid, and no bond or mortgage having been given, the court was of the opinion that the provision for an increase or rebate for any excess or deficiency in the land, remained in force as to any unpaid residue of the purchase-money, notwithstanding the execution of the deed; observing, however, that had such securities been given at the time the deed was delivei’ed, and they had not contained a provision, respecting deficiency, like that in the contract, a different question would have arisen from the one presented.” The cases of Vail v. McMillen, 17 Ohio St. 617, and Burkhardt v. Burkhardt, 36 Ohio St. 261, are simply to the effect that the deed is not conclusive as to the consideration paid or agreed to bo paid by the purchaser.

The only question that remains, is whether a recovery can be had by the plaintiff upon the terms of the deed itself. There is no express covenant in the deed that the land conveyed contains any definite number of acres. The designation of the number of acres is in connection with, and as a part of, the description of the land conveyed. If, at the execution of the deed, the intention of the parties had been that a definite number of acres should be assured to the vendee, the proper way would have been, and it would have been as easy as. proper, to incorporate a covenant in the deed to that effect. It would have been as easy to do so as to covenant that it is free from incumbrances. No such covenant as to quantity, having been inserted in the deed, no recovery can be had upon the deed itself for any deficiency in the number of acres in the tract conveyed by it. Powell v. Clark, 5 Mass. 355; Perkins v. Webster, 2 N. H. 287; Large v. Penn, 6 Serg. & Rawle, 488; Williams v. Hathaway, 19 Pick. 387; Kreitcr v. Bomberger, 82 Pa. St. 59; Beall v. Berkhalter, 26 Geo. 564. And it may be said in this case, as was said by Justice Sharswood, in the case of Kreiter v. Bomberger: “ The vendee threw out no anchor to windward as to quantity as he did as to title by his covenant of general warranty, If within any period short of' six years from the time of the transaction, a contract of purchase and sale, fully executed by delivery of the deed and payment of the purchase-money, can be overhauled and materially changed, very disastrous consequences will ensue not only to-vendors called upon to refund what they had every reason to believe was their own, and had a right to deal with accordingly, but to the public at large, by sowing the seeds of an abundant crop of lawsuits.”

There is no doubt but that, in an action by the vendee for relief against mistake in the transaction, or fraud practiced by the vendor, any considerable deficiency would be entitled to consideration as tending to show either that a fraud had been practiced, or that a mistake had intervened. But, as before shown, no such complexion has been given to this action either by the averments of the petition or the proof introduced on the trial.

Judgment affirmed.


source: Caselaw Access Project

author: Owen, C. J.

license: Public Domain

text:
    Rice v. Hassenpflug.

      Arbitration— Waiver of oath of arbitrator— Power of unsworn arbitrator to administer oaths — Presumption as to what matters considered by arbitrator— Interest— Usury.

    1. Where parties to an arbitration proceed to a hearing of the controversy before an unsworn arbitrator without objection, and without being misled into the belief that he has been duly sworn, they thereby waive the oath of the arbitrator and all objections to the award based on that Emission.
    2. It is not necessary that an arbitrator himself administer the oath to the witnesses before him; and when he is a justice of the peace, he is authorized (by section 5606. of the Revised Statutes) to administer a valid ■ oath to the witnesses, although he is himself unsworn as arbitrator.
    3. Where the written submission is of all differences, damages and claims whatsoever existing between the parties, and the award purports to have been made “ as per submission in writing,” the presumption is authorized that all claims and matters of difference presented by the parties were considered.

      4. Where the parties to such submission stipulate, as one of its terms, that the arbitrator in calculating whatever may be due on a matured promissory note calling for interest at ten per cent, shall compute interest thereon at that rate, such submission is not a usurious contract, and an award rendered in pursuance of it is valid.
    (Decided November 1, 1887.)
    Error to the Circuit Court of Pickaway County.
    P. G. Bostwiolc and P. O. Smith, for plaintiff in error.
    1. This being a statutory arbitration, the statute, section 5606 of the Revised Statutes, requires that the arbitrator be sworn. The oath is essential to the validity of the award. Day v. Hammond, 57 N. Y. 479; Combs v. Little, 3 Green Ch. (N. J.) 310; Inslee v. Flagg, 2 Dutch. 368; Lile v. Barnett, 2 Bibb (Ky.) 166; Overton v. Alpha, 13 La. Ann. 558; Bethea v. Hood, 9 La. Ann. 88; Frissell v. Fickes, 27 Mo. 557; Toler v. Hayden, 18 Mo. 399; Fassett v. Fassett, 41 Mo. 516; Jackson v. Steele, Sneed, (Ky.) 21; Otis v. Northrop, 2 Miles (Pa.) 350; Bulson v. Lohnes, 29 N. Y. 291; Howard v. Sexton, 1 Denio, 440; Tucker v. Allen, 47 Mo. 488; Valle v. North Mo. R. Co. 37 Mo. 445.
    The award cannot be enforced as an award upon submission at common law; Deerfield v. Arms, 20 Pick. 480; Morse on Arbitration, 48.
    2. The award itself must show that the arbitrator passsed upon all matters submitted to him. A failure to do so renders the award invalid, and it cannot be sustained by parol testimony. 6 Wait Ac. and Def. 538, 539; Harker v. Hough, 2 Halst. 428; Mitchell v. Staveley, 16 East, 58; Swan’s Treatise, 386, 387, 389; Morse on Arbitration, 342, 343, 345, 349, 359, 361, 363; Richards v. Drinker, 1 Halst. 307, 320; Carnochan v. Christie, 11 Wheat. 446; Russell on Arbitration, 249; James v. Thurston, 1 Cliff. C. C. 367; Young v. Kinney, 48 Vt. 22; Caldwell on Arbitration, 239; Kyd on Award, 172; Hall v. Vanier, 6 Neb. 85.
    3. The award itself must show that the arbitrators met at the place named in the submission, and the failure of the award to show that fact cannot be cured by parol testimony. Swan’s Treatise, 387; Strum v. Cunningham, 3 Ohio, 286; Morse on Arbitration, 150; Wilcox Forms.
    4. There is usury embodied in both the award and the judgment rendered thereon, which renders both invalid. No contract, however framed, however unlike a contract for a loan, or for interest, it might apparently be, can hold good if the ultimate effect of it be to secure more than the. legal rate of interest for the loan of money. Clague v. Creditors, 2 La. 114; 7 Wait Ac. & Def. 611; Scott v. Lloyd, 9 Pet. 446: Spaulding v. Bank of Muskingum, 12 Ohio, 546; Beals v. Lewis, 43 Ohio St. 220; Moncure v. Dermott, 13 Pet. 345, 355; DeWolf v. Johnson, 10 Wheat. 367; Smith v. Cross, 90 N. Y. 554.
    If usury is incorporated in the judgment, the case will be reversed. Bates v. Peoples’ Sav. & Loan Ass’n, 42 Ohio St. 655; Van Ausdal v. Potterf, 41 Ohio St. 677; 3 Par. Con. 107; Kilgore v. Dempsey, 25 Ohio St. 420; Goode v. Sutton, 29 Ohio St. 587; 3 Har. Dig. 2126.

      Page, Abernethy & Folsom, for defendant in error.
    1. The award is a good common law award. It is not pretended that the parties proceeded according to the statutes, and the statutes have no application to any part of the proceeding. Childs v. Updyke, 9 Ohio St. 333; Wilcox v. Singletary, Wright, 420; West. Female Seminary v. Blair, 1 Dis. 370.
    2. At common law, both the submission and the award might be verbal. Morse on Arbitration. 256; Comyn’s Dig. Arbitrament, E. 20; Wilcox v. Singletary, supra; Tullis v. Sewell, 3 Ohio, 513.
    3. At common law the arbitrator need not be sworn. Morse on Arbitration, 110; Daggy v. Cronnelly, 20 Ind. 474.
    4. At common law the witnesses need not be sworn. Morse on Arbitration, 279, 280, 290; 1 Steph. Nisi Prius, 130; Musselbrook v. Dunkin, 9 Bingh. 605.
    6. Nothing was said in the submission about delivery or publication, and both parties were bound to take notice of it. Houghton v. Burroughs, 18 N. H. 499.
    The delivery of a copy of an award is a publication of it. Low v. Nolte, 16 Ill. 475.
    7. The doctrine by which awards are required to be mutual is not applied in the strict sense in which it was formerly taken. Horrel v. M'Alexander, 3 Rand. (Va.) 94.
    An award ordering a payment of a sum of money carries in itself a mutuality, as it must be held to be a satisfaction of the matters submitted. Mead v. Ellis, 3 Kames, 254; Gordon v. Tucker, 6 Me. 247; Gaylord v. Gaylord, 4 Day, 422; M’Kinstry v. Solomons, 2 John. 57; In re Brown, 1 P. & D. 391; s. c. 9 A. & E. 522; Hayllar v. Ellis, 3 M. & P. 553; s. c. 6 Bingh. 225; Harrison v. Creswick, 13 C. B. 399.
    8. An award may be of a gross sum. Morse on Arbitration, 254, 255, 265; Lowenstein v. McIntosh, 37 Barb. 251; 6 Wait Ac. & Def 540, 541, 546, 547.

      9. Parol evidence is admissible to show what matters were submitted to the arbitrators. Buck v. Spofford, 35 Me. 526.
    This was so at common law as to judgments. Freem. Judg. sec. 273.
    10. No precise form of words is necessary to constitute an award; it is sufficient if the arbitrator expresses it by a decision upon the matters submitted. Lock v. Vuliamy, 2 N. & M. 336; s. c. 5 B. & Ad. 600; Wykes v. Shipton, 3 N. & M. 240; Gray v. Gwennap, 1 B. & Ald. 106; Ott v. Schroeppel, 5 N. Y. 482.
    11. An award may be in the shape of an opinion. Matson v. Trower, R. & M. 17.
    12. The presumption of the law is that the arbitrator considered all matters presented to him. Sperry v. Ricker, 4 Allen, 17.
    13. The principles of law in regal’d to usury nave no application to this case. The agreement in question was not made for the forbearance of the money, nor at the time of a loan. It was made many years after, when the parties were trying to settle, and the agreement was made in consideration and for the purpose of a settlement of the controversy. Such an agreement is not usurious. Meeker v. Hill, 23 Conn. 578; Raphael v. Boehm, 11 Ves. Jr. 92; Mowry v. Bishop, 5 Paige, 98; Byrd v. Odem, 9 Ala. 755; Harger v. McCullough, 2 Denio, 119; Thurston v. Cornell, 38 N. Y. 285; Tyler v. Yates, 3 Barb. 223; Daniels v. Wilson, 21 Minn. 530; Sunderland on Damages, 531; 3 Par. Cont. 152; Nichols v. Fearson, 7 Pet. 109; Woodruff v. Hurson, 32 Barb. 557; Grœme v. Adams, 23 Gratt. 225; Hogg v. Ruffner, 1 Black (U. S.), 115; Cunningham v. Green, 23 Ohio St. 296; Gould v. Bishop Hill Col., 35 Ill. 324; Sumner v. People, N. Y. 340; Long v. Storie, 10 Eng. L. & Eq. 182; Fox v. Lipe, 24 Wend. 164; In re Badger, 2 B. & Ald. 691; Morgan v. Mather, 2 Ves. Jr. 15; Sherry v. Oke, 3 Dowl. P. C. 349; Beahorn v. Wolf, 1 Alcock & Nap. (Irish) 233; Armitage v. Walker, 2 Kay & J. 211; Gardner v. Masters, 3 Jones Eq. 462.
    14. An award made under a common law reference cannot be resisted on the ground of unfairness in obtaining the award, or for error of j udgment in the referees. Newman v. Labeaume, 9 Mo. 30; Johnson v. Noble, 13 N. H. 286; Merritt v. Merritt, 11 Ill. 665; Fairchild v. Adams, 11 Cush. 549; Smith v. Smith, 4 Rand. (Va.) 95; Cleary v. Coar, 1 Hayw. 225; Todd v. Barlow, 2 John. Ch. 551; Duncan v. Lyon, 3 John. Ch. 356; Burchett v. Marsh, 17 How. (U. S.) 344.
   Owen, C. J.

On the 29th day of March, 1881, "William Rice and Joseph Hassenpflug entered into an arbitration agreement of the following tenor:

“We hereby agree to submit to Palmer Lowe, as arbitrator, all the differences, damages and claims whatsoever now existing between us; the said award to be made in writing and signed by the said Lowe, and the said matter is to be heard by him at his office, at such times as he shall appoint, reasonable notice thereof to be given to the undersigned, and ho may adjourn the hearing of said case from time to time, at his pleasure.

“ The undersigned mutually promise and agree to abide by and perform the award of the said arbitrator. It is further agreed that a certain promissory note, made by said William Rice to said Hassenpflug, dated April 1, 1866, for $448.10, shall be submitted to said arbitrator, and -in calculating whatever there may be due thereon, the interest shall be computed at ten per centum per annum.

“ In witness whereof we have herewith set our hands and seals this 29th day of March, 1881.

Wm. Rice, [seal.]

Jos. Hassenpflug. [seal.]”

Thereafter the arbitrator made his award in writing of the following tenor:

“Award of arbitrator, in case of Joseph Hassenpflug and William Rice, submitted to me as arbitrator, on the 29th day of March, A. D. 1881, as per submission in writing, now in my possession.

“ I find that the said William Rice is indebted to the said Joseph Hassenpflug, as follows: On one promissory note, executed by tbe said William Rice, and payable to Joseph Hassenpflug, dated April 1, 1866, for $448,10, and bearing interest at ten per cent., amounting ar this date to the sum of $1,169.06.

“ I further find that the said William Rice is entitled to a credit thereon of $100, paid April 13,1877, with interest thereon to this date, at ten per cent., amounting to $150, leaving a balance due said Hassenpflug of $1,018.84.

“Dated April 18, 1882.

Palmer Lowe, Arbitrator.

“ Fee of arbitrator, $25; each party to pay one-half.”

Hassenpflug filed in the court of common pleas his petition against Rice, in which he declared upon the foregoing submission and award and prayed judgment for the balance found due him by the arbitrator, with interest from the date of the award.

Issues of fact were finally joined, upon the trial of which the plaintiff below recovered the full amount claimed. The record embraces a bill of exceptions which brings before this court all the evidence given upon the trial. The j udgment of the trial court was affirmed by the circuit court, to reverse whose judgment the present proceeding is prosecuted.

The several assignments of error which are insisted upon in the argument of the case in this court as grounds of reversal, are based upon the contention that the award is invalid and cannot be made the predicate of a judgment for the reasons:

1. That the arbitrator was not sworn to the performance of his duties as such.

2. That being unsworn he had no authority to administer oaths to witnesses, who were for that reason not under oath when they gave their testimony at the hearing.

3. That the award does not show that the arbitrator passed upon all matters submitted to him, and that this omission cannot be supplied by parol testimony that all matters submitted to him were so considered.

4. That the award does not show that the arbitrator met the parties at thé place named in the submission, and that this omission cannot be supplied by parol testimony.

5. That usury is embodied in both the award and judgment thereon, which renders both invalid.

I. The arbitrator was in fact not sworn. The Revised Statutes (section 5606) provide that: “ The umpire or arbitrators, and all witnesses shall be under oath, to be administered to him or them respectively by any judge or justice of the peace of the county.”

The parties, howrever, proceeded without objection to a hearing before the arbitrator, and were both sworn and testified in their own hehalf. Upon this feature of the case issue was joined as follows: Rice alleges in his answer:

That said Palmer Lowe, without the knowledge or consent of this defendant, proceeded to act as such arbitrator, and hear the evidence offered under the submission, without having been sworn as required by law, as such arbitrator, before any court, magistrate, or other officer, authorized to administer oaths in the state of Ohio.”

The plaintiff replies to this :

He has no knowledge as to whether the said arbitrator was sworn or not; but he denies that the said arbitrator was required to be sworn, as such arbitrator. And he denies that the said Lowe proceeded to hear the evidence, and to act as such arbitrator without the knowledge or consent of the said defendant.”

This left the fact admitted that the arbitrator was not sworn but put Rice upon his proof of the fact, if it was material, that it was without his knowledge or consent that the arbitrator proceeded to the hearing without being sworn. Upon this issue the record is utterly .barren of proof.

Several authorities are presented by the plaintiff in error which support the proposition that it is necessary in a statutory arbitration that the arbitrator be sworn unless the oath is waived by the parties. Did the conduct of Rice amount to a waiver of the oath by the arbitrator ? In Howard v. Sexton, 1 Denio, 440, (cited by plaintiff in error), it was held that “ parties to a submission to arbitration may waive the oath of the arbitrators, and such waiver will not divest the proceeding of the character of a statute arbitration; * * * such waiver may be tacit, by going on where the arbitrators are not sworn, without objection, as well as express.”

In Winship v. Jewett, 1 Barb. Ch. 183, it was said by Walworth, Chancellor, that it would be wholly unjust, where the parties have suffered the arbitrators to proceed, without requiring them to be sworn, afterwards to urge that they were not sworn, as an objection to the validity of their award, because such parties are not satisfied with the decision; and when it was too late to obviate this technical objection, if it is one. As wc have already indicated, Rice does not show that he was misled into the belief, or supposed from any cause, that the arbitrator was sworn. We conclude, without any hesitation, that here was a waiver of the oath. While the authorities are not in harmony upon this question, and while some of them support the view that the oath of the arbitrator is necessary to clothe him with jurisdiction to proceed with the hearing, the weight of reason and logic as well as of the adjudications is with the view we have adopted.

II. The witnesses were in form sworn by the arbitrator.

It appears that the latter was in fact a justice of the peace. This clothed him with authority, under section 5606 of the Revised Statutes, cited supra, to administer binding oaths to the witnesses. It is not necessary that the oath be administered by the arbitrator himself; and as this arbitrator was authorized, by virtue of his office, to administer oaths to witnesses before any other person acting as arbitrator, it is not easy to see why he could not administer oaths to the witnesses before himself. This assignment is not well taken.

III. The contention that the award does not show that the arbitrator passed upon all matters submitted to him, is not well taken. The recital of the award itself shows it to be “an award of arbitration in case of Joseph Hassenpflug and William Rice, submitted to me as arbitrator, on the 29th day of March, 1881, as per submission in writing, now in my possession.” Settlements of controversies by arbitration or otherwise, are favored, and that liberality which we ought to exercise in the construction of the awards of arbitrators, requires us to construe the above recital to mean that the arbitrator proceeded throughout according to the terms of the submission. That this claim of plaintiff in error is severely technical appears from the fact that the arbitrator testified without objection at the trial below: u I took into consideration all that they (the parties) presented,” and we are not called upon to review the findings of fact upon the evidence. The form of the award appears consistent with this statement, when we consider that he also testifies that: I threw the items of both sides out of the case.” This may fairly imply that, upon consideration, he disallowed them.

IY. The same rule of construction calls for a like conclusion concerning the contention that the award is invalid for the reason of its failure to show that the arbitrator and the parties met, pursuant to notice, at the place named in the submission. It should be observed that the defense was not that they did not so meet, but that the award fails to show that fact. It is sufficiently shown by the award.

Y. A more difficult question than either of those already considered, arises upon the contention of plaintiff in error, that usury is embodied in both the award and judgment, which renders them both invalid. It was stipulated by the parties, that in calculating whatever there might be due from Rice to Hassenpflug on a note dated April 1, 1866 (and which stipulated for ten per cent, interest) interest should be computed at the rate of ten per cent, per annum. The arbitrator (as his award shows) computed interest on this note according to the instructions and submission of the parties. Is this award invalid for the reason that it embraces usurious interest ?

The action below was not upon this note. The plaintiff declared upon the breach of the condition of the submission to abide by and perform the award of the arbitrator.” The submission furnished to the arbitrator a basis of adjustment of the controversy between the parties, so far as it involved this note, If the parties had themselves computed the interest on the note at ten per cent., added it to the principal, and given the result to the arbitrator as one of the bases of his award, it would have been fully as exposed to the imputation of usury as in its present form. The question presented is: Did this submission embrace an agreement to pay usurious interest, and is the award thereon for that reason void? To constitute a usurious contract, there must be an agreement to pay interest-Interest is a creature of the statute. Section 3179 of the Revised Statutes authorizes parties to stipulate for the payment of interest, at a specified rate, upon the amount of any bond bill, promissory note, or other instrument of writing for the forbearance or payment of money at any future time,” etc. The agreement concerning the computation of interest in the submission before us, is not one for the forbearance or payment of money at any future time. It is a stipulated basis of computation of past and matured interest by the arbitrator upon a sum of which payment presently, and as soon as the award should be. rendered, was contemplated by the parties. The forbearance or payment of money at a future time, constituted no element of the consideration for the stipulation concerning interest.

It is a well-established principle that to constitute usury there must be either a loan upon usurious interest or the taking of more than'legal interest for the forbearance of a debt or sum of money due. Hogg v. Ruffner, 1 Black (U. S.) 115; Gould v. Bishop Hill Col., 35 Ill. 324; Woodruff v. Hurson, 32 Barb. Thurston v. Cornell, 38 N. Y. 281; Nichols v. Fearson, 7 Peters, 109.

Daniels v. Wilson, 21 Min. 530, was an action on a note given for a sum agreed upon for interest after the time for which it was computed had elapsed and at a rate in excess of of that antecedently specified in the contract. The court said a contract to pay interest is a contract to pay a consideration for the future use of money. That the contract in this case was a contract to pay for the past use of money and therefore not a contract to pay interest in any proper or legal sense. Sutherland on Damages, 531.

In the case at bar, a disposition was shown by the parties finally to settle differences of long standing. The fact also appears and assumes much prominence in the case, that the stipulation for the computation of interest on the note was one of the controlling considerations of the contract to arbitrate, which in its turn furnished a new and independent consideration for this direction to the arbitrator to compute past interest. This stipulation is closely allied in principle to the case of a contract to build a house where, if the interest is part of the contract price, it is not usurious, Grœme v. Adams, 23 Grattan, 225; to a contract for sale of lands, Hogg v. Ruffner, supra; to contracts for more than the legal rate of interest in a partnership agreement, Cunningham v. Green, 23 Ohio St. 296 ; to contracts to pay interest upon interest which is due at the time the promise is made, although the aggregate sum of interest exceeds the legal rate, Tyler v. Yates, 3 Barb. 223; 3 Par. Con. 152. In none of these cases is the agreement usurious.

This principle and the distinction which it marks between usurious contracts and those based upon considerations other than the forbearance or payment of money át a future time is well illustrated by Byrd v. Odem, 9 Ala. 755, where it was held that: “Where one party, with the assent of another, borrows money at a usurious rate of interest, to pay a debt for which both should provide, and after the payment of such interest by the borrower, the other refuses to contribute, but by agreement with the borrower, submits the matter of interest to arbitrators, an award which adjudges him to pay half the interest will be supported.” The award in the case before us is not void for the reason assigned. In the discussion of this case the plaintiff in error assumed that this was a statutory arbitration, while the defendant in error assumed, with the same confidence, that it was a common law arbitration. We have not found it necessary to follow counsel in this discussion, nor to define the respective characteristics of these two modes of arbitration. It serves our purpose to say that if it was a common law arbitration the first four objections urged against the award are, beyond all question, untenable ; and if on the other.hand, it was a statutory arbitration, the attacks upon the award are fully met and answered by the forgoing considerations, which assumed, with the plaintiff in error, and for the purposes of the discussion, that the arbitration proceeded under the statute.

Judgment affirmed.


author: Williams, J.

text:
    Wise v. Miller.

      Guaranty — Notice of acceptance — Release—Corporation—Stockholders—Contract of indemnity.

    1. When a guaranty is absolute, notice by the guarantee of its acceptance and his intention to act under it, is not necessary to fix the liability of the guarantor. The rule requiring such notice, applies only where the instrument, being in legal effect merely an offer or proposal, acceptance is necessary, as in case of other offers and proposals, to that mutual assent, without which there can be no contract.
    2. An agreement among the stockholders of a corporation, whereby in consideration of the mutual benefit derived by them from the indorsement of its paper by one of their number, they bind themselves to protect him, in proportion to the amount of its stock held by them, against any loss or damage by reason of his indorsements, executed by all the parties at the same time, and by them delivered to a third person for their use, with the intention that it should be acted upon, is not a mere offer or proposal of guaranty, but is an absolute contract of indemnity. Such delivery is equivalent to a delivery by each contracting party to the others, and no further acceptance, or notice thereof, or of intention to act under it is necessary to bind them.
    3. The liability of the parties under such contract, to one who has incurred obligations, by indorsements made on the faith of it, continues until the performance of its conditions by them. A party is not released therefrom, by notice after the obligation has been incurred, that he revoked the contract, and would be hound for no liability thereafter created, nor because after such notice, renewals were made of the indorsed paper, on the indorser’s credit, which he afterward paid.
    4. The stockholders, being indirectly liable for the debts of the corporation, to an amount equal to the stock held by them, and beneficially interested in its credit, and property thereby obtained, their covenant of indemnity to him who on the faith of it indorsed the paper of the corporation for their mutual benefit, expressly created an obligation like that which the law implies on the part of every principal; and his relation to them, if not strictly that of a surety, is analagous to it, giving rise to corresponding rights and remedies.
    (Decided November 22, 1887.)

      Error to the Circuit Court of Stark County.
    Jacob Miller brought his action in the court of common pleas of Stark countv against Lewis J. Wise upon the following agreement:
    “ We, the undersigned, stockholders in John Ball & Co., of Canton, O., in consideration of the mutual benefit derived by the stockholders of said company by reason of the indorsement of said company’s paper by the individual stockholders thereof, do hereby jointly and severally bind and pledge ourselves to each and all of said indorsers and sureties, and especially to Jacob Miller, George Cook and W. W. Clark, that we will protect them and each of them in proportion to the amount of stock held by us in said company against any and all losses and damages sustained by them, or any of them, or which they may at any time be subjected to by virtue of any indorsement of said company’s paper heretofore made by them or that may hereafter be made by them or any of them, or any stockholder of said company, for the use and benefit of said company.
    “Dated January 2d, 1871.
    “ W. W. Clark, J. D. Hall,
    D. B. Douds, John Wonderly,
    A. J. Criss, T. H. B. Correll,
    L. J. Wise, Jacob Miller,
    Correll & Son, George Cook.”
    The petition contains forty-seven causes of action, being for Wise’s proportion of the several amounts paid by Miller on notes indorsed by him under the contract. It alleges that John Ball & Co. is a corporation organized under the laws of this state, with a paid up capital stock of twenty-eight thousand five hundred dollars, the defendant being the owner of three thousand dollars thereof. It further alleges the due execution of the contract; that in pursuance thereof the plaintiff indorsed the several obligations of the corporation, John Ball & Co., set forth particularly in the petition; that the corporation became insolvent, and he was compelled to and finally did pay the same, no part of which has been repaid by the defendant, though often requested. . The petition does not allege that Miller notified the defendant of his acceptance of the contract, nor of the several indorsements made by him thereunder. On this ground the defendant demurred to the petition, which being overruled, he answered, setting up five defenses, in which he admits the execution of the agreement; avers he never received any notice that the plaintiff had become liable for the corporation under it; that on the 2.6th of October, 1875, he notified Miller that he would stand responsible for no liabilities thereafter created; and that thereafter the plaintiff and John Ball' & Co., upon sufficient consideration, extended the times of payment, for a definite period, of all of the notes indorsed by him.
    A reply was filed controverting the averments of the answer, and by consent the cause was referred to Joseph J. Parker to hear and determine the issues of law and fact, and report his findings of fact and conclusions of law to the court.
    The referee filed his report, from which it appears that he found the contract was entered into as alleged in the petition; that Miller, acting under it, indorsed the various notes described in the petition, paid the same, and that Wise’s proportion of the amounts so paid is $4,019.98.
    In regard to the execution of the agreement, and notice to the defendant of its acceptance by the plaintiff, the finding is as follows:

      “ In order to obtain credit for the said corporation, on the 2d day of January, A. D., 1871, D. B. Douds, A. J. Criss, L. J. Wise, Correll & Son, J. D. Hall, W. W. Clark, John Wonderly, T. H. B. Correll, Jacob Miller and George Cook entered into the written agreement described in the petition, and each of said persons signed the same, and after it was so signed, it was left with Wm. W. Clark to hold for the parties.

      “ That after said paper was signed, no notice was given to Lewis J. Wise by the plaintiff, or any one else, that he or they had accepted said contract, nor was any notice given by the plaintiff to said Wise of the different notes or papers indorsed by the plaintiff or otherwise secured for the benefit of John Ball & Co., but that the plaintiff acted on the faith of said guaranty paper in signing and indorsing the paper of John Ball & Co., hereinafter mentioned; and that said Wise knew that said agreement was executed for the purposes heretofore recited, and knew that it was intended to be acted on by the plaintiff and others.”
    He further finds “ that on the 26th of October, 1875, the defendant, Lewis J. Wise, notified Jacob Miller that he revoked and cancelled the agreement, made January 2d, 1871, and that he would stand responsible for no liabilities thereafter created, in any of the ways, or by any of the persons or parties in said agreement.” And after that period certain of the notes 'were renewed.
    Among his conclusions of law are the following :

      “ That it was not necessary for the plaintiff to notify the defendant of his acceptance of said guaranty, nor of the securing or indorsing of notes by him.
    “ That said guaranty Avas binding on the defendant for all claims of said John Ball & Co., owing by it, secured or indorsed by the plaintiff, made after its execution, and before the defendant gave the paintiff notice that he withdrew from the contract. „ '

      “ That he was not bound on any new debts created after he gave the plaintiff notice that he withdrew from said contract.
    ‘"‘’That the defendant Avas bound by said guaranty to pay such proportion of the claims as were created after the date of said guaranty, notwithstanding they were renewed and extended after such notice.”
    The defendant filed exceptions to the referee’s report and moved the court for judgment in his favor, on two grounds.
    “ 1. Said referee, having found, as matter of fact, that several notes set up in the plaintiff’s petition, Avere renewed and extended in time of payment after the notice of defendant that he Avould no longer be held liable on the contract of guaranty sued upon, should have found as a matter oflaAvthat said defendant Avas discharged from all liability upon the several causes of action set forth in the petition.

      “ 2. Said referee, haAÚng found as a matter of fact that said Wise never received any notice of the acceptance of the contract of guaranty sued upon, or the obligations incurred by the plaintiff upon the strength thereof, should have found as matter of law, that said Wise was not liable to the plaintiff upon the several causes of action set forth in the petition.”
    The exceptions were overruled and judgment entered against Wise for the amount found due by the referee.
    This judgment was affirmed by the circuit court, and the reversal of both judgments is now sought in this court.

      Day & Lynch, for plaintiff in error.

      W. W. & J. J. Ciarle and J. A. Ambler, for" defendants in error.
   Williams, J.

The two propositions upon which the plaintiff in error asks the reversal of the judgments below, are embraced in his exceptions to the report of the referee, and, briefly stated, are:

1. That Wise having received no notice of the acceptance of the contract of guaranty, never became liable to the plaintiff; and

2. That some of the notes indorsed by Miller were renewed after the defendant notified him on the 26th day of October, 1875, that he would stand responsible for no liabilities thereafter created, and as to such, he was discharged from his obligation.

Both of these propositions are based upon the hypothesis that the contract is purely one of guaranty, and that the defendant sustains no relation to the plaintiff but that of a guarantor. Whether this be the true conception of the agreement, will be considered hereafter.

1. Grant, however, that it is simply a contract of guaranty, under the facts found by the referee, was notice by the plaintiff that he accepted the contract, or of the indorsements made by him thereunder, necesary to fix a liability upon the defendant?

Upon this point it is contended for plaintiff in error, that where the guaranty is indefinite in time and amount, with no obligation resting upon the guarantee to act upon it, authority and reason have settled the rule that notice of his acceptance of, and intention to act under the guaranty, and of the principal’s default, are necessary to charge the guarantor.

It must be admitted that there is irreconcilable conflict in the decisions upon the question both in regard to the cases in which notice is necessary, and the ground upon which the necessity of the notice is placed. Some American cases hold that upon every guaranty for future advances or credit, it is the duty of the party making the advances or extending the credit, to give notice to the guarantor of his acceptance of, and consent to act under the guaranty; and the tenor of these decisions is, that guaranties for future advances or credit, are peculiar mercantile contracts, with an implied condition that notice of acceptance and intention to act under them should be given. While the English cases generally, and many American cases, hold that the rule requiring notice by the guarantee of his acceptance of the guaranty and his intention to act under it, applies only where the instrument being in legal effect, merely an offer or proposal, such acceptance is necessary to that mutual assent, without which there can be no contract. Since the case of Powers v. Bumcratz, 12 Ohio St. 273, the latter has been the rule in Ohio'. In the opinion of the court in that case, which contains an extended review of the cases on the subject, Gholson, J., says: We have examined some of those cases in which the guaranty being indefinite as to the amount and time of the advances, something might be expected in the pleadings or points made, as to notice of the acceptance of the guaranty, but nothing of the kind appears j” and in support of the conclusion that such notice is not necessary cites Paige v. Parker, 8 Gray, 211, where it is said: On this point a distinction which is sometimes overlooked is to be taken between a guaranty and an offer of a guaranty. In the ease of an offer of a guaranty, as in the case of any other offer or proposal, an acceptance thereof, seasonably made known to the party offering, is necessary to the completion of the contract. But express notice of the acceptance of an absolute guaranty is not always, if ever, necessary for the purpose of binding the guarantor. In the state of New York the courts hold that no notice of acceptance is necessary where the guaranty is absolute.” Gholson, J., then proceeds: “ The distinction thus pointed out is the one sustained by the authorities we have examined, and the question whether an instrument be an absolute guaranty, or a mere offer to guaranty, depends upon a fair construction of its terms. Applying this rule, and rejecting that which would make every undertaking to be responsible for a credit to be given to a third person, a mere offer or proposal to guaranty, it is scarcely necessary to say that the instrument sued on in this case is an absolute guaranty.”

In that case Gholson, J., quotes, with approval, from the opinion of Cowen, J., in Douglass v. Howland, 24 Wend. 35-49, as follows: I am aware that there are a class of eases which hold that, under a contract guaranteeing a debt yet to be made by another, the guarantor is not liable to a suit without notice that the guaranty has been accepted and acted upon. Indeed, they go farther; if notice of accepting the guaranty be not given within a reasonable time, no debt whatever arises. I will only say that these cases have no foundation in English jurisprudence, where adjudications are numerous and clear the other way.”

And in the case of Whitney v. Groot, 24 Wend. 82, it was held that a guaranty addressed to a mercantile firm in these words, “ we consider Mr. J. V. E. good for all he may want of you, and we will indemnify the same,”, is a valid instrument binding upon the guarantors; and that they were not entitled to notice of the acceptance of the guaranty or of the sale and delivery of goods under it to the principal. Nelson, C. J., says, The instrument did not contemplate any notice of acceptance, or of the sales to the defendant made in pursuance of it; it was not a proposition to become surety for Wan Eps, but an absolute undertaking to pay for the goods if he did not, and obviously contemplated a sale and delivery on presentation. Unless there is something in the nature of the contract or terms of the writing creating or implying the necessity of acceptance or notice as a condition of liability, neither are deemed requisite.” And in Paige v. Parker, supra, it was held that, “a guaranty delivered by the guarantor to the guarantee, of the payment of any sales to be made to a third person, binds the guarantor without proof of a promise of the guarantee to make such sales, or of formal notice of the acceptance of it, or of notice to the guarantor of each sale as it is made.”

The application of the doctrine of these cases to the contract' in question does not leave this branch of the case' doubtful. The instrument is in no sense a mere offer or proposal of guaranty to Miller; it is an absolute and unconditional contract of indemnity; the parties thereby jointly and severally bind themselves to Miller that they will, in proportion to the amount of stock held by each in the corporation, protect him against all loss and damage sustained by him by reason of his indorsements of the company's paper. The contract is signed by Miller as well as Wise, and, under the authorities, no notice of acceptance was necessary. But if it were, the result must be the same. The referee reports that the contract was entered into by all the parties on the 2nd day of January, 1871, to obtain credit for the corporation; and after it was signed by each, it was delivered to Clark to hold for the parties; that the plaintiff, acting on the faith of it, indorsed the company's paper; and that Wise knew he intended to act upon it. Beside, the contract recites that it was entered into for the mutual benefit of all the parties. The cotemporaneous execution of the agreement by all the contracting -parties, with the intention that it should be acted upon, for a purpose beneficial to the promisors, and its delivery by the parties to a third person for their uses, which is equivalent to a delivery by each to the others, is a sufficient acceptance and notice thereof. Any further acceptance and notice would be idle ceremony.

2. The referee charged the defendant with his proportion of the amounts paid by Miller, on notes originally indorspd by him after the date of the indemnity agreement, and renewed after the notice of October 26, 1875. The plaintiff in error claims he should not have been so charged.

The notice is not in writing. As found by the referee, it notified Miller that Wise revoked the contract, and would stand responsible for no liabilities thereafter created. Usually it requires the same meeting of minds of the parties to alter or terminate a contract, that it does to make it. This contract having been made by the stockholders of the corporation for their mutual benefit, with no reservation of such right to any one or part of the contracting parties, it may be doubted whether it could be modified or terminated without the concurrence of all. However this may be, it would seem clear that after obligations have been incurred by one upon the faith of it, the liability of the others under it should continue until performance of its conditions by them. While sureties are favorites of the law, and may stand upon the letter of their contracts, there is no duty imposed upon courts to search diligently for channels of escape from their obligations. It is the policy of the law to give effect to their agreements as it is to those of all other parties, according to their terms and purport. It cannot be denied that in the absence of the notice, the indorsements upon the renewals were as fully within the terms of the defendant’s engagement, as those upon the original notes; and hence, if the defendant was released from his liability under the contract to indemnify the plaintiff against his indorsements on the renewals, it must be by virtue of the notice. He can ask no more from his notice than it fairly imports. It stated in terms that he would stand responsible for no liabilities thereafter created.” Were these renewals the creation of new liabilities, liabilities “ thereafter created; ” or were they mere changes in the forms and evidences' of already existing liabilities ? In Horsey v. Heath, 5 Ohio, 353, it appeared that Lettler and Heath were partners in a drove of cattle, and borrowed money from bank on their note indorsed by Horsey. Afterward Heath renewed the note in his own name indorsed by Horsey; neither Lcttler’s nor the firm name being on it. Horsey paid the debt and sued Heath and Lettlor’s administrator (Lettler being dead.) Lettler’s administrator alone defended, and claimed that although he was liable on the original note, the renewal by Heath with Horsey’s indorsement made Horsey Heath’s individual security,- and discharged Lettler’s estate. But the court held otherwise. In the opinion, Wright, J., says: “No new debt was created (by the renewal). The old one remained outstanding, although to conform to the custom of business in the bank when continued and further time was given, the evidence of the debt was from time to time changed. No one ever in fact paid the debt but the complainant. * * * When the identity of the debt is ascertained, it is now settled that a mere change of the evidence .of it, will not affect the liability of the real parties in a court of chancery.”

In the case of Bush v. Critchfield, 5 Ohio, 109, the plaintiffs Bush and Tuttle furnished McConnell merchandise to sell on commission, for which he agreed to faithfully account. The defendants became bound as his guarantors. Afterward the plaintiffs and McConnell had a settlement of their accounts, on which McConnell was found to be indebted to the plaintiffs in a large sum, for one-half of which he gave his note to Bush, and for the other half gave his note to Tuttle. These notes not having been paid, suit was brought against the defendants on their guaranty. Their defense was that by taking the notes they were released. But the court held they were not, and gave judgment against them. In the course of the opinion Collet, J., says: “But that these notes to Bush and Tuttle so changed the contract with McConnell and the plaintiffs as to be a discharge of the defendants on an inquiry for damages, cannot bo successfully contended. * • * * The taking of these notes in this -way did not in any way injure them. The defendants covenanted -with the plaintiffs, that if they would deliver the goods to McConnell, they would indemnify them for any loss they might sustain, by McConnell not paying over the proceeds of their sale. Relying on this, the plaintiffs advanced their goods to McConnell, and he, of the proceeds of these goods, has kept back, and still keeps back, twelve hundred and sixteen dollars. Every principle of justice requires that the defendants should pay this sum to the plaintiffs.”

In this state the law seems well settled, that a note given by way of renewal or otherwise for a precedent debt does not have the effect of creating a new debt, or operate as a satisfaction or discharge of the debt for which it is given, unless it is so agreed by the parties. McNaughten v. Partridge, 11 Ohio, 223; Merrick v. Boury, 4 Ohio St. 60. It does not appear from the findings of the referee, that there was such agreement in regard to any of the renewals involved in this case after the 25th of October, 1875, nor anything giving rise to the presumption that there was. But whether the effect of these renewals was to create new liabilities, or simply to change the evidences of the pre-existing debts, we do not regard as of much practical consequence; for if they created new debts, they paid and extinguished those for which they were given; the latter were contracted, and Miller’s liability thereon by his indorsement incurred before the notice; the corporation being then insolvent, Miller’s, credit upon the renewals, which were afterward paid by him, was the means of payment. This appears from the report; and although in some causes of action in the petition, the defendant’s indebtedness to plaintiff, is stated to be for money paid on the renewals made after the notice, while strictly, they were payments by the renewals of the debts created before the notice, the variance is more technical than substantial, and amendments might have been allowed at any time to conform the petition to the facts. As upon the whole report the proper judgment was rendered upon the undisputed facts, the judgment should not be reversed because of such variance, when it is apparent the same judgment must ultimately be rendered. The defendant covenanted with the plaintiff, that if he would indorse the paper of the corporation for the former’s benefit, he would protect and indemnify him. Relying on this, the plaintiff by his indorsements incurred large liabilities which he was compelled to pay, and against which the defendant has neither protected nor indemnified him. It in no way concerned the defendant whether the plaintiff' paid in money on the maturity of his obligations so incurred, or by his credit obtained time on his renewals which he afterward paid. In either event he has paid the debt contracted on the faith of defendant’s covenants, and thus borne tne burden the defendant by his agreement made his own, and from which he promised to relieve the plaintiff.

On the other hand, as we have before seen, if the renewals created no new debt, but were mere changes in the form and evidence thereof, the original remaining unpaid or otherwise unextinguished, the notice by its terms did not apply to them, and the defendant’s liability under the contract remained unaffected by it.

3. But is the undertaking of the defendant simply that of a guarantor? He and his co-obligors were the stockholders of the corporation, and indirectly, at least, liable on its indebtedness to an amount equal to their stock; they were beneficially interested in its credit, and the property thereby obtained; and it was to their mutual advantage to advance its prosperity, and develop its purposes. Recognizing this, in consideration of the mutual benefit derived by the stockholders of the company,” by reason of the indorsement of its paper they bound themselves to Miller that they would protect him against loss and damage sustained by such indorsements. By their covenant of indemnity to Miller, who, on the faith of it, indorsed the paper of the company for their mutual benefit, they expressly created an obligation like that which the law implies on the part of every principal, and his relation to them, if not strictly that of a surety, is analogous to it, giving rise to corresponding rights and remedies. The engagement of every principal is to indemnify and protect his surety. This is implied from the relation of principal and surety, which generally arises, when one becomes bound at the request and for the benefit of another. A surety it is said “ is a person who being liable to pay a debt or perform an obligation, is entitled, if it is enforced against him, to be indemnified by some other person, who ought himself to have made payment or performed before the surety was compelled to do so. It is immaterial in what form the relation of principal and surety is established, or whether the creditor is or is not contracted with in the two capacities; the relation is fixed by the arrangement and equities between the debtors or obligors, and may be known to the creditor or wholly unknown.” Smith v. Shelden, 35 Mich. 42. The chief difference between the ordinary case of principal and surety, and the one we are now considering, consists in the mode in which the relation is established. Here, the stockholders who signed the agreement, expressly assume the position of principals, stipulate in terms to protect and indemnify their surety, and agree among themselves upon the proportion of the liability each shall discharge. Every element of suretyship is here present, as much as, if in contracting an original indebtedness, the contract itself be made to show on its face, that one of the obligors is surety merely. We see no reason why the plaintiff, after the notes indorsed by him became due, and before he paid them, could not have maintained an action against the stockholders who signed the agreement, to compel them to pay the debt, and protect him therefrom according to the terms of their covenant.

Wooldridge v. Norris, 6 L. R., Eq. Gas. 410, was a case where a surety on a bond to secure a money debt, was secured by another bond of indemnity entered into by the principal debtor’s father, who afterward died. The creditor having applied to the surety for payment, he filed his bill against the father’s executors to compel them to pay the debt, and for indemnity ; his bill was sustained.

Sir G. M. Gifford, V. C., deciding the case, said: “Now as regards the right of the plaintiff to file a bill quia timet, the principle is clearly laid down by Lord Redesdale in these terms:. ‘A court of equity will also prevent injury in some cases, by interposing before any actual injury has been suffered ; by a bill which has sometimes been called a bill quia timet, in analogy to proceedings at the common law where in some cases a writ may be maintained'before any molestation, distress or impleading. Thus a surety may file a bill to compel the debtor on a bond in which he has joined, to pay the debt when due, whether the surety has been actually sued for it or not; and upon a covenant to save harmless, a bill may be filed to relieve the covenantee under similar circumstances.’ ”

This view of the relation of the parties disposes of both propositions urged by the plaintiff in error, and results in the affirmance of the judgment.

Judgment affirmed.


author: Spear, J.

text:
    Commissioners of Mahoning County v. Railway Company.

      County commissioners — Right to maintain action for injury to bridge in municipal corporation.

    The act of April 8, 1880, entitled “ An act to authorize the commissioners of Mahoning county to build a bridge across Mahoning river,” gave to the commisioners authority to build a bridge across the Mahoning river in the city of Youngstown, at the foot of Market street, and the city, by ordinance, gave the commissioners the right to use and occupy so much of Market street as might be necessary in the building of a bridge and constructing approaches thereto. Under the authority thus given the commissioners proceeded to build a bridge. By their petition the commissioners set out the above facts and charge that the defendant, in constructing its railroad along the bank of the river under the south end of the bridge, excavated dirt near one of the abutments of the bridge in such way as to render the same insecure, and to damage the bridge and render it unsafe for travel. Held .•
    That the commissioners cannot maintain an action to recover damages for such alleged injury.
    (Decided November 22, 1887.)
    Error to the District Court of Mahoning County.
    This .action was commenced by the filing, in the court of common pleas, of a petition by plaintiffs, in which it is, in substance, alleged that they, by law, have the charge, control and care of the bridges in the county of Mahoning across the Mahoning River, and it is their duty to maintain, for the benefit of the public, bridges across such streams as may, in their judgment, be deemed necessary;, that in the discharge of their said duty they have paused to be erected and constructed in the city of Youngstown, and across the Mahoning river, which runs through the city, a bridge, located across said river at a point where South Market street is crossed by said river, which said street, together with said bridge, when completed, will form a continuous thoroughfare and line of travel through the city. In the erection of said bridge the southern abutment was placed at a distance of about seventy feet south from low water-mark in said river; that plaintiffs have the control of, and, as such commissioners, have title to, the land lying beneath said bridge, and extending from the southern terminus thereof to low-water mark, being a strip of land about seventy feet in width, and about ninety-four feet in length; that the northern wall of said abutment was protected by a natural mound of earth extending up about six feet above the foundation of said abutment, forming an abundant and necessary protection to said abutment, and was so left for such protection.
    The defendant, a railroad corporation, having authority to construct a railroad through said county and city, in the construction of its railroad and road-bed, have, without authority, entered upon said strip of land underneath said -bridge, and have cut and removed^said mound and the material composing the same,, to the depth of about fifteen feet, and so near to said abutment as to destroy the protection afforded thereby, thus rendering said bridge insecure and dangerous to the travelling public, to the damage of these plaintiffs, as such commissioners, in the sum of five thousand dollars, for which they, ask judgment. 1

    Issue was jpined by answer and reply, and the cause coming on to be tried by jury, the plaintiff gave in' evidence the act of April 8, 1880, entitled, “ An Act to authorize the commissioners of Mahoning county to- build a bridge across the Ma-honing river;,” which is as follows:

      “ Section 1. Be it enacted by the General Assembly of the State of Ohio, That the Commissioners of Mahoning county be and they are- hereby authorized and empowered, if in their judgment the sarnie ought to be done, to build a bridge across the Mahoning river,, in the city of Youngstown, at or near the foot of Market street therein, to the opposite bank, and to construct the necessary approaches thereto; and for the purpose of building said bridge-and constructing said approaches, said commissioners are hereby empowered to issue the bonds of said county, not to exceed’ twenty-five thousand dollars ($25,000), in sums of not less than one hundred nor more than five hundred dollars, and payable at such times as they may deem most advantageous, not exceeding five years from the date of their issue, and to negotiate and sell the same, but the interest upon such bonds shall not exceed six per cent, per annum, nor shall they be sold for less than their par value.

      “ Sec. 2. This act shall take effect and be in force from and after its passage.”
    They then called one of the commissioners as a witness, and asked him to state what, during the years 1880,1881 and 1882, was done by the commissioners in the way of constructing a bridge across Mahoning river, on Market street, in the city of Youngstown, to which defendant objected. The plaintiff then offered to show by the witness all the allegations of the petition, and offered further to show that the council of the city of Youngstown, by ordinance and resolution, had granted to them, as such commissioners, the right to use and occupy so much of Market street in said city, as might be necessary in the building of said bridge and constructing approaches thereto, to all of which defendant objected. The objection was sustained by the court, and no further testimony being offered, the court directed a verdict for defendant, and a judgment was rendered thereon. On error to the district court the judgment was affirmed, and this proceeding is prosecuted to obtain a reversal of both Judgments.

      J. B. Johnson and H. IT. Moses, for plaintiff in error.

      A. W. Jones, for defendant in error.
   Spear, J.

The real question in the case is, whether or not, under the petition, any right of action existed in the commissioners to recover for damages to the bridge ? That boards of county commissioners in Ohio have such powers, and such only, as are conferred by statute, and may maintain such actions, and such only, as are by statute authorized, is too well established to admit of controversy. So, in this case, we must look to the statutes for a determination of this question.

It is contended on the part of plaintiffs in error, that they have the right to maintain the action, because commissioners have, under sections 860, 863 and 4938, Revised Statutes, not only the general power to erect and maintain bridges in their respective counties, but it is their duty to do so; and that if the language of section 863 is not broad enough to embrace a bridge, the property of the county,” then the special act of April 8, 1880, brings this particular bridge within the meaning of the sections referred to.

Section 863 provides that where a bridge on any state or county road, or any public building the property of, or under the control or supervision of any county, is injured or destroyed by any person or corporation, such person or corporation shall be subject to an action for damages, and the board of commissioners is authorized to sue and recover for such injury or impairment, and the money so recovered shall be appropriated by the commissioners to repairing such bridge, building or road, as the case may be, or to reimburse the county for expenditure in that behalf.

Two important features of this section will be noted: 1. As to bridges, its terms are confined to such as are located on any state or county road.” 2.. The money recovered is to be appropriated by the commissioners to the repair of such bridge, or to reimbursing the county for expenditures in that behalf.

Section 860 provides that “ the commissioners shall construct and keep in repair, all necessary bridges over streams and public canals on all state and county roads, free turnpikes, improved roads aud abandoned turnpikes and plank-roads, in common public use, except only in such cities and villages as by law have the right to demand and receive part of the bridge fund levied upon property within the same.”

Section 4938 provides that the commissioners of the several counties shall cause to be constructed and kept in repair, in the manner prescribed by law, all necessary bridges in villages and cities not having the right to demand and receive any portion of the bridge fund levied upon property within such corporation, on all state and county roads, free turnpikes, improved roads, transferred and abandoned turnpikes and plank roads, which are of general and public utility running into and through any such village or city.

It will be noted that the petition does not, in terms, describe a bridge upon any one of the roads enumerated in either of these sections, nor can the court, sua sponte say that any one of these roads or turnpikes enumerated in the foregoing sections is the equivalent of a street in a city. So that, unless the fact that the bridge was built under authority of the act of April 8, 1880, makes it a county bridge, and brings it within the category of bridges upon county roads, it is manifest that the sections quoted can give no authority to the commissioners to keep this bridge in repair, or recover for damages to it. That act simply authorizes the commissioners to construct this bridge. There is no provision giving authority to repair, nor is there any authority to maintain an action for injury to it. Had those subjects been in the legislative mind at the time of the enactment of the statute, and had it been the purpose of the assembly to confer that authority, it seems reasonable to assume that clear language to that effect would have been used.

But if we were able to say that Market street may be treated as an improved road, or a turnpike, or a county road, still the exceptions contained in both sections 860 and 4938, confining their application to bridges in cities and villages not having the right to demand and receive any portion of the bridge fund levied upon property within such corporations,” would be fatal to a recovery in this case.. "We have, by statute, but two classes of cities both of which under section 2824 have the right to demand a portion of the bridge fund, and it follows that when this bridge is described as within the city of Youngstown, it is the equivalent of saying that it is within a city which may demand and receive a portion of the bridge fund, thus bringing it within the exceptions of the sections of the Revised Statutes referred to.

The purpose of the exception seems to be obvious. By section 2640, Revised Statutes, it is made the duty of the council to cause all bridges within the corporation to be kept open and in repair, and this requirement has no modification save as to those municipalities which cannot receive any portion of the bridge fund. In such, upon county roads, etc., the commissioners must keep the bridges in repair. The muncipality pays the whole of its tax raised for bridges into the county bridge fund, and it is but fair that the county should keep up the county bridges. The other class, having control of a part of the taxes raised for the purpose, may fairly be required to keep the bridges within their limits in repair.

Arguendo, it may be added that section 863 contemplates that the money recovered from those committing injuries to bridges will be expended by the commissioners in repairs to the injured bridge, but as control of bridges in this municipal corporation is confided to the corporate authorities, the commissioners, if they should recover in this case, would seem to lack authority to apply the moneys recovered to repairs upon this bridge. Railroad Co v. Commissioners, 35 Ohio St. 9.

Perry County v. Railroad Co., 43 Ohio St. 451, is cited asan authority sustaining the position of plaintiff in error. In that case a bridge upon a county road, within the limits of a village, was destroyed, and this court held that the board of commissioners of the county was the proper party to bring an action to reimburse the county for expense incured by the board in re-building the bridge. The case is so wholly different from the case at bar that no comment is deemed necessary.

'Whether or not in this case the authorities of the city of Youngstown could maintain an action we are not called upon to discuss. It is not clear that they could, and the subject may well receive the attention of the general assembly.

The question made by the record is not as to a right to recover for trespass upon, or injury to, real estate, but simply, as stated at the outset, whether the commissioners can maintain an action for injuries to the bridge. We think they cannot.

Judgment affirmed.