author: Shauck, C. J.

text:
    McGuire v. Caskey.

      Neighboring proprietors of urban lots — Bound not to erect buildings in prescribed distance from street — Either entitled to injunction to enforce observance by other — Relief not denied to one who has erected porch within prescribed distance.

    1. Where neighboring proprietors of urban lots are bound by a covenant in a deed, under which both hold, not to erect buildings within a prescribed distance from the street upon which the lots abut, either is entitled to an injunction to enforce observance of the covenant by the other.
    2. That relief will not he denied to a plaintiff because he has erected a porch in front of his residence and within the prescribed distance from the street when the purpose of the covenant is to secure and preserve the desirability of the street for private residence, and the porch does not substantially interfere with the easement of neighboring proprietors for light, air and view.
    (Decided April 10, 1900.)

      Error to the Circuit Court of Cuyahoga County.
    The defendant in. error, on behalf of himself and numerous others plaintiff, brought suit against the plaintiff in error to enjoin the erection of a building within fifty feet of the east line of Jennings avenue in Cleveland, upon a lot owned by him so that the building should extend to the east line of said avenue. The petition, alleged that the plaintiff and others for whom he sued, as well as the defendant, derived title through and under William H. Averill and others who conveyed to George Worthington, March 18, 1863, the deed of conveyance containing the following covenant running with the land :
    “The said George Worthington, for himself, his heirs and assigns hereby covenanting and agreeing with the said grantors and their assigns, as well for the use and benefit of any and every other person who shall or may become the owner of or have any title derived immediately or remotely from, through or under Martin Kellogg or said grantors in this deed to any lot of land or any part thereof fronting on said Jennings avenue or lying wholly or in part within fifty feet of said avenue on either side thereof for the use and benefit of said grantors, or their heirs and assigns, and with a view of increasing the beauty of said avenue and enhancing the value of the lots along the same for the purpose of private residence, not to erect or place, or cause, permit or suffer to be erected or placed at any time, or for any purpose on the above granted or bargained premises, any building of any name or description whatsoever so that any part of the building shall be within fifty feet of the east line of Jennings avenue.”
    That the titles of the plaintiff and defendant were alike subject to the restriction of said covenent and that the defendant was proceeding in violation thereof to erect a building upon his lot flush with the line of the avenue which it was alleged would operate to the irreparable injury of the property of the plaintiff and others which were used chiefly for residence purposes by limiting their views in various directions and impair the rental value of the property for residence purposes. McGuire demurred generally to the petition, and his demurrer was overruled. He then filed an answer admitting the ownership of the several parties alleged in the petition and the making of the covenant counted upon in the petition. He however denied that Jennings avenue was a street almost wholly given up to residence purposes, and alleged that there were upon the street fifteen or twenty business places, .eating houses and saloons. He denied that the residences on said street are constructed at a distance of fifty feet back from said street, but to the contrary alleged that a .number of the residences and other buildings were and are within less than fifty feet of the street line. He also alleged that the residence of plaintiff himself, upon his lot abutting upon said street, was within forty-four or forty-five feet of the street line. He further alleged that owing to the changes in the condition of said street and the purposes for which the property is used since the date of said covenant, it is much better fitted for business purposes than for residence.
    The plaintiff by reply admitted that after a number of residences had been erected upon the street fifty feet from the street line, but without porches in their front, by common consent he and a number of the others erected porches in front of their residences, and encroaching to the extent of five or six feet upon the fifty feet reserved for purposes of light and air. He alleged, however, that the other buildings in which there were substantial encroachments upon the fifty feet reserved were half a mile, or about half a mile, from his residence, while the property of the defendant immdiately adjoined it and was upon a portion of said street which continued to be used exclusively for residence purposes. He also alleged that as to some of the property which had been improved by building now within less than fifty feet of the east line of the avenue, they had been erected the required distance from the street, but that by appropriation proceedings that portion of the street had been widened and thus a new line established nearer to the buildings than that established by the terms of the grant.
    The case was tried on appeal in the circuit court where there was a general finding and a judgment in favor of the plaintiff, and McGuire was perpetually enjoined from erecting a house upon the line of the street. The evidence showed that there had been some slight disregard of the limitations defined in the deed as to the erection of buildings, but that most of those which were of a serious nature were quite remote from the residence of the plaintiff and others who were interested with him in the prosecution of the injunction suit. It also showed that some porches erected after the original buildings were constructed, as alleged in the reply, were constructed by the owners of the property.

      James M. Jones and Peter F. McGuire, for plaintiff in error.
    First. We claim that the court erred in overruling the demurrer of Peter F. McGuire to the petition. The petition was defective in this: That it did not aver performance of the conditions of the covenant in question by the plaintiff or those for whose benefit he prosecuted the action. 4 Eng. and Am. Ency., 539; 24 Wendell, 153.
    Second. We claim that no equitable relief can be granted by a court of equity or a court of law to the plaintiff below on the facts admitted by the plaintiff in his reply, which are, that he and all the rest of the people in the street by common consent have violated the covenants of said deed by building their porches inside of the lifty-foot limit. The restriction and covenants was against placing any part of a building within fifty feet of the street. Any substantial violation of a covenant is as much an actual violation of it as if it was wholly disregarded, and a building placed right up to the street. And we think a court of equity would enjoin against a small violation of the covenant as quick as it would a large one. Pomeroy’s Equity J., Sec. 1342.
    Can it be for a moment supposed that under such a covenant one could build his porch six or eight feet inside of the line and then go into a court of equity and get a restraining order to prohibit his neighbor who wanted to build his twenty feet inside the line. The authorities are clearly against this. C. E. Green, 206; High on Injunction, Sec. 58; L. R. 3 Equity, 515.
    Third. If the petition is to be held by the court to contain a substantial covenant that the plaintiff and those other persons for whom he brought his suit had themselves kept and fulfilled the covenants of the said Worthington deed, then the reply is a clear departure from the allegations of the petition and nullifies the allegations of the petition in that respect.
    Fourth. On the facts in the case which are either ' clearly proved, admitted, or not at all controverted, the plaintiff below was not entitled to a restraining order or any other relief, from a court of equity. This testimony shows an habitual violation of the covenants of the deed and an acquiescence in such violation by all the people on the street, including the plaintiff himself. When Mr. McGuire, the plaintiff in error, bought his property, with the building on it, this state of things had long continued.
    The cardinal principle governing all actions in a court of equity are:
    1st. That equality is equity.
    2nd. That equity follows the law.
    3rd. That he who seeks equity must do equity.

      4th. That the plaintiff must always come into court with clean hands in regard to the very transaction on which his suit is based. Beech’s Equity, Secs. 9 to 16; High on Injunctions, Sec. 119; L. Rep. 8 Ch. App., 658; 101 Alabama, 344; 64 Conn., 136; 50 Ill. App., 310.
    We are willing to concede that the covenant in the original deed is a covenant running with the land and that it is precisely the same in its legal effect on the parties to this suit as if it had been a contract directly between them. All covenants running with the land may be enforced in an action of covenants, and by each successive assignee. 66 Ill., 393.
    In all cases of dependant or concurrent covenant performance on the part of the plaintiff must be pleaded and proved. 4 Am. Eng. Ency, 339; 24 Wendell, 153; 6 B. Monroe, 612; 13 W. Ya., 707.
    For it is one of the settled principles of a court of equity that he who seeks equity, or seeks for the aid of a court of equity to enjoin the violation of an agreement for the protection of his contraction rights, must himself come into court with clean hands, and to entitle himself to relief he must have carried out as far as possible his own part of the contract. 2 High on Injunction, Sec. 1119; 2 Jur. N. S., 348; 33 Bevan, 22.
    He cannot come into court with “clean hands” if he is violating or has violated the very contract that he is asking a court of equity to enforce. This is most distinctly held in numerous cases. The Ohio authorities and the practice of all the courts is clear and uniform on this question. It is unnecessary to quote any case except the 32 Ohio St., 184; in 10 Ohio St., 508, the same doctrine is laid down..
    We claim that no case can be found that warrants the idea that a persistent violator of the covenant in any material matter can enforce that covenant against others violating or proposing to violate it. Can it be claimed for a moment that building clear across a 40-foot lot from 6 to 10 or 12 feet inside of a prohibited 50-foot line is not a plain violation of the express terms of the covenant? I Pom. Eq. Jur., Sec. 385; 8 Oh. L. R, 658; 2 High on Injunction, 1119; 1 Turner & Russel, 17; 3 Eq. L. J., 515; 9 C. E. Green, 206.
    In this case the court granted an injunction against the construction of a bay window only four feet nearer the line fixed in the covenant, and only one story high.
    Long acquiescence in a violated covenant will prevent relief. 2 High on Injunction, 1159; 3 Eq. L. R., 515; L. R. 8 Ch., 658; 1 Turner & Russell; Ch. R., 22.

      Gaskey & Galhown, for defendant in error.
    Counsel for plaintiff in eror concedes that our action is Avell brought, that our covenant is a lawful one, that it runs with the land and that his client is bound by it, unless he can be relieved from the obligations thereof by reason of the conduct and acts of the plaintiff below or the other property owners on the street. So that it seems hardly necessary for us to spend any time arguing along those lines and we will not take the time of this court to do so beyond submitting to your honors the authorities cited below which have a bearing upon the case in hand. Hickey v. Railway Co., 51 Ohio St., 40; Shields v. Titus, 46 Ohio St., 528; Bank v. Cunningham, 46 Ohio St., 575; Peck v. Conway, 119 Mass., 546; Tobey v. Moore, 130 Mass., 448; Western v. Macdermott, 2 Ch. App., 72.
    But the fact that the owners of other lots who acquired title under a deed containing the same covenant have violated it, is no defense. It does not release defendant from the performance of the covenant in his deed so long as it remains of any value to the plaintiff. Lattimer v. Livermore, 72 N. Y., 174; Amer-man v. Dean, 57 N. Y. Superior Ct., 175.
   Shauck, C. J.

We do not understand counsel for the plaintiff in error to deny that the covenant with respect to the location of buildings upon the lots abutting upon the street is obligatory upon both parties. Indeed he insists that it is obligatory upon his adversary. His contention is that it binds equally all owners of lots Avithin the original grant in which the covenant Avas inserted, and that the equitable relief awarded in the circuit court is not available because of the habitual disregard of the covenant by the defendant in error and others owning lots which are subject to it. The finding of the circuit court being general Ave must take the facts to be as favorable to the prevailing party as any view of the evidence would warrant. Most of the violations of the covenant are upon portions of the street remote from the premises of Caskey, and some of them are upon the opposite side of the street. There appears to be neither reason nor authority for the conclusion that the plaintiff’s submission to such encroachments upon the space devoted to light, air and view as did not substantially affect his enjoyment of his OAvn property, should operate as a waiver of his right to object to other encroachments by which such enjoyment would be materially impaired.

The more definite proposition of the plaintiff in error is that his adversary should not have prevailed because of his own violation of the covenant. The facts in that regard are that Caskey and others, having built their residences upon the prescribed line fifty feet from the street line, subsequently and by common consent built in front of their residences and Avithin the space resented for light, air and view narrow porches, that of Caskey being between five and six feet in width. These porches are not otherwise described, nor is it shown that they offer any obstruction to the easements of neighboring proprietors for light, air and view. The purpose for which the covenant was made is not left to conjecture. It is defined by its terms to‘be “increasing the beauty of said avenue and enhancing the value of lots along the same for the purpose of private residence.” It is not shown by any evidence, nor can it be inferred from anything which appears in the case, that the porch is to any extent whatever subversive of that purpose. As Caskey had not in any substantial way violated the covenant by which both of the parties were affected, he was entitled to the aid of equity to prevent its substantial violation by the plaintiff in error. This conclusion is in accordance with the decided cases which relate to the subject. Western v. MacDermott, 2 L. R. Ch. App. Cases, 72; Peck v. Conway, 119 Mass., 546; Tobey v. Moore, 130 Mass., 448; Lattimer v. Livermore, 72 N. Y., 174.

Judgment affirmed.


source: Caselaw Access Project

author: By the Court :

license: Public Domain

text:
    State of Ohio ex rel. Attorney General v. Tontine Insurance Co., Etc. State ex rel. Attorney General v. Diamond Contract Company.

      Deposit required of bond and investment companies — Act of April 25, 1898■ — Corporations agreeing for payment of certain instalments to deliver a bond to payer to receive articles of value.— Subject to above act.

    Corporations, which in consideration of stipulated instalments of money paid to and to be paid, deliver to the payer a bond entitling him upon conditions named to receive an article of value and requiring the payer to contribute to the payment of the expenses of the corporation are subject to the provisions of the act “to regulate certificate, bond and investment companies,” etc., passed April 25, 1898 (93 O. L., 401).
    (Decided April 10, 1900.)
    'iN QUO WARRANTO.
    The defendants are corporations organized under the laws of other states, the former under the laws of Michigan, the latter under those of Illinois. The actions are brought to oust them from the further exercise of their corporate franchises and privileges within this state because of their failure to deposit money or bonds with the treasurer of the state and to comply in other respects with the act of April 25, 1898, entitled “An act. to regulate certificate, bond and investment companies, partnerships and associations other than building and loan companies, and to regulate investment guaranty companies, partnerships and associations doing business on the service dividend plan, and to protect holders of their certificates, debentures and securities” (93 O. L., 401). The nature of the business carried on in this state by the defendants is shown by the contracts for bonds which they respectively execute to residents of the state who enter into business relations with them. The contract of the Tontiae Surety Company is as follows :
    “Incorporated under the laws of the state of Series.... Michigan.” Number....
    THE TONTINE SURETY COMPANY.
    I-IOME office:

      Suite 12, Whitney Oyera House Bloch, Detroit, Mich. Capital Stock, $50,000.00.
    DIAMOND INVESTMENT CONTRACT.
    This contract is one of a series of contracts of like tenor numbered 1 to 100.
    Know all men by these presents, That in consideration of..................., the holder hereof, well and truly making each and all of the payments herein provided for, to be made by him at the time and in the manner herein specified, time, manner and amount of payment being of the essence hereof, The Tontine Surety Company, of Detroit, Michigan, will purchase from its redemption fund, sell and deliver to him or to his legal representative and assigns, a commercial white, clear and perfect diamond of the weight of two carats, the same to be deliyered at any time when presented at this office, within three months after making the 63rd payment on this contract. The Tontine Surety Company is hereinafter designated as the company and the person to whom this contract is issued is hereinafter designated as the holder.
    The holder hereof, hereby promises and agrees to pay the company, at its home office in the city of Detroit, as and for the consideration hereof, the full sum of $80.00 in the following manner, to-wit: $1.25 on delivery hereof, the receipt of which is hereby acknowledged, and $1.25 on or before the. last day of each calendar week, following the date hereof for sixty-three consecutive weeks thereafter. If he shall fail to pay any of said installments within the week in which it is payable, the said delinquent installment, together with the additional sum of twenty-five cents, may be paid at any time before the end of the next succeeding calendar week. But if he shall fail or neglect to pay any of said weekly installments at the time and in the manner herein provided, and. shall continue in such default for more than one week, then, and in that case, this contract shall, because of said default, become and be wholly null and void and all payments made thereon shall be forfeited and said sums so paid shall be. retained by the company as agreed liquidated damages for the non-performance therof by the holder. The holder shall, within three months after making his 63rd payment hereon, present this contract to the company’s office for redemption, and in case of failure so to do, then said contract holder waives all rights under this contract and. the same becomes null and void.
    “The Tontine Surety Company is authorized to pay or retain from its redemption fund, $200.00 for each and every diamond delivered in performance of this and similar contracts.
    The company shall employ $1.00 out of each weekly installment after the fourth payment, paid on this and similar contracts, in the purchase and delivery of a diamond required for the fulfillment of these contracts, and said $1.00 shall be kept in what is known as the redemption fund of said company, but it is hereby expressly authorized to retain the first four weekly payments, paid on this and similar contracts, being $5.00 in all, and twenty-five cents from each weekly payment after the fourth, together with all fines and other receipts, for the purpose of paying the company’s running expenses.
    “In case the party does not desire his two-carat diamond after the same is delivered to him, the Ton-tine Surety Company agrees to buy it back, at the same time of delivery, for $160.00 in cash.
    “This contract is transferable, but no transfer will be recognized by the company unless first registered with the company, for which a registration fee of $1.00 will be charged.
    “In witness whereof, the Tontine Surety Company has caused this contract to be signed by its president and secretary and its corporate seal to be hereto attached, this......day of........, 18....

      iSecretary.” President.”

    The contract of the other defendant is as follows:
    “Contract No........
    “Series No..........
    “United States of America.
    “DIAMOND CONTRACT COMPANY.
    “Incorporated under the laws of the State of Illinois, A. D., 1897.

      Some Office, Chicago.

    “contract.
    “Know all men by these presents, That the Diamond Contract Company, of Chicago, Illinois, promises to deliver at its home office in Chicago Illinois, to............or............assigns, a diamond at the time and on the following conditions, to-wit:
    “This contract is one of a series of contracts of like tenor, numbered from number one to fifty, each with four coupons attached (which constitute a part of each contract).
    “The original holder hereof has paid the sum of five dollars to apply on said diamonds, and in accepting this contract agrees to pay to the company at its home office, on or before the last day of each week after date, until the conditions herein are complied with, the sum of one dollar and twenty-five cents, to be applied as herein stated, of which amount the sum of twenty-five cents, together with said sum of five dollars, and all fines collected hereon, shall be retained by the company for its expenses.
    “It is further agreed that the failure to pay said .weekly sums as stated, shall subject the holder hereof to a fine of twenty-five cents, and said delinquent installment, with said-fines must be paid on or before the last day of the following week, or his contract shall thereupon become null and void for such default in payment, and all money so paid shall be forfeited at (the option of the company), time being the essence of this agreement. Out of the weekly installments paid as aforesaid, one dollar shall be set aside to constitute a Merchandise Fund to be used for the redemption of coupons as they shall mature.
    “Merchandise Fund: As soon as two hundred and fifty dollars shall have accumulated in said fund, the company shall apply it upon, the purchase price of the diamonds described in the said coupons, at the rate of $83.33 per carat, to redeem its contracts and coupons as herein provided, and it is further agreed between the company and the holder of this contract that the holder hereof shall pay one hundred and four weekly installments on each contract, then the company will deliver to said holder diamonds as specified in said coupons out of the first money accumulating in the Merchandise Fund in the order of their issue, and such specified payment shall constitute the preferred order of redemption of contracts in this series. Each coupon is one-fourth part of this contract and will be redeemed accordingly. It is estimated they will be reached for redemption every twenty-six weeks after date of issue,' but should the coupons be reached in either order of redemption hereinafter described, before the said number of weekly installments specified are paid in, then the holder hereof shall pay to the company an amount sufficient to make up the difference.
    “The company may redeem contracts in this series in addition to the preferred order of redemption described above, on an alternating plan as follows: The first coupon redeemed shall be the first coupon on contract No. 1, the second coupon redeemed shall be the first coupon on contract No. 2 in the same series, and contihuing in like manner throughout the first series until all of the first coupons in the first series are redeemed as herein provided. The next coupon in the order of redemption shall be the first coupon attached to contract No. 1, in series No. 2. The next coupon to be redeemed shall be the second coupon attached to contract No. 1 in series No. 1; the next coupon to be redeemed shall be the first coupon attached to contract No. 2, in series No. 2, and continuing throughout the second series, on the first coupons alternating with the second coupon in the first seriés, until all of the first coupons in the second series are redeemed as herein provided. The next coupon in the order of redemption shall be the first coupon attached to contract No. 1, in series No. 3, alternating consecutively with the second coupons attached to contract No. Í in series No. 2, and the third coupon attached to contract No. 1 in series No. 3, and continuing throughout the third series until all of the first coupons have been redeemed as herein provided.
    It is agreed between the company and the holder of this contract, that when the first coupon hereto attached, is reached in either order of its redemption, the holder hereof shall be entitled to the delivery to him of a diamond as specified on said coupon, when the holder hereof may continue this contract in force by making his payments hereon regularly as aforesaid until his second, third and fourth coupons aro reached in the order of their redemption, when he shall be entitled to the delivery to him of diamonds as specified on said coupons, when this contract shall be delivered to the company, cancelled and be retired. This contract is transferable only on the books of the company, under the signature of the secretary, for* which a transfer fee of fifty cents shall be charged.
    “In witness whereof, the said Diamond Contract Company has caused its corporate seal to be hereunto affixed, and this contract to be signed by its president and secretary at the offices of the company, in the city of Chicago, state of Illinois, this.....day of .........., A. D. 189. ..
    “DIAMOND CONTRACT COMPANY,
    ..............., President.”,

    ...................., Secretary.

    The first section of the act which the defendants are charged with violating is as follows:
    “Section 1. Be it enacted by the General Assembly of the State of Ohio, That every corporation, partnership and association, other than a building and loan company, doing in this state the business of placing or selling certificates, bonds, debentures, or other investment securities of any kind or description, on the partial payment or installment plan, and every investment guaranty company doing business on the service dividend plan, shall, before doing business in Ohio, deposit with the state treasurer twenty-five thousand dollars either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, for the protection of the investors in such certificates, debentures or other investment securities. Andinadditionthereto, the said company, partnership or association shall, on or before the 10th day of January of each year, deposit with the said treasurer, either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, ten per cent, of tbe gross receipts on tbe amount of business done by it in tbe state of Ohio for tbe twelve months next preceding the thirty-first day of December. The said deposit shall be made each year as aforesaid, until the total amount of such cash or bonds deposited shall be worth one hundred thousand dollars.”
    Other sections of the act impose further duties upon the corporations to which it applies as conditions precedent to their doing business in this state. There is, however, no further description of the corporation whose business the act undertakes to regulate. The defendants admit that they have not complied with any of its requirements and deny that they are within its provisions.

      J ohn M. Sheets, Attorney General, and J. E. Tocld, Assistant Attorney General, for the state.

      Winch & Thompson, and Huggins, Sowers & Watson, for the defendants.
   By the Court :

The contracts or bonds delivered by these companies to persons who pay to them the contemplated installments are not contracts of sale in the view of commercial law. In one case the price to be paid is contingent, and in both the payer shares in the operating expenses of the corporation. The companies within the terms of the statute.

Judgment of ouster.


author: Davis, J.

text:
    State ex rel. Calderwood v. Miller.

      Election of City Clerk by Council — Candidate receives plurality of votes — Formal declaration of result by Mayor — Not necessary to fix right lo office.
    1. Where all of the members of a city council, in a city of the second class, vote to elect a city clerk, and one of the candidates voted for receives a plurality .of the votes cast, such candidate is duly elected, and a formal declaration of the result is not necessary to fix his right to the office; and thereafter it is not within the power of any member of the council to change the result by changing his vote.
    2. When a choice has been made on such vote, it is not essential that the mayor as the presiding officer of the council shall declare the result. In such ease the mayor has no duty whatever to perform as to the election. He can take part only in case of a tie vote.
    (Decided April 24, 1900.)
    Eeeoe to tbe Circuit Court of Darke county.
    Tills action was brought by petition in quo warranto, filed, by the relator in the circuit court of Darke county, to oust the defendant from the office of city clerk of Greenville, a city of the fourth grade . of the second class, having a council composed of eight members. The relator alleged that the defendant was not the legally elected clerk of said city, and that he has unlawfully usurped and intruded himself into the said office, to which the relator claims that he was properly elected and was entitled. The most material part of the petition is as follows:
    That on the 17th day of April, A. D., 1899, at the meeting provided by law for the organization of the council, the mayor presiding, the newly elected members of the.council having properly qualified, and all the-members being present, an election was held for the office of clerk of the said city, which resulted in the said ElsAvorth E. Calderwood, relator, receiving four votes; Elliott M. Miller, two votes, and Harry J. Brenneman, two votes. Thereupon, the mayor declared the relator duly elected to the office of city clerk of said city.
    That thereafter, hut without authority, or legal right, as the relator avers, the two members of said council Avho A’oted for said Harry J. Brenneman, changed their votes to Elliott M. Miller, and the mayor then assumed illegally, as the relator claims and avers, to cast the deciding vote in favor of said Elliott M. Miller.
    The defendant’s ansAver contains three defenses. The defendant in his first defense, denies that the relator Avas elected, and denies that the mayor at any time declared the relator elected to the office of city clerk of said city. In the second defense the defendant says that the said city council met at the time stated in the petition, for organization and election of city clerk, all members, namely eight, being present ; and that the mayor of said city presided at said meeting. That thereupon the said city council proceeded to elect a city clerk, and the roll being called four members of said council voted for said relator. ElsAvorth E. CalderAvood, and tAvo members of said council voted for said Harry Brenneman, and two members of said council voted for said Elliott M. Miller, the defendant. That thereupon, and before the said presiding officer, the mayor, had announced or in any way declared any result, the tAvo members of said council who had cast their votes for said Harry Brenneman changed their votes from said Harry Brenneman to said Elliott Miller, and the said two members of said council each cast his vote for said Elliott Miller, the’defendant, making a tie between said relator and defendant Miller, the said relator receiving four votes, and the defendant Miller receiving four votes; that thereupon, the said mayor of said ' city cast his vote in favor of said Elliott Miller and publicly declared said Elliott Miller elected to the office of city clerk of said city of Greenville for the term of two years. That thereupon, the said Elliott Miller gave the bond and took the oath required by law in such cases and entered upon the duties of said office and has been and is now discharging the same.
    The third defense is as follows:
    The said defendant, Elliott Miller, for his third defense says that he claims title to said office of city clerk and the right to hold said office and to discharge the duties and receive the emoluments thereof by virtue of the action of the city council of said city had in the council chamber on April 17, 1899; that the said city council is composed of eight members and that a meeting of said council was held on the 17th day of April, all members being present for organization and election of a city clerk. That the mayor of said city was present at said meeting and presided at the same. That the record and minutes of said meeting of said council, so far as they relate to the election of said city clerk, are as follows, namely :
    “The mayor then called for the'vote on clerk which resulted as follows: For E. E. Oalderwood, Ries, Arens, Harter and Ridenour; for E. M. Miller, Swartz and Reppeto; for H. J. Brenneman, Westfall and Oolvin. Oalderwood, four; Miller, two and Brenneman, two. The mayor then stated if any member desired to change his vote before he would announce his decision they should do so, and if no member desired to change his vote he would have to declare E. E. Oalderwood elected as clerk. Oolvin and Westfall thereupon declared their intention to change their vote and did so by changing their vote from that of Brenneman to that of Miller; the vote then being Miller, four, Calderwood, four. The mayor then stated as the vote was a tie he would cast the deciding vote in favor of E. M. Miller, and declared E. M. Miller as clerk for the term of two years.”
    The said defendant further says that on April 24, 1899, said council met in regular session being next succeeding meeting and all members being present and transacted certain business and that in the record and minutes of said meeting of the 24th of April, among other things, appears and is recorded the following:
    “Minutes of previous meeting read and objected to by Ridenour and Ries. On motion of Ridenour, seconded by Ries, the following amendment to same was adopted, to-wit: The clerk then announced the vote to be Calderwood, four; Miller, two, and Brenneman, two. Whereupon, Ries and Ridenour claimed that E. E. Calderwood had received a plurality of the vote and was the legally elected clerk, and Mayor Chenoweth had declared him so to be, and thereupon, protests being made, Mayor Chenoweth stated that he wanted it to be satisfactory and wanted the council to know what they were doing, and if any member wanted to change his vote he might do so. Thereupon Colvin and Westfall, under the protests of Ries and Ridenour, changed their votes to Miller, and Mayor Chenoweth declared a tie vote, and stated that he would vote in favor of Miller, thereby disregarding his former action, and declared Miller elected clerk. * * * Minutes were then approved as amended.”

      Defendant Miller says that on the 18th day of April he took the oath and gave the bond required by law in such cases and entered upon the discharge of the duties of said office and has been hnd is discharging the same.
    The relator demurred to the second and third defenses, and the demurrer was overruled. The relator replied as follows:
    Now comes said relator, E. E. Calderwood, and for his reply to the amended answer of E. M. Miller, says that it is not true, that said two members of said council changed their votes from Harry Brenneman for clerk to said E. M. Miller before the said presidig officer, the mayor, had announced or declared the result of said election for clerk, and contrary the relator says that as stated in his petition the said mayor duly declared the relator elected to said office of city clerk, and thereupon and against the protest of certain members of council, said two members stated in said answer, changed their votes from Brenneman to said E. M. Miller and the said mayor notwithstading his former action, without authority of law, cast his vote for said E. M. Miller, and illegally assumed to declare that the said E. M. Miller was elected clerk.
    Whereof, said relator prays judgment as claimed and asserted in his petition herein.
    Upon the trial of these issues the circuit court found in favor of the defendant and dismissed the petition. A motion for a new trial, by the relator, was overruled. The petition in error assigns, in substance, the following alleged errors: First, that the circuit court erred in overruling the demurrer to the second and third defenses contained in the answer, and second, that the judgment should have been for the relator upon the pleadings and undisputed facts.

      Allread & Teegarden and D. P. Irwin, for plaintiff in error.
    There are two questions of law:
    1st. Was Calderwood’s election completed upon the announcement of the vote by the clerk as shown in the second and third defenses of the answer.
    2nd. Was there a sufficient declaration of the result by the presiding officer when he declared that “According to the way the vote now stands, Calder-wood will be elected.”
    It is claimed that the members of the council had a right to change their votes so as to create a tie and give the mayor a right by casting his vote to change the effect of the election. It is important in tMs connection to determine when the election is completed under this section, so as to prevent members of the council from changing the result by changing their votes.
    In case of an appointment by a body like the council, it has been held, that where the result is publicly declared, it can not be rescinded or revoked by reconsideration. State v. Barber, 53 Conn., 76; 79 Me., 506; Horr and Bemis on Mun. Ord., sec. 46; Mecham on Public Officers, secs. 113, 114, 119 and 120; 12 C. C., 235; 4 Circ. Dec., 124; 15 C. C., 526;. 8 Circ. Dec., 357.
    Whatever might be the rule as to an appointment, we think the .case is different in the case of an elec- ■ tion.
    In this state it has been held, that the city clerk is elected and not appointed. State v. Squire, 39 Ohio St.. 199; State v. Brady, 42 Ohio St., 504; State ex. rel. v. Anderson, 45 Ohio St., 196;
    It has been repeatedly decided in Ohio, that a plurality under this section elects. State ex rel. v. Green, 37 Ohio St., 227.

      The mayor is not a member of tbe council. He is simply ex-officio president at tbe time of sucb organization and in case of a tie vote, he is to give tbe casting vote.
    In this case tbe statute gives him no power, except to preside, and in case of a tie to give tbe casting vote.
    Then tbe only question is, — wbat power was granted to tbe mayor by virtue of bis authority to preside over the meetings of the council?
    If the parlimentary rule governs the decision in case of State ex rel. v. Green could not have been made, for nine members voting where eighteen are present and tbe other nine declined to vote and protest against the election, would not be a parliamentary majority. And in the case of Slate ex rel. v. Anderson, supra, the parliamentary rule would have required a repetition of the vote until either there was a tie, or a majority.
    The statute 1676 as construed by our courts seems to contemplate that the election of a clerk must necessarily take place on the first vote. If one receives a plurality, be is elected; in case of a tie tbe mayor decides by his casting vote. Here was a complete vote and the clerk announced the vote to the council and no one then challenged its correctness, nor does anyone now. Has the mayor anything further to do than simply to confirm this choice by his declaration of the result? He can not change the result by withholding his declaration or allowing the council to re-vote or to change their votes, especially where this is done over objection. 11 Ohio St., 102; 6 C. C., 324; 3 Circ. Dec., 471; Blanchard v. Bissell, 11 Ohio St., 102; State ex rel. v. Railway Co., 6 C. C. 324; 3 Circ. Dec., 471.

      George W. Mannico, Jr.; 8. V. Hartman and John O. Olarh, for defendant in error.
    The statute makes it the duty of the mayor to preside in suck cases at the organization of the council and the election of city clerk. The statutes prescribes no rules or regulations for such election, and in the absence of any such rules or the adoption of any rules by the council the ordinary parliamentary rules usually followed under such circumstances should govern.
    It is claimed in the brief of the counsel for the plaintiff in error that the call Of the roll and the recording of the vote as cast was of itself sufficient to constitute an election of Mr. Calderwood. We think to hold that it was unnecessary for the mayor to declare the result, and that it was sufficient for the clerk to do so, and that the election was over when the clerk had done so, would be to deprive the presiding officer of all functions and to make useless the provisions of the statute making it his duty to preside.
    The mayor, by the statute, is authorized in case of a tie to cast the deciding vote and declare the result of the election. And when the result has been so declared in the absence of an appeal from his decision and of any error, fraud or illegality, the council has exhausted its power in respect to such election and it cannot thereafter reconsider its action or change the result.
    Robert, in his Rules of Order (110-111), states “When a vote is taken the chairman should always announce the result.” “He will count * * * * announce the number and declare the result.” If tellers are appointed they must make the count and report to the chairman.

      “A member has a right to change his vote (when not made by ballot) before the decision of the question has been finally and conclusively pronounced by the chair, but not afterwards.”
    We refer the court to secs. 1675, 1676 and 1685 of the Revised Statutes and to the following cases bearing upon the case before the court: State ex rel. v. Green, 37 Ohio St., 227; State v. Squire, 39 Ohio St., 197; State v. Brady, 42 Ohio St., 504; State, ex rel. v. Anderson, 45 Ohio St., 196; Marbury v. Madison, 1 Cranch., 137; State v. Phillips, 79 Me., 506; State v. Foster, 2 Halst., 101; Whitney v. Van Buskirk, 40 N. J. L., 463; Baker v. Cushman, 127 Mass., 105; Putman v. Langley, 133 Mass., 204; State ex rel. Coogan v. Barbour, 53 Conn., 76; State ex rel. Southey v. Lashar, 71 Conn., 540; 44 L. R. A., 197.
   Davis, J.

The relator’s chief contention is that upon the undisputed facts the judgment of the court below should have been in his favor. The undisputed facts, or at least such of them as are necessary for our present purpose, are, that the council numbered eight members; that all of the members Avere present at the meeting on the 17th day of April, 1899; that the may- or presided at that meeting;that an election was then held for the office of city clerk; that four votes were cast for the relator, two votes for the defendant, and two votes for a third person, and that the clerk announced the result of the vote. Thereupon, after some parley, the two members who had voted for the third candidate changed their votes to the defendant causing a tie, and the mayor then cast his vote for the defendant and declared him to be elected. Whether the mayor did, or did not declare the relator elected, before the change of votes, is a disputed question and not very material. The statute (Revised Statutes, sec. 1676) declares that the members of the city council shall elect the clerk and other officers. It is provided that in cities of the second class the mayor, by virtue of his office, shall preside at the organization of the council; but he is not a member of the city council, and it is not provided that he shall participate in the election, except in case of a tie vote. That contingency did not arise in this case, unless the two members who changed their votes to the defendant, might lawfully do so after a vote had been taken and the result ascertained.

But the vote having been cast, and the result having been announced to the council by the clerk, by which it was apparent that the relator had received a plurality of the votes cast, the function of the council was discharged. State ex rel. Attorney General v. Anderson, 45 Ohio St., 196. The election was complete. The formality of a declaration by thé presiding officer of the council could neither add to, nor detract from, the thing which had already been done. The right of the relator to qualify and to be inducted into the office was fixed eo instante.

The council was engaged in the duty of electing officers, a duty imposed on the members thereof, not on the body as a council. They were not engaged in the deliberative business which is the ordinary work of the council; but in the election of a city officer. They were not acting under parliamentary law; but were casting their votes and making their choice as required by a specific statute. They could make this choice but once. Having done so they could not reconsider it. Much less, could some of them against the protest of á plurality, under the suggestions or invitations of the presiding officer or sua sponte, change their votes. This would give to the minority the power of defeating the choice of a plurality which had already been, legally made and ascertained. See Reg. v. Donoghue, 15 U. C. Q. B., 454; and Hopkins v. Swift, 87 S. W. Rep., 155.

The relator was duly elected city clerk and must he inducted into the office.

Judgment reversed and judgment of ouster against defendant.


author: Spear, J.

text:
      The Wick National Bank v. The Union National Bank et al.

      Corporation stockholder’s liability — Transfer of stock — Transferee insolvent — Liability of assignor subject to payment of debts accruing while he held stock, when — Assessments .on solvent stockholders to be applied pro rata upon debts of corporation, when — Rights of corporation creditors.

    1. Where the holder of stock in a corporation has transferred his stock in good faith to one who, at the time of subjecting the stockholders’ liability to the payment of the debts of the corporation, is insolvent, the liability of such assignor of stock may, subject to the rule established in Harpold v. Stobart, 46 Ohio St., 397, be subjected to the payment of debts which accrued while he held the stock in case a sufficient fund is not raised by assessment upon solvent stockholders to satisfy all creditors.
    2. In such case the fund arising from assessments on solvent persons who are stockholders at the time of the decree should be applied pro rata upon all the debts of the corporation; and funds arising from assessments on persons who had been stockholders, but had assigned their stock in good faith before the insolvency of the corporation, should be applied to the residue, if any, owing to those who were creditors at the time such stock was' assigned.
    (Decided April 24, 1900).
    Error to the Circuit Court of Cuyahoga county.

      Williamson, Cushing & Clarke; C. D Hine; Webster c6 Cook; Garfield, Garfield & Howe, and J. J. Sullivan, for plaintiffs in error.

      Horsley & Bclzer, and Squire, Banders & Dempsey, for defendants in error.

    Brief of Williamson, Cushing & Clarice.

    Upon the facts shown hy the record the sole question is: Where a solvent stockholder transfers his shares to one who is insolvent at the time of the subjecting of the stockholders’ liability to the payment of debts, shall the fund derived from such transferring solvent holders of stock be applied exclusively to the payment of the debts which accrued before such transfer, or shall such proceeds go into a common fund to be distributed pro rata among all of the creditors of the corporation?
    The courts below decreed that such fund should go only to the creditors whose claims accrued prior to such transfer. We respectfully contend that such fund should be distributed pro rata among all of the persons creditors at the time of the winding up of the corporation.
    The syllabus of Ulmsted v. Buskirk, 17 Ohio St., 114, establishes unequivocally the position for which we contend in these words: “The liability on the part of stockholders is several in its nature, but the right arising out of this liability is intended for the common and equal benefit of all the creditors.” Candor, however, compels the admission that the point was not pressed upon the court in such manner in that case as to make the decision an entirely authoritative, and final one. While, therefore, we cannot claim that there is an express decision in favor of our claim by this court, we can say, with entire confidence, that no decision can be produced in Ohio, giving warrant for the position taken by the courts below. And a close reading of the cases relating to the subject decided in this state, leads us to say, that no principle has been announced either by the supreme court, or by any circuit court of the state, from which a rule of law sustaining such a distribution as decreed in this case can properly be derived.
    The liability created by sec. 3, of art. 13, of the constitution, and by sec. 3258 of the Revised Statutes, is expressly “to the creditors of the corporation”— not to a part of them, nor to those whose debts were created at any given time, but to all of the creditors. This liability is to secure “payment of the debts and liabilities of the corporation” — not some of them, but all of them; not such as may be contracted at some given period, but without restriction all of the debts and liabilities of the corporation.
    The only cases sufficiently analogous to the one at bar to be considered are the following: (1.) Brown v. Hitchcock, 36 Ohio St., 667. This case decided only, (a) the individual or personal liability of stockholders attaches in favor of the creditors when the' debt is contracted; (b) transferees of stock are under an implied obligation to indemnify their transferors against all liability for debts of the corporation. But if the amount due from such stockholders is not collectible because of insolvency the transferor of the stock up to the. time the liability attached may be charged with the deficiency. This case surely does not reach the point of the case at bar. It is concerned with, and only with, the liability of the stockholder, and not at all with the application of what he may pay. It lays down the rule for creating a fund for “the creditors of the corporation,” but does not pretend to provide a rule for its distribution.
    (2.) Harpold v. Stobart, 46 Ohio St., 397. This case decides only that a transferor of stock is liable for such proportion only of the debts created while lie owned the stock as the stock owned by him bears to that owned by the solvent stockholders liable to contribute to the same indebtedness. Surely this does not touch the point in controversy in this case. It determines only the method of calculating the amount of the liability of the stockholder, and is not concerned with determining to whom the money shall go when paid. It relates solely to the creation of a fund, not to the distribution of it.
    (3.) Peter v. The Union Man’g Co., 56 Ohio St., 181. This case decides only that if a person sells or gives away stock for the express purpose of avoiding liability for the future indebtedness that may be contracted, such transfer is valid and he is not liable for subsequently contracted debts. These are the only cases from which the rule applied in this case can by any possibility of loose thinking be derived. But when they are attentively considered it seems very clear that not the slightest warrant of authority can be found in these decisions for the decree of the lower courts in this case.
    Not only is the express letter of the statute thus against the law of the decree in this case, but time and again expressions of judges of this court, of highest character, upon the point have been distinctly favorable to our contention, with the concurrence in two instances at least of the whole bench,' such that it makes the utterances of highest authority short of actual decision. In what follows it is important to note that “we are not materially aided in making answer (to such question as is here proposed) either by text books, or by decisions of courts outside our own.” Harpold v. Stobart, supra.

      Brown v. Hitchcock, supra. Here Judge Mcllvaine, than whom it would be hard to produce higher individual authority, in dissenting from the majority of the court upon points decided in the case uses this language: “There is no disagreement between the members of the court, in this: that the aggregate security for the dues of a corporation thus provided is the aggregate stock of the corporation, and all amounts unpaid thereon, together with a further sum equal to the total amount of the stock, and no more; nor is there any disagreement between us as to the rule that the security thus provided, when realized, must be distributed pro rata among all the creditors of the corporation, without regard to the time when the credit was given, and without respect to persons who owned the stock when the debt was contracted.”
    Here the precise question which we seek to present was distinctly in the mind of the judge writing the opinion, had obviously been under discussion by the ■whole court, and the conclusion was unanimous in favor of the contention which we here set up.
    In Harpold v. Stobart, supra, Judge Spear uses this language: “This right against the stockholders is intended for the common and equal benefit of all creditors.
    From Ulmsted v. Buskirk, supra, we have given one paragraph of the syllabus. We add the 4th paragraph : “A right to contribute grows out of the organic relation existing between stockholders. As between them and the creditors each stockholder is severally liable to.all of the creditor’s; as between themselves each stockholder is bound to pay in proportion to his stock.”
    Thus in the three most elaborately and carefully considered stockholder cases decided in this state the various judges are united in repeatedly declaring in favor of the claim which we make. In this last case the decisive language is found in the syllabus and so' as in the first is the opinion of the entire bench. We can not bring ourselves to think that the judges of this court, through a period of more than thirty years, have been so careless of precision in the use of language that the citations given do not constitute all but conclusive authority to the point of our contention. 1
    Passing now from the decided cases to the general-principles that should be considered in reaching a conclusion upon this question. We are limited in speculation as to what should be, as distinguished from what is, the law in such cases as this, by the fact that the liability has its origin neither in principles of equity nor in the common law. ' “The individual liability of stockholders in a corporation is always a creature of statute. It does not exist at common law. The first thing to be determined, therefore, in all such cases, is what liability has been created.” Terry v. Little, 101 U. S., 216. Whatever conclusions, therefore, we may think pointed out by “correct thinking,” or by “substantial justice,” or considerations expressed by equivalent phrases, must, after all, find warrant for their enforcement in the language of the statute.
    With this in mind, some suggestions may not be improper.
    First. If the three transferring stockholders had not transferred their stock at all, the three creditbrs receiving the entire fund in this case would have come in for their pro rata share only, with all of the other creditors.
    Second. If the transfer had been to solvent persons, no liability would have attached to the three transferring, and now contributing, stockholders, because, under Brown v. Hitchcock, supra, the transferees would have been under implied contract to indemnify or discharge the transferors from the liability which, attached to them as stockholders while they held the stock, and the collection would have been made from them.
    Third. It may be said again that the three creditors trusted to the fund to be derived from the then stockholders, while later creditors trusted others, and that each should have the benefit of his judgment as to the responsibility of the persons who were to pay. Judge Johnson, in Brown v. Hitchcock, supra, expressed the truth with respect to this claim, saying: “Much stress has been laid upon the assumed, not actual, fact that every creditor looks to the stockholder when he trusts a corporation.” But, supposing that to be reality, .which is, in truth, fiction, if stock held by insolvents when debts were contracted should be transferred to solvent holders, a share of the fund derived from these last would be promptly claimed by the person’s creditors before the transfer, and the statute would, be searched in vain for bar to such claim. The superior judgment of the later creditors in selecting whom they should trust would be of no avail as an argument against this claim. It is a poor rule of natural equity that does not work both ways.
    Fourth. Again, if the guide to the conclusion upon this question is to found in this trust reposed by creditors in the solvency of stockholders at the time the debt is contracted, the statute, if natural justice be the pursuit of construction, should be so construed as to confine the security to the then holders of stock, and, following such considerations of justice as lie in this suggestion, such creditors should surely not be allowed to share in any fund that might be derived from holders of stock that was not in existence when such debt was contracted. Yet, if any stock be issued after contracting of debts, the holders of such new stock must contribute to such old debts precisely as if contracted after such stock was issued. Barrick v. Gifford, 47 Ohio St., 181— though it was thought earlier such should not be the law. Bonewitz v. Bank, 41 Ohio St., 78.
    Sixth. It may be argued that the amount to be paid into court by the transferring stockholder is determined by the amount of the indebtedness before the transfer, and that such payment should therefore be applied to the liquidating of such indebtedness. But the amount of such indebtedness is but one factor in determining what shall be paid by transferring stockholders' upon it. Harpold v. Stobart, supra. Therefore the argument that the amount to be paid by these stockholders is to be determined wholly by the amount of the indebtedness, and that therefore the entire sum should be applied to the indebtedness existing before the transfer, should fail.
    Seventh. It is said in some of the cases that the transferring stockholders should not be called upon to pay anything upon account of debts contracted subsequent to the transfer, and that any rule that causes them to make such payment is obviously incorrect. We assent to this, but say, that the rule for which we contend does not call for payment by the transferring stockholder upon the account of any such subsequent debts. That amount is determined wholly by the ratio of the transferred stock to the solvent stock contributing to the same indebtedness. The fact that a part of this fund may go to later creditors under the express terms of the statute does not make that part payable by the stockholder upon the account of such debt. If .later debts are not a factor in determining the amount to be paid, the sole question is, shall the sum, after being paid, go to all ereditors, as the statute directs, or shall the courts enact a new statute sending it elsewhere?
    We may sum up this argument by saying that, by the construction for which we contend, the three creditors preferred by the decree of the court below would get precisely the same amount that they would have reecived on their claims if no transfer had been made by the stockholders at all; they would get precisely the same amount as if the transfer had been made to solvent persons; and we cannot conceive how, from the language of the statute, words can be raised, by construction, to make a different rule of distribution when the transfer happens to be made to an insolvent person, from that which governs when no transfer at all is made, or when it is made to a solvent person. We cannot believe that the most perfect master of condensed expression could- write the two rules thus made necessary by the construction of the court below in the same number of words found in the entire statute governing this subject. To sanction an importing of language into a statute, amounting to more than a re-writing of it, does not seem to us 'to be construction, but to be the enacting of judicial legislation — as business courts are always very slow to enter upon.
    We respectfully submit upon the authorities which we have cited, and upon the arguments which we have sought to advance, that the lower courts both erred in the decision of this case, and that their decision should be reversed.
    Brief of Heisley & Belzer.

    A suit to subject the statutory liability of stockholders in an Ohio, corporation is a proceeding in equity, and a court can render such decree as equity requires.

      In Wright v. McCormick et al., 17 Ohio St., 86, Judge White in the opinion says: “The statute under which the liability arises contains no provision in regard to the manner in which the liability is to be enforced. It is a provision inuring to the benefit of the creditors of the corporation; but in what way, and on what principles of equity, as between creditors, and as between stockholders, it is to be made available, and under what circumstances resort may be had to it, are matters left for judicial determination.”
    If the plaintiff in error had brought suit against the company and its. stockholders to subject the statutory liability of the stockholders to the payment of the company’s debts, and had not alleged that the suit was predicated upon a debt or liability incurred by the company before the stock was transferred, a demurrer by the transferring stockholders would have been sustained. In other words, if all of the debts Avere contracted after the defendants in error ceased to be stockholders, they would not be liable. Hoav can the plaintiffs in error get part of a fund that a creditor creates by suit against former stockholders Avhen plaintiffs in error could not themselves file a petition that would stand the test of a demurrer?
    In Harpold v. Stobart, 46 Ohio St., 397, this court in the opinion says: “We are of the opinion that a stockholder who has, in good faith, sold and assigned his stock to one who becomes insolvent, is liable to the creditors of the corporation, for such portion only of the debts existing Avhile he held the stock, and remaining due (not in excess of the amount of stock assigned), as will be equal to the proportion which the capital stock assigned by him bears to the entire capital stock held by solvent stockholders, liable in respect to the same debts, who are within the jurisdiction, to be ascertained at the time judgment is rendered.”
    Let us assume that the transferring stockholders transferred stock in the amounts found by the court, but for the sake of the argument, that the debts of those creditors which existed at the time of the transfer were only one thousand dollars each; that is, they aggregated but three thousand dollars instead of over forty thousand dollars. In that case, the transferring stockholders would have to pay into court but three thousand dollars and the costs — their liability would be limited to the actual debts that the company owed at the time of transfers, and the three-creditors would be paid in full, would a court of equity then say to these three creditors, that while it was true, there was in the court’s hands money sufficient to pay their claims in full, yet, creditors whose debts had been contracted long after the transfers, claimed the right to participate in the fund, and the court thought it but equity to alloAV such participation? Surely not. The logical — the irresistible conclusion from the reasoning in Harpold v. Stobart, is: that stockholders, Avho in good faith, transfer stock to persons who become insolvent, can be held for their pro rata payment only of'the debts of the company contracted while they Avere stockholders. Following out this reasoning to its natural end, are Ave not forced to conclude that where the liability of transferring creditors is large enough to pay all debts .contracted before the transfers of stock, that persons holding such claims should be paid in full? And does not this lead us to conclude in the case at bar, that where a fund has been created by persons who transferred, paying in the amount for which they were liable, that the only ones entitled to participate in that fund, are those who were creditors at the time of the transfers? As was said by this court in Earpold v. Stobart, in commenting upon the liability of the transferring stockholders, and the rights of creditors existing at the time of the assignment — “They go together.”
    The quotations in brief of plaintiffs in error from earlier decisions of this court cannot aid in the decision of the question we have here. Distribution was not involved in any of the cases. The expressions relied upon were outside of the cases, and in no way necessary to their determination.
    If the contention of the plaintiffs in error be right, then the practice in this state from the day of the first statutory liability suit to the present has been all wrong. To establish the principle they maintain, as the law of Ohio, "would be to revolutionize the practice of the state. While there are no adjudicated cases disposing of a fund created as the fund in this case was, we respectfully submit, as these plaintiffs in error could not maintain an action against the transferring stockholders, it would be far from equity to permit them to participate in a fund they could not create.
    Brief of Squire, Sanders & Dempsey.

      ■ Starting with the conceded fact that the money in dispute was derived by assessing stockholders who ceased to be such before the plaintiffs became creditors, the first question naturally presenting itself is— who earned the fund? It will be conceded that, in the absence of fraud, a stockholder is liable to creditors of a corporation for his portion only of the debts existing while he held stock. If it is not conceded, the court has but to refer to the case of Harpold v.
      Stobart, 46 Ohio St., 397. And it makes no difference how or for what reason the stockholders ceased to be snch by transferring his stock, so long as the transaction was carried out in good faith. And, in passing, we may say, no fraud or bad faith is claimed or found in this case. Such is the law as announced in Peter v. Union Man’g Co., 56 Ohio St., 181.
    With these decisions in mind, and considering them in the light of conceded facts, that the fund, about the disposition of which complaint is made, was derived by assessing stock owned and transferred prior to the existence of the debt of the complaining creditors — it seems to us there can be but one answer to the question propounded, and that is— the fund was earned by the creditors to whom it is distributed. Putting it another way, would any fund be here to dispute over if the defendant creditors had not been such on September 15, 1895, and January 6, 1896? Surely under the decisions just quoted, it appearing that the stock had been actually transferred in good faith, the transferring stockholders would owe nothing to future creditors, that is, the complaining creditors, because their debts accrued after the transfer of the stock. This being so, the complaining creditors could not possibly have any claim against the stockholders in question, and, not having any claim, could not have raised any fund by assessing the stock owned and transferred prior to that time.
    If, then, it is made clear that the complaining creditors had no claim against the stock or stockholders as they existed September 15, 1895, and January 6, 1896, upon what theory may they now ask that they be permitted to participate in the distribution of a fund which they had absolutely no legal right to create, and which accrued, as before suggested, because it so happened that the defendant creditors were such prior to the time the stockholders parted with the stock. Under the law of assessments, if the stockholders existing at the time of the insolvency of the corporation do not own sufficient stock, are insolvent, or for any olffier reason an amount sufficient cannot be raised from them, then the law permits creditors to go back and trace the holdings of the stock to the time when the debts were created; and if any one along the line is found owning stock, and is solvent, the law permits an assessment in favor of the tracing creditors to be made against him.
    If the complaining creditors had taken any part in the creation of these funds, different questions might arise; but so long as they are in this court confessing that they had nothing to do with the raising of the funds in question, and still are asking to participate in the distribution thereof, we have no fear that they will be permitted to do so, unless there is applied a different rule of equity than has ever been applied in any court of justice.
    We close by calling the attention of this court to the case of Brown v. Hitchcock, 86 Ohio St., 667, quoting therefrom for the purpose of showing how the double liability is worked out by this court:
    ■ “After such liability attaches to a stockholder, it is not discharged by the subsequent assignment or transfer of his stock; but the successive assignees or holders, by accepting the stock and the benefits arising therefrom, impliedly undertake to indemnify or discharge the assignor from the liability which attached to him as stockholder while he held the stock.
    . In a suit by creditors to enforce such liability against the stockholders of an insolvent corporation, the existing stockholders are severally chargeable with the payment of such liability. If, by reason of insolvency, the amount due from any stockholder is not collectible, the assignors of this stock up to the time the liability attached may be charged with the deficiency.”
    At page 686, the court say: “The extent of the liability is not increased whether the stockholder-first liable retains his stock or transfers it; and the extent of the security of the creditors, both as to the stock and the personal liability, is the same as it would have been if no transfers had been made.” All which is approved and followed in Mason v. Alexander, 44 Ohio St., 318.
    In the case at bar the courts below have strictly followed the rules above quoted.
   Spear, J.

The case here in error arises out of a controversy in a suit brought by the creditors of The Champion Spring Bed Company, a corporation, against stockholders to enforce stockholders’ liability under the statute.

Certain of the existing debts of the corporation were created prior to the transfer of the stock of certain stockholders Avho sold and transferred their stock to insolvent purchasers, but the )ulk of the existing indebtedness accrued afterwards, and the controversy below was as to the division of the amount arising from assessments upon those former stockholders. The trial court held that the fund so arising should be applied in payment of the indebtedness existing at the time of the transfer, and that no part thereof should be applied to the debts of the company contracted subsequent to that date. The circuit court affirmed that judgment, and error is brought in the interest of the later creditors.

So that the question presented by the record is: Where a solvent stockholder transfers his shares to one who, at the time of subjecting the stockholders’ liability to the payment of debts, is insolvent, shall the fund derived from the assessment upon such transferring stockholders be applied solely to the payment of debts of the corporation existing at the time of such transfer, or shall it be applied pro rata to all debts, regardless of when they were contracted?

Our constitutional provision is: “Dues from corporations shall be secured by such individual liability of the stockholders, and other means, as may be prescribed by law;” * * * and the statute is: “All stockholders * * * shall be deemed and held liable to an amount equal to their stock subscribed, in addition to said stock, for the purpose of securing the creditors of such company.”

It is to be noted that no method or basis of distribution is prescribed, and whether distribution is to be pro rata among creditors, or otherwise, is left to judicial determination.

It is conceded by plaintiffs in error that no decision of this court covers the proposition. But it is insisted that expressions in cases involving the enforcement of statuory liability, notably, Umsted v. Buskirk, 17 Ohio St., 114; Brown v. Hitchcock, 36 Ohio St., 667, and Harpold v. Stobart, 46 Ohio St., 397, favor the claim of the plaintiffs in error.

That claim is, in substance, that, as stated in Umsted v. Buskirk, supra, “the right arising out of this (the stockholders’) liability is intended for the common and equal benefit of all the creditors,” and from this it follows that the liability of the stockholders is to secure payment of the debts and liabilities of the corporation, not some of them but all of them; not siich as may be contracted at some given period, but without restriction, all of them.

On the other hand counsel for defendants in error insist that the creditors who were such at the time the transfer of stock was made are to receive the same pro rata share as other creditors out of the general fund derived from the assessment of all solvent stock outstanding at the time of the insolvency of the corporation, and, in addition, to receive the extra amounts by reason of assessments on stock outstanding while they alone were creditors, to be applied toward the payment of such parts of their claims as remain unpaid by reason of the insufficiency of the fund raised by the general assessment.

It is not proposed here to discuss these several contentions at length, but to simply state the conclusions to which the court has arrived. For arguments pro and con, reference is had to the able briefs of counsel which precede, and to the authorities which are there cited.

It is true that the precise question has not been heretofore considered by this court, at least not in any reported case. It is further true, as we think, that excerpts from Umsted v. Buskirk, and Harpold v. Stobart, supra, to be found in the brief of plaintiffs in error, do not materially aid their contention, for, by all rules of construction, they must be held to apply to the precise question in hand, which was not this question, no matter of distribution being then before the court. An attentive consideration of those cases will show that when it is stated that the right against stockholders arising out of their statutory liability is intended for the common and equal benefit of all creditors, the context indicates that reference is had to such creditors as are in a position to demand an enforcement of the right, and to them only. As to the expressions quoted from the opinion of Mcllvaine, J., in Brown v. Hitchcock, it should he remembered that they are dicta of a dissenting judge, and while apparently they seem to have been shared by the others, yet the proposition stated was not argued by the counsel, and not involved in the case before them for adjudication. What conclusion would have been reached after full argument, and under the responsibility of deciding a live question, we have no means of determining.

It having been settled by previous decisions that where holders of stock are at the time action is brought to enforce stockholders’ liability, insolvent, the liability of assignors of such stock may be subjucted to payment.of debts existing at the time of the transfer, we have as a new question, a proper rule of distribution of the fund made by assessment upon such former holders of stock; and it is not free from difficulty. Two considerations, however, lead us to the conclusion that the better reason supports the contention of defendants in error, and that the judgments below should be affirmed.

Those who were creditors at and prior to the transfer are in law presumed to have trusted to the responsibility of the then stockholders, as well as to the property of the corporation, and the obligation of the stockholder to the creditor is in the- nature of a contract, and although not in form an express personal contract, yet, is of equally binding force. It springs out of, and is co-existent with, the contract .between the corporation and the creditor. Brown v. Hitchcock, supra; Corning v. McCullough, 1 Comst., 47; Hawthorne v. Calef, 2 Wall., 10; Norris v. Wrenschall, 34 Md., 492; Hager v. Cleveland, 36 Md., 467. There arises, therefore, a manifest equity in favor of such creditors.

Such transferors of stock have incurred no statutory liability to the later creditors, and OAve no contractual duty to them; nor are they in any Avay liable to them because of once having been the owners of stock. These later creditors can have no standing to demand distribution to them of a fund which arose, not from any contract with them, or with anyone for their benefit, nor by reason of any liability accruing in their favor, but from a contract wholly with others and for the benefit of others, and resting upon a liability created wholly in favor of others. Hence, the fund which accrues from assessments upon such assignors of stock can in no sense belong to the subsequent creditors, and they are, therefore, not deprived of any right by the application of such fund to the satisfaction of the debts owing to the earlier creditors.

We are of opinion that the proper rule is that as to the fund arising from assessments upon all who were stockholders at the time of the decree enforcing stockholders’ liability, all the creditors should share pro rata; but as to funds arising from assessments upon persons Avho had been stockholders but had assigned their stock in good faith before the insolvency of the corporation, such funds should be applied to the residue, if any, owing to creditors who were such at the time of the assignment of the stock, the liability of such transferors of stock being subject to the limitations stated in Harpold v. Stobart.

Judgment affirmed.