author: Williams J.

text:
    Armstrong v. Karshner.
    Railroad Companies — Subscriptions to Capital Stock of — When pay able— Sections 3275, 3276 and 3298, Revised Statutes, Construed.

    1: While false statements, made by an authorized agent of a corporation, in regard to the past or present status of the corporate enterprise, or of material matters connected therewith, whereby a subscription is obtained to its capital stock, may be fraudulent, and defeat a recovery thereon, representations concerning the future intention, purpose or expectation of the corporation, will not have that effect, especially when it is not shown they were fraudulently made for the purpose of deceiving.
    2. A subscription to the capital stock of a railroad company, the payment of which is made dependent upon the completion of a part of its road, may be enforced against the subscriber after the company has fully complied with the condition, although, when the subscription was made, the company had not expended ten per centum of its authorized capital in the construction of its road, nor obtained actual bona fide subscriptions to its capital stock to the amount of twenty per centum thereof. Though, such subscription when made, was, under the provisions of section 3298 of the Revised Statutes, unauthorized, it nevertheless constituted a continuing offer of the subscriber to pay the company the amount subscribed, upon the performance by it of the conditions therein contained, ■ which, when not withdrawn before the conditions were fully complied with, became an absolute subscription, and payment thereof cannot be defeated on the ground that the company was without corporate capacity to receive it.
    3. Railroad companies incorporated under the laws of this state, are not required to construct first-class railroads before they can collect subscriptions to their capital stock, unless the subscription contains a stipulation to that effect.
    4. A statute, authorizing a railroad company to sell the whole or any part 1 of its road, in force at the time a subscription is made to Its stock, becomes a part of the contract of subscription, and a sale thereafter made by the company of a part of its road under the authority of such statute, does not release the subscriber, except when, and as, provision is made therefor in the statute.
    5. It is no defence to an action on a subscription to the stock of a railroad corporation, that the company has not completed the road in its entirety, nor, that it has abandoned a part of the enterprise, when no condition to that effect is expressed in the subscription.
    6. Subscribers to the capital stock of a railroad company, are not released from the obligations of their subscriptions, by a change afterward made in the line of the road under section 3275 of the Revised Statutes, so as to pass through a county not named in its articles of incorporation. It is only when the line of the road is diverted from a county named in the articles of incorporation, that persons who subscribed to the capital stock of the company on the line of that part of the road so changed, are released from the obligations of their subscriptions. Revised Statutes, section 3276.
    (Decided April 29, 1890.)
    Error to the Circuit Court of Ross county.
    The original action was brought by John Karshner against Milton Armstrong in the Court of Common Pleas of Ross county, by filing therein the following petition:
    “ The plaintiff, John Karshner, says: That on the 26th day of April, A. D. 1877, The Cincinnati & Fayetteville Railroad Company was duly incorporated as a corporation under the laws of Ohio, for the purpose of building and operating a railroad from the city of Cincinnati, in the county of Hamilton, through the counties of Hamilton, Clermont and Brown, to the village of Fayetteville, in said last named county — all in this state.
    “ That the capital stock of said company was $120,000, divided into two thousand four hundred shares of $50 each; and that, shortly after the incorporation of said company, the amount of such capital stock required by statute for the purpose, having been duly subscribed and paid, said company duly organized by electing according to law a board of directors, who duly qualified as such.
    “ That on or about the 81st day of May,.A. D. 1878, said company, a large amount of its capital stock, to wit, more than twenty per centum of its authorized capital stock in bona fide subscriptions having been subscribed, and a large amount of money, to wit, more than ten per centum of its authorized capital having been expended by it in the construction of its said railroad, duly and legally ohanged the eastern terminus of said railroad, and extended the line of the same from said village of Fayetteville eastward through the counties of Brown, Clinton, Highland, Ross, Hocking and Athens, to the town of Nelsonville, in said last named county — all in this state.

      “ That, afterwards, on the 9th day of March, A. c. 1880, the name of said company was, by proceedings had for the purpose in the court of common pleas within and for said county of Brown, duly and legally changed to The Cincinnati, Fayetteville, Hillsboro & Huntington Railway Company, and that, afterwards, on the 7th day of March, A. D. 1881, the name of said company was, by like proceedings in said court of common pleas within and for said county of Brown, again duly and legally changed from The Cincinnati, Fayetteville, Plillsboro & Huntington Railway Company to The Cincinnati, Hocking Valley & Huntington Railway Company, which said last name it still retains.
    , “ That, on or about the 14th day of October, A. D. 1880, The Cincinnati, Fayetteville, Hillsboro & Huntington Railway Company made and entered into a contract in writing with one Henry T. Niles under the firm name and style of Henry T. Niles & Co., for the building and completing of said company’s line of railroad, and the said Henry T. Niles & Co., under said contract, and certain contracts supplemental thereto, made and entered into between said firm and said railway company after its name had been changed, as aforesaid, to The Cincinnati, Hocking Valley & Huntington Railway Company, to wit: on the 5th day of September, A. D. 1881, and the 19th day of December, A. D. 1881, respectively, agreed to build and complete the line of said company’s railroad from its junction with The Cincinnati & Eastern railroad, in said county of Clermont, to said town of Nelson-ville, in said county of Athens, in consideration of which among other things said railway company authorized and empowered said Henry T. Niles & Co., to procure stock subscriptions and donations to and for said company to the amount of $5,000 per mile for all that part of its said line of railroad between the Scioto river in said county of Ross and said town of Nelsonville, in said county of Athens, and to collect, hold, have and use the same as their own, in and about the construction of said railroad.
    “ That on the-— day of October, A. D. 1881, the defendant, Milton Armstrong, for the purpose of aiding in the construction of said railroad, and in consideration of the advantages. and benefits to accrue to him therefrom, and especially from the building of that part of said railroad from The Scioto Valle}r railroad in said county of Ross, to a point at or near the village of Adelphi, in said county, as well as in consideration of like subscriptions and agreements by others for said purpose, became a subscriber to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company by executing and delivering to said company an agreement in writing in the words and figures following, which was duly accepted by it, to wit.
    “We, the undersigned, agree to pay the number of shares annexed to our respective names, of fifty dollars each, to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, and we hereby bind ourselves, our heirs, executors or administrators to pay the same to the authorized agent of said company; but it is expressly provided as follows : That no part of said subscription shall be due until a railroad track shall .be laid ready for the running of ears from some point on the Scioto Valley railroad to a point at or near Adelphi in Ross county, and when said railroad track is so laid we the Undersigned mutually agree that we will each, on demand, pay the amounts set opposite our respective names to such authorized agent of said company in full payment for such shares of capital stock.
    “ Names. — Oct. 1881. — No. of shares. Amount.
    “ It is distinctly agreed and understood that all the within stock subscriptions are binding, providing the road is built on the north of Adelphi, otherwise they are void.
    “ Ten shares $50 each. $500.
    Milton Armstrong.”
    “ That said defendant thereby agreed to take ten shares of the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, each share being of the par value of $50, and agreed to pay therefor the sum of $500 to the authorized agent of said company on demand, so soon as a railroad track should be laid ready for the running of cars from some point on said Scioto Valley railroad to a point at or near said village of Adelphi, in said county of Ross, provided said railroad should be built north of said village of Adelphi.
    “ That, afterwards, on or about the 20th day of October, 1882, the said Henry T. Niles & Co., who had in compliance with the terms of their said contracts with said railway company, and in consideration of said subscription of said defendant, and induced thereby, partly built a portion of the railroad of the said company, including a part thereof between the village of Kingston, in said county of Ross, situate on the said Scioto Valley railroad, and said village of Adelphi, and were still engaged in the construction of the same, made and entered into a contract in writing with the plaintiff, which was duly approved by The Cincinnati, Hocking Valley & Huntington Railway Company, under and by virtue of which he, the said plaintiff, agreed to build and complete that portion of the railroad of said company from said village of Kingston, at and on said Scioto Valley railroad, to said village of Adelphi,.on the west side of the Circleville and Adelphi turnpike, and, also, agreed conditionally, to build that portion of said railroad of said company between said last named point and Daniel Davis’, at or near the mouth of Big Pine creek, in said county of Hocking, upon certain terms and conditions in said contract set forth, in consideration of which among other things, the said Henry T. Niles & Co., with the approval and assent of said railway company duly given, agreed to assign and transfer, and did duly assign and transfer to him, the said plaintiff, all stock subscriptions and subscriptions for donations held and acquired by them under their said contracts with said railway company, including said subscription of said defendant, from the city of Chillicothe, in said county of Ross, to said Daniel Davis’.
    “ That he, the said plaintiff, under his said contract, which he was induced to make by said subscription of said defendant, and like subscriptions of other persons, built that part of said railroad between said village of Kingston, at and on said Scioto Valley railroad, and said village of Adelphi; and that the last rail on that part of said railroad and of the track thereof between said points was laid on the 28th day of September, 1885, and said part of said railroad was then ready for the running of cars thereon; and that since the 21st day of December, 1885, he, the said plaintiff, has been operating said part of said railroad by running trains for carrying both freight and passengers over the same between said village of Kingston, at said Scioto Valley railroad and said village of Adelphi.
    “That said railroad was built north of said village of Adelphi, as mentioned in, and required by the subscription agreement of said defendant, and all conditions in said subscription' agreement have been fully performed by said railway company, and by him, the said plaintiff.
    “ That the full amount of said subscription of said defendant became and was due and payable to the plaintiff, from him, when said railroad track was laid ready for the running of cars thereon, from said village of Kingston, at and upon said Scioto Valley railroad, to said village of Adelphi, to wit, on said 28th day of September, 1885, but no part of said sum has been paid by said defendant, although the plaintiff, at or about that time, demanded payment of the same; and he, the said defendant, has since been requested by the plaintiff to pay the same.
    “ That said railway company and the plaintiff were, at said time, and have been at all times since, ready and willing, and still are ready and willing, to issue and deliver to said defendant, upon the payment of said subscription, certificates of stock in said company, for the number of shares so subscribed for by said defendant, and have repeatedly offered to deliver such certificates to him.
    “ Wherefore the plaintiff asks judgment against the defendant for the sum of $500 with interest thereon from the . 28th day of September, 1885.”
    A general demurrer to the petition was overruled, and thereupon the defendant filed the following answer and amendment thereto.
    “And now comes the defendant and answers the petition of the plaintiff against him, and for his first defense he says: that his alleged subscription in said petition mentioned was a conditional subscription made to The Cincinnati, Hocking Valley & Huntington Railway Company in said petition mentioned, based upon the completion of such parts of said proposed railroad as lies between the Scioto Valley railroad and the town of Adelphi in Ross county, Ohio. That The Cincinnati, Hocking Valley & Huntington Railway Company was, by the terms of its charter, authorized to build a railroad leading and extending from Cincinnati, in the county of Hamilton, Ohio, to Nelsonville, in the county of Athens, Ohio, and the officers and agents of The Cincinnati, Hocking Valley & Huntington Railway Company, who obtained said conditional subscription, at the time said conditional subscription was obtained, and gave out in speeches, and said to the defendant that said railway company intended to, and would build said railroad from said city of Cincinnati, Ohio, to said town of Nelsonville, Ohio, and this defendant, relying on said representations . and said charter, and believing said railroad, if built from Cincinnati to Nelsonville, would be beneficial to the public generally along the line of said proposed railroad, and advantageous to the defendant, and knowing that a railroad from the Scioto Valley railroad to Adelphi, a distance of only about ten and one third miles, would be of no benefit to this defendant, he made said conditional subscription; but since said conditional subscription was made by defendant to The Cincinnati, Hocking Valley & Huntington Railway Company, the said company has sold, conveyed and abandoned all that part of said proposed railroad as lies southwest of the town of Hillsboro, and do not intend to build the same, or any part thereof, and so this defendant says, that he is released from his said conditional subscription, and the same has been rendered, by the action of The Cincinnati, Hocking Valley & Huntington Railway Company aforesaid, null and void.
    “ This defendant further answering the petition of the plaintiff against him, and for his second defense thereto, he says: That the authorized capital stock of The Cincinnati & Fayetteville Railroad Company was, on the 81st day of May, 1878, duly and legally increased from $120,000 to $750,000, and that on the 7th day of July, 1880, the authorized capital stock of said ‘ The Cincinnati, Fayetteville, Hillsboro & Huntington Railroad Company,’ was duly and legally increased from $750,000 to $5,250,000; that at the time the alleged subscription of this defendant was made to the capital stock of said ‘The Cincinnati, Hocking Yalley & Huntington Railway Company,’ the duly authorized capital stock of said company was $5,250,000; and this defendant further answering, says: that at the time the alleged subscription of this defendant was made, twenty per cent., to wit: $1,050,000 of actual bona fide subscriptions to the capital stock of said railway company had not been obtained, nor had said company expended ten per cent., viz.: $525,000 of its authorized capital stock, in the construction of its said proposed railroad. This defendant therefore says : that said alleged subscription of this defendant to the capital stock of said railway company in said petition mentioned, was unauthorized by law, and is absolutely void.
    “ And further answering, and for his third defense this defendant says: that the said ‘ The Cincinnati, Hocking Yalley & Huntington Railway Company,’ on or about the 30th day of November, 1882, sold, transferred and conveyed all that part of its proposed road southwest of the town of Hillsboro, in Highland county, Ohio, to The Atlantic & Columbus Railroad Company at private sale, without the knowledge or consent of this defendant.
    “ This defendant therefore says : that the railroad, the line thereof, and its termini to which the alleged subscription of this defendant was made, has been so altered and changed by the action of said company that the said railroad as now existing, and authorized by its charter, and by the action of said company, to be constructed and operated, is not the same railroad for which said alleged subscription was made, and by reason thereof, the said alleged subscription of this defendant has been rendered nugatory and void.
    “ This defendant further answering, and for his fourth defense he says: that the charter of The Cincinnati, Hocking Valley & Huntington Railway Company called for and authorized the building of a railroad from, the city of Cincinnati, Ohio, through the counties of Hamilton, Brown, Highland, Clinton, Pike, Jackson, Ross, Vinton, Hocking and Athens (which was afterwards changed to also include, and pass through, the county of Pickaway) into the heart of a very rich and valuable and extensive coal region in which is found immense beds of bituminous coal, and said company obtained all the subscriptions ever obtained by it, to its capital stock, upon the promises, and inducements held out by the said company, that it would build a railroad from said city of Cincinnati, to said town of Nelsonville, and this defendant made the alleged subscription in said petition mentioned, to the said The Cincinnati, Hocking Valley & Huntington Railway Company, upon said promises and inducements, and for the purpose of building a railroad from the said city of Cincinnati, a city of over 300,000 inhabitants, through the said counties of Hamilton, Brown, Highland, Clinton, Pike, Jackson, Ross, Vinton, Hocking and Athens, (and which was afterwards changed to also pass through the county of Pickaway) into the heart of said rich, valuable and extensive coal region, where is found said immense beds of bituminous coal, which could be mined and shipped over said proposed railroad to market, and thus make the said railroad a profitable investment for its stockholders. That said proposed railroad was never in fact located between the town of Hillsboro and the Scioto river, nor did said railway company ever acquire the right of way for said railroad between said points; that that portion of said proposed railroad, from said town of Plillsboro southwest to said city of Cincinnati, the western terminus of proposed railroad was, since said alleged conditional subscription was made, sold, assigned and transferred by The Cincinnati, Hocking Valley & Huntington Railway Company, to a railway company known as The Cincinnati, Atlantic & Columbus Railway Company, without the knowledge or consent of this defendant, and has been wholly abandoned by The Cincinnati, Flocking Valley & Fluntington- Railway Company, and that that part of said proposed railroad from the said town of Hillsboro east to the Scioto Valley railroad has been practically abandoned by The Cincinnati, Hocking Valley & Huntington Railway Company, and by reason of said sale, transfer and abandonment, the said railway company released all its conditional subscriptions, and released the alleged conditional subscription of this defendant, and lost the right to transfer the same to any third party, or to the plaintiff . herein. This defendant therefore says: that by reason of said sale, transfer and abandonment, by said railway company as aforesaid* the said alleged conditional subscription of this defendant in the petition mentioned, has become of no avail, nugatory and void.
    “This defendant further answering, and for his fifth defense, says: that the said The Cincinnati, Hocking Valley & Huntington Railway Company in its said contract with said Henry T. Niles & Co. in said petition mentioned, to build said railroad, authorized the said Henry T. Niles & Co. to obtain subscriptions to the capital stock of said railway company for the benefit of them, the said Henry T. Niles & Co., and that the alleged conditional subscription in said petition mentioned, was obtained by the said Henry T. Niles & Co. for the benefit of them, the said Henry T. Niles & Co., and not for the benefit of said railway company; and that they, the said Henry T. Niles & Co., assigned and transferred the said alleged conditional subscription, and the right to obtain the same to the plaintiff herein, he, the said plaintiff, having full knowledge of all said facts at the time of said transfer. This defendant therefore avers and .says: that said conditional subscription so obtained for the benefit of said contractors, for building said railroad, is against public policy, and is of no validity, and void.
    “ And further answering, and for his sixth defense, this defendant says: that since the signing of said paper in said petition mentioned, aud the making of said conditional sub scription to the said capital stock of the said The Cincinnati, Hocking Valley & Huntington Railway Company, the said railway company did on or about the 15th day of March, 1888, take the necessary legal steps to, and did alter its charter by providing for the extension of its said railroad through the county of Pickaway.
    “ And this defendant avers, and says: that the charter under and by virtue of which the said railway company is now acting, is not the same charter, under and by virtue of which said railway company was acting, at the time said alleged conditional subscription in said petition set forth was made. And said conditional promise, in said petition mentioned, was not made to the said The Cincinnati, Hocking Valley & Huntington Railway Company, as the same existed at the time the said conditional promise was transferred to the plaintiff herein, or as the same now exists.
    “ And the said defendant further answering, and for his seventh defense, he says: that he admits that he signed the writing, a copy of which is in said petition set forth, and designated conditional subscription to The Cincinnati, Hocking Valley & Huntington Railway Company in said petition mentioned. That said railway company was a company chartered and organized for the purpose of building a railroad from Cincinnati, in the county of Hamilton, Ohio, to Nelsonville, in the county of 'Athens, Ohio. This defendant further says: that said paper writing so signed by this defendant, is in the words and figures following, viz.:
    “The Cincinnati, Hocking Valley & Huntington Railway Company.
    We, the undersigned, agree to pay the number of shares annexed to our respective names of fifty dollars each to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, and we hereby bind ourselves, our heirs, executors or administrators to pay the same to the authorized agent of the said company; but it is expressly provided as follows: that no part of said subscription shall be due until a railroad track shall be laid ready for the running of cars from some point on the Scioto Valley railroad to a point at, or near, Adelphi, in Ross county, and when said railroad track is so laid, we, the undersigned, mutually agree that we will each, on demand, pay the amount set opposite our respective names, to such authorized agent of said company, in full payment for such shares of capital stock.
    Names. Oct. 1881. No. of Shares. Amount.
    It is distinctly agreed and understood, that all the within stock subscriptions are binding, provided the road is built north of Adelphi, otherwise they are void. Ten' shares of $50.00 each, $500.
    Milton Armstrong.”
    “This defendant denies that he became a subscriber to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, by executing and delivering to said company, said paper writing. He denies that he signed the same for the special purpose of building a road from the Scioto Valley railroad to Adelphi, on the contrary, he avers and says: that said railway company was by the terms of its charter, authorized to build a railroad leading from the city of Cincinnati, in the county of Hamilton, Ohio, to Nelsonville, in the county of Athens, Ohio, and the officers and agents of said The Cincinnati, Hocking Valley & Huntington Railway Company who obtained the signature of this defendant to said conditional subscription, at the time the same was obtained, gave out in speeches, and said' to this defendant, that said railway company intended to, and would build said railroad from said city of Cincinnati, to said town of Nelsonville, Ohio, and this defendant relying upon said representations, signed said paper, and without said representations, he would not have signed the same, as this defendant then, and still believes, that a railroad from Cincinnati to Nelsonville, would be beneficial to the public, along the line of said railroad, and would be profitable to the stockholders; while he believed then and still believes, that a railroad from Kingston to Adelphi, a distance of only ten and one third miles, would be of no benefit to this defendant, nor is the same any benefit to the public at large.
    “ And further answering, and for his eighth defense, this defendant sajrs: That the charter of the said The Cincinnati, Hocking Valley & Huntington Railway Company called for a good, substantial, first-class railroad, and when this defendant made Ms conditional subscription to said railway company he made it for the purpose of building a good, substantial, first-class railroad as aforesaid, such a railroad as would be called a good, substantial, first-class railroad by men experienced in railroad matters, and in building railroads ; and no other. And this defendant avers, and says : That the said conditional subscription does not become absolute and binding, until such good, substantial, first-class railroad is built, arid is built of first-class material. And this defendant avers, and says: That such good, substantial, first-class railroad has not been built, nor has such good, substantial, first-class railroad been built from Kingston to Adelphi, nor has it been built of first-class material. This defendant therefore says, that said railway company has not complied with all its conditions, and that said conditional subscription is not binding.”
    Amended Answer.
    “ And now coinés the defendant and amends his answer herein, and by way of amendment to be inserted at the end of the first defense in said original answer, he says, that the sale, conveyance and abandonment of all that part of said proposed railroad as lies southwest of the town of Hillsboro as aforesaid, works and will work a great and lasting injury to this defendant, and is prejudicial to the stockholders in said railroad company east of the Scioto Valley railroad.
    “ And he further amends his answer herein and by way of amendment to be inserted at the end of the third defense, he says : that the sale, transfer and conveyance of that part of said proposed railroad southwest of Plillsboro as aforesaid, by said company, works and will work a great and lasting injury to this defendant, and is prejudicial to a large number of the stockholders in said railroad company and particularly to this defendant.
    “ And he further amends his answer herein and by way of amendment thereto to be inserted at the end of the fourth defense in said original answer he says that the sale, assignment and transfer and abandonment of that part of said railroad west of Hillsboro and the abandonment of that part of said proposed railroad east of said town of Hillsboro to the Scioto river, works and will work a great and lasting injury to this defendant, and is prejudicial to a large number of the stockholders in said railroad company and particularly so to this defendant.
    [The following abstract of arguments contains the points made by counsel in the case of Lesher v. Karshner, immediately following this case. Reporter.]
    “ And further answering, he amends his original answer herein, and by way of amendment thereto to be inserted at the end of the seventh defense, he says: that since the signing of said conditional paper by this defendant, the said railroad company has sold, transferred, assigned and conveyed all of its proposed said railroad west of Hillsboro, and that said sale, transfer, assignment and conveyance of its said road, works and will work-a great and lasting injury to this defendant, and is prejudicial to nearly all the stockholders, and is particularly prejudicial to this defendant.”
    To each defense set forth in the answer the plaintiff demurred. The court sustained the demurrer, and, as the record shows, the defendant not desiring to further plead, judgment was rendered against him for the amount claimed in the petition. This judgment was affirmed by the circuit court, and the present proceeding is prosecuted here to reverse those judgments.

      P. O. Smith and Milt Morris, for plaintiff in error.
    1. A conditional subscription can only be received by a railroad company, in Ohio, when it has obtained- 20 per cent, of bona fide subscriptions to its capital stock, and has expended 10 per cent, of its capital stock in its construction. Sec. 8298, Revised Statutes.
    2. Corporations have only such powers as the act creating them confers, and are confined to those expressly granted, and such incidental powers as are necessary for the purpose of carrying into effect powers specifically conferred. Strauss v. Ins. Co., 5 Ohio St. 59; Railroad Co. v. Curtis, 80 N. Y. 219; Morning Star v. Selby, 15 Ohio 345; Thomas v. Railway Co., 101 U. S. 71.

      3. The sale rendered the' conditional subscription of the plaintiff in error, void. Railroad Co. v. Croswell, 5 Hill 583; 40 Am. Dec. 354, and note; Nugent v. Supervisors, 19 Wall, 248; Thompson v. Guion, 5 Jones (N. C.), 113; 3 U S. Dig. 636, sec. 403.
    4. The company having sold a part of its road, and having thus lost its identity, neither the company nor the plaintiff can deliver the stock subscribed, and hence the conditional subscription is not payable. James v. Railway Co., 2 Disney 261; Bridge Co. v. Sargent, 1 C. S. C. Rep. 354; Railway Co. v. Hinsdale, 45 Ohio St. 556; Clearwater v. Meridith, 1 Wall. 40; Dorris v. Sweeney, 60 N. Y. 463; Cook on Stockholders, secs. 493, 500.
    5. The promise was to make a gift, when the road was completed, and a gift cannot be enforced. Simons v. Savings Society, 31 Ohio St. 461; Carter v. Buckingham, 1 Handy 395; 1 Wait’s A. & D. 104.
    6. An alteration in the charter of a railroad company, releases the subscribers to the capital stock of such company, who do not consent to such change, and an abandonment of a portion of the line of said railroad will also release such subscribers to the capital stock of said company, and especially conditional subscribers. Cook on S. & S., sec. 501 ; Zabriskie v. Ry. Co., 18 N. J. Eq. 178; Railway Co. v. Crosswell, 5 Hill 383; Railway v. Hinsdale, 45 Ohio St. 556; Bank v. City of Charlotte, 85 N. C. 433; Rev. Stats., secs. 3272-3298; Railway Co. v. Fisher, 39 Ohio St. 330; Supervisors v. Railway Co., 21 Ills. 338; 3 U. S. Dig., 634; Bool v. Railway, 10 Ind. 93; Burrows v. Smith, 10 N. Y. 550; Plank Road Co. v. Arndt, 31 Pa. St. 317; Railway Co. v. Ellliott, 10 Ohio St. 57; Turnpike Co. v. Locke, 8 Mass. 384.

      Lawrence T. Neal and John O. FJntrekin, for defendant in error.
    1. The declarations, and representations, made, in a general way, to the public, by the officers and agents of the company, cannot affect the liability of Armstrong to pay his subscription according to his agreement. Such speeches and representations were, at most, mere expressions of an existing intention, which was liable to be changed, and could-constitute no defense. McAllister v. Railway Co., 15 Ind. 11.
    2. The sale of a part of its road, by the company, does not release ' Armstrong from the payment of his subscription. The failure to complete the entire line, does not defeat the right of recovery. Cook on Stockholders, sees. 189, 190; Dorman v. Railway Co., 7 Fla. 265-281; Railway Co. v. Gifford, 87 N. Y. 294; 14 Ind., 205; Bish v. Bradford, 17 Ind. 490. Morgan County v. Thomas, 76 Ill. 120, 141; Railway Co. v. Bailey, 18 Ohio St. 208; McMillen v. Railroad Co., 15 B. Mon. 235. The sale was authorized by the statute, Secs. 3409 to 3412, Rev. Stats.
    3. The subscription is not affected by the assignment of it, by the company, in part payment for the construction of the road. Downie v. Hoover, 12 Wis. 174; Same v. White, Id. 176; Bank v. Heirs, Id. 512; Morris v. Cheney, 51 Ills. 452; Smith v. Hollette, 34 Ind. 519.
    4. The change of route, as shown, does not release the subscription. Rev. Stats., secs. 3272, 3275; Jewett v. Railway, 34 Ohio St. 601; Railway Co. v. Winchester, 13 Allen 29; Railway Co. v. Dudley, 14 N. Y. 336; Redfield on Railroads, 198; Waterman on Corporations, sec. 190; Turnpike Co. v. Brush, 10 Ohio 115; Canal Co. v. Webb, 9 Ohio 136; Barnet v. Railway Co., 13 Ills. 504; Railway Co. v. Wilson, 22 Conn. 435.
    5. Conditional subscriptions to the stock of a railroad are valid, by the common law of all of the states. Cook on Stockholders, sec. 82; Pierce on Railroads, 56 to 64; Potter on Corporations, sec. 240; Waterman on Corporations, secs. 175, 179; Railway Co. v. Dunn, 39 Me. 587; Chamberlain v. Railway Co., 15 Ohio St. 225-247; Railway Co. v. Smith, 15 Ohio St. 328; Railway Co. v. Stout, 26 Ohio St. 241-257; Emmitt v. Railway Co., 31 Ohio St. 23; sec. 3298 Rev. Stat.; Potter’s Dwarris on Statutes, 68; 1 Kent’s Com., 505; Shaw v. Railroad, 101 U. S. 557; Cook on Stockholders, see. 78; Railroad Co. v. Leavell, 16 B. Mon. 365.
    6. Armstrong is estopped to deny the validity of his subscription. The company has fully performed the agreement ■on its part; he has had the benefit of such performance, and will not be permitted to repudiate his contract and retain and enjoy such benefit. Hays v. Gas Co., 29 Ohio St. 340; Larwell v. H. F. S. Society, 49 Ohio St. 285; Whitney Arms Co. v. Barlow, 63 N. Y. 62; Bank v. Mathews, 98 U. S. 629; Pierce on Railroads, 516-517; Sedgwick on Stat. and Const. Construction, 73; Pollock on Contracts, 97 note ; Morawetz on Corporations, secs. 100 to 108,1 ed.; Same, 2d ed., secs. 689 to 699; Hagerman v. Building Association, 25 Ohio St. 200; Hydraulic Co. v. Railway Co., 29 Ohio St. 341; Goff v. Flesher, 33 Ohio St. 107.
    7. Armstrong did not stipulate in his agreement for “ a good, substantial, first class railroad,” one “built of first class material.” He cannot, therefore, avail himself of the fact that such a road has not been built, as a defense. Pierce on Railroads, 63; Waterman on Corporations, 22; O'Neal v. King, 3 Jones (N. C.), 517; Freeman v. Matlock, 67 Ind. 99; Ogden v. Kirby, 79 Ills. 555.
    8. The agreement of Lesher was made.in consideration of the advantages and benefits to accrue to him from the building of a certain part of the road, and in consideration of like subscriptions of other persons, for the same purpose. It was accepted by the company, and Karshner, in consideration of, and induced by it, made his contract and performed it; and having performed it on the faith of the subscription of Lesher, we have the common case of a promise to pay, on one side, and work done in consideration thereof on the other. “ The consideration for a promise may well be contingent, that is, it may consist in the doing of something by the promisee which he need not do unless he chooses, but, which being done by him, the contract is complete and the promise binding.” Pollock on Contracts, 160, 180, and notes; 3 Apr. & Eng. Ency. of Law, 847, and cases cited: Turnpike Co. v. Coy, 13 Ohio St. 92; Sperry v. Johnson, 11 Ohio 452; Gilmore v. Lewis, 12 Ohio 281; Miller v. McKenzie, 95 N. Y. 575; Morse v. Bellows, 7 N. H. 549; Cummings v. Gann, 52 Pa St. 484: Perkins v. Hadsell, 50 Ill. 216; Mathews v. Fitch, 22 Cal. 86; Train v. Gould, 5 Pick. 380; M. E. Church v. Kendall, 121 Mass. 528. Mutual interest of subscribers is a valid consideration. Trustees v. Stetson, 5 Pick. 508; George v. Harris, 4 N. H. 533; Society v. Perry, 6 N. H. 164; Watkins v. Eames, 9 Cush. 537; Underwood v. Waldron, 12 Mich. 73; Comstock v. Howd, 15 Mich. 237; Lathrop v. Knapp, 27 Wis. 214; Pierce v. Ruley, 5 Ind. 69; Stewart v. Hamilton College, 1 Comst. 581.
    9. Lesher, not having subscribed to. the capital stock of the company, but having made his as a donation, must rest his case on the question of consideration, or no consideration, for his promise and agreement. He cannot avail himself of the defenses of a subscriber to the capital stock.
   Williams J.

It is not urged here, that the petition does not state a cause of action. The complaint is, that the demurrer to the answer was sustained. The allegations of the petition are not controverted; but the plaintiff in error contends, that upon each of the following grounds, the averments of the answer are a sufficient defense to the action, viz.: 1. The instrument sued on, was procured by misrepresentation ; 2. The subscription was a conditional one which the railroad company was without corporate authority to receive ; 3. That it was an implied condition of the subscription, that a first-class road should be constructed between the termini called for in the charter, which condition was not performed ; 4. By the sale and abandonment by the company of parts of its road, the obligation of the subscription, if it were otherwise binding, was discharged, and 5. That the company so changed its charter as to divert the line of the road from one of the counties called for in its articles of incorporation, which operated to release the subscription.

The allegations of the answer on the subject of the misrepresentations, are contained in that paragraph numbered as the first defense, and are to the effect, that the agents of the company who obtained the subscription, gave it out in speeches, that the company intended to build the road it was incorporated to build, between the termini named in its articles of incorporation, and that it did not do so, but thereafter sold, conveyed and abandoned parts of the proposed road. It is not alleged that these speeches, or any representations, were fraudulently made; nor, that when made, there was not a bona fide intention to build the road as stated. The fact that the company was incorporated for the purpose of building the road, would naturally give rise to the presumption that it intended in good faith to build it according to the articles of incorporation, and, if any part of it was thereafter sold or abandoned, that subsequent exigencies or circumstances made it necessary, or advisable to do so. Then, these speeches related entirely to the future purpose and intention of the company. That false statements made by an authorized agent of a corporation in regard to the past or present status of the corporate enterprise, or of material matters connected therewith, whereby subscriptions are obtained, may be fraudulent, and defeat a recovery thereon, is not disputed. But representations which are matters of opinion in regard to the future prospects or purposes of the corporation, are not such fraudulent representations as constitute a defense to an action on a subscription, though the subscriber believed and relied on them. It is said by Mr. Cook, in his work on stock and stockholders, that the essential allegations in a defense to a subscription on the ground that it was obtained by fraud, are, “ that a material misrepresentation of a question of fact was made, setting out fully the fact misrepresented; that the person making the misrepresentation thereby bound the corporation ; that the subscriber was thereby induced to make his subscription ; and that upon discovery of the fraud, he immediately disaffirmed the contract.” Cook on Stock and Stockholders, Section 165.

The established rule in this state is, that “ One seeking to be relieved from a contract, on the ground of alleged false representations, must show that there were, in fact, false representations of a material fact, upon which he relied, and upon which, from the circumstances of the case, he had a right to rely, and, in doing - so, was misled to his injury.” Insurance Co. v. Reed, 38 Ohio St. 283. Representations in regard to a future intention, purpose or expectation, do not come within the rule, or afford ground for relief from a contract induced by them, especially where it is not shown, that the representations were fraudulently made for the purpose of deceiving.

The principal question in the case, arises upon the second defense, the substance of which is, that the defendant’s subscription is a conditional one, and, at the time it was made, the capital stock of the company had been increased, and actual bona fide subscriptions to the amount of twenty per centum of the capital stock, so increased, had not then been obtained, nor had ten per centum of such capital stock been expended in the construction of the road.

The claim is, that the railroad company had no corporate power to receive the defendant’s subscription, because it had not then obtained unconditional subscriptions to the amount of twenty per centum of its capital stock, or expended ten per centum of its authorized capital in the construction of its road. This claim is based upon section 8298 of the Revised Statutes which provides: “ The directors of a company which has expended in the construction of its road ten per centum of its authorized capital, and has obtained actual bona fide subscriptions to its capital stock to the amount of at least twenty per centum thereof, may receive subscriptions to its capital stock, payable in such instalments, dependent upon the completion of the whole or any part of its road so that cars may pass over the same, as its directors may deem expedient, and upon full payment thereof may issue certificates of stock therefor.”

Unless restrained by statute, corporations may receive conditional subscriptions to their stock at any time after their actual incorporation. “A conditional subscription to stock, taken and accepted by a corporation after its incorporation, is legal by the common law of all the states.” Cook on Stock and Stockholders, section 82. And it is said by White, J., in Ashtabula and New Lisbon R. R. Co. v. Smith, 15 Ohio St. 336, that, “Except in New York, conditional subscriptions, in the absence of a special prohibition so far as we have observed, have been sustained, as authorized, and not in conflict with public policy.”

No special prohibition is found in section 3298, against a railroad corporation receiving conditional subscriptions. The most that can be claimed from the section is, that, it having specified the eases in which such conditional subscriptions may be received, there is a want of authority to receive them otherwise than as therein provided. If this be admitted, does it necessarily follow that a subscription not in all respects in conformity to the statute may not be enforced ? “ The rule seems well established,” says Boynton, J., in Hays v. Galena Gaslight and Coal Co., 29 Ohio St. 340, “ that where a contract has been executedand fully performed, on the part either of the corporation or of the other contracting party, neither will be permitted to insist that the contract and such performance by one party were not within the cdrporate power of the company.”

Generally, after the acceptance by the corporation, of a conditional subscription which it is authorized to take, the subscriber is bound until performance of the condition, to await such performance; he cannot withdraw the subscription unless the performance is unreasonably delayed. Cook on Stock and Stockholders, section 84. But a conditional subscription, which is not a present valid contract, may be a continuing offer to subscribe upon the specified conditions, and when those conditions are performed, if the offer be not before withdrawn, it may then become an absolute and unconditional subscription. The difference between the two classes of subscriptions is, that the former, becomes binding when accepted, and the latter, only when the condition is performed, and it may, at any time before then, be withdrawn. If not so withdrawn, it becomes an absolute subscription. In Ashtabula & New Lisbon R. R. Co. v. Smith, supra, White, J., speaking of the conditional subscription to the capital stock cif the railroad company involved in that ease, and the effect of the performance of the conditions by the company, said: “ The subscription was designed as, and was in fact, a standing or continuing proposition, upon which'the plaintiff was not expected to act, until the time arrived for the final location of its road. Having been delivered for' this purpose, and acted on by the plaintiff, after the condition has been complied with, it became an absolute subscription.” In the case óf The Mansfield Coldwater & Lake Michigan R. R. Co. v. Stout, 26 Ohio St. 254, it is said by McIlvaine, J., “ There has been some contention whether the instrument sued on, is to be regarded as a subscription of stock, subject to a condition precedent, or as a mere offer to subscribe, when the conditions named might be performed. This question we deem to be immaterial in this case, as there is no pretense that the offer,. if a mere offer it be, was at any time withdrawn. The important question is, have the conditions been performed?”

The conditions expressed in the defendant’s subscription, it is alleged in the petition, were fully performed, and upon this, no issue is raised by the answer. If it be conceded, therefore, that the instrument executed by the defendant, was not, by reason of the provisions of the statute, a valid and binding subscription to the capital stock when subscribed and delivered to the company, it was, at least, a continuing offer to pay the amount stipulated, upon the performance of the conditions therein specified; and, while the defendant, at any time before such performance, might have withdrawn his offer, he did not, and the conditions having been fully complied with by the railroad company, he cannot now, we think, defend against the payment of the subscription on the ground that the company was without corporate authority to receive it. It is not important, whether the subscription is enforced on the ground that on the performance of the conditions it became an unconditional subscription, or on the ground of estoppel. The legal result is the same.

'Was it one of the conditions of defendant’s subscription that the company should build a first class railroad?

In that part of the answer, numbered as the eighth defense, it is alleged that the charter of the company called for a “ first class railroad,” and the defendant made his subscription for the purpose of building “ a good, substantial, first class railroad,” and that his subscription “ does not become absolute and binding until such good, substantial, first class railroad is built of first class material; ” and, such road not having been built, the company has, he claims, failed to comply with all the conditions of hjs subscription.

It is not contended that any such condition is expressed in the subscription. In fact it is not. Nor, do we think it is implied. It appears from the petition, that the company was incorporated under the laws of Ohio, in 1877. It therefore had no special charter, but became a corporation under the general laws of the state, on the subject. Our attention has not been called to any provision of those laws making it obligatory upon a railroad company incorporated thereunder, to make its road conform to the standard contended for by the defendant, before it can enforce subscriptions to its capital stock. We do not question, but that the defendant might have expressly stipulated in his subscription that it should be payable only upon the construction of such road, but he has not done so.

The further claim is made, that the railroad company by the sale and abandonment of parts of its road, discharged the defendant from the obligation of the subscription.

The allegations of the answer upon this subject, are, in-substance, that after the defendant’s subscription was obtained, the company sold and conveyed to another railroad company that part of its road west of Hillsboro; and that another portion of the road, east of Hillsboro, has been practically abandoned. It is not alleged that the sale was illegal or irregular; and, in the absence of any averment to the contrary, it will be presumed that the sale was in conformity to law.

Section 3409, of the Revised Statutes, authorizes a railroad “company, owning in whole or in part any road-bed and right of way for a railroad within this state, including those acquired by purchase at judicial sale, which, from lack of means, or other cause, is unable to complete the construction of its proposed line of road thereon,” to “sell, assign, and transfer the same, or any part thereof, to any other company incorporated under the laws of this state, with authority to construct and operate a railroad over the same route, or any part thereof, which transfer shall include all work done upon such line of road, together with all material furnished therefor, not exempted by the terms of the grant, with all rights, privileges, and easements, as fully as the same are or may be possessed by the company making the same, and shall to the same extent, vest the title of and the right to enjoy the same in such grantee.” And section 3412 provides, “ No transfer shall be made against the dissent of any stockholder, expressly declared and filed in writing at such meeting, with out the guaranty of the company grantee that it will cause to be issued to him certificates of its capital stock, equal in amount to his pro rata interest as a stockholder of the grantor, in the amount for which the property is sold.”

, These statutes were in force when the defendant executed the instrument which is the subject of the suit, and when its conditions were performed by the company, and, according to the decisions of this court, they entered into and became part of the agreement. Jewett v. Railway Co., 34 Ohio St. 601. That the company might exercise its right under the statute to sell all or part of its road, must be held to have been within the contemplation of the parties at the time the subscription was made. Mansfield, Coldwater & Lake Michigan R. R. Co. v. Stout, 26 Ohio St. 241.

It is not averred that the defendant objected to the sale or transfer, or that he filed any writing, expressing his dissent therefrom. If the sale occurred before the liability of the defendant became fixed by the performance of the conditions of his subscription, so that he could not, as a stockholder, file in writing his dissent as provided by the statute, he might, for that reason, or without assigning any reason, have withdrawn his offer to make the payment he promised, and thus avoided all liability. He chose, however, not to withdraw it on that, or any other account; but waited until the company fully complied with the conditions of his promise, and he must be regarded as acquiescing in such sale; as much so, as if he were a stockholder and entered no dissent.

In regard to the abandonment, it is well settled, that neither the failure of a railroad company to complete its road, or the non-user of a part of it, constitutes ■ a defense to a suit on a subscription to its capital stock, unless such failure or non-user, violates some condition to that effect, expressed in the subscription. It is laid down in Cook on Stock and Stockholders, section 189, as the settled doctrine, that, “a subscriber cannot defeat the subscription by the fact that the corporation has not completed and has no intention of completing the road in its entirety;” and, “an abandonment of part of the enterprise,” the same author says, “ is no defense.” Neither the sale nor the abandonment effected a change in the identity of the company to which the defendant subscribed. The case is unlike Railway Co. v. Hinsdale, 45 Ohio St. 556, where it was held, that a conditional subscription made to one railroad company, could not be enforced bjr another to which the defendant did not subscribe. The latter company could not make the subscriber its debtor, by performing the conditions of the subscription.

The only remaining question in the case, which we deem it necessary to notice is, whether the change, which the answer alleges the railroad company made in the line of its road, released the defendant from the obligation of his subscription. It was held in Nugent v. The Supervisors, 19 Wall. 241, that “ although a subscriber for stock in a company is released from his subscription by a subsequent alteration of the organization, or purpose of the company, this is only where such alteration is a fundamental one, and when, in addition, it is not provided for, or contemplated by either the charter itself or the general laws of the state.”

Section 3275, of the Revised Statutes of this state, which was in force when the defendant subscribed to the stock of the company, and which thus became a part of the contract, expressly authorizes a railroad company, the line of whose road has not been finally located in whole or in part, when found necessary by it in order to avoid dangerous or difficult curves or grades, or dangerous or unsubstantial grounds.or foundations or for other reasonable cause,'to pass through a county not named in the articles of incorporation, or to avoid passing into or through a county named therein, other than a county in which a terminus of- the road has been-fixed by the articles of incorporation, by making and 'filing with the secretary of state a certificate declaring such necessity and the cause thereof. The next section, 3276, provides that “when the line of any road is, under the preceding section, diverted from a county named in the, articles of incorporation, the company shall be liable in damages, if any be caused by such change or diversion, to any person owning land in such county, and all persons who subscribed' to the capital stock of the company on the line of that part of the road so changed shall be released from all obligations to pay their subscriptions.”

It will be noticed, that by this section, which defines the rights of subscribers to the capital stock of a railroad company which under the provisions of the preceding section has changed the line of its road, such subscribers are released from the obligations of their subscriptions, only when the road is diverted from a county named in the articles of incorporation. The allegations of the answer upon this subject are, that the “ company did on or about the 15th day of March, 1883, take the necessary legal steps to, and did alter its charter by providing for the extension of its railroad through the county of Pickaway.” It thus appears from these allegations, that the only change made by the company in the line of its road, was to extend it through a county not named in the articles of incorporation, and that the steps by which the change was effected, were legal. The answer contains no averment that the line of the road was diverted from any county named in the articles of incorporation, and in this, it fails to state a defense. *

The answer is also defective, if .the change was made under section 3272, of the Revised Statutes. That section provides, “ A company may, by a resolution adopted by a majority of its board of directors, at a meeting thereof duly called for the purpose, with the written consent of three fourths in interest of its stockholders, change the line, or any part thereof, and either of the proposed termini, of its road; but no change shall be made which will involve the abandonment of any part of the road, either partly or completely constructed; and any subscription of stock made upon the faith of the location of such road, or a part thereof, upon any line abandoned by such change, shall be canceled at the written request of the subscriber not having consented thereto, filed with the secretary or other chief officer of the companjq within six months after such change.” It is no where alleged in the answer, that the defendant requested the cancellation of his subcription, as provided in this section of the statutes, nor that his subscription was made upon the faith of the location of any part of the road on any line abandoned by the change. On the contrary, it is averred in the first paragraph of the answer, that the subscription was “based upon the completion of such parts of said proposed road as lie between the Scioto Valley railroad and the town of Adelphi in Ross county, Ohio,” which parts of the road, it is admitted, were completed. We are of opinion there was no error in sustaining the demurrer to the answer, and

The judgment is affirmed<


source: Caselaw Access Project

author: Williams, J.

license: Public Domain

text:
    Lesher v. Karshner.

      JRailroads — Subscriptions to capital stock of — Conditional contract of subscription construed.

    The defendant subscribed to the capital stock of a railroad company, and thereby promised to pay the company the amount of his subscription “ when the track of the road should be laid ready for the running of cars”1 between certain specified points. The subscription contained the further provision that the amount should be payable when the road was completed “on the within terms,” provided the location did not - run through the defendant’s lands; “paid as donation.” The subscription was made for the purpose of aiding in the construction of the company’s road, and in consideration of the advantages thatmight accrue to the defendant therefrom, and especially from the construction of that part of the road between the points specified in the subscription, as well as in consideration of like subscriptions for that purpose by others. The railroad company completed the road between the specified points, ready for the running of cars, and the road was not located on the defendant’s land. Held: 1. The subscription was not a mere promise to make a gift to the company; the subscriber’s promise to pay was supported by a sufficient consideration.
    2. The subscription became due and payable when the road was completed between the designated points; it was not necessary that the company should complete its entire road before it could enforce the payment of the subscription.
    (Decided April 29, 1890.)
    Error to the Circuit Court of Ross county.
    The case is stated in the opinion.

      JP. O. Smith and Milt Morris, for plaintiff in error.

      Lawrence T. Neal and John 0. JSntrelcin, for defendant in error.

   Williams, J.

The action below was upon the following subscription to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company:

“ We°, the undersigned, agree to pay the number of shares annexed to our respective names of fifty dollars each to the capital stock of The Cincinnati, Hocking Valley & Huntington Railway Company, and we hereby bind ourselves, our heirs, executors or administrators to pay the same to the authorized agent of said company; but it is expressly provided as follows: That no part of said subscription shall be due until a railroad track shall be laid ready for the running of cars from some point on the Scioto Valley railroad to a point at or near Adelphi in Ross county, and when said railroad track is so laid, we, the’undersigned, mutually agree that we will each, on demand, pay the amounts set opposite our respective names to such authorized agent of said company, in full payment for such shares of capital stock. Names.—October, 1881. — No. of shares. — Amohnt.-1 agree to pay five hundred dollars (1500), payable when the road is completed on the within terms, provided the location does not run through mjr land; paid as donation. Lewis R. Lesher.”

The only questions in this case, not decided in the preceding case of Armstrong v. Karshner, arise upon the following clause of the agreement, viz.: “ I agree to pay five hundred dollars, payable when the road is completed on the within terms, provided the location does not run through my land ; paid as donation.”

What is claimed from this provision is, 1 — That it gives to the subscription the legal character of a promise to make a gift, which cannot be enforced ; and 2 — That the amount of the subscription does not become due and payable until the company completes its entire road.

That a mere promise to give, creates no legal obligation, is admitted; but, it is denied that the words “ paid as donation,” in the clause referred to, have the effect contended for.

It is alleged in the petition, and not controverted by the answer, that the defendant made the subscription “ for the purpose of aiding in the construction of said railroad and in consideration of the advantages and benefits to accrue to him therefrom, and especially from the building of that part of said road from the Scioto Valley railroad in said county of Ross to a point at or near the village of Adelphi in said county, w;hich said part of said road is between said Scioto river and said town of Nelsonville, as well as in consideration of like subscriptions and agreements, of other persons for said purpose executed and delivered to said railroad company.” Besides, the subscription stipulates that when a railroad track is laid ready for running cars from some point on the Scioto Valley Railroad to a point at or near Adelphi, the defendant will pay the amount named in the subscription ; and the petition alleges that upon the faith of the subscription, and of others of like character, the railroad was so constructed between the designated points, ready for running cars, and the same is being operated by the running of trains over it. carrying freight and passengers. These averments are undenied, and we are of opinion that a sufficient consideration for the defendant’s promise is shown by the uncontroverted allegations of the petition. The purpose of inserting the words, “ paid as donation,” in the instrument, probably was to avoid the liability of a stockholder. Whether that result is accomplished, is not a question in the case.

The language, “ when the road is completed on the within terms,” obviously refers to some other provision of the agreement on the same subject. By a previous provision, the subscriber agrees to pay the amount of his subscription when the track of the road is laid ready for the running of cars between two specified points.

Applying to the subscription the familiar rule, that in the construction of a contract regard must be had to all its parts, and if it admits of two interpretations, one of which will make them consistent and the other contradictory, the former will be adopted, little difficulty is encountered in arriving at the true meaning of the language referred to.

The stipulation that the amount is to be payable “ when the*road is completed on the within terms,” must refer to that part of the road upon the completion of which the defendant had already agreed to pay. This makes the instrument consistent with itself, while if the construction contended for by^the defendant should prevail, it would not only be contradictory, but so self-repugnant as to render one of its provisions inoperative. There would be two distinct and different periods fixed for payment, and effect could not be given to both.

Judgment affirmed.


author: Mtnshall, O. J.

text:
    Bank v. Johnson et al.

      Mortgages — Execution of — Application of statutes to — Legal and equitable character of — When made to a partnership in firm name, a valid lien.

    1. The statutes of the state regulating the mode of signing, sealing, acknowledging and recording mortgages, are limited in their application to these particulars; the legal or equitable effect of the instrument and its contents are unaffected thereby; and the rights of the parties and of third persons subsequently dealing with the land are to be determined by the general rules of law and equity, applicable to the subject in analogous cases.
    2. In order to mortgage land as security for a debt, it is not necessary, in all cases, to clothe the creditor with the legal title; it is sufficient if the intent to pledge the land as a security clearly appears from the instrument, and the instrument is duly executed and recorded, as required by statute.
    3. A mortgage upon real estate, made by the owner to a partnership in its firm name, to secure an indebtedness to it, duly executed and recorded, as required by statute, constitutes a valid lien upon the property in favor of the firm as a security for the indebtedness to it.
    (Decided April 29, 1889.)
    Ebbob to tbe Circuit Court of Clinton county.

      Yayle, Moos Sg Me Cabe (with wbom was Henry B. Bindley), for plaintiff in error.
    The sole question in this case is this : Was the mortgage, • taken for the partners jointly in their firm name, “ The New Vienna Bank,” a valid mortgage lien, from its date, upon the. premises described in it, either at law or in equity ?

    In Ohio a mortgage is regarded as a mere security. Swartz v. Leist, 13 Ohio St. 419; Winters v. Bank, 33 Ohio St. 253; sec. 4, Kent’s Com. p. 160; Perkins v. Dibble, 10 Ohio, 433; Robinson v. Fitch, 26 Ohio St. 659, 663; Lindeman v. Lindeman, 36 Ohio St. 9; Johnson v. Nelson, 3 W. L. M. 306. A chattel mortgage made by a firm is good. If property can be so conveyed, it can be so received. An alien may take a mortgage. Hughs v. Edwards, 9 Wheat. 489; Jones op Mortgages, see. 132. A mortgage passes to the personal representative, on the death of the mortgagee. Lewin on Trusts (Scott’s Ed.), p. 15. A partnership may exist in the purchase and sale of real estate. Ludlow’s Heirs v. Cooper, 4 Ohio St. 1; 13 Ohio, 552; Bank v. Sawyer, 38 Ohio St. 339, 343 ; and dower cannot be claimed in such lands until the partnership debts are paid. Sumner v. Hampson, 8 Ohio 328; Johns v. Johns, 1 Ohio St. 357; Bank v. Sawyer, 38 Ohio St. 343. So, a grant “ to the heirs at law of a deceased person,” is good. Shaw v. Loud, 12 Mass. 446; Sheppard’s Touchstone, ch. 12, p. 235. A legacy to a firm is a legacy to those who compose it at the time the legacy vests. Cbllyer on Part., 6 ed., notes by Wood, vol. 1, p. 288, note 2 to sec. 158; Stubs v. Sargon, 2 Keen, 255, and 3 M. & Cr. 507.
    The taking of a mortgage on land is but acquiring a chose in action — merely a personal demand — by the mortgagee, an incident only to his mortgage debt, and certainly may be acquired in the firm name, the same as other partnership property ; for a mortgage, whether before or after condition broken, on the death of the mortgagee, goes to his administrator, and not to his heir, as an incident of the mortgage debt.

      Hayes f Swaim, and Mills f VanPelt, for defendants in error.
    1. A partnership, as such, cannot hold the legal title to real estate in its firm name, unless the name of some person appear in the style of the firm, who may hold as trustee. Parsons on Partnership, 366; 3 Washburn on Real Property, 263; Hornbeck v. Westbrook, 9 Johns. 75; Coles v. Coles, 15 Johns. 159; Jackson v. Corey, 8 Johns. 385; Winter v. Stock, 29 Cal. 407; Natchez v. Minor, 17 Miss. 544; Sloane v. McConnahy, 4 Ohio 169; Stambaugh v. Smith, 23 Ohio St. 584; Story on Partnership, Secs. 90 to 100; note 3 to sec. 921, and authorities cited; Morrison v. Mendenhall, 18 Minn. 232; Collyer on Partnership, sec. 133 et seq. and notes; Dyer v. Clark, 5 Mete. 562; Howard v. Priest, 5 Mete. 582.

      2. In Ohio, a mortgagee of real estate is regarded as holding the legal title during the continuance of the mortgage, and, after condition broken, he may recover possession by an action in ejectment. Jones on Mortgages, 4 ed., vol. 1, from page 1 to 59; Bank v. Carpenter's Adm’r, 7 Ohio, pt. 1, 70; Cowles v. Raguet, 14 Ohio, 55, 57; Raguet v. Roll, 7 Ohio, pt. 2, 70; Williams v. Enlebrecht, 37 Ohio St. 385; Bailey v. Smith, 14 Ohio St. 409; Hibbs v. Ins. Co., 40 Ohio St. 559.
   Mtnshall, O. J.

Joshua W. Johnson being indebted to the New Vienna Bank in the sum of $1,628, execubed, December 30, 1885, a mortgage to the bank to secure the same, which was duly filed for record the following day. The bank was a partnership doing business in that name. The mortgage covered two tracts of land, one containing 71 and a fraction, and the other 38 and a fraction, acres, and purported to convey “ all the estate, title and interest ” of said Johnson in and to said lands “ to the said New Vienna Bank, its successors and assigns forever,” without other words of limitation. Afterwards, in the month of January, 1886, Johnson and his son Edward entered into an agreement for an exchange, by which the father agreed to convey to the son the 38 acre tract covered by the mortgage, and the son agreed to convey to the father 26 acres, owned by himself. In accordance with this agreement the son at once conveyed the 26 acres owned b}r him to his father, who, on the 4th of February, following, mortgaged it to one Morris to secure an indebtedness. But the father by reason of sickness, as is alleged, failed to convey the 38 acre tract to the son, as by the terms of the agreement he was bound in equity to do. •On the day following the mortgage to Morris, he executed a mortgage to one Woolard to secure an indebtedness of $1,995, on the other tract of 71 acres covered by the mortgage to the bank. And afterward on June 24, 1886, being in failing circumstances, he made an assignment of all his property for the benefit of his creditors to Edwin Arthur which was duly filed on the same day in the probate court The assignee, under the order of the probate court, being about to sell the 38 acre tract with the other lands assigned to him, Edward, the son, commenced an action in the common pleas to enjoin the sale, and compel the conveyance of the tract to him under the agreement for an exchange which had been executed on his part by the conveyance of the 26 acres to his father; he also averring that he had taken possession •of the 38 acres, at the time of the exchange, and had continued in the possession and occupation of it as his own ever since, whereby all parties had notice of his rights.

All parties in interest were finally made parties to the suit and answered setting up their rights. To the answer and cross-petition of the bank, setting up its mortgage and claiming a lien prior to all others upon the 38 and 71 acre tracts covered by it, the plaintiff and the administrator of Woolard (he having died) demurred, claiming that the mortgage having been executed to the bank by name, instead of to the members composing the firm, was of no avail as a security, and that, therefore, the cross-petition of the bank failed to state facts entitling it to any relief.

The case having been heard and determined by the rendition of judgment in the common pleas, was appealed to the circuit court; where, upon a renewal of the demurrers, they were sustained, and the answer and cross-petition of the bank dismissed. The action of the circuit court in this regard is assigned for error here. Hence the only question to be decided upon the record is, whether the mortgage executed to the New Vienna Bank can be made available to it as a lien on the land as a security in its favor against the claim of the plaintiff and those of the other mortgagees, all of whom are subsequent in time. It is claimed that it cannot for the reason that the bank is not a legal entity; that it is simply a partnership of certain natural persons doing business in that name, and incapable of holding the legal title to lands in their firm name. Conceding this to be true, does it follow that the instrument is not available to the bank as a lien on the land to the extent of the debt intended by the maker to be secured thereby ? If so, it must be for the reason, that, in order to create a lien on laird as security for a debt, the legal title must, in all cases, be transferred to the person intended to be secured, or, that such a lien cannot exist independent of the legal title. But this is not the ease. There are what are termed equitable as well as legal mortgages. The distinction is that a legal dr common -law mortgage is a conveyance of the land accompanied by a condition contained either in the deed itself, or in a separate instrument executed at the same time. And, to quote the language of Mr. Jones, which has been frequently quoted with approval by the courts., “ In addition to these formal instruments which are properly entitled to the designation of mortgages, deeds and contracts which are wanting in one or both of these characteristics of a common law mortgage are often used by parties for the purpose of pledging real property, or. some interest in it, as security for a debt or obligation, and with the intention that they shall have effect as mortgages.” These kinds of mortgages, are, as he says, “ as many as there are varieties of ways in which parties may contract for security by pledging some interest in lands.” And he adds, “ whatever the form of the contract may be, if it is intended thereby to create a security, it is an equitable mortgage.” Jones on Mortgages, §162. We are not unmindful of the fact that, under the decisions that have been made in this state, giving a construction to our statutes regulating the execution and recording of mortgages, many instruments that would be treated elsewhere as equitable mortgages, could have no effect given them here as against third persons, whether they had notice of their existence or not. But these statutes and the construction placed upon them, do not go beyond what they require as to the signing, acknowledgment and recording of the instrument. They prescribe no requisites as to the contents of the instrument- — -as to how lands shall be charged as a security, or the intent manifested. The character of the instrument in this regard and its effect, are left to be determined by the application of the general principles of law and equity on the subject. So that any instrument that would, by the application of these princi pies, be regarded as constituting a lien on land as against third persons with notice, will have the same effect under our recording statutes, where it has been duly executed and recorded. Strang v. Beach, 11 Ohio St. 283; Hurd v. Robinson, Id. 232, and Dodd v. Bartholomew, 44 Ohio St. 171. By the record of the instrument it becomes notice to others of the equitable as well as legal rights of the parties. It may as against third persons be corrected to give effect to the intent apparent upon the face of the instrument, or the courts may,, in a proceeding to enforce it, regard that as done which ought to have been done, and treat the instrument as if corrected. Pomeroy, Eq., § 1235.

A few instances may be selected to illustrate the doctrine and show its application to this case. An instrument which does not transfer the legal estate has been held to operate as an equitable transfer of it in the nature of a mortgage. Thus, a mortgage to certain executors from which the word “heirs,” creating a fee, was omitted, and the word “successors ” used instead, was held to be an equitable mortgage in fee, and was reformed in a proceeding to foreclose it, against a subsequent mortgage of the same land with notice. Gale v. Morris, 29 N. J. Eq. 222. And so, in Brown v. National Bank, 44 Ohio St. 269, effect wass given to an instrument as a mortgage in fee, although words of inheritance were not used in it. The instrument had been executed in the state of Indiana upon lands in this state, and had therefore to be construed by the laws of this state. By it the debtor simply mortgaged and warranted his land to his creditor as a security for the debt, with a provision for foreclosure • in case of non-payment. The purpose to secure the debt by a mortgage upon the land was apparent from the instrument, and of this intention all persons, dealing with the land, were held to have notice by the record of the instrument. See the opinion by Owen, C. J., p. 276. And so in California it is held, that the words “ we mortgage the property,” accompanied by a provision for the sale of it, upon non-payment of money thus secured, are sufficient to create a mortgage. De Leon v. Higuera, 15 Cal. 483, and Barroilhet v. Battelle, 7 Cal. 450. So, too, when by the terms of his deed, a grantor reserves a lien on the land as a security for the unpaid purchase money, it operates as a mortgage, and the record of the deed is constructive notice to all others of his rights. Pomeroy Eq.,'Sec. 1255. But the lien so secured is independent of the legal title, as that passes by the deed to the purchaser, who is said to hold in trust for the grantor until the purchase money has been paid. For many other similar instances see Jones on Mortgages, Secs. 163-171. It is true that some of these could not, for reasons before stated, be made available as liens in this state against third persons.

Holding the legal title may, in some cases, be of much advantage to the mortgagee, as thereby, on condition broken, he may recover the land and hold it until his debt is satisfied. And this may be said to be the distinguishing feature of a common law mortgage. It is, however, seldom resorted to — the remedy by foreclosure and sale (and which may be had in all cases), being more generally adopted. In a proceeding by foreclosure it is not material where the legal title resides. A sale is required in all cases, (Section 5316 Revised Statutes,) and the purchaser takes thereby all the interest of both the mortgagor and mortgagee in the land. As the passing of the legal title is not necessary to affect land as a security for a debt, no reason can be assigned why the debtor may not create, and the creditor accept, such a security, provided compliance is had with the statutes regulating the execution and recording of similar instruments. Such form of security certainly contravenes no rule of law or public policy, and is in harmony with the purpose and intention of the parties in all cases where, the whole object is, on the one hand to give, and on the other to obtain, a security.

The execution of a mortgage in the usual form is now generally regarded as only a security, and not as a conveyance. Like the debt it secures, it is treated throughout as a chose in action. That a partnership may make contracts in its firm name is a matter of elementary law. It may make a note in its firm name, or may accept one payable to itself It may be formed to deal in land, and may make valid contracts therefor. And if the firm cannot hold the legal title, the vendor holds it in trust for the firm. Sherry v. Gilmen, 58 Wis. 324, 332. In this case the court say: “ There does not seem to be any reason for holding that a partnership, in making a purchase of real estate for the benefit of the firm, may not do so in the same manner that they make other purchases, viz.: in the firm name.” A number of cases are cited, where it has been held that a general description of the grantee is sufficient to support the deed — as the “ heirs ” or “ children ” of a given person, on the principle that, that is certain which can be made certain, and therefore applicable to the members of a firm. See, also, Bates on Partnership, Sec. 296, and eases cited.

And it has been held in some cases that a conveyance to a firm is a conveyance to the members as tenants in common, who hold the title in trust for the firm. Jones v. Neal, 2 Pat. & H. (Va.) 339; Beaman v. Whitney, 20 Me. 413. That a partnership may acquire an equitable estate in real property is decided in Rammelsberg v. Mitchell, 29 Ohio St. 22, 52. Therefore, to say that a partnership cannot contract for an interest in land in its firm name as a security only, would be to establish an exception, with neither reason nor necessity for its existence. There are quite enough conflicting principles in the law, or what the Romans would have termed “inelegancies,” without adding to their number, in the absence of any controlling necessity for so doing.

The instrument, the validity of which is questioned in this case, was designed by both parties to be a mortgage. This is apparent on the face of it. The only objection made to it is, the incapacity of the partnership in its firm name to take and hold the legal title to real estate. But this is not material, for if it were so, then, as already shown, Johnson, the mortgagor, would hold the legal title in trust as a security for the firm. In such case there would be no need of a formal reformation, as it would be the duty of the court, m the exercise of its equity powers, to treat that as done which ought to have been done, and give effect to the instrument in a proceeding to enforce it, according to the priority of its record, by awarding to the bank a lien upon the land for the satisfaction of the amount due it.

The case of Hughes v. Edwards, 9 Wheaton 487, has a close analogy to this case. There by the laws of Kentucky an alien could not hold the title to lands in that state, and the mortgagees being subjects of Great Britain, objection was taken to the mortgage on this ground. But the court said: “ The objection is deprived of all its weight in.a- ease where the mortgagee, instead of seeking to obtain possession of the land, prays to have his debt paid, and the property pledged for its security sold, for the purpose of raising the money. Under this aspect the demand is, in reality, a personal one, the debt being considered as the principal, and the land merely as an incident; and, consequently, the alien-age of the mortgagee, if he is a friend, can, upon no principle of law or equity, be urged against him.”

In The Chicago Lumber Co. v. Ashworth, 26 Kan. 212, a mortgage, taken in the firm name of partners, was held to be a valid security. The court said : “ Ashworth was cognizant of the name and style under which the partners transacted their business, and executed'the mortgage to the Chicago Lumber Co. for the benefit of the partners composing the partnership transacting business in that name. The mortgage was therefore'taken in the name of the partnership ; hence there was an actual grantee in the mortgage, although such grantee was merely the name and style of the partnership; ” and the legal title was regarded as held in trust for the real grantees, the partners, which, as we have seen, is all that is necessary where a sale, and not the possession of the land, is sought, in proceedings to enforce the mortgage as a security.

The case of Stambaugh v. Smith, 23 Ohio St. 596, is not in point. The real question there was, not whether a firm could hold the title to a lease in its firm name, but whether it could be released by the firm in its own name, the legal title being not in it, but in a member in trust for it. It was held that it could not, for the very plain reason that the cestui que trust can, in no case, transfer the legal title. That can only be done by the trustee. The case does not decide, nor was it intended to decide, that a partnership may not hold a .lease in its firm name, so as to be protected in the enjoyment of it, according to the -intention of the parties. That it may hold the equitable title in fee simple was held in Rammelsberg v. Mitchell, supra.

We think the court erred in sustaining the demurrer to the answer and cross-petition of the bank.

Judgment reversed and cause remanded for further proceedings.


author: By the Cohrt.

text:
    Westlake v. Westlake et al.

      Chattel Mortgage executed by a partnership — When partners line in different counties, where tobe filed.

    A mortgage of goods and chattels, executed by the members of a partnernership, one of whom lives in the county where the property is situate, and the other in another county of this'state, upon property jointly owned by them, which is not accompanied by an immediate delivery and followed by an actual and continued possession of the things mortgaged, is void as against an assignee for the benefit of creditors of such mortgagors, subsequently appointed, unless, pursuant to section 4151, Revised Statutes, the mortgage, or a true copy thereof, be properly filed in the township where each of such mortgagors resides, notwithstanding the fact that such assignee had, at the time of the execution of the mortgage and of the assignment, full knowledge of tire execution and filing of the mortgage in the township where one of said mortgagors resided, and where the goods and chattels were situate.
    (Decided May 6, 1890.)
    Error to the Circuit Court of Trumbull county.

      Tuttle ¿f* Mllius, for plaintiff in error.
    <7. A. Harrington and W. Hyde, for defendants in error.
    On the 27th day of May, 1884, and for a time- prior, Charles Westlake and William A. Westlake were jointly engaged in operating a rolling mill, located at Warren, Trumbull county, Ohio, under the firm-name and style of C. Westlake & Co. On the date above named they jointly executed a chattel mortgage to the plaintiff in error on certain iron then situate in the rolling mill, which was jointly owned by them, and was a part of the proceeds of their joint business. The mortgage was signed by each of the mortgagors in his own name, and did not purport, on its face, to be executed by them as partners. At the time, and for a long time prior and afterward, one of the mortgagors resided at Waxi’en, and the other at Youngstown, in Mahoning county. On the succeeding day the mortgage was filed with the recorder of Trumbull county, whose office was in the city and township of Warrexi, but was not filed, nor was a copy thereof, in the township or city of Youngstown.
    On the 23d of June following, the mortgagors, being insolvent, made a deed of assignment for the benefit of creditors, executed aixd delivered at Warren, to one J. C. Carter, who, in the execution of his trust, took possession of the iron covered by the mortgage, and sold it. It was never in the possession of the inortgagee. At the date of the mortgage, and of its filing, as well as at the time of the acceptance of the deed of assignment, Carter had full knowledge of the execution and filing of the chattel mortgage.
   By the Cohrt.

Section 4150, Revised Statutes, provides that a mortage of goods which is not accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, subsequent purchasers and mortgagees in good faith, unless the mortgage, or a true copy thereof, be deposited as directed by the next section. It is provided in the next section that the mortgage shall be deposited with the clerk of the township where the mortgagor resides at the time of the execution thei’eof, if a resident of the state, and if not such residexxt, then with the clerk of the township in which the property is situated at the time of the execution of the instrument; but when the mortgagee is a resident of a town ship in which the office of county recorder is kept, the mortgage shall be deposited with the county recorder.

That the term “ mortgagor,” in this section, means each mortgagor, there can be no serious question. This is the natural import of the language used, and is necessary to carry out the purpose of the statute. Not only is this construction authorized by section 23, Revised Statutes, Avhere, as a rule of interpretation, Avorcls in the plural are to be held to include the singular, and vice versa, but with this construction the statute is plain, and its requirements easily complied Avith. The opposite interpretation would lead to uncertainty as to w'hich mortgagor, in a case like the present, was referred to, and consequent difficulty as to ascertaining the proper place for deposit. Nor can the place where the property is situated ansAver the requirement, because the statute itself, as above quoted, clraAvs a sharp distinction between the place Avhere the property iqight be at the time of the execution of the instrument, and the place of the mortgagor’s residence. We are of opinion that Avhen a chattel mortgage is executed by several resident mortgagors, the statute requires that the mortgage, or a true copy, be filed in the township where the mortgagors at the time respectively reside, as essential to the validity of the mortgage as against creditors, and in this Ave but affirm Avhat has been before held by this court. Aultman v. Guy, 41 Ohio St. 598; Rich v. Roberts, 48 Me. 548; Stewart v. Platt, 101 U. S. 731.

If invalid as against creditors, a chattel mortgage is equally invalid as against an assignee for the benefit of creditors. Hanes v. Tiffany, 25 Ohio St. 549. Thé decision in this ease was placed, not upon the ground that the assignee was a subsequent purchaser in good faith, but on the ground that the rights of creditors could be asserted through an assignee for their benefit, as they could have been by judgment and execution against the property. It is said in Blandy v. Benedict, 42 Ohio St. 299, that “ Every right which the creditors might have asserted against the property before the assignment, the assignee is bound to secure for their benefit after the assignment.” We believe the rule to be as stated, and from it it follows that the knowledge of the assignee as to the mortgage when it was filed and when the assignment was accepted by him, cannot affect the question. He stands for the creditors, and they are not prejudiced by knowledge on his part which might have affected him had he been a subsequent purchaser. The opposite view would enable failing debtors to make good defects in mortgages, by making their assignment to persons having notice of the defective instrument, and so defeat the policy of the law.

Judgment affirmed.


author: By the Count.

text:
    Johnson v. Railway Company.

      Adjournment of court — Close of term — Bill of exceptions.

    Where the journal of a court of common pleas shows a regular adjournment from day to day, up to a day certain of the term, but no other adjournment thereafter during such term, except an entry of adjournment sine die on the last named day, which entry was, at the next succeeding term, by a nunc pro tunc order, stricken from the journal, as having been made through the mistake of the clerk, and further shows, that no judge was present, and no business was transacted in the court after such day certain, until the commencement of the next succeeding term, the adjourned term should be deemed to have closed on such day certain of the term as shown by the journal, and a bill of exceptions should be allowed, signed and filed within thirty days after the last named day.
    (Decided May 6, 1890.)
    Erbob to the Circuit Court of Madison county.

      George B. Cannon, and Harrison, Olds ¿f* Marsh, for plaint iffs in error.

      Charles Darlington, for defendant in error.
   By the Count.

In the court of common pleas of Madison county, at the February term, 1888, the plaintiff in error, Luther Johnson, as administrator of Andrew C. Martin, deceased, recovered a judgment against the defendant in error, The Pittsburgh, Cincinnati & St. Louis Railway Company, which judgment was rendered and entered May 26, 1888, that being one of the days of the February term. The railroad company took a bill of exceptions, which was allowed, signed and filed in the common pleas court on June 27,1888, a day of the May term of that court. On May 26, 1888, before noon, the judge of the court of common pleas directed that the sheriff adjourn the court without day. The sheriff not being present, the judge directed the clerk of the court to enter such adjournment on the journal of the court. But the prosecuting attorney, that he might attend to certain matters on the criminal calendar that were not disposed of, requested that the term of the court should not be finally closed until the afternoon of May 26, 1888, whereupon, the judge directed the clerk not to make the entry of final adjournment, and stated that he would be back at two o’clock that afternoon, to dispose of such matters. The arrangement and understanding that the judge was to be back at two o’clock was forgotten by him, and he did not return to the court room at that time, or at any other time after the last mentioned day, until May 29, 1888, when the succeeding May term of the court was open. No other judge of the court of common pleas was present in the court house after May 26, 1888, nor was the court opened, or any business done therein until the opening of the May term of the court on May 29, 1888. There was an entry made on the journal purporting to adjourn the court without day on May 26, 1888, but such entry was made thereon on May 28th, by the clerk, and was done without the direction or order of the court, and without any formal adjournment by the sheriff.

Afterwards, and during the May term, 1888, to wit: on June 29, 1888, the railroad company filed its motion for an order mmo pro tune, to strike from the journal the entry purporting upon its face, and on the face of the journal, to have been made May 26, 1888, adjourning the February term on that date, because of the mistake on the part of the clerk in entering the same. And on July 2, 1888, that motion was heard by the court of common pleas, and the court thereupon, to wit: at the May term, 1888, made and caused to be entered upon its journal the following order, to wit: “ It is therefore ordered and directed that the said record be so far corrected as to show no adjournment of said court without day on said 26th day of May, 1888, or any other time between said date and the 29th day of May, 1888, when the succeeding term commenced, and that said entry go for naught, and that said journal stand the same as though no entry of adjournment had been entered thereon.”

Held : That the circuit court erred in deciding as a matter of law, that, the February term, 1888, of the court of common pleas, did not finally end on the 26th day of May, 1888, but continued open by operation of law until the commencement of the next succeeding term thereof on the 29th day of May, 1888, and that, the bill of exceptions which was allowed, signed and filed in the court of common pleas on the 27th day of June, 1888, was allowed, signed and filed within thirty days from the close of the February term, 1888.

Judgment of the circuit court reversed, and that of the court of common pleas affirmed.