author: Spear, J.

text:
    Meeks v. Stillwell et al.

      Delivery of deed of gift — To stranger for -use of grantee — Grant.or may resume possession of\ when — Grantor's intent — ■Grantees title — Delivery during grantor's life of deed intended to be effective after grantor's death.

    1. The rule that delivery of a deed of gift may be to a stranger for the use of the grantee implies that the instrument truly expresses the intention of the grantor. But where the instrument so delivered does not express the real intent of the grantor, and has not been recorded nor actually delivered to the grantee, the grantor may lawfully resume possession of the instrument and correct it so that it will conform to the , real intent.
    2. If, after such correction, there is a valid delivery, the grantee’s title will be such as is given by the corrected instrument.
    3. Equity will not reform a deed of gift so as to give it an effect contrary to the intention of the grantor.
    4. Where husband and wife, being in possession of a homestead) the title to which is in the wife, join in a deed of gift intending that it shall not be delivered until after the decease of both, and the wife attempts to deliver such deed during the life of the husband without his knowledge and consent, the right of the husband in the homestead will not be affected by the deed. ■
    (Decided May 26, 1896.)
    Error to the Circuit Court of Miami county.
    Plaintiff’s action was for the recovery of real estate, and an accounting for rents and profits. Defendants denied plaintiff’s right to a recovery, and sought to have title quieted on alleged equitable grounds. The common pleas found plaintiff entitled to possession, and ordered a reference to ascertain rents and profits. The defendants thereupon appealed to the circuit court. That court found for the defendants, ordered title quieted, and adjudged that petition be dismissed at plaintiff’s costs. Plaintiff here asks a reversal of that judgment.

      M. Ii. Gcontz, and A. F Broomhall, for plaintiff in error.
    The court erred in holding the first delivery to Jas. H. Means to be absolute and irrevocable when the proofs showed Means acted for Mrs. Meeks. The donee must take possession and retain it till donor’s death. Hatch v. Atkinson, 56 Me., 324. It is perfectly natural to believe that the deed was executed for the purpose claimed. If Mrs. Meeks had died before the law was changed Dr. Meeks would have taken a life estate in the property, as they intended, and they undoubtedly thought that the deed could remain in the bureau drawer until the Doctor’s death, and then Roxie could take it.
    It follows from above that the gift was donatio causa mortis. It cannot be a gift inter vivos, because Mrs. Meeks continued to occupy and use the property as her own up to the time of her death. The Law Reports, Equity, Cases, vol. 9, page 44.
    The deed could not be inter vivos as to Dr, Meeks and causa mortis as to Mrs. Meeks. That it was causeo mortis as to Mrs. Meeks, is beyond dispute. Then what are the rights of the parties to this suit?
    If the deed was ceousco mortis as to Mrs. Meeks, it was also subject to her revocation and modification. Thornton on Gifts, section 123; Am. and Eng. Ency., vol. 8, page 1351; 2 Kent Com. 444-85 Phipps v. Hope, 16 Ohio State, 586; Andrews v. Andrews 12 Ind. 348; Curtis v. Barns, 38 (Hun.), N. Y., 165; Emery v. Clough, 63 N. H., 554.
    The grantee cannot claim under the deed which slie admits, or rather which the undisputed proof shows was made causa mortis and at the same time dispute a limitation which the grantor herself wrote in the deed while in sound mind and under no duress or undue influence.
    The deed must stand as it is so far as the grantee is concerned, or it must be held wholly void and Mrs. Meek’s estate settled under the statute. Williams v. Schatz, 42 O. S., 47.
    Again, it is clear, from the proof, that it was not the intention of these old people to deliver this deed until after their deaths. 14 Allen, 417; 86 Mass., 417.
    The following authorities hold that a gift of real estate causa mortis is invalid, Am. & Eng. Ency., vol. 8, page 1350; Peck v. Rees, 7 Utah 467, or Book 13, Lawyers’ Report Annotated, page 714.

      Cal/oin D. Wright and Thomas i& Thomas, for defendants in error.
    As to acceptance there can be no doubt, in our opinion. The gift being" beneficial the law presumes acceptance. Mitchell v. Ryan, 3 Ohio St., 377; Harvey v. Gardner, 41 Ohio St., 642.
    We cite the following authorities on our claim that the title passed to Roxa, upon the delivery of the deed to James H. Means. Mitchell v. Ryan, 3 O. S., 377; Black v. Hoyt, 33 O. S., 203; Crooks, v. Crooks, 34 O. S., 610; Ball v. Forman, 37 O. S., 132; Burt v. Cassety, 12 Ala., 734; Guard v. Bradley, 7 Ind., 600; Brown v. Austen, 35 Barb. (N. Y.), 341; Bryan v. Wash, 7 Ill. 557.
    This is not a gift causa mortis, first, because real estate is not the subject of such a gift. Meach v. Meach, 24 Vt., 594.
    Second, because it was to take effect immediately, and no control over it reserved by the donor. Gratton v. Appleton, 3 Story, 755; Raymond v. Sellick, 10 Conn., 480; Dole v. Lincoln, 31 Me., 432.
    There is no fraud set up by the plaintiff, then the court must assume that the act of Mrs. Meeks in the delivery was in fact in accordance with the understanding of the parties at the time of its execution and contemplated delivery to Roxanna Stillwell. The state of mind as to what one could do is not evidence of what one did do. 2 Ohio St., 500.
    It being admitted that the delivery was made to Jas. H. Means, trustee, for the purpose of being put on record, and that fact not being disputed in fact in the testimony of the plaintiff, is now es-topped from denying it and its legal effect. 14 Ohio St., 414.
    This would not be true if there was fraud ox-mistake. 18 Ohio St., 246.
    The plaintiff by his silence as well as his acts bar him ixow; and by those acts and silence con vince us that he has no real claim. 2 Ohio, 506.
    Declarations and acts of the donor after delivery of the deed in which it may be sought to qualify or change the terms of the deed are not competent proof, and should be rejected by the court. 7 Ohio St., 292; 15 Ohio St., 15.
    Except, if Mrs. E. B. Meeks intended to make the gift, her declarations to make that gift are competent if she made it. 29 Ohio St., 14.
    We think that the declarations of the grantor eaxxnot be shown to prove fraud in an action between the grantee and his heirs. 26 Ohio St., 402.
    It is a dangerous doctrine that parol evidence may be admitted of the statements made after the delivery of the deed, by Mrs. Meeks. 21 Ohio St., 596.

      The plaintiff and Mrs. Meeks lost all control over the deed after its delivery for record to Jas. H. Means. 1 Ohio, 321; 1 Ohio St., 141.
    . Suppose that this was a gift “causa mortis,” there is no proof that such was the fact except that the grantor died soon after its delivery; and if it was, the delivery of the deed without any qualifying statements or limitations or acts, takes it out of the rule. 3 Ohio St., 377; 5 Ohio St., 124-130, cited; 33 Ohio St., 203-212; 37 Ohio St., 132; 38 Ohio St., 300-314; 43 Ohio St., 77-89.
   Spear, J.

The record discloses that in the year 1886, and for a long time prior, Eusebia B. Meeks and her husband, Isaac S. Meeks, the plaintiff, were in the possession, as a homestead, of the real estate which is the subject of the action, and so remained in possession until the decease of Mrs, Meeks, June 17, 1889. The title was in the wife. On August 6,1886, they executed a deed of gift of the premises to Roxanna M. Still-well, a child six years of age and a granddaughter of Mrs. Meeks. The deed.was placed in the drawer of a bureau in their bedroom, with the understanding that it would be delivered after their decease. It there remained until the month of May, 1886, when Mrs. Meeks, being ill with what she believed was, and which proved to be her last sickness, and being told that the deed would have no effect unless delivered before her death, without the knowledge or consent of her husband, handed the deed to an attorney who was her friend and adviser, with directions to place it on record for Roxa. A few days thereafter, and while the deed was in the hands-'of the attorney, Mrs. Meeks sent for him to bring' the deed to her, which was done. She then stated that it was not her intention to have her husband put out of the property, and that he should be allowed to live there and occupy it as he had been occupying it before. She then wrote in the deed, following the warranting clause, these words:

‘ This deed is by no means designed to prevent the aforesaid Dr. Isaac S. Meeks, my husband, from the right of a home in part of the house, he to pay the taxes and make the repairs. Also can collect the rents. E. Í3. Meeks.

“June 3d, Troy, Ohio.”

The deed was then handed to the attorney, who the next day delivered it to the recorder of deeds of the county, and it was at once recorded. The plaintiff had knowledge of the above addition to the deed and assented to the subsequent delivery for record.

After the decease of the wife the plaintiff, being advised that his rights in the homestead had been taken away. by the deed, and that he would be liable for rent if he remained in the house, moved out. Later, being advised to the contrary, this suit was commenced, to obtain possession, etc.

It was held by the circuit court that the delivery of the deed by Mrs. Meeks to the attorney, with direction to have it placed on record for Roxa, constituted a complete deliverjq and that the subsequent transactions respecting the deed were without legal effect. In this we think the learned court erred. True it is that the delivery to another than .the grantee does not necessarily invalidate it, for, as held in Mitchell v. Ryan, 3 Ohio St., 377, delivery of a deed may be to a stranger for the grantee’s use. In the case at bar, however, it is at least doubtful whether the delivery referred to having been made to one who was thus constituted . the grantor’s agent for one purpose only, viz., to deliver the deed to the recorder for record, the grantor might not, before that act was done, even though the instrument had expressed the intention of the makers, revoke the authority and resume control of the instrument. The acts which the grantor apparently intended should constitute a delivery were the leaving of the deed with the recorder and its record. Neither of these acts had been performed, and it is difficult to see why the grantor might not change her direction to her agent with like effect as though she had undertaken to deli ver the deed to the recorder herself and changed her mind before doing so. But be that as it may, the deed on its face and by the record, contained a reservation in favor of the husband. The donee, in face of this reservation, could not prevail without a reformation of the instrument setting aside that provision, and before the court could do that all of the facts pertaining to the execution and delivery must be inquired into. Such inquiry disclosed that the addition made by Mrs. Meeks was for the purpose of making the instrument conform to her intention. That fact appearing, it necessarily ended the controversy. Equity will not reform a deed of gift against the intention of the donor. On the contrary, such deed will be set aside when it is clearly shown that it does not conform to the intention of the donor, or was executed under a material misapprehension as to its effect. Mulock v. Mulock, 31 N. J. E., 594; Story’s Eq. Jur., sec. 706a; Thornton on Gifts, secs. 118, 450.

Objection was made to proof of the declarations of Mrs. Meeks as to her intention made to the attorney at the time she corrected the deed, as hearsay. We think the declarations were competent as part of the res gestae. They accompanied the act, and served to illustrate and give color to it.

But the first delivery to the attorney should not be sustained against the plaintiff for the further reason that it was not assented to by him, and was contrary to the understanding had when the deed was executed.

Objection was made to the testimony by the plaintiff respecting the cause of his moving out of the property. We think it was competent to show that he surrendered possession in ignorance of his legal rights, and to rebut any presumption of an agreement which would prejudice his rights.

A portion of the premises was sold and conveyed by the guardian of the grantee, while the plaintiff was voluntarily out of possession. As to this portion the plaintiff should not now be heard to assert his claim. But, under the undisputed evidence the plaintiff should recover possession of whatever the reservation in the deed secures to him, less the parcel above referred to. The meaning of the reservation clause is not free from doubt, but we are inclined to the conclusion that the intention of Mrs. Meeks was to secure a home for her husband in the entire premises, and so hold.

The judgment will be reversed and judgment for plaintiff entered, dismissing the cross-petition, awarding possession to the plaintiff, with costs, and remanding the cause for further proceedings as to rents and profits.

Judgment reversed.


source: Caselaw Access Project

author: Burket, J.

license: Public Domain

text:
    Greenville Gas Company v. Reis et al.

      Corporation — Director of, dealing in its property on own account— Chargeable with notice — President made trustee of bond for sale — Cannot convert to own iise.

    1. A director of a corporation dealing in its property on Ms own account, is chargeable with notice of the action of the board of directors as to such property, whether he was present or not at the meeting which took such action.
    2. The president of a corporation, to whom a bond has been delivered by the board of directors in trust for sale, has no right to convert such bond to his own use in payment of a claim due him from the corporation, without the consent of the board of directors.
    3. A director or stockholder of a corporation, may be compelled by an equitable action, to surrender to the corporation, a bond which he holds in trust for it, but which he claims to hold in his own right.
    (Decided May 26, 1896.)
    Error to the Circuit Court of Darke county.
    The Greenville Gas company, plaintiff in error, is a corporation under the statutes of this state, and at a meeting of its board of directors, on the fifth day of December, 1887, the following preamble and resolution was unanimously adopted:
    “That whereas, the bonds of said gas company issued January 1, 1882, and running five years from date, calling for the sum of $15,000.00, and secured by the first mortgage on the real and personal property of said company, will fall due January 1, 1887, and that it will be necessary to build a new gasholder, at the works of said company, and make other improvements at a cost of $5,000.00, be it therefore resolved, That the president and secretary of said company issue bonds in the sum of $20,000.00, of the denomination of $1,000.00 each, and to be numbered from one to twenty in-elusive, and bear date of January 1, 1888, and run five years from date, and bear six per cent, interest from date, payable semi-annually, and that said bonds be made payable to the order of John Devor, as trustee, to dispose of said bonds at the best advantage for said company to redeem the aforesaid' bonds.
    “And that said bonds be secured by first mortgage on the real and .personal property of whatever kind and description of said company. ’ ’
    The bonds were issued, but were made payable to John Devor or order, nothing being said as to his being a. trustee, and were secured by mortgage on the gas works made to John Devor, who was president of the company. The mortgage securing the bonds, recites the substance of the above resolution, and further recites that there are outstanding bonds of the company to the amount of fifteen thousand dollars which have matured, and that it is necessary to make certain improvements in and about the works of the company to the amount of five thousand dollars. It is further recited in the mortgage that “whereas, it was further ordered by said board of directors that said bonds, having been negotiated to John Devor, that said party of the first part should make, execute and deliver to said John Devor, party of the second part, the purchaser of said bonds, a mortgage deed of all the franchise and property of the party of the first part to secure the payment of said bonds and interest which have been issued in accordance with said resolution. Now, therefore, The Greenville Gas company, for and in consideration of the premises and the sum of $20,000.00 to it in hand paid, the receipt whereof is hereby acknowledged, does hereby bargain, sell and convey unto the said John Devor, his. heirs and assigns, the following described real estate, etc.”
    The bonds recite on their face that they are secured by mortgage, recorded on the 27th day of December, T887, in book 56, page 479, of records of mortgages of Darke county, Ohio.
    The defendants in error having possession of bond number 17 of said series, an action was brought against them and the company by a stockholder to compel its surrender and cancellation. A demurrer having been sustained to this petition, the company filed its cross petition against said defendants in error, who were also defendants below, and by its amended cross petition, after setting out said resolution, the issuing of said bonds, and the execution and record of said mortgage, together with the recitals averred that said bonds were placed in the hands of said John Devor, president of said company, for sale, for the purposes specified in said resolution; that in the year 1888 said defendants became surety for said John Devor on an individual debt in the sum of one thousand dollars; that said John Devor delivered to them said bond number 17 as collateral, to indemnify them against loss as such sureties; that said bond belonged to the company and was held by said John Devor as trustee; that the said defendants did not pay anything further for said bond; that the company received nothing for said bond; that John Devor was insolvent, and well known to be so by said defendants; that said defendants, at the time of receiving said bond, had knowledge of the facts set out in the petition, and of the trust relation in which said Devor held said bond; that the said defendants claim to be tona fide owners of said bond, and that there is danger of their disposing of the same to an innocent purchaser.
    The defendants, by their answer, deny that the bond was placed in the hands of John Devor for sale, deny that the company was at the time of the transaction the owner of the bond, deny that at the time he. held the bond as trustee; deny that the company received no consideration for the bond; deny that they paid no consideration for the bond other than signing* said note as sureties ; deny the insolvency of John Devor ; deny notice of such insolvency ; deny knowledge of said resolution and deny knowledge that John Devor received or held the bond in trust, and aver that before said transaction the bond had been sold to John Devor by the company; that the company received a fair and full consideration for the bond; that said defendants paid a full consideration for said bond, and that they had no notice or knowledge that the company had or claimed any interest in the bond. As a second defense said defendants say that at the time of said transaction John Devor was the owner and holder of the bond; that it was payable to him or order, was regular and negotiable on its face, that John Devor indorsed and delivered the bond to them, that they are innocent holders of the bond, and at the time had no notice that the company had or claimed any right to, or interest in, the., bond, and that Devor became insolvent in April, 1890, and they were compelled to pay and take up the note at a cost to them of $1,119.92.
    There were two other defenses which were on motion stricken out by the court.
    The reply is a general denial of the new matter contained in the answer.

      Upon trial in the common pleas, judgment was rendered in favor of defendants, and the company appealed the case to the circuit court.
    A motion to dismiss the appeal was overruled and exceptions taken. Upon the trial in the circuit court the company having introduced its evidence and rested, the court found that said evidence did not sustain or establish the cause of action set out in the amended answer and cross petition of the company and found the issues”joined in the pleadings in favor of the defendants, and rendered judgment accordingly. A motion for a new trial was overruled and exceptions taken, and a bill of exceptions containing all the evidence was allowed, signed and filed, and made part of the record.
    Thereupon a petition in error was filed in this court, seeking to reverse the judgment of the circuit court.
    Knox, Mct/rtz <& Rv/pe and Safer <& Robeson, for plaintiff in error.
    John Devor certainly, no more than his brother, had any right to use this bond in his personal affairs, to the loss and damage of the corporation of which he was a trusted officer, and this fact was well known to Messrs. Shuffelton and Reis when they received the bond. Angelí and Ames on Corp., section 312.
    There is “no difference in principle or precedent between the agents of corporations and those of natural persons.” A. & A., section 315. Ib., section 276.
    Shuffelton and Reis are not innocent holders. Strong v. Straus, 40 O. S., 87; Board of Education v. Sinton, 41 O. S., 504, 513; Long v. Mulford, 17 O. S., 509.

      Shuffelton and Reis took the property knowing of the trust, and well knowing that the sale was not in the interest of the trust, and acquired no title to the property if the trustee misappropriated the proceeds of the sale. In such case the purchaser is put upon inquiry, and buys at his peril. He can stand in no better position than 'the trustee himself, and must be held to be a trustee for the beneficiary. The N. Y. Ins. Co. v. National Ins. Co., 14 N. Y., 85-91 and authorities there cited. Jackson v. Neely, 10 Johnson, 374, 376. Parker v. Nickerson, 112 Mass., 195-6; Gardner v. Butler, 30 N. J. Eq., 702, 721; Cook v. Mill Co., 43 Wis., 433.
    In the case at bar, Devor had no right whatever to pledge the bond in question, either individually or as trustee. Davoue v. Fanning, 2 John Ch., 252; Story’s Eq. Jur., section 400.
    It has likewise been held, that the words “ ‘Agent Glass Buildings,’ added to the signature to a check, are enough to put one who receives it in payment of a debt from the signer on inquiry as to his authority to use the fund for such payment.” Girard v. McCormick, 14 L. R. A., 234, 130 N. Y., 261.
    And good faith in receiving the payment of a debt with notice that the money belongs to the debtor’s principal will not relieve the creditor from liability to refund it to the principal, if the agent had no authority to use it for such payment. 14 L. R. R. A., 237; 130 N. Y., 266; Stock Yard Bank v. Gillespie, 137 U. S., 411; Shaw v. Spencer, 100 Mass., 382; Duncan v. Jaudon, 15 Wall., 165; Gaston v. The Bank, 29 N. J. Eq., 98; The National Bank v. The Ins. Co., 104 U. S., 54, Syl.2.
    ■ The relief sought for by the plaintiff in error in this case is to be obtained in a suit in equity, rather than by oue at law.

      Anderson c& Bowman, for defendants in error.
    That this court will not examine the evidence for the purpose of determining its weight is well settled by the repeated decisions of this court. Ford v. Osborne, 45 Ohio St., 1; Ferry et al. v. Gottlieb et al., 45 Ohio St., 195; Seville v. Wagner, 46 Ohio St., 52; Damarin & Co. v. Huron Iron Co., 47 Ohio St., 581 ; Ratterman, Treas., v. Ingalls, 48 OhioSt., 468; Railway Co. v. Erick, 51 Ohio St., 146; Wetzel v. Richcreek, 53 Ohio St., 62.
    The testimony showed that the bond was rightfully in possession of Devor for negotiation and sale. Therefore, he did not fraudulently obtain possession of the same. If Devor failed to account for this bond, it was a breach of trust on his part.
    If plaintiff in error was entitled to have them surrendered up and cancel the bond, it was equally entitled to recover from them the value thereof in ease they had sold and transferred the same.
    Therefore, plaintiff in error had an adequate remedy at laxo, and there was no occasion for the interposition of a court of equity.
    This could in no event happen if defendants in error were solvent. This claim is’ well settled. Bruner v. Meigs et al., 64 N. Y., 506; The Globe Mutual Life Ins. Co. v. Reals et al., 79 N. Y., 202; Town of Springport v. Teutonia Savings Bank, 75 N. Y., 397; Lewis v. Tobias et al., 10 Cal., 574; Grand Chute v. Winegar, 15 Wall., 373; Farmington Village Corporation v. Sandy River National Bank et al., 85 Me., 46; Bank v. Weyand, 30 Ohio St., 126.
    The bond in controversy is negotiable in form, and is a negotiable instrument having all the qualifications and incidents of commercial paper. Beech on Corporations, section 684. City of Lexington v. Butler, 14 Wall., 282.

      The defendants in error took the bond in question before due for a valuable consideration, without knowledge of any defect of title in Devor, and in good faith. Murray v. Lardner, 2 Wall., 110.
    The fact that the defendants in error are pledgees does not change the rule. Colebrooke on Collateral Securities, sec. 43; Swift v. Smith, 102 U. S., 442; Morris, Admx., v. Preston, 93 Ill., 216; McNeil v. The National Bank, 46 N. Y., 325; Long Island Loan & Trust Co. v. Railway Co., 65 Fed. Rep., 455; The Notional Bank v. Dakin, 54 Kan., 656.
    Of course if the defendants in error took said bond from Devor with knowledge that he held the same as a trustee, only, and with full knowledge that in pledging the same to them for his personal benefit, he was exceeding’ his trust and acting without authority, the rule would be otherwise. Dowden v. Cryder, 55 N. J. L., 331; State of Ohio ex rel. v. Board of Education, 35 Ohio St., 519.
    But the plaintiff in error is aprivcote corporation, and this rule does not apply. This distinction is well settled and made very clear in the case of Board of Education v. Sinton, 41 O. S., 504.
   Burket, J.

It is not necessary to determine as to the weight of the evidence in this case, because the ease can be disposed of upon a construction of the written documents and the undisputed facts.

As any business man would understand the transaction, when thinking honestly without reference to technicalities, the company issued its bonds secured by mortgagee, and put them into the hands of its president in trust to be sold for cash with which to take up its fifteen thousand dollars of outstanding bonds, and make certain improvements at its works. John Devor, in his testimony, says that the company owned the bonds, and that he held them as trustee to sell. There is nothing in the ease to contradict this, and upon the face of the transaction this must be true.

As John 'Devor received and held the bonds as trustee for the company, he could get rid of them only in one of three ways; either execute his trust and sell the bonds, or end his trust by returning the bonds to the company, or by disposing of the bonds in some other way by order of the board of directors.

He did neither. He pledged this bond number 17 as collateral security to indemnify the defendants against loss as sureties on his note. This was in violation of his trust, and as to parties with notice gave no title to the bond.

But defendants claim in their answer that they are innocent holders of the bond for value and without notice of the trust, but admit that they received it from John Devor as collateral to indemnify them against loss as his sureties on his individual note.

It conclusively appears by record evidence, that the defendant, Shuffelton, was at and before the adoption ofsaid resolution and the issuing of said bonds, a director of said gas company, and that the defendant, Reis, was a stockholder, and had been a director the two years immediately preceding that time. The record shows that Mr. Shuffelton was not present at the meeting at which the resolution was passed authorizing the issuing of the bonds. But that fact does not aid him. When it comes to dealing in the property of a corporation, a director is charged with notice of all that has transpired at the meetings of the board of directors. He is not allowed in such case to plead ignorance or want of notice or knowledge.

Mr. Reis was a stockholder, and had been a director, but the law does not charge him with notice as it does a director, and it may be possible that he acted in good faith and without notice, and if so he should be protected.

The rule of law applicable in this ease to Mr. Reis, a stockholder, and to Mr. Shuffelton, a director, is well expressed in the case of ex pcui'te Brown, 19 Beav., 97, thus: “In a former case (16 Beav., 500), I held that a shareholder of the company is not bound to have knowledge of what is contained in the books of the company; * * * but as regards the directors of a company, the case stands on a totally different footing. A person when he becomes a director accepts a trust which he undertakes to perform for the benefit of the company. If in the due performance of that trust, he must necessarily have acquired certain knowledge, it appears to me but fit that he should be charged with the knowledge of those facts which it was his duty to have become acquainted with. It is merely saying that a person shall be held to know that which it was his bounden duty to know. It appears to me that Mr. Brown .was bound to know what took place at the meetings of the board of directors, of which he was a member. * * * I must hold Mr. Brown to have had knowledge of that of which he ought to have known, and whether he had actual knowledge of it or not, is, in my opinion, immaterial for the present purpose.”

. To same effect is Merchants Bank v. Rudolf 5 Neb., 527, in which it is held that “Whatever knowledge a director has or ought to have officially, he has, or will be conclusively presumed at law to have, as a private individual. ” To the same effect is Brown v. Finn, 34 Fed. Reporter, 124.

John Devor had no power to pledge the bond for his own debt while he held it in trust for sale as trustee for the company, and with the knowledge with which Mr. Shuffelton stood charged, he had no power to acquire the bond from Mr. Devor, except by a sale made to him by Mr. Devor under his authority as such trustee. The knowledge which Mr. Shuffelton acquired, and with which he stood charged while he was a director, adhered to him thereafter as to his dealings with the trust property of the company. He therefore had notice at the time he received the bond, and he cannot be regarded as an innocent holder.

It was attempted at the trial, to show that Mr. Devor had expended some money of his own for the gas company, and was therefore entitled to hold this bond as his own to reimburse himself. This cannot be tolerated. He received the bond in trust for sale, and he was bound to hold it in trust until he sold it, or until by action of the board of directors he purchased the bond from them, or was by their action otherwise relieved of the triist. He could not deal in the trust property with himself as president. If he spent money for the benefit of the gas company, it may -have become his debtor therefor, but he could not of his own motion take a bond held by him in trust, and apply it in payment of such debt. In such case, to make the bond his property, would take the action of the board of directors. No such action was had, and therefore he held the bond in trust at the time he pledged it; and as Mr. Shuffelton knew that fact, or at least is chargeable with such knowledge, he also received and holds the bond in trust for the company, and if he has disposed of it, he should-make compensation therefor.

And if Mr. Reis had notice of the trust relation with which Mr. Devor held the bond, he also received and holds the bond in trust for the company, and should be held to return the same, or make compensation. Whether or not Mr. Reis is chargeable with notice, under all the circumstances, may involve a weighing of the evidence, and that might well be left to the court below. His dealings in the bonds of his company received from its president for his individual benefit, and to the detriment of the stockholders, should be closely scrutinized, and if he had notice of the trust, or knowledge of facts which would charge him with notice, he had no right to receive the bond as collateral, and having so received it, he holds it in trust for the company. He was bound to know that an officer cannot use the securities belonging to the company, for his own benefit.

It is urged that the case cannot be maintained in equity, but should be at law, by way of defense to the bond.

The'facts disclosed in the record, as claimed by the plaintiff, make this an action by a corporation against a director and stockholder, who hold a bond of the corporation in trust, but claim to hold it in their own right; and in such cases equity will always interfere to compel the delivery to the corporation of such bond so held in trust. If the pleadings are not sufficiently specific and certain, leave should be granted to amend so as to conform to the real facts of the case.

When it appeared that Mr. Shuffelton was a director, the circuit court should have held that he was charged with notice of the fact that John Devor held the bond in trust, and with such notice on his part, the judgment should have been against him, and as it was not, the judgment is contrary to law. Ford v. Osborne, 45 Ohio St., 1. The judgment in favor of both defendants must therefore be reversed, and a new trial granted; and if upon such trial it should appear that Mr. Reis, under all the circumstances, is entitled to hold said bond to indemnify him for one-half of the amount of said note, a decree can be entered protecting his rights, and also the rights of the gas company; but should it appear that Mr. Reis, under all the circumstances, is chargeable with notice, then a decree should be rendered against both defendants for the surrender of the bond, of-for compensation.

Judgment reversed and cause remanded.


author: Williams, C. J.

text:
    The Baltimore and Ohio Railroad Company v. Smith et al.

      Judgment, upon finding of issues, conclusive between parties — Facts involved cannot be contested or re-tried in proceeding to carry judgment into execution — Action to enforce stockholder's liability.

    1. A judgment rendered upon a finding of the issues in an action is conclusive, as between the parties, upon all the material facts involved, and they cannot be contested in any subsequent proceeding in the same action, so long as the judgment remains in force.
    2. Where, in an action to enforce the statutory liability of the stockholders of a corporation, the petition contains appropriate allegations of the amount and nature of the claims of the plaintiffs, the insolvency of the corporation, and the ownership of the stock by the defendants with the number of shares Owned by them respectively, and on the trial there has been a finding that the allegations are true, and the issues for the plaintiff, followed by judgment that defendants pay the creditors the amount found due them as may be apportioned among such of the defendants as are solvent, the judgment, until reversed or vacated by proper authority, is a final determination of the validity of the plaintiff’s claims, the insolvency of the corporation, the ownership of the stock and the number of shares held by each owner, that the action was not barred, and that the proper parties were before the court.
    3. Appropriate proceedings thereafter, in carrying the judgment into execution, do not include a re-trial of, or inquiry into any question of fact involved m it, but relate to the apportionment of the liability among the solvent stockholders according to their respective ownerships as determined by the judgment; and a valid assessment cannot be made against a stockholder on any greater number of shares.
    (Decided May 26, 1896.)
    Error to the Circuit Court of Licking county.
    Action was brought in the court of common pleas of Licking county, on the 22d day of December, 1881, by James H. Smith, in behalf of himself and all other creditors of the Newark, Somerset & Straitsville Railroad Company, against the stockholders of that company to enforce their statutory liability.
    An amended petition was filed December 18,1882, in which, after alleging that the corporation was one organized under the laws of this state, and had becpme insolvent, the names of its stockholders are set forth with the number of shares owned by ■ each, and among them are Drexel, Morgan & Co., and the Baltimore & Ohio Railroad company ; the former is alleged to be the owner of 13,450 shares, and the latter of “4,002, or more, of which 3,500 were issued to it as preferred stock. ” It is further averred: “ That each of said shares is of the nominal amount of fifty dollars, and said defendants, together with the said plaintiffs, are by law liable to contribute pro rata to their respective shares, such sums of money as may be sufficient to satisfy the claims of the plaintiff and other creditors of said corporation, not exceeding the amount of their respective shares, and the costs incident to the enforcement thereof.” And the petition prays, “that the court will order, adjudge and decree that an account shall be taken of the amount which is or may become due the plaintiff and such other creditors of said corporation as may appear and prove their claims, together with the costs that may accrue in this case; that the same be referred to a master commissioner to ascertain the proportion necessary to be paid by each of said stockholders who may be responsible and may be brought before the court ; and that a decree may be made against each of such stockholders for such sum as may be found by such master properly chargeable against them respectively.”

      William D. Hamilton was, on his motion, made a party plaintiff, and set up in a pleading stjded a petition, certain indebtedness due him from the insolvent corporation, and prayed judgment “against the said stockholders of the said The Newark, Somerset & Straitsville Railroad Company for the amount due him as aforesaid, to be assessed on each, ratably according to the amount of the stock held or owned by each, and that if any are found to be insolvent or out of this state, that the same be assessed upon the solvent resident stockholders ratably as aforesaid. ’ ’
    Drexel, Morgan & Co. were not served with process or otherwise brought into court, though it is not claimed they were insolvent, nor, is any reason shown why they were not brought in. The .Baltimore & Ohio Railroad Company answered, setting up several defenses, which need not be particularly noticed here; the pleadings are quite voluminous.
    After the issues were made' up and the cause tried in the court of common pleas, it was taken on appeal to the circuit court, where it was tried at the October term, 1887. That court made an extensive finding of facts aud rendered the follow- ' ing judgment:
    “ And this court now finds the equity of the case in favor of the said James H. Smith and the said William D. Hamilton, plaintiffs herein, and as between them and all of said defendants the court finds the facts stated in their respective petitions and replies to be true, and that the facts contrary thereto, stated in the answers and cross petitions of the said Newark, Somerset & Straits-ville Railroad Company and Baltimore & Ohio Railroad Company, and said J. B. Jones, defendants, are not true ; and the court, on full consideration of the premises, now orders, and adjudges and decrees that the solyent stockholders of said Newark, Somerset and Straitsville Railroad Company shall pay to said plaintiff, James H. Smith, the said sums of money hereinbefore found due to him amounting in the aggregate on the first day of the present term of this court, to-wit : October 11, 1887, to the sum of one hundred and twenty-six thousand and four and 37-100 ($126,004.37) dollars, with interest thereon at the rate of seven per cent, per annum till paid, as may hereafter be apportioned among such of those defendants in this case as are solvent. And it is further ordered, adjudged and decreed that the said stockholders shall pay to the said William D. Hamilton the said moneys hereinbefore found due to him, amounting on the first day of this term to the sum of twenty-three thousand one hundred and seventy-eight ($23,17(8.00) dollars, with interest thereon at the rate of seven per cent, per annum, in like manner as the same may hereafter be apportioned among such of them defendants in this case as are solvent. And it is further ordered that the costs of this case shall be paid by said defendant stockholders inlikemanner to be apportioned. And it is further ordered that this case shall be and is remanded to the court of common pleas for such further proceedings as the nature of the case may require.”
    Error was prosecuted from that judgment to this court, where it was affirmed. The case is reported in 48 Ohio St., 218. Afterwards the cause was again taken to the circuit court on appeal from certain proceedings had in the court of common pleas, and on the 23d day of December, 1893, by leave, of the circuit court, the plaintiff filed an amendment to his amended petition, in which it was alleged, in substance, that the Baltimore & Ohio Railroad Company was the owner of the stock which, in the original and amended petitions it was alleged belonged to Drexel, Morgan & Co.; and the amendment asked that the liability thereon be assessed against that railroad company. To that amendment the railroad company pleaded the former judgment of the circuit court in bar. The reply thereto was in the nature of a demurrer. At its October term, 1894, the circuit court made and entered on its record a finding to the effect that, at the commencement of the action, the Drexel, Morgan & Co. stock belonged to the Baltimore & Ohio Railroad Company, which, added to its other stock made it the owner of 17,801 shares of stock of the insolvent corporation, upon which number of shares, so determined, the Baltimore & Ohio Railroad Company was held liable to be assessed for the payment of the creditors of the insolvent corporation, and judgment was rendered against it accordingly.
    Various other findings were made and judgments rendered, which we do not deem it necessary to further refer to here. The Baltimore & Ohio Railroad Company excepted to the finding’ and judgment against it, and prosecutes error here to obtain a reversal. Any further facts that may be considered material in the decision of the ease, will be stated in the opinion.

      J. II. Collins, for plaintiff in error.
    The decree is an interlocutory one, and the rule is that such decrees are under the control of the court so long as the cause is pending. Interlocutory decree defined, Trapp v. Hewett, 1 Ohio St. R., 512-520. Fournique v. Perkins, 16 How., 85; American Diamond Drill Co. v. Sullivan Machine Co., 21 Fed. Rep., 74. Steam Stone Cutter Co. v. Sheldon, 21 Fed. Rep., 875 Wooster v. Handy, 21 Fed. Rep., 51; Henry v. Travelers Ins. Co., 34 Fed. Rep., 258. Kelley v. Stanberry 13 Ohio, 408; Jaques v. Methodist Episcopal Church, 17 Johns. Rep., 548; 48 Ohio St., 219.
    This being an interlocutory decree, it is under control of the court until the final decree is made.
    The decree is void as to those not served,. voidable as to those who were, the liability being joint, under section 3260, and the judgment being joint against all the stockholders. Douglas v. Dunlap, 16 Ohio, 271; Newburg v. Munshower, 29 Ohio St., 617.
    It was the duty of the plaintiff before proceeding in this case to have had all the stockholders of the Newark, Somerset & Straitsville, Railroad Company in court. Church v. Nelson, 35 Ohio St., 638:
    Section 3260 directs who must be parties to a suit of this character ; Lamar v. Stephens, 27 W. L. B., 301; Railroad Co. v. City of Detroit, 64 Fed, Rep., 646; Nuth v. Tamplin, 8 L. R. Q., B. Div. 253; Sutherland Stat. Con. section 238. Impracticability of getting all parties before the court does not affect the question. Cattle Co. v. Frank, 158 U. S., 603.
    This defect of parties was not waived. Church v. Nelson, 35 Ohio St., 642.
    This dismissal is authorized by section 5313 of the Revised Statutes, and it is respectfully submitted that the word “may” in this section means the same as “must.”
    “Majq” in the construction of public statutes, is to be construed must in all cases where the legislature mean to impose a positive and absolute duty, and not merely to give a discretionary power. 1 Peters’ Reports, 46, 64. 3 Hill’s (N. Y.) R., 612, 615. 9 Gratton’s R., 391. The word “may” in a statute, means must or shall, when the public interest or rights are concerned, or the public or third persons, have a claim, de jure, that the power shall be exercised. 1 Vera., 153. 1 Kent’s Com., 467, note 24 Mississippi R., 657.

      Mason v. Faerson, 9 How., 248; Rex and Regina v. Barlow, 2 Salkeld, 609; The King v. The Inhabitants of Derby, Skinner, 370; Blackwell’s case, 1 Vernon, 152; 2 Chitty, 251 ; Dwarris on Stat., 712; Newburgh T. Co. v. Miller, 5 Johns, Ch. 113; City of New York v. Furze, 3 Hill, 612; Minor et al. v. The Mechanics' Bank, 1 Pet., 64; Malcolm v. Rogers, 5 Cowen, 188; 1 Pet., 64; 5 Johns. Ch. 113; Scully & Dixon v. Ackmeyer, 2 Cin. Sup. Ct. Rep., 296 p.; Railroad Co. v. Mowatt, 35 Ohio St., 284.
    A failure to continue process from term to term against a defendant not served, works a dis.continuance. Pollard v. Huston, 7 Lea(Tenn.), 689; Bissell v. Gold, 1 Wend. (N. Y.), 210; S. C. 19 Am. Dec., 480.
    The effect will be the same under the Ohio statutes. Section 4988.
    What we have hereinbefore insisted it was the duty of the court to do under the sections of the statute quoted, seems tobe imperative by sections 5007 and 5013. Mahr v. Norwich Union Fire Ins. Society, 127 N. Y., 452.
    The plaintiff’s cause of action had not accrued at the time of the commencement of this suit, because the N., S. & S. R. R. Co. was, and is, the owner of property subject to execution. The findings of the circuit court, therefore, when considered together, find that the N., S. & S. R. R. Co. has property subject to execution. The road and franchises subject to this mortgage and lease may be sold on execution. Farmers' Bank of Canton v. Com. Bank,, 10 Ohio, 71; Moor v. Rittenhouse, 15 Ohio St., 310; Morgan v. Lewis, 46 Ohio St. R., 1; Garrick v. Gifford, 47 Ohio St. R., 180; Bronson v. Schneider et al., 49 Ohio St., 438; Younglove v. Lime Co., 49 Ohio St., 663. .
    The equity of redemption held by the N., S. & S. R. R. Co., was subject to sale on execution.
    Land mortgaged may be sold on judgment and execution against the mortgagor. Farmers’ Bank of Canton v. Commercial Bank of L. E., 10 O., 71.
    Until foreclosure, or' possession taken under it, the mortgage remains a chose in action, and the mortgagor the legal owner, as to all the world. A mortgagor in possession has an interest which is bound by a judgment. Miami Ex. Co. v. Bank of United States, W., 249, 251; Morris v. Way 16 Ohio, 469; Lawrence v. Belger, 31 Ohio St., 175.
    If the Newark, Somerset & Straitsville Railroad company had property subject to execution, then the right of action had not accrued at the time the suit was commenced, and if these answers, or .either of them, furnish a good defense against the stockholders’ liability, they inure to the benefit of all of the Stockholders, whether they have answered or not. Baker v. Jerome, 50 Ohio St. Rep., 682.
    Smith and Hamilton were not entitled to have the assessment against the stock standing in the name of Drexel, Morgan & Co., charged to the Baltimore & Ohio Railroad company, for the reason that the pleadings in the amended petition and the amendment thereto are inconsistent, and if inconsistent, their effect is to annul each other. 29 O. S. R., page 654.
    The facts presented by us furnish a complete defense to the enforcement of the stockholders’ liability against the Baltimore & Ohio Railroad company in this case — not one defense, but several. 17 A. & Eng. Ency. of Law, 1080.
    There is no equity in the claim made to enforce the stockholder’s liability against any of the stock owned by the Baltimore and Ohio Railroad Company, but, on the contrary, the attempt of Shields, Evans & Co., any of its members, or anyone in privity with them, to enforce this liability against the stock owned by that company is simply infamous. Brown v. Hitchcock, 36 Ohio St., 667.
    This arises out of the nature of the property and the relations of the parties to it and to creditors, in connection with the equitable principle that he who derives all the advantages ought to bear the burdens. Sutliff v. Atwood, 15 Ohio St., 186, 194; Johnson v. Underwood, 52 N. Y., 203, 211; Hodkinson v. Kelly, L. R. Eq. C., 6, 486, 503; Cape's Ex’ r’ case 2 De Gex,M. & G., 562; Mexican and S. A. Co., Gieswood & Smith’s Case, 4 De Gex & J., 544, 555; Mason v. Alexander, 44 Ohio St., 318.
    The agreement at the time of the settlement of August, 1872, that the notes were payable only out of the earnings of the road subject to payment of preferred stock, was and is binding- on the holders of the notes, although not embodied in the notes themselves, and Smith being a purchaser after maturity stands in nobetter position than the original holders. Brown v. Eastern State Co., 134 Mass., 590; Morawetz on Corps, section 829; Cook on Stock and Stockholders and Corporation Law, section 216.

      ' The double liability may be waived by creditors. Hardman v. The Cincinnati and Eastern R. R. Co., 18 W. L. B., 264; McMurray v. Moran, 134 U. S., 150.
    By the terms of the lease, voted for by Shields, Evans & Co., the N., S. & S. R. R. Co. was prohibited from making the notes here sued upon, and the holders had knowledge of and were bound by the terms of this contract contained in the lease. Ingle v. Norrington, 126 Indiana.
    There is another principle of influential importance here, and that is this: Where parties have by their acts given a construction to a contract entered into by them the courts,will adopt and enforce that construction. Vinton v. Baldwin, 95 Ind., 433; Ætna Life Insurance Co. Nexsen, 84 Ind., 346, and cases cited. Reissner v. Oxley, 80 Ind., 580; Johnson v. Gibson, 78 Ind., 282, and authorities cited.
    The conduct of the parties warranted the inference that they had by their conduct construed the contract in accordance with the appellee’s theory, and this justified the finding of the trial court. Indianapolis, etc. R. R. Co. v. Collingwood, 71 Ind., 476. Gaines v. Union Transportation Co., 28 O. S. R., 440.
    In the case at bar there was an express contract which included an agreement on the part of Shields, Evans & Co. not to enforce this stockholders’ liability against the Baltimore & Ohio R. R. Co. There was, therefore, no implied undertaking by that company to indemnify Shields, Evans & Co. against this liability. Broom’s Legal Maxims, 785.
    Under the provisions of section 4993 and section 5077 of the Revised Statutes of Ohio, the claim which the firm of Shields, Evans & Co. and its members held against the stockholders of the Newark, Somerset & Straitsville Railroad Company should be deemed compensated, as of the date when that firm and its members occupied the position of both creditor and stockholder. Wyman v. Robbins, 51 Ohio St., 98; King v. Armstrong, 50 Ohio St., 222.
    The Baltimore & Ohio Railroad Company is also a creditor, as shown by the notes executed to it by the Newark, Somerset & Straitsville Railroad Co. and which have been introduced in evidence.
    As between the Baltimore & Ohio Railroad Company and the Newark, Somerset and Straitsville Railroad Company the notes are not onlyprima facie evidence of anindebtedness, but are conclusive until impeached for fraud or mistake, or something’ similar. ’ Bryant v. Sweetland, 48 Ohio St. Rep., 209.
    Finally, we contend that a stockholder can only question the validity of the notes executed by the Newark, Somerset and Straitsville Railroad Company to the Baltimore & Ohio Railroad Company after he has asked the corporation to act. Morawetz on Corporations, sections 240, 241; Cook on Stockholders, section 646.
    The Baltimore and Ohio Railroad Company is not liable upon the stock standing in the name of Drexel, Morgan & Co.
    The charter of that company has been introduced in evidence. By sections twelve and fourteen the officers of the company, and their powers and duties; are to be fixed by the president and directors, or a majority of them. The .powers and authority of the corporation are also fixed within certain specific limits. Prom this it follows that there is not liability for several reasons.

      First — It has not been shown that the acts of any of the officers or agents which the plaintiff has attempted to prove were in the scope of their authority.

      It is a well settled principle that before either the acts or the declarations of an agent can be offered in evidence, that it must be shown that such acts, or declarations are within the scope of authority of such officer or agent. Greenleaf on Evidence, sections 13, 14 and 14a. Vicksburg & Meriden R. R. Co. v. O'Brien, 119 U. S., 99; Packet Co. v. Clough, 20 Wall, 540; Story on Agency, section 134.

      Second — There has been no consent (so far as this record shows) of the Baltimore & Ohio R. R. Co., through its board of directors or president, to become a stockholder in the N., S. & S. R. R. Co.
    Neither a person nor corporation can become a stockholder in a corporation except by his or its consent. Morawetz on Corporations, Chap. 2, sections 44-62; Glenn v. Gorth, 133 N. Y. Rep., 18. No consent of the B. & O. R. R. Co. to become the owner of or the assignee of the Drexel, Morgan & Co. stock is'shown. The expunged transfer instead of so showing, proves directly the contrary.
    Besides, this canceled transfer is not shown to be by any one authorized by the B. & O. R. R. Co. either to make it or cancel it. It was- made and signed by John King, Jr., in his personal character only, and can in no possible manner bind the B. & O. Co. Officers of a corporation, from the highest to the lowest, are agents only, and can bind it only by acts and contracts within the scope of their authority. 34 Am. St. R., 528.
    A corporation can not empower an agent to do an act in excess of the powers of the corporation conferred by its charter. 34 Am. St. R., 815 ; Oliver v. Moor, 23 O. S. R., 473; 48 O. S. R., 294, supra.

      Thwd — Even if it be shown satisfactorily to the court that the Baltimore & Ohio R. R. Co. did subscribe for or purchase this stock, the act was idtra vwes. Beech on Corporations, sections 393 and 394; Railway Co. v. Iron Co., 46 O. S. R., 44; Morgan v. Lewis, 46 O. S. R., 1; Whitney Arms Co. v. Barlow, 63 N. Y., 69; State v. Vanderbilt, 37 Ohio St., 590; Humbolt Mining Co. v. American Manufacturing Co., 62 Fed. Rep., 356. This case is directly in point and reviews all the Ohio cases. Railroad Co. v. Oregonian Railroad Co., 130 U. S. S. C., 1.

      'J. B. Foraker, for plaintiff in error.
    1. The judgment below should be reversed because: 1. The former j udgment (that which was affirmed in 48th Ohio State) was either final or interlocutory. It was treated as both.
    2. If final, nothing could be done below except only to execute it. It was error, therefore, if final, to make new parties either of defendant stockholders or co-plaintiff creditors.
    It was also error, if final, to change the issue as to the stock held by Drexel, Morgan & Co.
    These errors were prejudicial because: (1) without new parties the case could not proceed; and (2) if the judgment had stood as final that Drexel, Morgan & Co. owned the stock standing in their name, then Shields, Evans & Co., as the assignors of that stock, would have been liable to assessment upon it, they being in court and Drexel, Morgan & Co. beyond the court’s jurisdiction.
    The claim of W. D. Hamilton would, in that event, have been cancelled by his obligation as a member of the firm of Shields, Evans ds Co. to pay the assessment on this stock.

      The claim of Smith would have been cancelled because he took his notes after maturity and, therefore, with full notice of all equities. As a result the obligation of Shields, Evans & Co. to pay the assessment on this stock would apply to him because he, so taking his notes, stood in their shoes.
    II. When the court below, as to these matters, treated the former judgment as interlocutory and allowed the change of issue as to the Drexel, Morgan & Co. stock to be made, it opened up the whole case. It was competent, therefore, for the Baltimore and Ohio Railroad company, in defending against this new claim, to raise all defenses it might have. It did then make and establish as a new defense, under the general issue, want of corporate power. The court below expressly so found.
    We claim, with respect to this question, that it was the duty of the plaintiff below, when he showed ‘the stock was held by a corporation, to go further and affirmatively show that the corporation had the corporate power so to hold it. But, however, this may be, the charter of the Baltimore and Ohio Railroad Company is in evidence, and we call attention to it as showing, not only want of corporate power as found by the court below, but also want of authority and power in the officials of the company, even its board of directors, to purchase and hold the stock on which it is sought to hold this company liable to the assessment in this action. The powers of these respective officials are defined in the charter and it shows no such power in any of them. But the rule is that a corporation acts by its board of directors and only by its board. There is no attempt to show that the board of directors of the Baltimore and Ohio Company ever authorized anything with respect to this Drexel, Morgan & Co. stock.
    There was not sufficient testimony, therefore, to support the conclusion that the stock was held in trust for the B. & O. Company.
    But, if there had been, it was error to assess the B. & O. Company on the stock in the name of Drexel, Morgan & Co., because the court will not look beyond the legal holder of stock to assess the beneficial owner, except only where the stock has been put out of the name of the real owner, for some fraudulent or improper purpose. It was so held in the case of Henkle v. The Salem Manufacturing Co., 39 Ohio State, 547.
    There is no pretense of evidence or claim that there was any fraudulent purposb on the part of anybody in connection with the placing of this stock in the name of Drexel, Morgan & Co.
    It was error to assess the B. & O. Company on this stock, in the second place, because, not having this stock in the name of the B. & O. Company, it never held itself out as owner to creditors, and never induced credit on that account, and, therefore, never misled anybody. In Harpold’s case, 46 Ohio State, 397, it was held that Harpoid should be assessed on the stock there in controversy, although he had sold it and asked that it be transferred, and had done all that was incumbent on him to have it transferred, on the ground, that remaining in his name, he was thereby held out to creditors as the owner of the stock, and they had a right to assume that he was the stockholder and liable to assessment.
    The change of issue as to this stock opened up the case also, if it were not already open, for the question as to the solvency or insolvency of. the Newark, Somerset & Straitsville Railroad Company. We are told that this question was settled by the former judgment. We do not think so. The record shows that no such question was presented to or passed upon by this court in the case reported in the 48th Ohio State. We understand the rule to be as announced by this court in the Pugh case, 43d Ohio State, page 121; that the court is bound by only such questions as are presented to it, considered by it and passed upon by it, and that it is not bound by a question that only “lurks in the record.” The question of the insolvency of the Newark, Somerset & Straitsville Railroad Company was not presented to, considered by or passed upon by this court. But, if it had been, the B. & O. Company.had a right to make that' defense when it was sought, after the case had been sent down from this court, to change the issue and increase its liabiity,' and it did make that defense, and the record" shows that it established that defense. The general finding of insolvency in special finding is cancelled by the specific findings of fact made at the same time, which show that the road was still in operation; that it had not been placed in the hands of a receiver or assignee, but was a going concern, with a la/rg& rental and a valuable ■equity' of redemption. There is nothing to controvert any of these facts. There was no excuse, therefore, for the bringing of this action against stockholders before judgment recovered and execution returned nulla bona.

    But, if it was insolvent when this suit was brought in December, 1881, it had been equally insolvent for more than six years prior thereto, as shown by the record. .For the record discloses' that from and after the execution of the lease to the B, & O. Company, January 1st, 1872, down to the time of the bringing of this suit in 1881, there was no change whatever in the debt of this company, except only by the execution of the notes sued upon in this case which are not, for reasons to be given, to be considered in determining the question of insolvency. On the contrary, the road was constantly improving and developing and becoming more valuable. In other words, it was more insolvent when these notes were executed in December, 1872, than it was when the petition was filed in December, 1881. The right of creditors to enforce the stockholders’ liability was, therefore, barred by the statute of limitations.
    III. The only question decided by this court in 48 Ohio State, pertinent to the present inquiry was that the equities between assignor and assignee stockholders should be adjusted in the final judgment. That holding had reference to the fact, among others, that Shields,. Evans & Co. were assignors of the stock on which it is now sought to assess the B. & O. Company. These equities were not adjusted by the court below as required by law, because: (1) The Baltimore and Ohio Railroad Company purchased its stock with the distinct understanding and agreement, as set forth in the lease and in the letters and telegrams that passed between the companies, that there was not and should not be created any floating debt of the Newark, Somerset & Straitsville Railroad Company. Shields, Evans & Co., the assignors of this stock, were parties to that agreement, and they got the full benefit of the results of the agreement; (2) in view of these stipulations and agreements it was expressly agreed when these notes were executed that they should be paid only out of the earnings of the road under the lease, and subject to the redemption of the preferred stock. (3) The issuing of the notes in view of all this, was a fraud on the Baltimore and Ohio Railroad Company. (4) Smith, the plaintiff, bought after maturity and, therefore, with full notice, while Hamilton, a member of the firm of Shields, Evans & Co., and a director of the Newark, Somerset & Straitsville Railroad Company, had full notice from the beginning.
    In adjusting equities, the court below should, in view of all this, have held that the Baltimore & Ohio Railroad Company took this stock from Shields, Evans & Co., under such circumstances as to preclude any implied undertaking to pay, on account of its statutory liability, the notes which had been so issued to Shields, Evans & Co. The exact opposite was the truth in so far as the circumstances make the agreement with respect to the matter namely: That there should be no liability to pay any debt previously contracted to Shields, Evans & Co., or anybody else — the agreement being that there should not be any such debt.
    IV. The neglect and omission of plaintiff to make all solvent stockholders parties was fatal, and the petition should have been dismissed on that account. The statutory provision on the subject of stockholders’ liability'provides that all the stockholders shall' be jointly liable in an action where all are sued. It is prejudicial error to a stockholder of a corporation to omit any solvent stockholder in a suit brought to enforce the stockholders’ liability, although the assessment of those who are brought into court may be proportionately reduced on account of the omission to sue those who are not parties, because the debt, to the extent it is not satisfied, remains over against the corporation, and the stockholder who is assessed may be again made to suffer by the taking of the corporation’s property. It is not a sufficient answer, therefore, whore solvent stockholders are omitted, to say eith r that only a few were omitted or that those who were sued were assessed less on that account.
    V. The common ownership, at the time of the execution of these notes, of both the notes sued upon and the stock now s ught to be assessed, cancels the one the other. The liability of stock to assessment attaches at the moment the debt of the corporation is created. When, therefore, these notes were given in December, 1872, the liability of the stockholders to be assessed under their statutory liability, then and there attached.
    The stock was then held by Shields, Evans & Co. The notes were also held by Shields, Evans & Co. Had suit then been brought — and the company was as insolvent then as it was in 1881 — it would have been sued by Shields, Evans & Co., to collect their notes by an assessment upon themselves on account of the stock which they held. It was not competent for this cancellation to be avoided by selling the notes in one direction and the stock in another. In adjusting the equities between assignor and assignee, the court below completely ignored these facts.
    VI. There is no equity in favor of either Smith or Hamilton, and never was.
    Hamilton was a member of the firm of Shields, Evans & Co., and a director of the Newark, Somerset & Straitsville Railroad Company. He not only had full knowledge of all the agreements and stipulations, but was an active party in making them. He knew that these notes were not payable except only out of the earnings of the Newark, Somerset & Straitsville Railiroad Company; he knew the making of them was in violation of the stipulations of the lease and the other agreements referred do that there should be no floating debt created. Recognizing these facts he never sought to collect the same or to make any claim on account of them until after this suit was brought.
    As to Smith, he is in a much worse attitude. He is a mere speculative litigant. He not only had full knowledge of all these facts attending the creation of this indebtedness and the execution of these notes and the agreement that they should be paid only out of the earnings and that there should be no floating debt, but he also knew that except only as to this paper, there had been no change in the indebtedness of the Newark, Somerset & Straitsville Railroad Company from the time when the paper was made down to the time when he bought it, and he knew, therefore, that the company was no more insolvent at the one time than it had been at the other. He knew necessarily when he bought the paper that it was past due. Aside, therefore, from the actual knowledge he had, he was “on notice” and took subject to all equities. Knowing all these facts, both actually and constructively, he • sought to buy up this dishonored paper. The record shows he paid $14, 000 for $65,000, principal and interest; and there is something else to which we call especial attention, and that is, that he did not buy this dishonored paper, at about twenty cents on the dollar, until after he himself had sold to the Baltimore

      c& Ohio Railroad from $115,000 to $150,000 oj the stock of the Newcvrk, Somerset <& Straitsville Rgil/i'o'od Company. In other words he did not buy up this paper until the Newark, Somerset & Straitsville Railroad Company had, from his own sale, acquired, as he thought, a solvent stockholder whom he might be able to squeeze into the payment of his claim. Accordingly we find him, immediately after he acquired this paper, asking, not the maker of it, the Newark, Somerset & Straitsville Railroad Company, to pay it, or to make some arrangement about it, but asking the Baltimore & Ohio Railroad Company, through Mr. Quincy, a general manager, who had nothing whatever to do with the subject, whether or not it would take up the paper, or whether it wanted to do anything about the paper, and 9, little bit later we find him telling the private secretary of Mr. Quincy that he would take $50,000 for his notes; or in other words, that he would throw off the interest. Payment being refused, he next brought suit and now asks the courts to require the Baltimore & Ohio Railroad Company to pay in the settlement of his claim and Hamilton’s more than $300,000, to which large amount the claims have grown.
    It would be difficult to think of a case more unconscionable, as in violation of good faith and positive agreements, or a standing more objectionable, because of the speculative character of the complainant, or a judgment that should more certainly be reversed because of manifest errors.

      J. Buckingham, George B. Smythe and J. D. Jones, for defendants in error.
    The question is, what office does the judgment of the circuit court of 1887, and the facts found then by the court, perforin in the course of this litigation. Counsel for plaintiff in error claims that it counts for nothing, that it was mere byplajr, and that the B. & O. R. R. Co. can, as matter of right, have all the matters then heard and determined, reheard, and set aside as of no potency whatever.
    If it was final, the judgment settled all matters expressly in dispute, and just as well, all matters admitted or not disputed; also all matters of defense, which the B. & O. Co. as- stockholder did plead, but also all matters of defense, which the company might have pleaded. The judgment settled all those matters pleaded or which might have been pleaded, not only for that hearing, but, between the same parties, for all time and under all circumstances. Grant v. Ramsey, 7 O. S., 158, First Syl., 162; Hites v. Irvine's Adm'r, 13 O. S., 283, Syl.; Ewing v. McNairy & Clafflin, 20 O. S., 315, 1st Syl.; The C. & G. Bridge Co. v. Sargent, 27, O. S., 233, 1st Syl.
    This principle is fully sustained,, where it is sought, to re-litigate in different actions, and even where one is ex contractu and the other is ex delicto. Hixon v. Ogg, 53 Ohio St., 361.
    But, suppose the decree was interlocutory only, the result would not be different. The B. & O. Company is estopped from questioning either the jurisdiction of the court, or the efficacy of the judgment. Herman on Estoppel and Res Adjudicata, sections 823, 824; Buckley v. Stephens; 29 O. S.,620, 624; Ohio Life and Trust Co. v. Goodin, 10 O. S., 557; Cairnes v. Knight, 17 O. S,, 69, 71.
    In a case, proper for second trial, parties appealed to district court and went to trial there, without objection, held: District court had jurisdiction, and appellant could not object, on error. Potter, Receiver, v. Bunnel, 20 O. S., 150, 151.
    After appeal to supreme court, and decree rendered therein, it is too late to object on bill of review, to regularity of the appeal. Brown v. Haines et al., 12 O., 1 to 9 ; Elliot on Appellate Procedure, section 578.
    This rule governs the case, in the same court, and in the trial court, through all subsequent stages of the proceedings. Wells on Res Adjudicata and Stare Decisis, section 613. Herman on Estoppel, etc., 115; Sibbald v. U. S., 12 Peters, 448; Roberts v. Cooper, 20 How. (U..S.,) 467, 481; Stacy v. Vermont R. R. Co., 32 Vt., 552; Phelan v. San Francisco, 20 Cal., 39; Northern P. R. R. Co. v. Ellis, 144 U. S., 458.
    This question, as to whether the supreme court of this state can change its judgment upon a second petition in error, and whether its judgment is-“the law of the case,” in the subsequent proceedings, does not seem to have been before the court in any reported case. But it has been held in the following cases, that no rehearing of judgments in error,, in the supreme‘cou^t, can be allowed, and that the judgments are final. Longworth et al. v. Sturgis, 2 O. S., 105, 106; Zink v. Grant, 26 O. S., 378; Maud et al. v. Maud, 34 O. S., 540; Atcherly v. Dickenson, 34 O. S., 537; Corry v. Campbell, 34 O. S., 205; Railroad Co. v. Belt, 36 O. S., 93.
    The matters which became res adjudicata, by the judgment of the circuit court of 1887 (the said judgment not having been changed or modified), and binding on the parties, thereafter, we claim to be.as follows:
    . T. That the notes owned by Smith and Hamilton, were valid claims against the N., S. & S. R. R. Co., and as such, enforcible' against the defendants— • stockholders of that .company, in proportion to their stock.
    2. That the N., S. & S. R. R. Co. was insolvent in that sense, which supports a judgment against its stockholders, for its debts.
    3. That the allegations of the amended petition, and the facts found by the court, justified the judgment that the stockholders should pay, without any judgment being first obtained on the notes by plaintiff and Hamilton.
    4. That it was not agreed by the payees of the notes, held by plaintiff (below) and Hamilton, that they should be paid only out of the earnings of the railroad, or upon any condition, which precluded a judgment against the N., S. & S. Co. or its stockholders for payment of the amounts due on them.
    5. 'That the B. & O. Co. was a stockholder, and the owner of 4002 or more shares of the stock of the N., S. & S. R. R. Co. and that it was liable to the plaintiff and Hamilton, for its proportionate amount.
    6. All the facts, which were found by the court, and that they were sustained by sufficient evidence.
    There has been no controversey over any of the claims settled by the, subsequent proceedings, except that made by the B. & O. R. R. Co.
    We think it is clear, that, after an action by creditors of an insolvent corporation, has been commenced, against the stockholders, to enforce the statutory liability, the directors of the insolvent company cannot as against the creditors, create any new liability, or by acknowledgment or settlement, affect existing obligations, and the individual liability of stockholders cannot be affected by such acts. And this applies to indorsements and guarantees of debts assigned to creditors to pay or secure them. Richmond v. Irons 1 21 U. S., 27., see 4 O. S., 21, 32, top; see 111 U. S., 787; Brown v. Hitchcock; 36 Ohio St., 687.
    Where no dividends are earned, none are due. Miller v. Ratterman, 47 Ohio St., 142.
    A creditor can object to the allowance of a claim, by another creditor, cause being shown why it should not be allowed; Hardman v. C. & E., 18 Bul., 264; Richmond v. Irons, 121 U. S., 27; Daniels on Ch. Pls., 1408.
    As to the meaning of “redeem,” see Miller v. Ratterman, 47 O. S., 156.
    We come now to the second matter, which the court did, in the progress of the fwther proceedings for which the case was remanded. It ascertained the number of shares of stock held by each solvent stockholder, party to the action.
    We claim that this question of the judgment of 1887, being void or voidable does not arise, because the judgment was against stockholders, defendants, and no one who was brought in afterwards is complaining, and the B. & O. Co. who was a party, cannot complain.
    As to it the judgment was or is not voidable:
    1. Because the judgment was affirmed in this court.
    2. Because the liability is not joint but several, and a several judgment only, can be rendered in the case. Wright v. McCormack, 17 O. S., 96, last par. but one; Umsted v. Buskirk, 17 O. S.; 113, 2 Syl.; Mason v. Alexander, 44 O. S., 333, middle.
    Another objection is, that no judgment can be rendered until all the stockholders are made parties to the suit.

      This was not the law before the passage of section 3260, R. S. Before that, the suit was to be prosecuted on behalf of all the creditors and against all. the solvent stockholders. Umsted v. Buskirk, 17 O. S., 113, 3 Syl. and page 118; Wheeler v. Faurot, 37 O. S., 26; Wright v. McCormack, 17 O. S., 86.
    But being the law of the remedy, all ■the solvent stockholders, meant those within the jurisdiction. Brown v. Hitchcock, 36 O. S., 667, 4 Syl; Mason v. Alexander, 44 O. S., 319, 5 Syl. 2. Beach on Cor., section 700, 2; Morawetz on Cor., section 902, 2 par.
    It is claimed that section 3260, requires all the stockholders to be parties, before any. judgment can be rendered, and that any judgment rendered, is erroneous, unless this requirement is complied with.
    We claim that no such construction ought to be given to the section.
    The error, alleged in rendering the judgment, without the presence of all, was not prejudicial to the B. & O. Co., and under the circumstances, the company ought not to be permitted to make the objection.
    We think, that the company after all this, must be held to be satisfied with the parties as they stood before the court, and cannot be heard to demand that the case be dismissed, because the statutes of limitations ran in favor of those not served.
    This conduct waived the objection, at least so far as error is concerned.
    Another objection is, that the plaintiffs’ cause of action had not accrued at the time of the commencement of the suit, on two grounds :

      First — That the N., S. & S. Co. was not insolvent, in the sense of supporting an action to enforce-this liability against the stockholders.

      Second — That the plaintiffs had not recovered judgment on the notes, before bringing this suit.
    We answer: First — That both these matters are res adjudicata by the judgment of the circuit court of 1887, as- against the B. & O. Co.

      Second — That neither of these matters have ever been pleaded or denied by that company.

      Third — That this judgment was rendered not only upon the claims of Smith' and Hamilton, but also upon the petition of Gibson Atherton, trustee.

      Fourth — That the N., S. & S. R. R. Co. had no valuable interest in any property, and practically, a railroad of this small size, with a mortgage of $800,000 upon it, cannot be sold on execution, and payment of the plaintiff’s claim could not be enforced against it by ordinary process. Wright v. McCormack, 17 O. S.. 86, 2d.
    We claim the B. & O. Co. was the equitable owner of the stock that was in the name of Drexel, Morgan & Co., if not the legal holder also, never having yielded possession to D., M. & Co. or any body else. There was no error in assessing the company on this stock, although it did not stand in its name on the books, if the B. & O. Co. is equitable owner only. Section 3259, Revised Statutes. Henkle v. Salem Manufacturing Co., 39 Ohio St., 553.
    If equitable owner only, and Drexel, .Morgan & Co. is trustee and the B. & O. Co. • is cestui qui frustent, then the B. & O. Co. being substantial owner, we insist that the creditors may in this action look to it, and it is in law under obligation to pay Drexel, Morgan & Co. •all that the latter may be bound to pay as trustees.
    Trustee of stock must look to the cestui qui trust for his indemnity or reimbursement. Henkle v. Salem Co., 39 O. S., 532, bottom.
    And this obligation arises upon any express promise, or if there is no express promise, then just as well upon the implied promise, which the law always raises, when there is a clear duty. Perry on Trusts, section 485 ;Harpold v. Stohert, 46 O. S., 401; Cook on Stockholders, section 503, page 539. Brown v. Hitchcock, 36 O. S., pp. 680.
    Again, the B. & O. Co., the cestui qui m-ust, being liable to Drexel, Morgan & Co., its trustee, for whatever they would have to pay on the stock, at the suit of the creditors, the creditors, may enforce immediately, in this suit (the B. & O. Co. being party to the suit), that liability, against it, as the party ultimately liable. Brown v. Hitchcock 36 O. S., 681, middle; Riddle v. Mandeville, 5Cranch, 322; 2 Story Eq. Jur., section 1253; Grant v. Ludlow, 8 O. S., 24 ; Russell v. Clark's E'x’rs, 7 Cranch, 69; Banker. Weisiger,2 Peters, 331, 347.
    Equity delights in saving multiplicity of suits and avoiding circuity of action, and in reaching the person on whom a claim should ultimately fall; and will do so when that person is a party to the suit.
    Where executor has paid assets to legatee, credit- or may sue legatee directly. 1 Roper on Leg., 458 (2.) 2. Story on Equity, section 1253.
    Creditor will be given the benefit of lien of partners on partnership property. Miller v. Estill, 5. O. S. 5 516, 1; Story on Equity, section 675. 2; Story on Equity, section 1253.
    A third party may maintain an action either at law or equity on a promise made for- his benefit.
      Crumbaugh v. Kugler, 3 Ohio St., 549; Bageley v. Waters, 7 Ohio St., 367; Trimble v. Strothers, 25 Ohio St., 381. In the case of an implied promise. Thompson v. Thompson, 3 Ohio St., 333. If the transfer or purchase is made in the name of a fictitious or irresponsible party, a fortiori, the real owner can be ascertained and made liable, and it would be' done even before section 3259 was enacted. Morawetz on Cor., section, 855; Thompson on Liability of Stockholders, sections 311 to 314.
    The fact that the B. & O. Co. procured certificates of stock to be issued in the name of Drexel, Morgan & Co., the certificates never having been delivered to them, does not invest the title in Drexel, Morgan & Co. Witters v. Sowels, 32 Fed. Rep., 762.
    The defense of ultra vires is not raised or presented so that this court can ' consider it because the ownership of stock by the B. & O. Co., was admitted by that company in the pleadings and never denied.
    The corporate power of the B. & O. Co. to hold the stock does not arise on the pleadings or otherwise.
    It is a defense that must be pleaded specially, as infancy, insanity, coverture and the like are pleaded. 2. Beach on Priv. Corp., sections 422 and 868. Germ. Sav., etc., v. Jacoby, 11 S. W. 256, Mo. Rep., 1891.
    Demurrer to a plea of want of power sustained. Hamilton & Bossville Hy. Co. v. The C., H. & D. R. R. Co., 29 O. S., 341.
    Leave to file answer alleging want of power refused. Third Ave. Savings Bank, 24 N. J. Eq., 26.
    It has not been so pleaded. The fact of ownership, which implies the power to own, has been repeatedly admitted by it, in the pleadings.
    Those admissions of ownership in the pleadings were not made casually or carelessly, but with deliberation and to achieve a benefit to itself.
    If the B. & O. Co. had not corporate power to purchase the stock, still the title in fact vested in it, and so long as it holds it, it is liable as other stockholders are.
    A conveyance of property to a corporation is not void, because the corporation was not authorized to receive it. The title passes. 2 Moraw , sections 707, 710, 712, 100; Union Bank v. Matthews, 98 U. S., 188; Walsh v. Barton, 24 O. S., 42; Sanderson v. Iron Co:, 34 O. S., 442; Morgan v. Lewis, 46 O. S., 128, 105 U. S., 108, 106 U. S., 481.
    Title so acquired cannot be disavowed unless the property be restored. Cook on Stockholders, section 744.
    Even statutory prohibitions to acquire, do not make the title void, on account of the insecurity it would cause in titles. 2 Moraw., 678.
    While stock purchased without corporate authority is held, dividends on it may be collected, though the corporation holding may have no rig’ht to vote it. Millbank v. N. Y. & S. E., 64 How.Pr., 20; see Wrights. Pipe Line Co., 47 Am. R., 701.
    In a suit for rent of a branch road, a railway corporation cannot defend on ground of its own ibltra vires to take the lease. 2 Beach Corp., section 433; Camden and May, 48 N. J., 530.
    Every tort by a corporation involves the commission by it of an unauthorized act, and yet the corporation is held liable as an individual would be. It will not be heard to say that the act was done in a matter beyond its corporate powers. 2 Morawetz Corp., sec. 726; 2 Beach.Corp., sections 404n, 432 ; Cent. R. & B. Co. v. Smith, 76 Ala., 572.
    The right or power of a corporation in Ohio to hold its own capital stock rests upon different grounds, especially that it would defeat the statutory liability. But under circumstances even it is lawful, as when a corporation takes it in payment of a debt. State v. Building Association, 35 Ohio St., 258.
    That it has been decided in this state that a corporation cannot, by action, enforce against a defendant an executory contract made by the corporation, in a matter beyond its own corporate powers, does not weaken our claim. Coppin v. Greenlee, 38 O. S., 275; Railw. Co. v. Iron Co., 46 O. S., 44.
    No such question arises here.
    There is no presumption that a particular purchase by o'ne corporation of shares in another, or that any other act done, is ult/ra vires, especially the purchase of shares in another corporation transacting the same kind of business. 2 Beach Priv. Corp., sec. 393; Taylor v. M. Exp. Co., 6 O., 176, 219; Ehrman Ins. Co., 35 O. S., 324 and 258.
    The presumption that arises upon the transactions of individuals that what has been done was lawfully and innocently done, ajiplies equally to the transactions of corporations till the contrary is shown. 99 U. S., 199; 7 N. Y., 381; 21 N. Y., 124; Wait on Insolvent Corp., section 10.
    The liability of stockholders to creditors is by contract. 2 Morawetz on Cor., section 879; 1 Beach on Corp., section 24.
    This contract, having been fully executed between the B. & O. Co. and the corporation issuing the stock, cannot be heard to make the objection of want of power. Whitney Arms & Co. v. Barlow
      63 N. Y., 62; Hays v. Gal. Gas Co., 29 Ohio St., 339; Bank of Chillicothe v. Mayor, 7 Ohio, pt. 2, 36; Steam Nav. Co. v. Weed, 17 Barb., 62.
    It is not as if the act alleged to be ultra vires was unlawful or criminal. The liability of one who buys stock of another, to be assessed to pay debts, is not based on an implied obligation to indemnify the seller. It rests solely on the fact of ownership, and is to be primarily charged on him who owns it when suit is brought. Barrick v. Gifford, 47 O. S., 180, 189, etc.; Wheeler v. Faurot, 37 O. S., 28; Brown v. Hitchcock, 36 O. S., 667 (Syl. 2, 3, 4.)
    Again, it is claimed on behalf of the B. & O. Co. that some equitable estoppel arises in its favor against Smith and Hamilton to prevent a part of its stock from being assessed to pay their claims.
    To create such an estoppel or equity by a representation, several things must concur.
    1. A transaction must be contemplated by one person. 2. And known to the other. 3. The representation must ordinarily be of a fact and be untrue, and must not be as to matters of opinion or inference. 4. The other party must have made substantially the transaction then contemplated, not some other; and have relied on the truth of the representation, and not have then known or had good reason to believe the contrary. Armstrong v. Karshner, 47 Ohio St., 276; Mulvey v. King, 39 Ohio St., 491; Herman on Estoppel, 778.
   Williams, C. J.

The principal grounds urged in argument for the reversal of the last judgment rendered by the circuit court against the plaintiff m error, briefly stated, are, in substance: 1. That the insolvency of the Newark, Somerset & Straits-ville Railroad company, in the sense which authorizes an action to be maintained against its stockholders, was not established; or, if it was, that insolvency had existed for a period so long before the commencement of the plaintiff’s action, that it was barred by the statute of limitations. 2. That there was a fatal defect of parties, by the omission to have all the stockholders before the court. 3. That the plaintiff in error, being itself a corporation, was incapacitated to hold stock in the insolvent corporation, and was therefore, not subject to assessment for the debts of the latter company. 4. That the notes which the plaintiffs were seeking to' enforce, were obtained • after maturity, from Shields, Evans & Co., who, under certain agreements with the plaintiff in error, could not have enforced them as against it, and the holders took them subject to the same infirmities; or, at least, the indebtedness should have been reduced by an amount equal to a proportional assessment on stock of the insolvent corporation owned by Shields, Evans & Co., while they were the holders of the notes. And 5. That the judgment against the plaintiff, in error, for the amount assessed ag’ainst the Drexel, Morgan & Co. stock, was without authority, the ownership of that stock having-been determined by the former judgment to be in Drexel, Morgan & Co., and not in the plaintiff in error.

One contention of counsel for the defendants in error is, that the first four of the grounds of reversal above stated were involved in, and determined adversely to the plaintiff in error by, the former judgment of the circuit court, which having been affirmed by this court, became a final adjudication upon them, and as between the parties, precludes further inquiry. That they were so involved and determined is manifest from the record. The amended petition contained allegations of the insolvency of the defendant corporation, and no plea in bar was interposed; the stockholders were named as defendants, and their names and the number of shares owned by them respectively were set out with proper averments of ownership, without apparent omission of any, and no defect of parties was pleaded; the ownership by the Baltimore & Ohio Railroad company of a specified number of shares was alleged, and no want of capacity to own them was asserted; the plaintiffs, Smith and Hamilton, set up the notes obtained from Shields, Evans & Co. as valid claims against the insolvent corporation and its stockholders, and issues were joined between them and the plaintiff in error, presenting' the variofis phases of the controversy concerning their right to have them enforced in the action. Upon submission of the cause, the court found the equity with the plaintiffs, the allegations of their pleading's to be true, and all the issues in their favor, and rendered judgment for them and against the defendants. That was necessarily a determination of the insolvency of the defendant corporation, and that the action was not barred; that the necessary parties were before the court; that the plaintiff in error had capacity to hold the stock it was so found and adjudged to own; and that the indebtedness asserted by the plaintiffs in, the action was valid and subsisting to the amount found by the court. As said by counsel for the defendants in error, every fact necessary to that determination “stands as a fact adjudicated between the parties, and, as between them, cannot be relitigated in any subsequent proceeding in the same action.”

“Questions before the court for decision, and by the court decided, as essential to a final judgment, are conclusively and finally adjudicated. The law as declared cannot be changed upon a second or subsequent appeal.” Elliott on Appellate Procedure, section 578.

It has been declared by this court that: “When the facts which constitute the cause of action or defense have been between the same parties, submitted to the consideration of the court, and passed upon by the court, they cannot again be the proper subjects for action or defense, unless the finding and judgment of the court is opened up and set aside by proper authority. This principle of law extends still further in quieting litigation. A party cannot re-litigate matters which he might have interposed, but failed to do in a prior action, between the same parties or their privies, in reference to the same subject matter. And if one of the parties failed to introduce matters for the consideration of the court, that he might have done, he will be presumed to have waived his right to do so.” Bridge Co. v. Sargent, 27 Ohio St., 233, 237.

The application of the same principle to the fifth ground urged in behalf of the plaintiff in error for the reversal now sought, renders it not the less certain that the former judgment of the circuit court was final and conclusive also as to the ownership of the stock of the insolvent corporation. As has been noticed in the statement of the case, the amended petition alleges, as a fact, that the firm of Drexel, Morgan & Co. was the owner of shares of stock of the insolvent corporation to the number of thirteen thousand four hundred and fifty, and the Baltimore & Ohio Railroad company was the owner of four thousand and two shares, or more, of the stock of the insolvent corporation, thirty-five hundred of which were issued to it as preferred stock ;each share being of the value of fifty dollars. And it is further averred that said parties were liable to contribute pro rata, according to “their respective shares,” for the payment of the creditors of the corporation. The finding of these allegations to be true, followed by judgment predicated upon that finding, must be accepted as final and conclusive of the ownership of the stock of the corporation, by the parties, and the extent of their respective ownerships, as alleged; as much so,as of any other material fact in the case. We attach no significance to the words “or more, ” following the designation of the number of shares belonging to the plaintiff in error; they furnish no basis for a liability beyond the number of shares specified, and certainly can 'afford no warrant for charging the plaintiff in error with liability on the stock distinctly averred to be the property of Drexel, Morgan & Co., and conclusively found and adjudged to be so, by the judgment rendered. Nor do we find any reservation in the judgment, under which the court in its subsequent proceedings was authorized to apportion and assess against the plaintiff in error any liability on account of the stock so found and adjudged to belong to Drexel, Morgan & Co. The further proceedings which the nature of the case required, on being remanded by the circuit court, were those relating only to the apportionment of the liability among the solvent stockholders, and' did not include or contemplate a re-trial of, or inquiry into any question of fact which had been settled by the judgment rendered. Nor, was it competent for the circuit court, after the term at which the judgment was rendered, to vacate it, in whole or part, except in the mode provided by statute, which was not done; so that, the answer pleading that judgment in bar, contained a good defense to the claim set up in the amendment to the petition, by which it was sought to establish the ownership by the plaintiff in error, of the stock which had been previously adjudged to belong to Drexel, Morgan & Co-, and was an appropriate method of saving the party’s right. Our conclusion therefore is, that the assessment made against the plaintiff in error, to the extent that it was based on that stock was erroneous, and invalid, and must be set aside, leaving the assessment to stand only in so far as it was made upon the number of shares of stock determined by the former judgment of the circuit court to be owned by the plaintiff in error, at the rate finally fixed by that court in making the apportionment of the liability among the stockholders.

The judgment will be modified accordingly, and otherwise affirmed.