author: Burket, J.

text:
    Palmer & Crawford v. Tingle. Young v. The Lion Hardware Company.
    Error to the Circuit Court of Putnam county.
    Error to the Circuit Court of Clark county.
    Mechanic’s, lien — Subcontractors and material men — Rights of ptoperty — Invalidity of act of April IS, 1894 {91 Ohio Laws 185). —Constitutional law.

    1. The inalienable right of enjoying liberty and acquiring property, guaranteed by the first section of the bill of rights of the constitution, embraces the right to be free in the enjoyment of our faculties, subject only to such restraints as are necessary for the common welfare.
    2. Liberty to acquire property by contract, can be restrained by the general assembly only so far as such restraint is for the common welfare and equal protection and benefit of the people, and such restraining statute must be of such a character that a court may see that it is for such general welfare, protection and benefit. The judgment of the general assembly in such eases is not conclusive.
    3. While a valid statute regu'lating contracts is, by its own force, read into, and made a part of such contracts, it is otherwise as to invalid statutes.
    4. The act of April 13, 1894, 91 O. L, 135, in so far as it gives a lien on the property of the owner to subcontractors, laborers and those who furnish machinery, material or tile to the contractor, is"unconstitutional and void. All to whom the contractor becomes indebted in the performance of his contract, are bound by the terms of the contract between him and the owner.
    (Decided December 8, 1896.)
    These two eases were heard and determined together. Both eases involve the constitutionality of the mechanic’s lien statute as amended April 13th, 1894. In the Putnam county case the contract was made on the 23d day of April, 1894, and was for' the repair of Mr. Tingle’s house at the agreed price of five hundred dollars, which was to be paid by the owner of the house to the contract- or,' a Mr. McComb, by endorsing and delivering to him two notes held by Mr. Tingle against a man by the name of Vale, and Mr. Tingle did endorse and deliver the two notes each for the sum of two hundred and fifty dollars, to Mr. McComb, and he received the notes in full payment and satisfaction of the agreed repairs.' Mr. McComb purchased materials from Palmer & Crawford, a co-partnership, for the purpose of making the repairs, and the materials were in fact used in the making of said repairs. Mr. McComb fully performed his contract, but failed to pay for the materials in the sum of $214.87, and thereupon the partnership, within four months, filed an affidavit, in all respects as required by statute, in the office of the recorder of the county, seeking to perfect a lien upon Mr. Tingle’s house and the land upon which it stands.
    The. circuit court upon appeal held the statute unconstitutional, and rendered judgment in favor of Mr. Tingle. The partnership filed its petition in error in this court seeking to reverse the judgment of the circuit court.
    In the Clark county case, Mr. Young made a contract with a Mr. Hollenback on the 29th day of June, 1894, by the terms of which Mr. Hollenback was to furnish the materials and labor and erect for Mr. Young upon premises owned by him, a dwelling house on or before the first day of October, 1894, except the foundation., painting and chimneys, for the sum of $1,925.00. The payments were to be $300.00 upon completion of the roof; $300.00 when ready for plastering; $400.00 when the plastering should be completed, and the remainder, $925.00 within thirty days after the completion and acceptance of the house. Mr. Hollenback performed his part of the contract and Mr. Young accepted the house and paid therefor according to the contract. Mr. Hollenback purchased from the hardware company materials for the completion of the house to the amount of $215.97, which materials were of that value, and were used in the completion of the house. After payment had been made in full for the completion of the house, and within four months after the materials were furnished, the hardware company filed its affidavit in due form in the office of the recorder of the county to perfect a lien upon the house of 'Mr. Young for the materials so furnished to Mr. Hollenback for the completion of said house. Mr. Young had no notice of the claim for said materials until after the house was completed, accepted and paid for in full.
    Upon appeal to the circuit court it made a finding of facts and rendered a decree in favor of the hardware company. Thereupon Mr. Young filed his petition in error in this court, seeking to reverse the judgment of the circuit court, and asking that judgment be rendered in his favor upon the findings of fact.

      Leasure & Powell for Palmer & Crawford, plaintiffs in error.
    Brief of J. P. leasure.

    This is an action to foreclose a sub-contractor’s lien. It is admitted by the pleadings that the plaintiff in error took all the formal steps required to obtain a’ lien under section 3185 of the Revised Statutes of Ohio.
    It was contended by the defendant in error that section 3184 is in violation of sections 1 and 2 of the Bill of Rights, because

      First — That it is class legislation.

      Second — That the statute created liabilities against parties without their knowledge or consent.

      Third — That it denied to owners of real estate the right to enjoy and possess property and contract in relation thereto as they might deem best.
    That section 3184 is not class legislation. Hancock et al. v. Yaden, 6 L. R. A., 576., (Ind. Supreme Court); Cooley’s Constitutional Limitations (5 Ed.) star pp. 390, 391, and foot note 4.
    That the statute does not create' liabilities against parties without their knowledge or consent, see Smith v. Parsons, 1 Ohio Rep. 236; Weil v. The State, 46 Ohio St. 450.
    In these cases the court held that a statute bearing on the subject-matter of a contract was as much a part of the contract as if written therein.
    Until section 3184 is held unconstitutional, how can it be said that there was no contractual relation existing between defendant in error and the plaintiff in error? Has the legislature, by enacting section 3184, denied the owner of real estate the right to enjoy and possess property and contract in relation thereto?
    There are no unreasonable restrictions imposed by section 3184 on the right of the owner of real estate to enjoy and possess property and contract in relation thereto.
    It will seem that in the absence of fraud the liens that a sub-contractor may obtain against the real estate can never in the aggregate exceed the contract price.
    In the court helow it was argued that the statute prevented the owner of real estate from contracting, except for a monied consideration. In answer it may be said that the owner of real estate who wishes to exchange real estate for materials ■ or labor may indemnify himself against any failure of the principle contractor to pay for his materials and labor, by taking an indemnity mortgage for the amount of the contract price on the property exchanged for the labor and materials.
    There are no express restrictions or limitations as to time. The effect of the statute, however, is to make it unsafe to pay within four months after the materials are furnished or labor performed.
    The owner has his choice, to contract on credit of four months, to pay within four months and take his risk or to demand security from the principal contractor to indemnify him against loss by reason of his failure to pay for the materials and labor.
    Similar legislation has been held constitutional in other states. Henry & Coatsworth Co. v. D. W. Evans et al., 97 Mo., 47; 3 L. R. A., 332; Maloy v. LaCruse, 80 Wis., 170; 5 L. R. A., 840; Hunger v. Lenroot, 32 Wis., 541; 32 Minn., 358; 14 Neb., 25; 80 Va., 821; 58 Ind., 17; 15 Neb., 58; 21 Neb., 131; 11 Neb., 147.

      Watts (& Moore, for William Tingle, defendant in error.
    ■ First — That the Mechanic’s Lien Law of 1894, 91 O. L,, 135, is in violation of sections 1 and 2 of the Bill of Rights.

      Second— That if such statute is not in violation of the constitution of the state, no lien can be acquired in the case at bar by the “material man,” because of the contract made with the principal contractor, and its execution by the owner of the building.

      We will discuss the latter proposition first.
    That is, that the right to the lien by the material man or sub-contractor, grows out of the contract between the principal contractor and the owner. Bulloch v. Horn, 44 Ohio St., 420; Harland v. Rand, 27 Pa. St., 511.
    The court will' observe the distinction that exists in the cases relied upon by the plaintiffs in error, and those to which we call its attention. The former were determined upon the question that payment had been made to the principal contractor ; the latter upon the right to a lien growing out of the contract between the owner and the principal contractor. It is the plain and obvious duty of one who deals with an alleged contractor to know the relation which he bears to the owner. Failing in this, he furnished lumber and material at his peril. Brown v. Cowen, 110 Pa. St., 588; McElroy et al. v. Bonden et al., 152 Pa. St., 78; Schroeder v. Galland, 134 Pa. St., 277. Phil. on Mech. Liens, section 497.
    .The relation of debtor and creditor never existed between Tingle and McComb. McComb, the terms of his contract,- was to be paid in advance. He was so paid.
    Palmer and Crawford were bound to know the terms of the original contract, and if so, and they then furnished material, they did it at their peril.
    Under the express provisions of our statute, all labor performed or materials furnished, must be performed or furnished by virtue of a contract with the owner of the building.
    The terms of the original contract prevail against the principal contractor, and against all who claim through or under him by virtue of the contract. It is only by virtue of such contract that any such rights enured, or could enure to Palmer and Crawford. If they failed to enquire and knew what the original contract was, it was their own neglect and no fault of Tingle, who had the right to contract most advantageously to himself. We are of opinion that this proposition is conclusive of the ease.
    Coming' now to call the attention of the court to the first proposition made, to-wit: That the
    Mechanic’s Lien Law of 1894 is in violation of sections 1 and 2 of the Bill of Rights, we have the following to suggest:
    The statement of counsel that the statute bearing on the subject-matter of a contract, is as much the part of a contract as if written therein, is in the abstract correct, but it is, however, simply begging the question, for if the statute is in violation of the constitution of the state, it can form no part of the contract.
    Under section 1 of the Bill of Rights, the right to acquire, possess and protect property is guaranteed to every citizen of Ohio.
    Under section 3184 of the statute just quoted, that right is denied to the citizen.
    The right to make contracts, beneficial to the person contracting, so long as such contract is not immoral or infringes no prohibitory law, is one of the modes he has to acquire and protect property. This statute prevents a person from making a contract upon such' terms of payment as might or could enure to his benefit.
    That would save to himself any deduction he might secure by reason of an advance payment, or payment in such property, or by such means as he might be enabled to make.
    The former statute relating’ to mechanic’s liens, only secure to the material man or sub-contractor, the amount remaining unpaid by the owner at the time that notice' was served, so that the owner could protect himself, and if the principal contractor was fully paid the owner was discharged.
    The statute did not interfere with the rights of the parties to contract. Its operation was in the nature of attachment, fastening in the hands of the owner the amount due the contractor, and then giving the sub-contractor the right of the contractor to establish and enforce a lien.
    The statute can only be sustained on the theory that the contract between the owner and the principal contractor gives the right to the latter to 'create the lien, and if his right exists then that right would enure to the sub-contractor and material man, and not otherwise.
    If these propositions are not tenable, then the legislature of the state can make a contract for a party without his knowledge and consent. Prior to the enactment of this statute such legislation was unknown in Ohio.
    This denies to the owner of real estate the right to enjoy and possess property, and contract in relation thereto, as he may deem best and most advantageous to himself. Sprey Lumber Co. v. Sault Sav. Bk. Co., 77 Mich., 199.
    Such statute compels the owner to pay the contractor’s debt to the material man, although'by his, the owner’s contract, he has paid in full, and as he contracted to pay. The legislature undertakes to change the terms of the contract, which the owner had the right to make, and to create a liability and burden upon his property, and impair the obligations of the contract that was entered into.
    We repeat that such legislation is monstrous. Hocking Valley Coal Co. v. Hiram Rosser, 53 Ohio St., 11; The State ex rel. v. Howard Ferris, 53 Ohio St., 314.

      Moioer <& Mower, for L. F. Young, plaintiff in error.
    To impair contracts, means to weaken, to lessen, to diminish; while it is true that many decisions relate to contracts made at the passage of the constitution, this is not its full scope. It was intended to protect the citizen in his contractional relation with his fellow citizen.
    Liberty includes the right to acquire property and that means the right to make and enforce contracts. Ritchie v. People, 155 Ill., 98, 46 Am. St., 315; Meyer v. Buyer, 12 A. S. R., 66; John Spry Lumber Co. v. Saul Saving Bank, 18 Am. St. R., 396, 77 Mich., 199.
    The right to make contracts is inherent and inalienable, and any attempt to unreasonably abridge it, is opposed to the constitution. Braceville Coal Co. v. People, 147 Ill., 66, 37 A. S. R., 206, note; Low v. Rees Printing Co., 41 Neb., 127, 43 A. S. R., 670; Stale v. Goodwill, 25 A. S. R., note, 881.
    An agreement to keep a lot free from liens between the owner and the principal contractor preeludes principal contractor, sub-contractor, or any other person from'filing liens. Fidelity Life v. Jackson, 163 Pa., 168, 43 Am. St. R., 789, Nice v. Walker, 153 Pa., 123; Taylor v. Murphy, 148 Pa., 337.
    A mechanic’s lien is a creature of statute, the lien of the sub-contractor and material man is always in strict subordination to the liens of the original contract between the owner and his immediate contractor. Dinsley v. Greene, 54 Cal., page 533, 74 Cal., 273, 43 Am. St. R., 900, 31 Cal., 333.
    The constitutionality of mechanic’s lien laws generally, we concede. But no law has been decided constitutional like this amended feature, to-wit: To compel the owner to respect a conti act with one he knows not. The mechanic’s lien laws that have been decided constitutional when the owner has not knowledge, seeks the unpaid funds due or to become due to the principal contractor or sub-contractor.
    But in this action it is sought to make the owner, after having fully paid the contractor, pay material man of .the contractor and not of the owner. There ■ can be no privity between the owner and the material man, unless he has notice or knowledge of the same before the contractor is paid.
    The rule that if the court can construe a law to be constitutional, it should do so is well established; but can the court construe that part of the act that requires the owner to pay an unknown material man the contract with another man when he has paid the contractor? The legislature cannot make a man an agent without the authority of the principal. The principal makes the agent either by express or implied authority.
    "We insist that the owner without notice of the person from whom the contractor obtains his material has a far superior equity over him who furnished material without any notice of the relation between contractor and contractee.
    This court in the ease of E. D. Stark v. W. J. Simmons, 54 Ohio St., 435, decided (under the law before amended) that the owner having a valid claim against the contractor overdue without knowledge that the contractor had a hired laborer could be compensated pro tanto for such claim, upon the principle that no money was due the contractor, although the contractor had no express agreement that it should be taken out, he had a superior equity.
    And if this amendment to the Mechanic’s Lien Law should by the court be found constitutional then the principles laid down in the case of Wm. Gimbert v. Jennie Madden et al., apply, 2 Ohio Nisi Prius Reports, 346.
    1. Material men have no claims against the owner not founded on the contract of the principal contractor with the owner.
    2. The law presumes in the absence of fraud that they (the material men) had notice of the terms of the original contract.
    3. If the contractor becomes the agent of the owner the agency is special and the powers are limited by it.
    4. That the material man contracting' with the principal contractor furnishes the material with an implied assent to the terms of the original contract between such contractor and the owner.
    Any other construction would require the plaintiff to pay twice for the same thing without notice, as the plaintiff in this case would be compelled upon any other construction.

      Wm. H. Griffith; and Eagan <& Eagan, for The Lion Hardware Co., defendant in error.
    Said law is alleged to be unconstitutional, as violating article I, section 1, article II, section 28, and article I, section 10, of the constitution of Ohio; and also, article I, section 19, of the constitution of the United States.
    It is vigorously contended in the plaintiff’s brief that the law in question violates section 28, article II, of the constitution.
    It is a sufficient answer to the claim of the plaintiff in error to say that the law of the land where a contract is made enters into the contract and forms a part of the same, the parties thereto by their own choice making the provisions of the law thus entering into their contract obligation upor themselves. Smith v. Parsons, 1 Ohio, 236.
    What we have said in this connection applies as well to section 10, articLe I, of the Federal Constitution and section 19, article I, of the Ohio Constitution. Weil v. The State, 46 Ohio St., 150; Gimbert v. Heinsath et al., 11 O. C. C., 339; The Van Oleve Glass Co. v. Wamelink, 1 Nisi Prius Reports, 203.
    It is furthei* claimed by the plaintiff in error that said law is unconstitutional, as violating section 1, article I, of that instrument, of said constitution of Ohio. And it has been urged in cases in other statés that such a law is obnoxious to a constitutional provision that private property shall not be taken without due process of law. But the law in question is not obnoxious on either score, as it does not either prevent the acquisition, possession, enjoyment or protection of property, or deprive its owner thereof without due process of law. Mallary v. La Crosse Abattoir Co., 80 Wis., 170.
    If the mere inconvenience of the owner is a sound argument for the unconstitutionality of the law, then such argument would be equally good as against the constitutionality of every mechanic’s lien law ever enacted in Ohio in favor of sub-contractors, laborers and material men, because they have all tended to inconvenience. the owner of property improving the same by contract. Owners of real estate have also been put to great inconvenience by other laws of the state relating to the mode of construction of and materials for building’s, prohibiting buildings of a certain character within fire limits ; requiring fire escapes, proper ventilation, sewerane, light, and air, seats for female clerks in stores, and many other regulations; for many provisions whereof reference is made to section 8023, Revised Statutes of Ohio. Every one of .these provisions is a restriction either upon the acquisition, or the possession, or the protection, or the enjoyment of real estate, and many of them are enforced by drastic means. Spokane Manufacturing Co., v. McCheesney, 21 Pacific Rep., 198; Henry v. Evans. 97 Mo., 479; Hunter v. Truckee Lodge, 14 Nev., 32; Taylor v. Murphy, 23 Atl. Rep., 1134; John Spry Lumber Co. v. Sault St. Marie, etc., 43 N. W. Rep., 778.
    The manifest intent of the present law is to' preserve the contract price for the building as a fund for the satisfaction of the claims of sub-contractors, material men and laborers.

      Manufacturing Company v. Falls, 90 Tenn., 471: Laud v. Noonan, 32 Minn., 358.
    Moreover the rule of construction adopted by the Supreme Court of Ohio as to mechanic lien laws is a liberal one, on the ground that such laws being remedial in their nature should be liberally construed in favor of those claiming under them. Davis v. Hines, 6 Ohio St., 475; Thomas v. Huesman, 10 Ohio St., 158; and Bullock v. Horn, 44 Ohio St., 420.

      Outlvwaite & Linn and Henry Cumble, for The Lion Hardware Co., .defendant in error.
    It is claimed that these provisions are in violation of the constitution of the United States, and of the state of Ohio, for the reasons—

      Fvrst — That the law deprives the owner of property of the right of possessing and protecting the same.

      Second — It deprives the owner of property of the same without due process of law.

      Thwd — It impairs the obligation of contracts, and

      Fourth — That the law denies to certain classes, to-wit: owners of buildings, or other structures described in the law, the equal protection and benefit of law as guaranteed by article I, section 2, of the constitution of the United States, and by the constitution of Ohio.
    The first three objections to the constitutionality of the legislation in question may be considered together.
    The rule that all contracts are subject to the conditions ■ and obligations imposed by existing laws is too well settled to be controverted. It has been the established law ever since the Dartmouth College case in 4th Wheaton. Parsons v. The State, 1 Ohio Rp., 236; Weil v. The State, 46 Ohio St., 450; Cooley, 346; Streubel v. Mil. & Miss. R. R., 12 Wis., 67; Denny v. Bennett, 128 U. S., 495; Edwards v. Kearsey, 98 U. S., 595; Jones on Liens, vol. 2, page 286; McMurray et al. v. Brown, 91 U. S., 266.
    In addition to the case referred to by the brief of Messrs. Griffith and Hagen & Hagen, we call attention to the following citations: Blauvelt v. Woodworth, 31 N. Y., 285; Glacius v. Black, 67 N. Y., 563; Gunney et al. v. Walsham, 16 R. I., 698; 43 Cal., 515; Abbott v. Miller, 49 Me., 409; Taylor v. Murphy, 148 Pa. St., 337; Wheeler v. Miller, 18 Pa. St., 52; 52 Minn., 358; Cole Manufacturing Co. v. Falls, 90 Tenn., 471; Paine v. Tillinghast, 52 Conn., 532; Overton on Liens, 532; 16 R. I., 698; 9 Mont., 133; 14 Neb., 24; 15 Neb., 58; 45 Ind., 96; 162 Mass., 592; 80 Va., 821; 85 Mo., 357, and other case cited in sections 1304, 1305 and 1305, Jones on Liens. Davis v. The State, 3 Lea (Tenn.) 380; 12 Heisk., 633; 3 Lea, 380; 14 Lea 520; 87 Tenn., 214; 16 Lea, 71; 10 S. W. Rep., 353; 86 Tenn. 272; Cooley’s Const. Lim., 482; Hing v. Crowly, 113 U. S., 708; Barbier v. Connolly, 113 U. S., 31; Lehman v. McBride, 15 Ohio St., 573; City of Cincinnati v. Steinkamp, 54 Ohio St., 284; Kelly v. The State, 6 Ohio St., 269; McGill v. State, 40 Ohio St., 328; State v. Powers, 88 Ohio St., 54; Railroad Tax Cases; 13 Fed. Rep., 722; County of Santa Clara v. S. P. R. R., 18 Fed. Rep., 385.
    There are upon the statute books of Ohio, many laws which apply only to certain classes, the constitutionality of which has never been doubted. The exemption of the homestead, or of a sum in lieu thereof in favor of the head of the family, the exemption of a portion of wages and of certain goods and chattels from execution, apply only to a portion, of the citizens, but the power of the legislature to enact such a law has never been questioned. Denny v. Bennett, 128 U. S., 494.
    The law regulating the rate of interest is another law of the same class. Bardier v. Connolly, 113 U. S., 32.
    The mechanic’s lien operates alike upon all persons and property under the same circumstances and conditions. It affects alike all persons similiarly situated, and is not obnoxious to the constitution of either Ohio, or of the United States. Overton on Liens, 533; Rodgers v. Goodwin, 2 Mass., 475; Cooley on Const. Lim., 81 et. seq.

   Burket, J.

The constitutionality of the amendment of the Mechanic’s Lien Law.as passed April 23rd, 1894, 91 O. L. 135, is challenged in each of the cases. In the first case payment was made under the contract in full before the work was done; in the second case payment was made under the contract as the work progressed, and a final payment in full upon the completion and acceptance of the building, and before any mechanic’s lien was filed, or notice given the owner. The section of the statute under which a right to a lien in these cases is claimed is as follows:

“Section 3184. A person who performs labor, or furnishes machinery or material for constructing, altering or repairing- a boat, vessel or other watercraft, or for erecting, altering, repairing or removing a house, mill, manufactory, or any furnace or furnace material therein, or other building, appurtenance, fixture, bridge,, or other structure, or for the digging, drilling, plumbing, boring, operating, completing or repairing of any gas well, oil well or any other well, or performs labor of any kind whatsoever, in altering, repairing or constructing any oil derrick, oil tank, oil or gas pipe line, or furnishes tile for the drainage of any lot .or land by virtue of a contract with or at the instance of the owner therefore or his agent, trustee, contractor or sub-contractor shaLl have a lien to secure the payment of the same upon such boat, vessel, or other water-craft, or upon such house, mill, manufactory or other building or appurtenance, fixture, bridge or other structure, or upon such gas well, oil well, or any other well, or upon such oil-derrick, oil tank, oil or gas pipe line, and upon the material and machinery so furnished, and upon the interest, leasehold or otherwise, of the owner in the lot for and on which the same may stand, or to which it may be removed.”

The former statute on this subject provided that a lien might be taken by a person who should perform labor or furnish machinery or material by virtue of a contract with the owner or his authorized agent; while the statute here in'question provides that such lien may be taken by any person who performs labor or furnishes machinery or material, or tile for drainage, by virtue of a contract with, or at the instance of the owner or his agent, trustee, contractor or sub-contractor.

It is claimed by those opposing the statute, that in so far as it undertakes to give a lien on the owner’s property for labor, machinery, materials or tile not supplied under any contract with him, or with his agent, and not at the instance of either, it is unconstitutional.

On part of those who are upholding the statute, it is claimed that the statute is constitutional, and that by operation of law its terms become woven into the contract between the owner and the contractor, and that the owner having thereby-agreed to pay the debts made by the contractor in completing the building-, has no cause for complaint.

As to which claim is right must be determined by the constitution, aided by general rules of law.

The preamble to the constitution is as follows: “We, the people of the state of Ohio, grateful to Almighty God for our freedom, to secure its blessings and promote our common welfare do establish this constitution.” It is worthy of notice that the constitution is established to secure the blessings of freedom, and to promote the common welfare. As the constitution must be regarded as consistent with itself throughout, it must be presumed that the laws to be passed by the general assembly under the powers conferred by that instrument, are to be such as shall secure the blessings of freedom and promote our common welfare.

To make this more emphatic, the first section of the Bill of Rights provides that, “All men are, by nature, free and independant, and have certain inalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing and protecting property, and seeking and obtaining happiness and safety.” And by the second section it is provided that “All political power is inherent in the people. Government is instituted for their equal protection and benefit. ”

The usual and most frequent means of acquiring- property is bjr contract, and one of the most valuable and sacred right' is the right to make and enforce contracts. The obligation of a contract when made and entered into, cannot be impaired by act of the general assembly. Article 2, section 28.

The word “liberty,” as used in the first section of the Bill of Rights does not mean a mere freedom from physical restraint or state of slavery, but is deemed to embrace the right of man to be free in the enjoyment of the faculties with which he has been endowed by his Creator, subject only to such restraints as are necessary for the common welfare. People v. Marks, 99 N. Y., 377; 52 Am. R., 34; Bertholf v. O'Reilly, 74 N. Y., 15; 30 Am. R., 323; Matter of Jacobs, 98 N. Y., 98; 50 Am. R., 636.

Contracts and compacts have been entered into between men, tribes and nations during all time from the earliest dawn of history, and the right and liberty of contract is one of the inalienable rights of man, fully secured and protected by our constitution, and it may be restrained only in so far as it is necessary for the common.welfare, and the equal protection and benefit of the people. That such restraint of the right and liberty of contract is for the common public welfare, and equal protection and benefit of the people must appear, not only to the general assembly, by force of popular clamor, or the pressure of the lobby, but also to the courts, and it must be so clear, that a court of justice in the calm deliberation of its judgment, may be able to see that such restraint is for the common welfare and equal protection and benefit of the people. People v. Gillison, 109 N. Y., 389; 4 Am. S. Rep., 465.

The statute in restraint of the liberty to contract as to interest on money, is valid for the reason that all can see that it is for the common welfare.

Many other like cases of restraint as to contracts are to be found in our statutes, but all of them, in so far as they are valid, depend for their validity upon the same principle. It was the infringement of the liberty of contract that induced this court in State v. Lake Erie Iron Co., unreported, to hold the statute unconstitutional which required corporations to pay their employees at least twice in each month. Our exemption laws can be sustained only on the ground, that while they in a slight decree limit the liberty of contract, such limitation is for the general welfare of the whole people, and does not interfere with their equal protection and benefit.

In such cases courts can see that the slight restraint of the liberty of contract, is for the common welfare of the people, but no court can see that it is for the common public welfare that the liberty of contract should be taken away from the owner of a building, to enable the seller of materials to collect their value from a man who never purchased them, and has already fully paid the one with whom he contracted for all that he has received. There can be no public necessity for making the contractor the agent of the owner, to enable the seller of materials to collect his pay from one who does not owe him, and with whom he has no contract.

• An agent can have no interest-adverse to his master, but this statute attempts to create an agent for the owner out of the contractor who is opposed to him in every interest. It is an attempt to make the contractor serve two masters, himself and the owner. This can not be done. For this we have the highest authority.

The owner has the right to acquire his building upon the best terms possible, and if he can by making a contract to pay in advance, or by exchange of securities or other property, acquire his • building cheaper than by contracting to pay after four months from its completion, he has the alienable right to so acquire it, and to be protected in its enjoyment, and it is not within the power of the general assembly to compel him to pay a higher price for his building, for the protection of laborers and furnishers with whom he has no Contractual relation.

To enable the contractor, by force of this statute, to enlarge the price to be paid by allowing liens to be taken on the property for labor and materials, would be as unjust as to authorize the owner by statute, to enlarge the building, without a corresponding increase in payment.

But it is urged that the act is constitutional, for the reason that the statute itself must be read into the contract, and that thereby the owner agreed that the contractor may obtain labot and materials for which a lien may be taken against the owner’s property. This begs the question, and assumes the constitutionality of the statute. If the statute is valid it must be read into the contract, but if invalid it binds neither party, and does not become a part of the contract.

It is further urged that the owner has the means of protecting himself against loss by taking a bond, or withholding payment for four months, or collecting his loss from the contractor, and that statutes in restraint of liberty of contract, are in such cases constitutional. There are eases which so hold; notably, Mallory v. LaCross Abattoir Co., 80 Wis., 170. But even in that case it was held that the means of protection must be adequate. It cannot be said that the means suggested would be adequate under the statute in question to proteet the owner against loss, as he would likely have to pay a higher price in case he should delay payment, or require a bond, or undertake to pay for the labor and material himself. And as to the collecting- from the contractor, there would be no necessity of taking a lien in case of his solvency, and in case of his insolvency, the loss would fall on the owner.

The suggested means of protecting the owner from loss are therefore not sufficient to compensate him for the loss of his liberty to contract to the best advantage, and besides there is no public necessity for singling out owners, and laying such heavy burdens upon them for the benefit of a favored class attempted to be created by this statute, and to do so would not be for the general welfare, and equal protection and benefit of the people.

It is also urged by the friends of the statute, that it is beneficial in this, that it drives all the small and insolvent contractors out of business, and leaves the contracting business in the hands of those who are rich enough to guarantee their contracts. But it is not for the general welfare that small and financially weak contractors should be driven out of business. As well might poor laborers and small furnishers be driven out of business, and thus leave the whole business of building and furnishing to the rich, and give them a monopoly of the whole trade, and drive the weak and poor into starvation. Liberty and the common welfare demand that all rich and poor alike should have an equal chance, and to be treated alike, and laws should be enacted for their equal protection and benefit.

With liberty and the equal protection of the laws, the weak and poor of to-day, become the rich and influential of the future. And it is a narrow, unworthy, and unpatriotic policy, to attempt to drive the poor and weak out of business for the benefit of the rich and influential. One of the principal virtues of the statute claimed by its friends, is, that it has driven all the poor and weak contractors out of business. This result instead of being commended, is to -be deplored.

There are some eases in other states in which statutes, somewhat similar, have been upheld, usually upon the theory that the statute enters into the contract, and is therefore agreed to by the owner, but as an unconstitutional statute cannot enter into a contract without the assent of the parties, those cases are not to be regarded as sound, and we refuse to follow them.

A statute of Michigan similar to the one here in question, was held unconstitutional by the Supreme Court of that state, for reasons which seem sound. Sprey Lumber Co. v. Sault St. Marie Savings Bank, 77 Mich., 199; 43 N. W. Rep., 778; See also Taylor v. Murphy, 148 Pa. St., 337; 23 Atl. Rep., 1134.

The conclusion is that the statute in question, in so far as it attempts to give a lien for materials, machinery, tile or labor obtained by the contractor, is unconstitutional and void.

The following eases throw some light upon the question: Hocking Coal Co. v. Rosser, 53 Ohio St., 12; State ex rel. v. Ferris, 53 Ohio St., 314; Harding v. The People, 160 Ill., 459; Godwill v. Minor, 33 W. Va., 179; 25 Am. S. Rep., 863; Frorer v. The People, 141 Ill., 171, 31 N. E. Rep., 395.

It follows that the Putnam county case should be affirmed, and that the Clark county case should be reversed, and judgment entered upon the finding of fact in favor of Mr. Young.

Judgment accordingly.

Minshall, J,, dissents.


source: Caselaw Access Project

author: Williams, C. J.

license: Public Domain

text:
    Meier & Co. et al. v. First National Bank et al.

      Co-partnership — Note signed by members creates partnership debt— Effect of judgment on such note — Preference among executions against same debtor — Section 5382, Rev. Stat. — Rule as to intervening liens.

      1. A promissory note signed by all the members of a co-partnership, when given for a consideration received by the firm, is as effectual to create a partnership debt as if signed in the firm name.
    2. The recovery of a judgment against the makers, on such a note, does not extinguish the partnership liability, nor exclude the creditor from participation in the distribution of the effects of the firm, in case of its insolvency, among the partnership creditors. <•

      3. Equity will look behind the form of a judgment, and inquire into the nature of the demand on which it is founded, and the relation of the parties, when necessary for the preservation of equitable rights.
    4. Thp provision of section 5382, of the Revised Statutes, which forbids preference among executions against the same debtor sued out during the term at which the judgment was rendered or within ten days thereafter, applies only to executions sued out on judgments of the same court.
    5. The rule of equality established by that provision is not dedefeated or affected by the intervention of another lien having legal priority over the judgments and executions that are subsequent to such lien; if the amount of money made is insufficient to satisfy all the executions, the whole amount applieable to each and all of them must, notwithstanding such intervening lien, be distributed to all the execution creditors, in proportion to the amounts of their respective demands.
    (Decided December 8, 1896.)
    Error to the Circuit Court of Franklin county.
    The controversy in the courts below was over a fund arising from sales on executions of the property of George P. Stiles and Abram Stiles, brothers, who were clothing merchants, having a store in the village of Ashley, in Delaware county, where they carried on business as partners under the name of the “Ashley Clothing Company,” and another store in the village of Cardington, in Morrow county, where they carried on a like business under the partnership name of “The Carding-ton Clothing Company. ” Becoming involved and unable to meet their debts, judgments were obtained against them by a large number of their creditors, executions were issued on these judgments, and the fund in question is the proceeds of the sale of the property in the two stores, seized on these writs. The controversy relates to the order in which distribution shall be made of the fund among the creditors.- The first judgments obtained, were two recovered by the First National Bank of Cardington, in the court of common pleas of Ashland county, at its September term, 1893. They were so obtained on the 20th day of September, 1893, on notes signed by George P. Stiles, and Abram Stiles, with warrants of attorney attached, upon which the judgments were taken by confession. On the same day that these two judgments were recovered, executions were. issued on them to the sheriffs of Delaware and Morrow counties, respectively, who, on the same day, levied the writs on the stock of goods in their respective counties. These were the first levies on the property. On the next day, September 21, 1893, the same bank obtained two judgments in the court of common pleas of Franklin comrty, upon notes executed by George P. Stiles and Abram Stiles, and on that day caused executions issued on them to be levied on the same property; and on that day, Sperry & Wormstaff also recovered a judgment in the same court, against the /same defendants, on notes executed in the same way, and caused an execution issued thereon to be levied on the same property, on the same day. These three levies were the next in point of time. All of these judgments weie rendered against George P. Stiles and Abram Stiles, without any mention of a partnership existing between them, but upon indebtedness contracted in the business and for the benefit of the firm, and on its credit.
    On the 23rd day of September, 1893, in the court of common pleas of Ashland county, which was during its' September term of that year, other creditors who are plaintiffs in error here, recovered judgments against George P. Stiles and Abram Stiles, described as partners, and on the same day caused executions issued on their respective judgments to be levied on the same property that was taken on the executions issued on the judgments recovered in that court by the bank; and these levies were the next or third in point of time. These judgments of the plaintiffs in error exceed in the aggregate the sum of $7,000.00.
    Afterward, but still at the Septemer term, 1893, of the court of common pleas of Franklin county, others of the plaintiffs in error, creditors of the Stiles Brothers, recovered judgments in that court, and caused executions to be issued thereon and levied on the same property, during that term of the court. These were fourth in point of time, and amount to a large sum.
    The property was sold, producing a fund amounting to $6,996.27, which, by agreement of all parties, was paid over to the clerk of Franklin county for distribution, as might be ordered by the court. Whereupon the First National Bank of Cardington filed its petition in the court of common pleas of Franklin county, to marshal the liens, and bring about a distribution of the fund according to the rights of the parties, making all the creditors who caused executions to be levied on the property, parties to the action. The case went to the circuit court on appeal, and was there submitted upon an agreed statement of facts, which, so far as they are deemed material, are substantially as above set forth; and upon these facts that court ordered distribution to be made of the fund as follows:

      “First — To the payment of the costs of this suit, and the costs on the order of sale in the case of Oppenheimer, Strauss &Co., amounting to the sum of §372.46.

      “Second — To the plaintiff, the amount of its said four several judgments and • costs, amounting in the aggregate to the sum of $3,895.00.

      “TImxl — To Sperry & Wormstaff, the amount of their said judgment and costs, $566.50.

      “Fourth — That the balance of said fund, being found insufficient to pay the remaining judgments in full, be distributed pro rata among the defendants who recovered judgments in the Ashland common pleas, on the 22nd day of September, 1893, the said pro rata amounts being as follows, to wit: To Lewis Meier & Co., the sum of $66.26; E. B. Robbins & Co., $122.51; Garson, Meier & Co., $253.20; L. C. Wachsmuth & Co., $140.05; The Gem Shirt Co., $262.05; Bergunder Bros. & Co., $363.90; Legler, Barlow & Co., $68.94; Levy, Price & Co., $190.73; Michaels, Stern & Co., $315.26; Kahn Bros. & Fellheimer, $65.17; G. Sturm & Sons, $284.”
    The creditors who were given a pro rata share of only what remained after deducting the judgments of the Bank and of Sperry & Wormstaff, and the creditors who recovered judgments in the Franklin county common pleas and levied their executions at the same term, but on a day subsequent to the judgments recovered in that court by the Bank and Sperry & Wormstaff, being dissatisfied with the distribution as ordered by the circuit court, have brought the case on error to this court.

      Thomas H. Ricketts; T J. Keating and M. R. Patterson, for plaintiffs in error.
    The averments of the petition in question, that the firm names of the partnership were other than that designated in the notes, and in the judgments of the plaintiffs in error avail nothing. It is sufficient if the judgments were against all the partners, as such. The' firm name serves no purpose in pleading, except one of identity; and under special statutes, where suit is brought in the name of the firm', no doubt the correct firm name must be used. 1st Bates on Partnership, sections 191, 192, 193; Maxwell on Code Pleading, 269.
    The form of such judgments cannot be collaterally attacked. March v. Mead, 57 Iowa.
    The petition in question shows that the Carding-ton Bank and Sperry & Wormstaff took judgments on the notes as they appeared, against the individuals signing them. This they had a right to do. Section 4995, R. S., Ohio.
    Upon the showing made by the petition, these defendants in error might have obtained their respective judgments against the partnership. Bank v. Little, 4 C. C. R., 195; 1st Bates on Partnership, section 453a.

    Standing upon individual judgments, they sought by the petition, and were allowed by the circuit court, the privileges of partnership judgment creditors. These positions are inconsistent. 1st Bates on Partnership Id.

    The creditors of the members of the partnership, as individuals, can compel the partnership creditors to exhaust the partnership assets before sharing’ with them the individual' property. Rodgers v. Meranda, 7 Ohio St., 180.
    On the other hand the partnership creditors may enforce their claims against the property of the partnership regardless of individual creditors, or of their liens thereon. Page v. Thomas, 43 Ohio St., 38. The doctrine that an election between the inconsistent rights and 'remedies, when once made is Conclusive, is well settled and based upon sound principles of justice. Melick v. Darling, 11 Ohio, 343; Bradford v. Byer, 17 Ohio St., 388; Wilson v. Wilson, 30 Ohio St., 366; Bell v. McColluch, 31 Ohio St., 397; Martin v. Poney, 41 Ohio St., 143; Ferry v. Munger, 121 N. Y., 161; Fritz v. McGill, 31 Minn., 536; Bigelow on Estoppel, 632, 4th ed.
    The bringing of an action and taking judgments is an election. Emmitt v. Brophy, 42 Ohio St., 89.
    Any decisive act with knowledge is an election. Bigelow on Estoppel, 648.

      An election to pursue the individual members of a firm, by taking judgment against the individuals, upon a debt which might have been asserted against the partnership, is an election between inconsistent remedies, and is conclusive. 1st Bates on Partnership, section 453a; Bank v. Mitchell, 58 Cal., 42; Bank v. Sprague, 20 N. J. Eq., 13; Exparte Bank, etc., 70 Me., 369; Benson v. Ela, 35 N. H., 416; O’Bannon v. Miller, 4 Bush., Ky., 25.
    A promise by a partnership, and a promise by all the individual members collectively, do not have the same effect. Forsythe v. Woods, 11 Wall., 486; Bates on Partnership, section 170, 172.
    Reducing such promise of all the individuals to a judgment against all the individual’s of the firm, does not change the individual character of the debt. Pom. Code Rem., sections 406, 407.
    The circuit court ordered that the fund be applied, first in full payment of the executions levied on the 20th day of September; second, in full payment of the executions levied on the 21st day of September, and third, the residue to the pro rata payment of the executions levied on the 22d day of September. The plaintiffs in error contend that this order ’of distribution by priority of levy, was wrong, and in violation of section 5382, R. S., Ohio, and the decisions of this court on the subject. Babbit v. Morgan, 31 Ohio St., 273.

      W. G. Vccughan and Olds <& Olds, for The First National Bank, defendant in error.
    Judgments against all the members of a partnership as individuals, though not for a firm debt, has a priority over a judgment subsequently taken against the same as partners, and for a partnership debt as a lien upon the real property of the partnership. Davis v. Delaware & Hudson Canal Conypany, 4 American State Reports, 418; 109 N. Y., 47; Saunders v. Riley, 105 N. Y.
    Equity deals with the substance and not the shadow. We regard that doctrine as established in the case of Paige v. Thomas, 43 Ohio St., 38.
    A creditor of a partnership has no lien upon the partnership assets until he, by judgment, execution, mortgage, or in some way obtains a lien; the right to have the partnership property applied to the payment of the partnership debts is the right of the partner, and a creditor can only be subrogated to such rights as the partner has; now in this case judgments have been taken* upon the joint notes of all the partners for a partnership debt, and upon which judgments partnership property has been seized; neither of the partners could do anything after that to give other partnership creditors a priority over the bank; and what the partner could not do a creditor can not do. Saunders v. Riley, 12 North East. Rep., 170 (N. Y. Court of Appeals, March 8, 1887); Hanford et al., v. Prutley et al., 24 North East. Rep., 565.
    It is claimed by plaintiffs in error that the taking of the judgment against the individual members of the firm is an election to rely upon their individual property. That doctrine seems to us absurd, and the claim wholly without merit. It was conceded that neither of the partners had any individual property; no election can be had without an intent; the levy was made upon partnership property the same day the judgments were taken, which certainly shows a disposition to make the judgments out of the partnership property. That it is not an election, Trowbridge v. Cushman, 24 Pickering, 310; Goldsmith v. Eichold Brothers, 33 Am. St. Reps., 97. And that you may go behind the judgment and show the real facts that the judgment was a partnership, debt, to prevent the lien being postponed to other partnership debts. Picket et al. v. Fisher, 7 Cushing, 386; Lewis v. Anderson et al., 20 Ohio St., 281; Citizens' National Bank v. Johnston, 44 N. W. Rep., 551; Brinkerhoff v. Marvin et al., 5 Johns. Ch. Rep., 320. Note 1 to section 189, Bates on Partnership; Bates on Partnership, section 149, also section 536; Bates on Partnership, section 1053. The judgment against the ostensible partner alone binds the entire partnership interest; it is still a partnership debt, and éntitled to priority over separate creditors the same as if all the partners had been sued. Martin v. Davis, 21 Iowa, 535; Stevens v. Bank, 31 Barb., 290.
    The equitable rule which requires the assets of a firm to be first applied to the payment of the firm debts, and the individual assets to the payment of the individual debts of the partners, is founded, not. upon the equities of the creditors but upon the equities of the partners; each member of the firm has an equitable right to have partnership assets, in the first instance, applied to the satisfaction of partnership debts, so that his individual property may, so far as possible, be relieved from the burden of firm liabilities; so the members of the firm have each an equitable right to have the individual property of each partner first exhausted in satisfying his individual debts, so, as to exempt the joint estate so far as possible, from the seizure for individual debts; but firm credit-j ors whose debts have not been reduced to judgment have no specific lien, either legal or equitable, upon the property of either the firm or the individual partner; and their' right to have the firm assets so marshalled as to first satisfy their debts can only be worked out through the equities of the partners. Hanford v. Proutty, 24 North-east Reporter; Bates on Partnership, section 560; Pierman v. Koch et al., 1st Cincinnati Superior Court Rep., 460; McGregor, Adm'r, v. Ellis & Sturgess, 2 Disney, 286; Wilcox et al. v. Kellogg et al., 11 Ohio, page 394; Miller, Assignee, v. Estell et al., Ohio St., page 508; Coter Gin & Machine Co. v. Bannon, 4 Am. St. R., 803; Arnolds. Hagerman, 14 Am. St. R., 712; Baker v. Kinsey, 41 Ohio St., 403; Clark v. Rowling, 3 Comst., 216; Lindsey v. Jackson et al., 2 Paige’s Chancery Reports, 581; Wyman v. Mitchell, 1 Wendell, 316.
    Suppose either of these partners had been the owner of any separate property, and the bank had attempted to enforce its judgments against it, they could have been compelled to first exhaust the partnership property. Hundley v. Faris, 23 Am. St. Reports, 863; Rogers, Assignee, v. Meranda, 7 Ohio St., 179; Wilder v. Kelly, 3 Paige’s Chancery Reports, 167; Blair v. Black, 17 American Reports, page 30; McGregor v. Ellis & Sturgess, 2 Disney; Smead v. Lacey, Assignee, 1 Disney, 239; Gwin, Reid A Taylor v. Sedley, 5 Ohio St., 96; Sigler & Ritchey v. Knox County Bank, 8 Ohio St., 511; Wilcox v. Kellogg, 11 Ohio, 394.
    And as to the judgment of all the parties herein whose judgments describe the defendants, G. P. & A. H. Stiles, as partners, the notes were signed by George P. Stiles, with both individual names, adding the words “under the firm name of G. P. &A. H. Stiles,” and were so signed wholly without the authority and without the knowledge or consent of A. H. Stiles, and were as to A. H. Stiles, and the partnership, wholly void; the same are only binding-, and are judgments only against George P. Stiles, individually, and are entitled to the individual interest of George P. Stiles, only, in the partnership property ; one partner, by virtue of the partnership has not the power, and can only bind his copartner by the partnership name; he has no authority to sign the individual name of his co-partner without express authority, and cannot confess a judgment for his copartner, individually, without express authority; and to bind the firm on a contract it must be in the firm name, and in this case, the firm name was not G. P. & A. H. Stiles, but it was Cardington Clothing Company, and Ashley Clothing Company. Bates on Partnership, section 377; Freeman on Judgments, 4th edition, section 545 on page 940; Lindley on Partnership, star paging, 272, and note 8. Christy v. Sherman, 10 Iowa, 535; Eckuards v Pitzer, 12 Iowa, 607; North v. Mudge, 13 Iowa, 496.
    Upon the question of distribution we claim that this fund should be distributed in accordance with the provisions of section 5375, taken in connection with the provisions of section 5382. The defendants in this case claim that distribution should be made under section 5382; Wilcox v. May, 19 Ohio, 408; Derckson v. Reid, 2 Handy, 159; Waymire v. Staley, 3 Ohio, 366; Benedict v. Deckand, 1 Cleveland Rep., 83; Choteau v. Tompson, 2 Ohio St., 114; Brazee v. The Lancaster Bank, 14 Ohio, 318; Holliday v. Franklin Bank, 16 Ohio, 534; Babbit & Herman v. Morgan, Root & Co., 31 Ohio St., 273.

      Watson, Burr & Livesay, for The National Bank, defendant in error.
    The question of distribution at issue has not, so far as we have found, been directly decided by this court, so that whatever rule it now adopts in this particular case must serve for all similar cases, no matter what the amounts of the different executions may be, nor how long one execution is prior to another, provided they be issued at the same term.
    A pro rata distribution under certain circumstances is provided for by the statute, but “in all other cases the writ of execution first delivered to the officer shall be satisfied.” In no event did the legislature intend that a later creditor could have a priority over an earlier one.
    In no branch of the law has this maxim greater force or effect than in determining the respective rights of creditors in respect to priorities under levies of executions. Herman on Ex., p. 263; Kilby v. Haggan, 3 J. J. Marsh, 208.
    Moreover it is but sheer justice to give the preference to the creditor, who by his superior industry and vigilance shall have procured the first levy on the debtor’s estate. Smith v. Lind, 29 Ill., 24. Freeman on Executions, section 203.
    Where two .judgments or two executions have no priority over each other as liens, priority . may be gained by activity and diligence. Adams v. Dyer 8 Johns, 347 (S. C., 5 Am. Dec. 344, and eases cited in note).
    This inflexible rule of common law has been modified by our statute, section 5382, in case of two or more executions sued out during the judgment term or within ten days thereafter, and in case of two or more writs, coming into the hands of the officer on the same day, but in all other cases the rule of common law, re-enacted in the statute, applies. Wilcox v. May, 19 Ohio, 408; Patton v. Sheriff., 2 Ohio, 396.
    The question at bar had received some consideration by inferior courts in reported cases in Ohio.

      Derkson v. Reid 2, H., 159; Benedict v. Deckand, 1 Clev. Rep., 83.

      W. L. Menoine and Charles B. Bewdsley, for Sperry & Worm staff, defendants in error.
   Williams, C. J.

The plaintiffs in error contend that distribution according to the judgment of the circuit court is erroneous: (1) In directing payment of any part of the fund to the defendants in error, the First National Bank of Carding-ton, and Sperry and Wonnstaff; or if not to that extent, then (2) in awarding them the full amount of their judgments out of the fund in controversy.

1. It is contended that the above named defendants in error, are not entitled to any share of the fund, because the notes upon which their judgments were recovered were executed in the individual names of the makers, George P. Stiles and Abram Stiles, without subscribing the- firm name, or otherwise indicating the existence of any partnership relation between them, or intention to bind the firm; and the judgments were rendered in the same way; from which it is argued that these defendants in error must be treated as the individual creditors of George P. and Abram Stiles, and excluded from participation in the fund, under the familiar rule which gives firm creditors of an insolvent partnership priority, in the distribution of the firm, effects, over the individual creditors of its members. It is conceded, however, that the notes were given in partnership transactions, with the intention of binding the firm, and for considerations which went to its benefit; and it seems indisputable that they created partnership obligations. It is well settled that a partnership debt may be created by the execution of a note by all of the members of a firm, as fully as by one member subscribing the partnership name. Chitty on Bills, pp. 52, 53; Woolen Company v. Juillard, 75 N. Y., 535; Mix v. Shattuck, 50 Vt., 421; Austin v. Williams, 2 Ohio 61. The adoption of a firm name is largely for convenience in making contracts binding on all the members by its use, thus obviating the necessity of securing the individual assent of, and execution by each of the partners, which, when the members are numerous might not only be inconvenient, but sometimes impracticable.

But, it is contended that, as the individual ■creditors have priority of right to the individual property of the partners, as against the partnership creditors, the former cannot, at the same time, be allowed the advantages, of partnership creditors, and be thus enabled to share equally with creditors of both classes; and that by putting their notes in judgment against George P. Stiles and Abram Stiles, without any designation of their partnership character, or reference to their partnership relation, the Bank and Sperry & Wormstaff have conclusively elected to stand as individual, and not as partnership creditors. It is not claimed that they have sought satisfaction of their judgments out of any individual property of the partners, nor that there is, or was any property of that kind which could be reached. The judgments follow the notes, and rendering-judgments in that form did not extinguish the character of the notés as partnership obligations, nor defeat their legal effect as such. Courts of equity look behind the forms of judgments and inquire into the nature of the demands on which they are founded, and the relations of the parties, when necessary to the preservation of equitable rights; so that, if from the form of the notes as executed, a presumption should arise that they were intended to create an individual obligation of the makers, and nothing more, such presumption is not conclusive, but it may nevertheless be shown that they were in fact given for considerations which went to the use of the firm, and which were parted with on its credit, and thus show that they represent partnership debts; and there can be no reason why that may not be done after judgment rendered on them., as well as before, especially as against other creditors, in a proceeding in equity involving the right, as between the creditors, of participation in a fund produced by the partnership property. The rights of the creditors, on that state of facts, against the firm, are in no respect different from what they would be if the firm name were attached to the notes; and an execution upon the judgments must, therefore; be as available against the partnership property. Whether, if the members of this firm were possessed of individual estates which these defendants in error were endeavoring- to have applied to the satisfaction of their judgments, they would be denied participation in the partnership effects, or put to an election as to the fund they would pursue, is a question not presented; there is nothing in the case to indicate an intention on their part to seek satisfaction of their judgments out of any individual estate of either of the partners, or abandon any rights against the partnership effects; on the contrary, their proceedings on their judgments were promptly and exclusively against the partnership property, and on those of the Bank, prior in order of time to any lien acquired by any other creditor.

2. The -method of making- distribution among the execution creditors entitled to share in the fund is controlled by section 5382, of the Revised Statutes, which provides that:

“When two or more writs of execution against the same debtor are sued out during the term in which judgment was rendered, or within ten days thereafter, and when two or more writs of execution against the same debtor are delivered to the officer on the same day, no preference shall be given to either of such writs; but if a sufficient sum of money be not made to satisfy all executions, the amount shall be distributed to the several creditors in proportion to the amount of their respective demands; in all other cases the writ of execution first delivered to the officer shall be first satisfied; and the officer shall indorse on every writ of execution the time when he received the same; but nothing herein contained shall be so construed as to affect any preferable lien which a judgment on which execution issued has bn the lands of the judgment debtor.”

The general rule established by that section is, that as between execution levies, that of the writ first delivered to the officer shall have priority; and subsequent levies shall have precedence in the order in which the writs are received by the officer. This is in accordance with the general principle which accords the preference to the diligent creditor, over one less diligent. But to this general rule the statute has prescribed two qualifications; one is to the effect that there shall be no priority as between executions sued out during the term of the court in which the judgments are rendered or within ten days after the term; and the other applies the same rule of equality as between all executions that are delivered to the officer on the1 same day. The first of these qualifications governs the ease before us; and it is clear the equality of right as between the executions there referred to, relates to those issued on judgments rendered in the same court and at the same term. Executions issued from different courts, though on judgments rendered at the same time, and during corresponding terms, do not come within the provision, but take priority,as between each other, from the time of their delivery to the officer. But when several executions issued on judgments rendered in the same court and ■at the same term are delivered to the officer during-that term, or within ten days thereafter, they are, by the express terms of the statute, made equal in right, and that equality is not disturbed by the intervention between the judgments or levies of another lien which becomes superior to the judgments or levies that are subsequent thereto. The statue makes no exception to the rule it prescribes with respect to such executions, on account of intervening, liens, but includes all executions against the same debtor sued out and delivered to the officer at the term of the rendition of the judgment, or within the designated time thereafter; and in plain and unequivocal terms forbids any preference between them on any account, and distinctly requires that, if a sufficient amount is not made to satisfy all the writs, it shall be distributed to the execution creditors in proportion to the amounts of their several demands. When different creditors place executions in the hands of the officer on the same day, the last one doing so is not regarded as so lacking in diligence as to postpone his writ until the first one delivered to the officer shall be satisfied; and there is no manifest impropriety in extending the same rule of equality to creditors who recover judgments against the same debtor at the same term of court and cause executions to be issued thereon and levied during the term, or within a short time thereafter. A similar rule has been adopted by another provision of the statute which denies priority to liens obtained by filing transcripts of justices’ judgments with the clerk of the court during vacation, over judgments rendered at the next ensuing term. Revised Statutes, section 5377. Babbett v. Morgan, 31 Ohio St., 273. A like principle is also adopted in that provision of the statute which makes judgments recovered at the same term of the court equal as liens on the debtors real estate situated in the county where the judgment is rendered. The race between creditor’s generally begins with the apparent or actual insolvency of the debtor; and when several judgments are procured at the same term of the court, followed by executions, the insolvency of the debtor is usually obvious or rapidly approaching; and in such case, equality among creditors of equal merit works no injustice. But whatever may have been the reason for the adoption of the statutory provision under consideration, the courts are not at liberty to disregard it; and when applied to the case in hand, it requi res a distribution of the fund involved, different from that ordered by the judgment below. That distribution should be as follows: After the payment of the costs of the action in the courts below, and the costs of the sale, as ascertained by the circuit court, there should first be set aside out of the fund, the amount of the two executions issued on the judgments recovered by the Oardington Bank in the Ashland county common pleas on the 20th day of September, 1893; those executions being the first levied, and superior in right to the executions issued from Franklin county and levied the next day. Next, there should be deducted from the remainder of the fund, the amount of the executions issued on the judgments recovered by the Bank, and Sperry & WormstafE, in the Franklin county common pleas on the 21st day of September, 1893; they being superior in right to the executions sued out on the judgments rendered on the following day in the Ashland county common pleas, in favor of the plaintiffs in error. This amount should be set aside for distribution as hereafter directed. The balance of the fund then remaining being insufficient to satisfy the executions of the plaintiff in error, issued on their judgments recovered in the Ashland county common pleas, which are next in order of priority, must be added to the amount set aside for the two Ashland county executions of the Bank, and the aggregate amount they produce applied toward the satisfaction of all these Ashland county executions, in proportion to their respective amounts; and the amounts set aside for the Franklin county executions of the Bank and Sperry & WormstafE, must be distributed in like proportions among all the executions that were sued out on judgments rendered at the same term of the court of common pleas of that county, and levied during that term. This distribution is in accordance with the rule laid down in Babbitt v. Morgan, supra, and with a recent decision of this court in the unreported case of the Carriage Company v. Ford, from Licking county. The judgment of the circuit court must therefore be reversed, and judgment rendered for the plaintiffs in error, in accordance with this opinion.

Judgment accordingly.


author: Minshall, J.

text:
    Musser, Auditor v. Adair.

      County auditor — Review on error of tax-omission proceedings — Appellate jurisdiction, extend to what — judicial power — Due process — Return of property jor taxation.

    The proceeding of county auditors, under sections 2787 and 2788, Revised Statutes, authorizing such auditors, in certain cases, to make additions to the valuation of the property of individuals, returned for taxation, cannot be reviewed on error under section 6708, Revised Statutes. The remedy of the individual for errors or mistakes in such cases, prejudicial to him, is by injunction under section 5848, Revised Statutes.
    (Decided December 15, 1896.)
    Error to the Circuit Court of Scioto county.
    The suit below was commenced in the court of common pleas by Mary O. Adair against Filmore Musser, auditor of Scioto county, and.Mark Wells its treasurer. It purports to be a petition in error by the plaintiff to the auditor and treasurer of the county. The plaintiff avers that on January 21,1891, the auditor on the application of certain persons, employed as tax inquisitors, made certain additions to her returns for the years 1886 and 1887, 1888, 1889, 1890 and 1891, being for credits claimed to have been omitted by her in making her returns for these years with an addition of fifty per centum on the amounts added for each year as a penalty. As the record of the auditor made in the ease, the notice is set out, and its service by Samuel G. Harper; the auditor’s statement of the facts, his certificate of the additions as made, and their entry upon the duplicate of 1891 as required by statute.
    “The statement of facts” is as follows:

      “In the matter of the returns of moneys and credits for taxation made by Mary O. Adair for the years 1886, 1887, 1888, 18’89, 1890 and 1891:
    ‘ ‘In obedience to a notice issued by Filmo re Musser, auditor of Scioto county, Ohio, and served upon said Mary O. Adair, who failed to appear but sent her brother, J.'C. Adair, who, on the 20th day of October, 1891, appeared before said auditor at his office in Portsmouth, Ohio, in said county, and said J. O. Adair was duly examined under oath touching the returns of moneys and credits of said Mary O. Adair to the assessor for said years, and he was given an opportunity to show that the returns made by her for said years of her moneys and credits were correct, but he failed to satisfy said auditor of the correctness of said returns for any one of said years; and thereupon said auditor, under sections 2781 and 2782 of the Revised Statutes of Ohio, proceeded to correct said returns and make the proper entries upon the tax lists and duplicates in his office, and upon the sworn testimony of said J. C. Adair and the records of the recorder’s office of Scioto and Lawrence counties, and other competent and satisfactory evidence, said auditor finds that the returns of said Mary O. Adair of her moneys and credits for each of said years were false, and from the same evidence said auditor finds that, said Mary O. Adair ought to have returned as, and for her true returns to the assesser for said years, the following, to wit:
    For 1886 .$4,867
    For 1887 . 4,867
    For 1888 5,539
    For 1889 6,430

      For 1890........................................................................ 6,345
    For 1891 .......................................................................... 6,645
    And from the records in his office said auditor finds that said Mary O. Adair made the following returns of moneys and credits and no more, to-wit:
    For 1886 $2,500
    For 1887 2.500
    For 1888 3.500
    For 1889 3.500
    For 1890 3.500
    For 1891 3.500
    “And from the foregoing facts and figures said auditor finds that said Mary O.. Adair ought to be and she is hereby charged ■ with taxes upon the following valuations which include the penalty of fifty per cent, prescribed by law upon the true returns which ought to have been made, to-wit:
    For 1886. $4,800
    For 1887. 4,800
    For 1888 4,808
    For 1889. 6,145
    For 1890. 6,017
    For 1891. 6,467
    “And said auditor finds that there is now'due and payable as taxes on said valuations the following sums, to-wit:
    For 1886 .$ 87.84
    For 1887 . 88.32
    For 1888 . 94.24
    For 1889. 113.68

      For 1890...............................:......................................... 111.31
    For 1891........................................................................ 103.47
    ‘ ‘Making the total taxes $598.86, now due and payable to the treasurer of said county, and thereupon said auditor has this day placed upon the proper tax lists and duplicates said sums against said Mary O. Adair, and has certified the same to the treasurer of said county for collection, and thereupon he files this statement of facts in his office as required by section 2782 of the Rev. Stats, of Ohio.
    “Filmore Musser, “Auditor of said county.
    “Portsmouth, Ohio, January 21, 1892.”
    Twenty-seven different assignments of error are then made upon the transcript of the record of the auditor, and the papers in the case as certified by the auditor, most of which are, however, simply averments of facts not disclosed by the record or any of the papers. The plaintiff finally, however, elected to stand upon her assignments of error of law. The cause was then argued and submitted to the court; and the court being of the opinion that there were no errors of law apparent on the record in the proceedings of the auditor, affirmed the same. Error was then prosecuted to the circuit court of the county.
    ' The case having been submitted to the circuit court, it found that there was error apparent in the record in this, to wit:
    “1. That the notice alleged to have been served upon the said Mary O. Adair to appear before the auditor was insufficient in law.
    “2. That no notice was served upon the said Mary O. Adair to appear before the auditor before he made the entry upon the tax list and duplicate of the taxes charged against her, as shown in the auditor’s statement of facts, and that said Mary O. Adair was not given, an opportunity to show that her returns of property for taxation for the years in question were correct before the auditor made the entry upon the tax list and duplicate of the taxes charged against her as shown by his statement of facts. ”'
    Thereupon the court reversed the judgment of the common pleas, and held that the proceedings of the auditor should be held for nought.
    The case is here for reversal of the judgment of the circuit court.

      John G. Milner and A. .G. Thompson, for plaintiff in error.

      Nelson W. Evans and D. Livingstone for defendant in error.
   Minshall, J.

The proceeding below purports to be a petition in error to - the auditor of Scioto county, the auditor being made the defendant. This seems a little novel. The court rendering the judgment is not ordinarily made the defendant in a proceeding to reverse it. But this novelty must be recognized in practice if this proceeding can be maintained. We do not think it can.

A court can only review the judgment of a court on a proceeding in error. In Logan Branch Bank ex parte., 1 Ohio St., 433, an appeal was taken by the bank from a decision of the auditor of state affectingit to the supreme court under the provision of a statute expressly authorizing such an appeal. This court has such appellate jurisdiction as may be conferred on it by law. The court dismissed the appeal on the express ground that it could not entertain it. The court held that the auditor did not act judicially as a court and an appeal can only be had from one court to another.

A proceeding in error is in the nature of an appeal — in fact invokes appellate jurisdiction. The holding in this case is in accordance with the established construction of appellate jurisdiction. •Story in his work on the constitution, section 1761, says:. “The essential criterion of appellate jurisdiction is that it revises and corrects the proceedings in a cause already instituted, and does not create that cause. In reference to judicial tribunals, an appellate jurisdiction, therefore, necessarily implies that the subject-matter has been already instituted in, and acted upon by some other court whose judgment or proceedings are to be reversed.” See also, Elliot’s App. Proc. §§ 16 and 17.

The auditor of a county under sections 2781 and 2782 Rev. Stat., does -not act as a judge. He is required to inquire and may take evidence to inform his mind and must use his best ‘judgment in the matter; but, in all this, he does not act judicially within the meaning of the constitution, that all judicial power is conferred on its courts. If he did, then the statute would be invalid, for he is not created by law and elected as a judge. The power to hear and determine, however much judgment and discretion is required, does not, of itself, 'make a judge, in the judicial sense.; The power simply indicates jurisdiction in the officer of the question to be heard and determined; whether the power conferred is judicial or not depends not only .upon' the nature and character of the question, but upon the manner and circumstances under which it is to be determined. All ministerial officers are required to exercise more or less consideration and judgment in the performance of their duties. In Murray v. Land Improvement Company, 18 How. (U. S.), 272, it was held that the power conferred by an act of congress on an auditor of the treasury to audit and ascertain the amount due from a collector of customs and on which a distress warrant may be issued and levied on the property of the delinquent by the solicitor of the treasury, does not confer judicial power on the accounting officer, within the meaning of the national constitution, conferring judicial power on its courts; nor did it violate the guaranty of due process of law, though no notice is required to the delinquent. It is said in the opinion, “that the auditing of the accounts of- a receiver of public moneys may be, in an enlarged sense, a judicial act, must be admitted. So are all those administrative duties, the performance of which involves an inquiry into the existence of facts and the application to them of rules of law.” The opinion was delivered by Justice Curtis, and is remarkable for its research and ability. State ex rel v. Hawkins, 44 Ohio St., 98, 109.

Judicial powers are those conferred on judges as courts in the hearing- and determination of questions arising in litigation between parties in actions pending before them. State ex rel. Harmon, 31 Ohio St., 250; DeCamp v. Archibald, sheriff, 50 Ohio St., 618, 624; Elliot, Appellate Procedure, section 8. Ex parte actions are only a seeming exception to this rule. In habeas corpus for instance the proceeding though styled ex pande, is, in fact, a proceeding between a party claiming his liberty, and the person claiming the right to restrain him of it. In short, judicial power is the power exercised by courts in hearing and determining cases before them, or some matter incidental thereto, and of which they have jurisdiction. Such powers cannot be conferred on a ministerial officer. A county auditor cannot be empowered to hear and determine an issue between A and B as to title to land, or to a horse, or as to whether A should recover of B a certain sum of money. These are judicial questions and can only be determined in a proper proceeding by a court. But as to whether a certain tract of land, or a horse, is owned by A, and should be taxed as his property, or that B owes A a certain sum of money which should be returned by A as a “credit,” are different questions; and, however much inquiry and consideration may be involved in their determination, he determines no question of title as between adversary parties that is binding on them. Therefore a county auditor under the sections above referred to, in making additions to the returns of a person of his property for taxation, does not act as a judge. He acts simply as an agent of the state in the valuation and assessment of property of its citizens for the purpose of taxation. He is simply a ministerial officer and none other. His proceedings under these sections make a prima facie ease for the collection of the tax based on the additions. The citizen cannot be heard to allege any want of due process of law in the matter, any more than he could of the returns of a township assessor. The township assessor, the auditor and the board of equalization are all parts of the same system, devised by the legislature for the assessment of the property of individuals for the purpose of taxation. The law provides the individual an adequate remedy where any injustice has been done, or where he thinks it has been done. Section 5848, Revised Statutes, expressly provides that courts of common pleas and superior courts shall have jurisdiction to enjoin the illegal levy of taxes or assessments or the collection of either. Such provisions, have uniformly been held to afford the citizen an adequate remedy against any unjust or illegal tax or assessment. Cooley on Taxation, 49, 51. McMillen v. Anderson 95 U. S., 37; Hager v. Reclamation District, 111 U. S., 701; Davidson v. New Orleans, 96 U. S., 97; Adler v. Whitbeck, 44 Ohio St., 539, 568. In McMillen v. Anderson it was held that the revenue laws of a state do not violate t-he amendment, guaranteeing due process of law, “although they do not provide that the person shall have an opportunity to be present when the tax is assessed against him, or that the tax shall be collected by suit;” and that “a statute which gives a person against whom taxes are assessed a right to enjoin their collection, and have their validity judicially determined, is due process of law, notwithstanding he is required, as in other injunction cases, to give security in advance.” In view of this statute and the propriety and adequacy of the remedy afforded, there is no ground for holding that it was the intention of the legislature, that the acts of the auditor, in making additions to the returns of an individual of his property for taxation, should be reviewed on error in the common pleas, or any other court.

If it be asked, what was the purpose of the provision requiring the auditor to file in his office a statement -of the facts or evidence on which he acted, it may be replied that it could not have been for the purpose of a review by the courts in a proceeding in error, or more would have been required than to simply “file” it in his office. If that had been the purpose it would certainly have provided for the taking and filing of bills of exceptions, setting forth the evidence, and the making of a record. It was most probably designed as information to the tax payer; and also, as a check on inconsiderate haste; as men always act with more care, when they are required to state their reasons.

In the remedy by injunction the court exercises an equitable jurisdiction. Mere irregularities are of no importance, unless they affect the substantial rights of the plaintiff: Notice must be given for the statute requires it; but it is not important how the notice is served, if the party have a- fair opportunity to be heard before the auditor placed the additions upon the duplicate for collection. The court may enjoin the whole tax, or part of it, or remit the penalty, as the facts and justice of the case may require. The suit' affords every remedy the citizen can require, consistently with the interests of thé state, which cannot be delayed in the. collection of its revenue without more or less embarassment to all the public interests. “Administrative process of the customary sort is as much due process of law as judicial process. We should meet a great many unexpected and very serious embarassments in government if this were otherwise.” Cooley, J., in Weimer v. Bunbury. 30 Mich., 201.

The intense feeling exhibited by counsel for the defendant in error in his brief against the law, would be more than justified, if its enforcement could only produce the injustice and wrong, so severely denounced. But in view of the fact that it is simply designed, not to make one pay more than another, but to compel all to contribute proportionately from their property to the support of a common government, there seems little ground for the severity of his arraignment of the law and those concerned in its enforcement.

Reliance is placed on Haff v. Fuller, 45 Ohio St., 495, and Lewis v. Laylin, 46 Ld. 663. These eases, as will be shown, must be confined to their particular facts. The first was a suit to enjoin the construction of a ditch. In such cases records are required to be made and kept of their proceedings ; and it was there held that a proceeding in error is the proper remedy, where the defects complained .of are apparent on the face of the record, and that injunction is only proper where they do not, and have to be supplied by averment. The same may be said of Lewis v. Laylin. It grew out of a road improvement under the two mile law; and the assessments were questioned on irregularities in the proceedings, and averments made of matters aliunde the record. The only evidence introduced of the irregularities charged, was the record itself; these the court regarded as of no consequence, and remarked that the case could be disposed of for this reason on the decision of the former case. In Genin's Executor v. Auditor, 18 Ohio St., 534, no question was made or considered by the court as to the review of the proceedings of the auditor on error. The question passed sub silentio, a,nd the case is therefore, not. authority on the point.

Authority for a proceeding in error in such cases is based upon the clause in section 6708, Revised Statutes, conferring jurisdiction in error on the court of common pleas to review the judgments of justices of the peace and probate courts; and by which it is extended to “any other tribunal, board or officer exercising judicial functions, and inferior in jurisdiction to the court of common pleas.” This clause of the section, so far as it relates to ministerial officers, is open to the objection on which Logan Branch Bank, ex parte, was decided. This case is sound in principle, and should not be departed fro.m further than has been done in the two preceeding cases. The above clause in section 6708 cannot be applied to cases coming within the provisions of section 5848, Revised Statutes, affording a remedy by injunction against the collection of illegal taxes and assessments. On well settled principles of construction, the provisions of this section must be excepted out of the generality of the language used in section 6708. If not, a statute, highly remedial, would, in a measure, be emasculated.

We are therefore of the opinion that there was no authority for the commencement of the proceeding in error in the common pleas, and that the judgment of the common pleas and of the circuit court should be, and are reversed, and that the petition in error in the common pleas be dismissed.

Judgment accordingly.