author: White, J. McIlvaine, J. Johnson, J.

text:
    Richard Brown v. William J. Hitchcock.
    1. The individual or personal liability of stockholders, under section 79 of the Corporation Act of May 1, 1852 (1 S. & C. 810); also under section 8 of April 10, 1861, regulating street railroad companies (S. & S. 136), attaches in favor of creditors at the time the debt is contracted or the liability incurred by the corporation.
    2. After such liability attacbcs to a stockholder, it is not discharged by the subsequent assignment or transfer of his stock; but the successive assignees or holders, by accepting the stock, and the benefits arising therefrom, impliedly undertake to indemnify or discharge the assignor from the liability which attached to him as stockholder while he held the stock.
    3. In a suit by creditors to enforce such liability against the stockholders of an insolvent corporation, the existing stockholders are severally chargeable with the payment of such liability.
    4. If, by reason of insolvency, the amount due from any stockholder is not collectible, the assignors of his stock up to the time the liability attached may be charged with the deficiency.

      Error to the Court of Common Pleas of Mahoning County. Reserved in the District Court.
    Charles H. Kjlgour v. John J. Hooker.
    Error to the Superior Court of Cincinnati.
    Jonathan H. Winters, et al., v. Gabrial Harman, et al.'
    . Error to the District Court of Montgomery County.
    The cáse of Brown v. Mitohcooh is an action brought by a creditor of a manufacturing corporation, against the corporation and its stockholders, to subject the statutory liabilities of the stockholders to the payment of a judgment previously recovered by Drown against the corporation.
    The amended petition, having alleged the recovery of the judgment against the corporation and the insolvency of the corporation, further says that at the time of the recovery of the judgment against the corporation and of the beginning of the action in which'the amended petition was filed, Hitchcock and all the other persons named as defendants were stockholders and the only stockholders of the manufacturing company; that Hitchcock purchased his stock after the indebtedness on which judgment was rendered was incurred by the corporation, but before said judgment was rendered; and that he purchased said stock well knowing of such indebtedness and subject thereto, and with the understanding and agreement that said stock was chargeable with indebtedness, and that said indebtedness was for property and machinery held and owned by said company at the time said Hitchcock purchased said stock and became a member of said corporation. It also states that no other indebtedness than the said judgment of plaintiff exists against the corporation.
    The defendant, Hitchcock, demurred on the ground : first, that facts sufficient to constitute a cause of action against him ■were not stated, and second, that there was a defect of parties defendant. This demurrer was sustained, because it w'as not alleged that the defendants were stockholders at the time the debt was contracted for which the action was brought, and judgment was rendered in favor of defendant, Hitchcock. On error in the district court, the cause was reserved for the decision of this court.
    The Kilgour case was an action by Charles H. Kilgour against John J. Hooker and others, the object of which was to enforce the statutory liability of the stockholders of the Pendleton Street Railroad Company for the payment of the debts of said company. The petition alleged that the plaintiff was both a creditor of said company and a stockholder therein. That all the defendants, except one (The Franklin Bank), were also stockholders in said company. That the plaintiff had obtained a judgment against the company at the February term, 1868, of the superior court, and that at the same term the Franklin Bank had also recovered a judgment against said company. That the company’s property had all been sold under proceedings in another suit, leaving nothing for the payment of the claims of plaintiff and the Franklin Bank and other claims not in judgment, and that the company was wholly insolvent. That each of said stockholders was liable to the plaintiff and the other creditors of said company pro rata with the other stockholders to such amounts as were unpaid on their stock, and in a sum of money equal to the amount of his stock ■ — or to such proportion thereof as might bo required to pay all the debts of said company. The petition prayed that an account be taken of the debts of the company, and the stockholders’ liability be ascertained, and that assessments on them be made to pay the debts.
    Judgment was rendered against each of the stockholders, among whom was Hooker, for the amount of the assessment on his stock, necessary to pay the debts.
    Hooker riled a petition in error in the general term, where the judgment against him was reversed on the sole ground that the petition did not state that he was a stockholder when the debts of the company were contracted.
    The case of Winters v. Ilarman was an action by Harman and others against Winters and others to enforce the statutory liabilities of the stockholders of the Oakwood Street Railroad Cornpany, a corporation organized under the laws of Ohio, and all who had been stockholders of said corporation.
    The petition alleges the recovery of a judgment against the corporation, the insolvency of the corporation, and the transfer of certain shares of stock, &c., and prays for an account and assessment, &c. Among the defendants were the plaintiffs in error1, Jonathan IT. Winters, John GL .Ziesler, and Benjamin Kuhns, all of whom made sales and transfers of their stock long prior to the suit and the insolvency of the company, but while there were some debts, and which, with the debts incurred subsequently, existed at the time of said suit.
    Winters, in his amended answer, in substance says, that the company, at the time of his transfer, was indebted in but a small amount, while the assets were many times the amount of tlic liabilities; that Isaac ITaas, to whom be made sale and transfer, was then responsible — in fact, reputed wealthy; that the transfer was for a full consideration, and not made with a view to escapo liability, tho stock being passed in the ordinary course of business ; and further, that the road was long thereafter sold for $10,000, an amount many times greater thnn the debts tliat existed against tlie company at the time of his said sale of stock.
    Tho facts in the Ziesler ¿mcl Kuhns amended answers are much the same, — the transfers being at a still later period. Ziesler and Kuhns each state that the transfers were made in the ordinary course of business; that E. A. Parrott, the transferee, was then and is now responsible and able to pay tho full amount of tho statutory liability on the stock so by him purchased.
    The court sustained demurrers to these defenses. Tho court held that the said plaintiffs in error were bound to contribute their portion for the payment of the debts that existed at tho time of the transfers, and that the transferees were only hound to contribute for the payment of the debts incurred subsequent to tho transfers. The decision of the common pleas was affirmed by tho district court.
    It is here sought to obtain a reversal of these judgments.

      II. IT. Moses, for plaintiff in error,
    in the case of Brown v. Hitchcock, claimed that by virtue of the statute 1 S. & C. 310, passed for the purpose of carrying out and applying the provisions of article 13 section 3 of the constitution of Ohio, the creditors of a company include all persons who have claims against the company, regardless of the time the debts were contracted. That all stockholders shall be deemed and held liable (to the extent mentioned and limited by the statute) for the purpose of securing all creditors. Wright v. McCormick, 17 Ohio St. 86 ; Umsted v. Buskirk, 17 Ohio St. 113; Middletown Bank v. Magill, 5 Conn. 63 ; Gilman v. Bank of Cincinnati, 8 Ohio, 62; Curtis v. Harlow, 12 Met. (Mass.) 3; Holyoke Bank v. Burnham, 11 Cush. (Mass.) 183 ; Story v. Furnham, 25 N. Y. 214.
    The cases from 32 N. H. 388; 2 Hill, 265; 35 Cal. 155, ehed by counsel for defendant, arose under statutes entirely different from ours. They made the stockholders liable as partners, or as though there was no act of incorporation.

      Sidney Sbrong, for defendant in error, Hitchcock:
    For the defendant in error I insist that no sufficient cause of action against him is stated in the amended j)etition, which alleges that he did not become a stockholder until after the corporation ineuned the indebtedness on which the action is brought, and, therefore, that the common pleas properly sustained his demurrer to the amended petition. If Hitchcock is liable on the facts stated in the amended petition, his liability must exist either, first, because it is law, when stock in a manufacturing corporation organized under the statute in question is sold and transferred after a debt is incurred by the company, and before judgment is rendered against the corporation on the debt, that both the seller and the purchaser of the stock are liable, under the expressed limitation of the statute, for the payment of the debt; or, second, because the individual liability in such a ease can be enforced under the statute against the assignee, and not against the assignor of the stock.
    1. As to whether, in such case, both the buyer and seller of stock are individually liable under the statute, see Larrabee
      v. Baldwin, 35 Cal. 155 ; Moss v. Oakley, 2 Hill, 265; Chesley v. Pierce, 32 N. H. 388 ; Middleton Bank v. Magill, 5 Conn. 38 ; Hooker v. Kilgour, 2 C. S. C. R. 350.
    II. When stock has been sold and transferred after a debt is incurred by the corporation and before judgment is recovered thereon against the corporation, is the stockholder who owns the stock at the date of the judgment and when suit is brought to enforce the individual liability, liable and alone individually liable for such indebtedness, so far as regards the stock which he owns t If the assignee in such a case is alone individually liable on the assigned stock it must be either, first, because the liability does not attach when the debt is made by the corporation, or second, Because the liability, though attaching when the debt is incurred, follows the assigned stock, and the assignor upon making the assignment ceases to be liable and the assignee by the same act becomes liable. Of these two propositions in their order:
    1. For the defendant in error I submit that under the statute the individual liability of the stockholder to any creditor of the corporation arises when the debt is incurred, and then attaches to the stockholders who then own the stock. Wright v. McCormick, 17 Ohio St. 86 ; Umsted v. Buskirk, 17 Ohio St. 113.
    2. If the individual liability provided by the constitution and the law attaches when the obligation of the corporation arises, I maintain that this liability is not assignable and does not pass from the seller to the buyer of the stock. If the creditor, by the transaction in which the obligation of the coloration arises, obtains for his security the individual liability of those who then own the stock, his property in the individual liability of those stockholders is as inviolable as his property in the primary obligation of the company. He has a vested interest both in the primary obligation of the corporation and in the conditional liability-of those who then own the stock. The acts of others cannot deprive him of either or any of his vested rights. It would be, I submit with deference, an '■ act of violence to so construe this statute, enacted for the creditor’s benefit, as to permit him thus to be robbed. The obvious intent of the statute is to afford a real security to creditors. Under it the credit may fairly be said to be given to the corporation and to the individual liability of the present stockholders. The statute warrants the creditor in making his contract, to do so in full reliance on the continuing liability of those who then own the stock. Ilis so-called security becomes a delusion and a snare if those who are bound for his security can of their own will release themselves from the obligation and transfer it to others. Counsel may say that a transfer of stock made for .the purpose of avoiding the liability would be held fraudulent. It would always bo difficult to show the .intent of the transfer, and, be-. sides, the creditor may suffer from assignments made in good faith as well as from those which are fraudulent. The vice inherent in the doctrine that the liability follows the assigned stock is, that without his consent the creditor can thus be deprived of that in exchange for which he parted with' his property, and be .compelled to accept in its place such other security as may graciously be accorded him.

      Healy <& Bram/nan, with whom were Matthews, Ramsey <& Matthews, for plaintiff in error in the case of Kilgour v. Hooker;

    I. The statutory liability of a stockholder to the amount of one hundred per cent, over and above the amount of his stock, is not dependent on his being a stockholder when the debt was contracted, but is a burden which attaches to the stock into whosoever hands it passes, except in the case of fraudulent transfers to irresponsible persons for the purpose of avoiding liability. McCullough v. Moss, 5 Denio, 567 ; Story v. Furman, 25 N. Y. 214; 1 Comst. 47; Stanley v. Stanley, 21 Me. 191; Curtis v. Harlow, 12 Metc. 3; Child v. Coffin, 17 Mass. 64; Holyoke Bank v. Burnham, 11 Cush. 183; Bond v. Appleton, 8 Mass. 472; Allen v. Montgomery, 11 Ala. 437; Webster v. Upton, 1 Otto, 65 ; Dauchy v. Brown, 24 Vt. 197; Middletown Bank v. Magill, 5 Conn. 28.
    The question as to what stockholders are to be held upon the liability imposed by statute, has given rise to conflicting deeisions in the different states,- but we think that where it has been held that only those persons are liable who were stockholders at the time the debt was contracted, it will be found that the decision was based on the peculiar phraseology of the statute of the particular state, and also that these cases are, in general, like those in New York, cases where the statute makes the stockholders individually liable for the debt of the corporation, so that the creditor can sue the stockholder directly, just as if it were a private debt.

      GolUns <& Herron, for defendant in error, Hooker:
    The statute being enacted 'for the protection of creditors, should be given that construction which will best protect them. "When they give the credit, they are entitled to know who are the stockholders, and to consider how much security there is in the individual liability of the then stockholders. If, after the credit is given, the parties then stockholders can evade their liability by getting their stock off to persons of doubtful responsibility, the protection to the stockholders would decrease, just as the prospect of insolvency to the corporation increased. Savage, C. J., Allen v. Sewell, 2 Wend. 327; Pierce Am. R. R., ch. 20, p. 510; Moss v. Oakley, 2 Hill, 265 ; Adderly v. Storm, 6 Hill, 226; Tracy v. Yates, 18 Barb. 152 ; Judson v. Rossie Galena Co., 9 Paige, 598; Corning v. McCullough, 1 Comst. 117; Stanley v. Stanley, 13 Shepley, 191; Southmayd v. Camp, 3 Conn. 52; Hosmer, C. J., Middletown Bk. v. Magill, 5 Conn. 44-53 ; Deming v. Bull, 10 Conn. 407; Marcy v. Clark, 17 Mass. 330; Chesley v. Pierce, 32 N. H. 388. Story v. Furman, 25 N. Y. 214, does not overrule .the previous line of decisions in that state, but turns upon the peculiar phraseology of the charter of the Woolgrowers’ Manufacturing Company.
    The chief authority relied upon by the other side is the warm opinion of Judge Chapman, in a divided court, in seeking to relieve a hard case. 5 Conn. 28.
    In a case in Massachusetts where the statute permitted it, the court, looking to the protection of the creditors, held not; only those who were members when the debts were contracted, but also those who were members when the debt was sought to be enforced. Deming v. Bull, 10 Conn. 409 ; Curtis v. Harlow, 12 Metc. 3 ; Bond v. Appleton, 8 Mass. 472.

      Gvmeliel c& Bowe, for plaintiffs in error, in the case of , Winters v. Harman, claimed that by the assignment of error the following questions were raised.
    1st. Are transferrers of stock bound (to the extent of an amount equal to the stock sold) for the obligations of a company made while they were stockholders — their said stock having been sold in the ordinary course of business, and while the company was largely solvent, although, subsequent to the sale, the company became insolvent, with the debts made prior to the transfer remaining unpaid ?
    2d. Do the liabilities follow the stock, if sales are made in good faith? In other words, do t/ransferees take the stock subject to the existing liabilities ?
    3d. Do not creditors in dealing with corporated companies, under our laws, consent to transfers in good faith, being made with the understanding that in case of insolvency of the company, they will look alone to the corporation assets and the holders of stock at the time of the failure ?
    The questions here raised are of the greatest importance. It is the accepted law among all classes that a transfer of stock, in good faith, rids the seller of all liability. If, however, the law itself be as defendants in error claim, capital will no longer purchase, or loan upon, or deal in, stocks. Corporation enterprises would soon come to an end if there were no safety in transfers, and owners of stocks should be compelled to remain in companies out of self-protection until every dollar óf debt is canceled.
    Debt is incident to all corporations, and sales of stock arc made with reference to that fact; yet, under the erroneous holding herein of the courts below, each transfer of stock creates a responsibility that hangs over the transferrer, although he is powerless to protect himself, and although the creditor has the right and power to enforce his claim while collectible against the corporation, yet does' not. ‘

    The following cases support our view: Story v. Furman, 25 N. Y. 214; Cushing v. Shepherd, 4 Barb. 113 ; Dibble v. Rogers, 13 Wend. 536-541; Empire City Bank Case, 8 Abb. Pr. 192 ; Eames v. Wheeler, 19 Pick. 442; Force v. Dahlonga, 22 Ga. 86.
    We claim then that assignors in good faith are not liable', and that the words “ each stockholder ” in section 3 article 43 of the constitution, and “' all stockholders ” in the statute 1 S. & C. 310, evidently mean the stockholders at the time the liability is sought to be enforced. Curtis v. Harlow, 12 Met. 3; 25 N. Y. 221; Ex parte Sutton, 14 Jur. 566, 966 ; Ex parte Croxton, 11 Law & Eq. 227; Cape's case, 19 Law & Eq. 1; 5 Conn. 28 ; 8 Mass. 472; 24 Vt. 197.

      Alfred A. Thomas, for defendant in error,
    Harman, claimed hat under our constitutional provision, and the statute authorizing this corporation, those stockholders are liable to a creditor on the statutory liability who were stockholders when tlie debt was contracted. Const. art. 13, § 3 ; 1 S. & C. 134; 1 Sup. Ct. R. 236; 2 Id. 350; 2 Wend. 343; 2 Hill, 68; 9 Paige, 598 ; 1 N. Y. 5, 56; 10 N. Y. 459 ; 14 Wis. 701; 17 Mass. 333 ; 46 N. H. 374; and cases cited by counsel in the other cases.
   White, J.

The statutory liability of stockholders involved in the case of Brown v. Hitchcock, arises under section 78 of the act of May 1, 1852, to provide for the creation and regulation of incorporated companies (S. & C. 310); the liability in the other two eases arises under section 8 of the act of April 10, 1861, to provide for and regulate street railroad companies (S. & S. 136).

The first question arising for determination is, when does such liability attach in favor of creditors ?

It was held, in Wright v. McCormack (17 Ohio St. 86), that the liability “ is not a primary resource or fund for the payment of the debts of the corporation; but is collateral and conditional to the principal obligation which rests on the corporation, and is to be resorted to by the creditors only in case of the insolvency of the corporation, or where payment cannot be enforced by ordinary process.”

The question whether the individual or personal liability of stockholders attached in favor of creditors at the time the debt was contracted, or the' liability incurred by the corporation, did not arise in that case. Nor would it be a material inquiry in any case where there was no change in the stockholders from the time of the incurring of the liability by the corporation, tq the enforcement of the personal liability of the stockholders.

The conditional character of the liability spoken of in the ease referred to has reference to the condition to which its enforcement by creditors is subject, and is not intended to in-r dicate that its taking effect as an obligation in favor of creditors is conditional or contingent. The condition to which the liability is subject is, that it is not available to creditors, as a security, until they are unable to obtain payment of theii? demands from the corporation. ¡

The question now is, when does this individual or personal-liability of stockholders to creditors, as a security, in addition, to the liability of the corporation, take effect í not, when may it be resorted to by creditors to obtain payment of their, demands ? ;

. The constitution, in providing for the creation of corpora^ tions by the general assembly, prescribes, as a condition tq, their creation, that the creditors of such corporations, in addition to the liability of the corporation, shall be secured by the individual liability of the stockholders. The constitutional provision is as follows :• — “ Dues from corporations shall be se-; cured by such individual liability of the stockholders, and other^ means, as may be prescribed by law; but in all cases, each, stockholder shall be liable, over and above the stock by him ois her owned, and any amount unpaid thereon, to a further ¡sumí at least equal in amount to such stock.” Art. 13, § 3. , ,

The corporation act of May 1, 1852, above referred to,- was; the first act passed on the subject of corporations aftqr the-adoption of the constitution. Section 78, as amended .April, 17, 1854, was intended to carry the constitutional provisino into operation. The section is as follows: “ All stockholders of any railroad, turnpike or plank-road, magnetic telegraph or bridge company, or any joint-stock company organized under the provisions of this act, shall be deemed and held liable to an amount equal to their stock subscribed, in addition to said stock, for the pwrpose of seorwring the creditors of such company, and the trustees or directors of pvery society or association incorporated under section 66 of this act, shall be deemed and held individually liabl&for all debts contracted by them, for their respective societies or associations.” S. & C. 310 ; 4 Curwen, 2582.

Under these provisions, it seems to us that the security furnished by the stockholder’s liability, in addition to that of the corporation, attaches in favor of creditors at the time the debt is contracted or the liability incui'red by the corporation.

, The coiporation itself is a mere legal entity, existing only in legal contemplation, and is created lor the convenience and benefit of the stockholders. All its dealings are for and on their account. It can contract no debts except under the authority, express or implied, of the stockholders, and through their corporate agents. Our constitution and laws therefore make it an essential condition to persons thus availing themselves of the instrumentality of a corporation for the transaction of business that the security of their personal liability shall attach to and attend all corporate liabilities.

In speaking of this liability of stockholders, in Corning v. McCullough (1 Comst. 47, 55), the court say: “ It is a liability which every stockholder must be understood to assume and take upon himself and to be under to those who deal with the company. Dealers contract with the corporation on the faith of that security for the performance of the contract. The credit they give is giveir, and they trust, as well to the personal liability of the stockholders, as to the responsibility of the corporation for the fulfillment of the engagement; and each stockholder incurs that liability to the creditor the moment the contract of such creditor with the company is consummated.” *And again, on p.'54 it is said: It is virtually and in effect a liability upon a contract, and tbe mutual agreement of tbe parties ; not indeed in form an express personal contract, but an agreement of equally binding obligation, consequent upon and resulting from the acts and admissions or implied assent of tbe parties.”

Tbe same principle is laid down by tbe supreme court of tbe United States. Hawthorne v. Calef, 2 Wall. 10. In this last ease it was held that a statute impairing tbe right of existing creditors to resort to such liability of stockholders for payment, was void, as impairing tbe obligation of a contract. See, also, Ochiltree v. Railroad Co., 21 Wall. 219, 252.

In Norris v. Wrenschall (34 Md. 496) and in Hager v. Cleveland (36 Md. 476), tbe stockholders’ liability to creditors is beld to be in tbe nature of a contract. The court say: “ It is a debt under tbe statute, due from tbe stockholder to tbe creditor, springing out of, and co-existent with, tbe contract between tbe corporation and tbe creditor.” And such being its nature, it is also said: “It is clear that no act by tbe stockholder, without tbe consent of the creditor, can exonerate him from tbe liability thus incurred.”

Whether tbe liability is joint and several, or several only, does not affect tbe question as to tbe time at which the-obligation attaches to the stockholder in favor of tbe creditor. In Corning v. McCullough, supra, tbe liability was joint and several ; but before tbe stockholder was liable to suit, there must have been an execution against tbe corporation returned unsatisfied.

In tbe Maryland cases tbe liability was limited and several . only.

Tbe language of tbe constitution is that “ m all eases each stockholder shall Toe liable, over and above the stock by him or her owned . . . to a further sum, at least equal in amount to such stockand of tbe statute that, 11 All stockholders . . . shall be deemed and beld liable to an amount equal to their stock subscribed, in addition to said stock,” &c.

To bold that this language embraces only those who may turn out to be stockholders at tbe winding up or settlement of tbe affairs of tbe corporation is, it seems to us, unwarranted. These provisions are intended to guard against improvidence in contracting debts on behalf of corporations, and to give security to creditors. These objects are best accomplished by attaching the liabilities to those under whose control the corporation is operating, and who' are known to those dealing with it as the persons interested. And certainly, when admissible, such a construction ought to be adopted as will promote these ends.

This view is further fortified by section 74 of the act of 1852, which provides for reducing the amount of the capital stock of corporations, and the nominal value of all the shares thereof; but provides “that the rights of creditors shall not be affected, or in anywise impaired, by the reduction of the capital stock of any such corporation.”

The act of April 3,1868, providing for the reduction of capital stock, contains in section 5 a similar provision, applicable to corporations not created under the act of 1852. S. & S. 242.

The next question is, whether, after the liability attaches to a stockholder, it is discharged by the subsequent assignment or transfer of his stock. "VYe think it is not. The liability, it is true, attaches to him in respect to his stock, but aftér it has attached' in favor of creditors it becomes as obligatory upon him personally as an express agreement. Ilis successive assignees or holders, by accepting the stock and all the rights and benefits arising therefrom, impliedly undertake to indemnify or discharge him from the liability which attached to him as a stockholder while he held the stock.

Each successive owner*, stands in his shoes as respects the stock and the liabilities growing out of it. This arises out of the nature of the property and the relations of the parties to it and to creditors, iu connection with the equitable principle that he who derives all the advantages ought to bear the burdens. For applications of this principle see Sutliff v. Atwood, 15 Ohio St. 186, 194; Johnson v. Underwood, 52 N. Y. 203, 211; Hodkinson v. Kelly, L. R. Eq. C. 6, 496, 503 ; Cape’s Ex’r’s. Case, 2 De Gex, M. & G. 562; In the Matter of the Mexican & S. A. Co., Giesewood & Smith’s Case, 4 De Gex & J. 544, 555.

• The expression, “ all stockholders,” must be regarded, in the absence of any legislative indication to the contrary, as including not only those who were such at the time the indebtedness was incurred, but all those who successively stand in their shoes in respect to the same stock.

The extent of the liability is not increased, whether the stockholder first liable retains the stock or transfers it; and the extent of -the security of the creditors, both as to the stock and the personal liability, is the same as it would have been if no-transfers had been made.

In a suit to enforce the liability against the stockholders of the insolvent corporation, the existing stockholders are severally chargeable with such liability. If, by reason of insolvency, the amount due from any stockholder is not collectible, the assignors of his stock successively, up to the time the liability attached, may be charged with the deficiency. Such suit, in this state, must be in equity, and prosecuted for the benefit of all the creditors. Umsted v. Buskirk, 17 Ohio St. 113. And where equity has jurisdiction, the liabilities of the parties are so marshaled as to first charge those who, as between themselves, are ultimately liable.

The constitution of the state of New York of 1816'(article 8), declares that all dues from corporations shall be secured by such individual liability of the corporators and othor moans as may be prescribed by law; and that stockholders in every banking association, issuing bank notes after January 1, 1850, shall be individually responsible to the amount of their respective shares for all its debts and liabilities contracted after that date. State Constitutions, part 2, 1363.

April 5, 1819, the legislature of that state passed an act to enforce this responsibility of stockholders in banking corporations. 1 Statutes at Large, 151. Section 3 of the act declares this responsibility to attach primarily to the person who is a stockholder at the time the debt or liability is contracted by the company; but also provides that it may be shifted entirely from him to another, declaring that lie shall be exonerated in respect to any stock which shall have been transferred on the books of the company (previous to any default in the payment of the debt or liability) to a resident of the state, of full age, in g.ood faith, and without any intent to evade such responsibility; and the assignee is made responsible to the extent of such stock in the same manner as if he had been the owner at the time of the contracting of the debt, with the same power to transfer this liability to another by like assignment.

Without a transfer, as therein provided, it is evident the liability of the stockholder who was such at the time of the contracting of the debt, would continue as to the creditor.

The constitutionality of this act was upheld in the case of the Empire Bank, 6 Abb. Pr. 385; s. c., 18 N. Y. 199.

The provision in our constitution as to individual liability, is modeled after that in the New York constitution, though somewhat varied in terms; and the principle of liability, as applied to banking corporations in New York, is declared by our constitution to apply to all corporations.

The constitution of California, adopted in 1819, in article 1 provides:

“ Section 32. Dues from corporations shall be secured by such individuad liability of the corporators and other means as may be prescribed by law.”

“ Sec. 36. Each stockholder of a corporation or joint stock association shall be individually and personally liable for his ¡proportion of all its debts and liabilities.” State Constitutions, pt. 1, 199.

It was held in French v. Techemaker, 21 Cal. 539, that section 36 was not self-executing, but required legislation to carry it into operation. In the subsequent case of Larrabee v. Baldwin, 35 Cal. 155, it rvas held that the legislature had power to limit the stockholders’ liability to his proportion of all the debts and liabilities of the company contracted or incurred during the time he was a stockholder*.

In England, under the joint stock companies act of 1862, a person who has ceased to bo a member for a year or upwards, prior to the commencement of winding up proceedings, is not liable to contribute to the payment of debts, nor is a past member liable to contribute with respect to a debt or liability contracted by the company after he ceased to be a member; and no past member can be required to contribute unless the existing members are unable to'pay. Wordsworth on Joint Stock Companies, 59, 60.

In the eases before us, the general assembly have not undertaken to prescribe the extent of the liability nor to regulate its enforcement, further than to adopt the minimum liability allowable by the constitution, leaving it to be enforced by the judiciary upon such legal and equitable principles as should be found appropriate to the subject.

It is said, in Umstead v. Buskirk, supra, that “ the right arising out of this liability is intended for the common and equal benefit of all the creditors; ” but no question there arose as to the liability of successive stockholders of the same stock, as between themselves or to creditors, and that language must be understood as limited to the case then before the court.

The language cf section 8, in the act regulating street railroad companies, is as follows: “ The stockholders of every company organized under this act, shall be liable for the dues of such company over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum equal in amount to such stock.”

This section does not substantially differ from that already considered in the corporation act of 1852, and. the liability of the stockholders to the creditors is the same in both.

In the case of Brown, the judgment is reversed, the demurrer to amended petition overruled, and cause remanded.

In the case of Kilgour, the judgment in general term is reversed and that of the special term is affirmed.

In the case of Winters et ak, the judgments are reversed and the cause remanded for marshaling of the liabilities of the stockholders according to the principles above stated.

McIlvaine, J.

I regret', that upon a question of so much importance, a difference of opinion should exist among the members of the court; but beiug unable to agree with the majority, I deem it a duty to state very briefly the grounds of my dissent.

, Admitting that section 3, article 13, of tlie constitution does not execute itself, it is nevertheless true that the statutes passed in pursuance thereof, and involved in the eases before us, do not pretend to vary the minimum liability of stockholders as fixed by the section of the constitution above named, and which reads as follows : Dues from corporations shall be secured by such individual liability of the stockholders and other means, as may be provided in law; but in all cases, each stockholder shall be liable, over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum at least equal in amount to such stock.” (

A majority of the court hold that the individual liability of the stockholder, provided for in the last clause quoted, attaches in favor of the creditor and against stockholders owning stock at the time credit is given. If this be so, the judgment in the case is clearly right; for I admit, that a stockholder, upon ■whom the constitution fixes the liability, cannot, by a transfer of his stock, discharge his liability to a creditor in whose favor it attached, although, as between successive owners of the same stock, the primary liability, by virtue of an implied contract obligation, may rest upon the owner who may be such at tliq winding up of the corporation. But, on the other hand, if the liability firci attaches to the stockholders, .who may be such at the time suit is brought to enforce it, I apprehend that no one will contend that prior owners of die stock, can, under such circumstances, where good faith has been observed, be held liable to creditors.

I also admit, that the security for dues from corporations thus provided, was intended to induce and does induce credit to be given to them; aud that in giving credit, an accurate knowledge of the solvency of the security offered is an important element. But, after all this is admitted, the question, whether knowledge of the solvency of the stockholders at the time credit is given to a corporation can be regarded as an element inducing the credit, depends entirely upon the solution of ithe main question: Does the constitution (or the statute), fix the liability in question upon such stockholders 1

■ In determining this main question, it must be assumed that the framers of the constitution had in mind the transferable nature of corporate stock, and every thing that is implied or understood therefrom; and it-must also be assumed, that persons giving credit to corporations u¡3on the faith of the individual liability of stockholders as provided by the constitution, must have in mind the same facts; so that the argument that a knowledge of the solvency of stockholders, at the time credit is given, induces such credit, although persuasive, is not conclusive as to the true interpretation of this clause of the constitution. Indeed, the persuasive power of the argument is almost, if not altogether, lost, when we admit the observance of good faith toward the creditor of the corporation in the making of transfers of stock. If such faith is kept, and it must be, I see no reason for apprehending that stockholders at the winding up of corporations will not be as responsible for such individual liability as the stockholders who were such at the time credit was given, whether the period between the dates be short or long. Between the date of contracting the debt and the enforcing of the individual liability, many years may intervene, and many successions in the ownership of stocks; yet, it seems to me, that no reason exists for believing, that, as a general rule, the stockholders at the latter date will be less able to respond, than those of the date of contracting the debt. .

In determining the true meaning of this provision in the constitution, it must be observed, that each stockholder, who is made liable at all, is made liable, over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum at least equal in amount to such stock. The language is,“but, in all cases, each stockholder shall be liable,” &c. There is no doubt about the meaning of these words. The meaning is, that whenever this liability attaches in favor of a creditor and against a stockholder, such stockholder is bound to the last farthing of the liability fixed, before such creditor shall lose a farthing of his claim.. A less liability on the part of the stockholder will not give such creditor .the security intended. By the decision of the court, as I understand it, the effect given to this provision is the same as if it read, “ but, in all cases, the successive owners -of each share of stock, in the aggregate, shall be liable,” &e. So that, if the owner at the winding up discharges the liability named, all previous owners of the same stock are exonerated, although creditors, who gave credit while they were owners of the stock, receive payment of their claims only in part. While I admit that the amount of security raised for the creditors in the aggregate by the payment by all the stockholders at the time of winding up, of the full amount of the individual liability fixed by the constitution, is all that was intended to be secured, it does not make “ each stockholder ” upon whom the liability attached, according to the decision, liable for the amount named in the provision. The effect of the decision is to attach the liability to the'stock and not to the stockholder.

There is no disagreement between the members of the court, in this: that the aggregate security for the duos of a corporation thus provided, is the aggregate stock of the corporation and all amounts unpaid thereon, together with a further sum equal to the total amount of the stock,- and no more; nor is there any disagreement between us as to the rule that the security thus provided, when realized, must be distributed jpro rata among all the creditors of the corporation, without regard to the time when credit was given, and -without respect to the persons who owned stock when the debt was contracted. The correctness of these views being conceded, it appears to me, beyond doubt, that the terms of the provision, 4‘ in all cases, each stockholder shall be liable, over and above the stock by him or her owned and any amount unpaid thereon, to a further sum at least equal in amount to such stock,” point directly and plainly to stockholders who may be such at the time the liability may be enforced, and that each stockholder who is liable at all, is liable unconditionally for the full amount named.

It has heretofore been decided by this court, upon unquestioned reasoning, that the individual liability of stockholders, under our constitution, is not a primary resource or fund for the payment of the debts of a corporation; that is to say, it cannot be resorted to by a creditor in the first instance and for his own benefit.' That it is a security for the exclusive benefit of creditors, over which the corporation has no control. That it can be resorted to by creditors only in case of the insolvency of the corporation, as where payment cannot be enforced by ordinary process. And that no creditor can acquire any priority over such fund, or institute a suit for the enforcement of such liability in his own behalf. 17 Ohio St. 87,113.

In addition to the points thus decided, it can safely be asserted that this liability can be enforced but once. I am not now discussing the power of the legislature over this subject, but simply affirming that the liability fixed by the constitution can be enforced only once. And this being so, it seems to me that after its enforcement the corporation can no longer have a rightful existence, for the reason that it is essential to the rightful existence of a corporation that the individual liability of the stockholders shall inure as a security for all debts contracted; hence, when such security is exhausted, the rightful existence of the corpoi’ation must cease.

Now, in view of these principles, the time meaning of the constitution is manifest. Each stockholder shall be liable.” When liable ? The answer is patent, — at the winding up of the corpoi’ation. Liable for what ? The dues of the corporation. To what extent? “In a sum at least-equal to the amount of the stock by him or her owned.” By whom owned ? By the stockholder so made liable. Owned by him or her when ? At the time the liability is sought to be enforeed. But this sum is not the only liability of “ each stockholder.” The stock by him or her owned is also made liable. Not the stock which he or she may have transferred, but the stock which he or she may then own. And further, for any amount unpaid on such stock. It matters not who may have subsci’ibed the stock, or who may have owned it at the time the debt was contracted, or whether calls had been made or not; it is enough that the stockholder is the owner at the time the liability is enforced. Such ownership at that time makes him liable to creditors for any amount unpaid thereon. ■ . '

Not only is the plain, and obvious meaning of the words of the constitution against the construction of the majority of the court, but, I think, every consideration of trade and public policy. The sale and transfer of' corporate stocks are impeded. Responsibility for unfaithfulness in the future management of corporations remains with the vendor after his ownership, interest and power of control are transferred. The principle of repose after unreasonable delay in the enforcement of claims, is also disregarded. The statute of limitations can afford no relief to such a surety. The creditor and the corporation may continue the liability for indefinite periods. Even the ordinary privilege of a surety to compel his principal to pay the assumed debt after maturity cannot be asserted by a person liable under this provision of the constitution.

The construction which I have adopted I believe is not only consistent with the terms of the constitution, and the intention of the framers, but is the only one which can work out com- • píete justice between all parties. As between successive owners of stock, its justice is plain. The value of stocks depends in a large measure upon, the relations between the assets and liabilities of the corporation.: The assets are at all times held in trust for creditors and stockholders, and the management of ■ the trust devolves upon-the stockholders and officers for the tóme being. ■ • The vendee of stock, therefore, impliedly engages with his vendor that the assets shall be faithfully applied. And having purchased 'at a price determined by the excess of assets over liabilities, as between vendor and vendee, the lattei’, alone, should be burdened with the payment of debts. *

And it does no violence .to the faith in the securities upon which credit is given to the corporation. The transferable nature of corporate stock is universally understood. A creditor has no right to expect that the stock, will not be sold and bought. All that he has a right to expect is that the stock will not be fraudulently transferred, with a view to diminish liis security in. the individual liability of stockholders. And while he is entitled to the increased security which may be afforded by the succession of solvent to insolvent stockholders, be should submit to the diminished security of insolvent successors, where no bad faith has been practiced.

Johnson, J.

I fully concur in the foregoing opinion of Judge Mcllvaine. The difficult nature of the question involved, the importance of the case, and the effect of the opinion of the majority on the character and value of property in the state, represented by corporate shares, induce me to state briefly one or two of the reasons for my dissent.

Under the liberal policy of past state legislation, authorizing-corporations for almost every kind of business, having its inception and a large development under the constitution of 1802,. and a still larger one under that of 1851, a vast amount of the individual property of the state is represented by shares in such corporations.

Any legislation or any decision which materially affects the character and value of this species of property, heretofore so-liberally fostered and encouraged, is a matter of great public concern.

The constitutional provision under consideration was intended. to remedy an existing evil, and to provide an additional security to creditors. Prior to its adoption, there was no individual responsibility (except by legislative enactment in a few instances), of those who had the management of the corporate business. 'Hence the provision that: “ Hues from corporations shall be secured by such individual liability of the stockholders and other means as may be prescribed by law; but in all cases each stoelcholder shall be liable over and above the stock by him or her owned, and any amount unpaid thereon to a further sum, at least equal in amount of such stock.”

One of the peculiar and valuable features of corporate shares, arises out of their transferability without the vexatious restraints imposed upon the sale and transfer of partnership or other common property.

Prior to the adoption of this provision, it was well settled, that stockholders could dispose of their interest in the corporation by a sale of their shares, as fully as they could any other species of property, and by a transfer cease to be stockholders The transferee became a stockholder and the owner of the stock, charged with all duties and liabilities as such. He was invested with all the powers and rights, and was subject to all the responsibilities as if lie had been an original subscriber.

This alienable quality of corporate shares added greatly to their value. Of course, a sale to hinder, delay, or defraud creditors, did not release the assignor, any more than a like sale of other property; but a bona fide sale was just as valid as a like sale of other property.

The scope and intention of the constitutional provision and the statute were simply to further secure creditors when the assets of the corporation were insufficient to pay all debts, by imposing a liability on the owners of the shares of stock, at least, equal to its par value. The liability at common law was to lose the investment. This loss fell on the owner of the stock, not on the assignor’. In addition to this loss, the object of the statute, as well as this constitutional provision, was to impose upon the same person an individual liability.

It is a misnomer to call one a stockholder ” and the owner of stocks,” and so liable to assessment, who has long since ceased to he such by a bona fide sale and transfer. The transferees are such stockholders and owners in fact and in law, and are entitled to represent this stock in all proceedings of the corporation.

The statute containing this liability clause, clearly shows, in other clauses on the same subject, that this is its true meaning.

The corporators, their associates, meoessors and assigns, are clothed with all corporate powers, and as a legal consequence, are charged with all the duties and liabilities imposed on owners of stock. The obligations and duties of stockholders go hand in hand with and are inseparable from their rights and privileges.

Section 7 of this act gives a statutory remedy for the collection of unpaid stock, and makes the transferee or assignee liable.

In case of a sale, the assignee by that section is the stockholder and owner, made liable in case the stock does not sell for sufficient to pay the amount due. This unpaid amount on stock is the same debt mentioned in the .constitution and in the liability clause of this statute as unpaid stock, and the person who is liable under the one as an owner, is liable under the other. Under section Y, it is the assignee in case of a sale that is liable as the owner, and for equally strong reasons, the same meaning should be given to the liability clause, both being used in reference to the same subject matters.

Again, sound principles of justice would dictate, that those who are in law the stockholders for the purpose of receiving' dividends and enjoying the rights incidental to ownership, should be liable to pay the losses, when by their mismanagement, fraud or from other causes, the creditors go unpaid.

This statutory liability is collateral and conditional. It can only be resorted to in equity, when the assets of the corporation prove insufficient. Wright v. McCormack, 17 Ohio St. 86; Umstead v. Buskirk, 17 Ohio St. 113.

.Being collateral and conditional, no primary liability attaches, or can attach, when the debt is created. No liability attaches, nor does any right of action accrue to creditors, until the condition happens that fixes the liability. To hold that this liability attaches to those who are stockholders when the debt is contracted, and that in case of a transfer the creditor must first exhaust the assignee when the contingency arises, presents an anomaly. It compels the creditor to resort to a stranger to his contract before he can pursue the man he trusted.

Again, if the assignor is liable in case of default of his assignee, he is guarantor of the solvency of the latter, when the time arrives to resort to the stockholders. He becomes liable for an indefinite period for the conduct of stockholders over whom he has no control.

Much stress is laid upon the assumed, not actual, fact that every creditor looks to the stockholders when he trusts the corporation. Admit that this is so, yet ho also is presumed to know, that each stockholder has the right at any time to retire, and it may be properly said, he trusts the corporation, subject to this right of transfer.

If such a contingent liability is to hang over • a stockholder for an indefinite period after he has parted with his stock and lost his power to control, no prudent man will care to invest in such shares.

If, on the other hand, we apply the same rules that govern the alienation of other property, and that governed the sale and transfer of stock prior to this provision of the organic law, we preserve the harmony of the law relating to sales of all other property.

For these and other reasons that I have not time to write out, I dissent from the opinion of the majority. ,


source: Caselaw Access Project

author: McIlvaine, J.

license: Public Domain

text:
    Ohio ex rel. The President and Trustees of the Ohio University v. John F. Oglevee, Auditor of State.

      1. The act of March 21, 1881, appropriating money to repair the buildings of the Ohio University, is not within the operation of section 29, article 2, of the constitution, requiring the allowance, by two-thirds of the i members elected to each branch of the general assembly, of claims, the subject matter of which was not provided for by a pre-existing law.
    '2. The fact that there was no existing fund in the treasury to which the sum so appropriated could be added, does not prevent the operation of the statute.
    13. Funds in the state treasury, arising from taxes levied and collected for “ the expenses of the state,” may be subjected to the payment of such appropriation.

      Mandamus.
    On March 21, 1881, the general assembly passed the following act:
    “ An act to appropriate money not otherwise appropriated, to repair the buildings of the Ohio University.
    • u Section 1. Be it enacted by the General Assembly of the ffoate of Ohio, That the sum of twenty thousand dollars, from any money not otherwise appropriated, is hereby added to the fund now existing in the treasury of the state, for the purpose of repairing the buildings of the Ohio.University.
    Section 2. The treasurer of state is hereby directed to pay, on the warrant of the auditor of state, to the treasurer of said university said sum of money in installments not exceeding five thousand dollars.
    “ Section 3. This act shall take effect and be in force from and after its passage.”
    Afterward, the auditor of state, upon demand duly made, refused to issue his warrant upon the treasury for the first installment of $5,000, claimed by relator to be due under this act, whereupon this proceeding was commenced to compel the issuing of such warrant.
    The case is now submitted upon the pleadings and an agreed statement of facts.

      Welch & Welch and De Steigner <& Jewett, for plaintiff:
    The act was not in conflict with section 29, article 2, of the constitution. To sustain the objection to the act, for that it is in conflict with the constitution, it must appear that the appropriation is to “ a claim, the subject matter of which had not been provided for by pre-existing law.”
    This is not the case of a claim, in the sense in which the term is used in section 29, nor the case where the subject matter to which the appropriation went, had not been provided for by pre-existing law.
    A claim is defined to be “ aright or title, actual or supposed, to a debt, or other thing in the possession of another.” This is an appropriation of money for the payment of repairs of buildings, to be made in the fut/wre, not to the payment of a claim for repairs made in the past without authority of law. The act questioned would sufficiently authorize the subjeet matter (the repairs) to which the appropriation goes (if it had not already been sufficiently provided for before, as will appear from the legislation hereinafter set out). For it is certainly competent in the same act to provide for any subject matter giving rise to a claim in the future and for its payment.
    The state and the corporation cannot be viewed as two distinct persons, and, as such, dealing in regal’d to the subject matter to which the appropriation is directed, and giving rise to a claim; on the contrary, the corporation is the instrumentality of the state,.created by it to act for it, in regard to a public and governmental trust; and the acts of the corporation are the acts of the state. In fact the state has jealously provided for, claimed and exercised a supervising control of the corporation at all times.
    The “ subject matter ” to which the appropriation went, was to, and in aid of an educational trust arising out of a donation by the United States government, which trust was assumed by the legislature, almost coeval with the first existence of the state, the sacred obligation of which on the state it has recognized in both of its constitutions, and in regard to which it has constantly exercised controlling and supervising power.
    As to the second objection to the issuing of the wa/rrant. That the taxes were not levied for the purpose to which the $20,000 was appropriated. The law of 1879 (76 O. L. 42), under which the money in the state treasury was levied, is as follows:
    . Section 1. “ That there shall be levied anually, taxes for state purposes, on each dollar of valuation of taxable property, as follows.
    “ For general purposes, being the expenses of the state, the benevolent, charitable, penal, and reformatory institutions, for the payment of such other charges as maybe made by law, and for reimbursing to the sinking fund, such sums as have been transferred from that fund one mill and one tenth of one mill, the same to be styled the ‘revenue fund.’
    “For the payment of interest, and the constitutional reduction of the principal of the public funded debt of the state, five tenths of one mill. Said fund to be styled the sinking fund.
    “Eor the support of the common schools, one mill. ^ Said fund to be styled the state common school fund.”
    We claim that either of the clauses—“ charitable institutions,’5 or, “ for the payment of such other charges as may be made by law,”—was a sufficient statement of the object of the taxation to authorize the application of the $20,000 from the general revenue fund to the repair of the building of the Ohio University.
    1. The law of March 21, 1881, both authorizes the repairs of the buildings, and so constitutes them “ charges made by law” and appropriates the money for their payment, and it is not contended, or if so, cannot be successfully contended that they would not constitute a public and governmental purpose, to which to appropriate a fund raised by taxation in view of the relation existing between the state and the university, and the various provisions of the constitution and state legislature 'touching the university.
    As to the third objection, is the act void .for uncertainty ? If the act is valid, but for uncertainty, it would require a very strong case indeed to demand that the court hold the law void for that reason. It must be such an uncertainty that the court, in view of the language of the law, and all- acts inpa/ri materia, and surrounding facts, would be unable to gather its meaning.
    The intent is manifest, to give $20,000 to the' university for building and repairs.
    The punctuation may be disregarded. Whether there was something already in the treasury to which the $20,000 might be added is immaterial. But there was a fund already in the treasury.
   McIlvaine, J.

The first ground of objection to a peremptory writ of mandamus is, that the statute in question, not having been passed by the vote of two thuds of the members elected to each branch of the general assembly, is in contravention of section 29, article 2, of the constitution. The provision, of the constitution is a follows : “No extra compensation shall be made to any officer, public agent, or contractor, after the service shall have been rendered,_ or the contract entered into ; nor shall any money be paid on any claim, the subject matter of which shall not have been provided for by pre-existing law, unless such compensation or claim be allowed by two thirds of the members elected to each branch of the general assembly.” The contention on the part of the defendant is, that the statute is in violation of the second clause of the above provision.

• The money intended to be appropriated by the act was not in payment of any claim against the state within the meaning of this provision. In the judgment of the general assembly this enactment was passed in the discharge of the duty imposed upon it by section 7 of article 1 of the constitution ; namely, to pass suitable laws to encourage schools and the means of instruction. The Ohio University, an institution of learning, had no claim, in the nature of a debt, against the state, for which payment was demanded; but, being without means to make necessary repairs upon the buildings of the University, she solicted aid from the state, which the general assembly granted, not by way of paying a claim, but as giving generous aid to a needy and worthy institution of learning. There is no constitutional objection to the statute. See Ohio ex rel. v. Oglevee, emte, where the the same principle was applied to sustain an appropriation in favor of Longview'Asylum.

That there did not exist in the state treasury, at the date of said act, or now, a fund to which the said appropriated sum of $20,000 could or can be added, except an irreducible fund, the interest of which is payable annually to the university. This objection does not interfere with the reasonable and proper execution of the statute. If the general assembly was mistaken concerning the state of the funds in the treasury, the intention to appropriate the sum named in the statute and for the purpose named, is nevertheless clear. The intention was not to create or to increase an irreducible fund in the treasury, the interest of which alone should be paid to the University, but to donate the sum of $20,000 in ggroesenU, for the purpose of' making repairs now needed on the buildings of the university ; and it would be unreasonable to hold that the institution should lose the proffered bounty, because, unfortunately, it did not possess other means to which this might be added.

The third objection is, that there are no moneys in the treasury subject to an appropriation for the purpose named in the act. It is not said or meant that there are no funds in the treasury not otherwise appropriated, but, that, under section 5 of article 12 of the constitution, which provides that “no tax shall bo levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied,” no money in the treasury, though not otherwise appropriated, can be applied to this purpose, for the reason that no tax has been levied or collected for such purpose.

Unappropriated moneys were in the treasury, levied and collected under the act of March 26, 1879 (76 Ohio L. 42), which provides:

“ That there shall be levied annually, taxes for state purposes, on each dollar of valuation of taxable property, as follows:
“ For general revenue purposes, being the expenses of the state, the benevolent, charitable, penal and reformatory institutions, for the payment of such other charges as may be made by law, and for reimbursing the sinking fund such sums as have been transferred from that fund, one mill and four tenths of one mill, the samé to be styled the £ revenue fund.’ ”

Now, it is contended that, under the constitutional provision above quoted, none of the funds raised under the above statute can be applied to the payment of relator’s demand. If it were conceded that the phrase “for the payment of such other charges as may be made by law',” is too indefinite to have operation under the provision of the constitution above quoted, and that the “ benevolent and charitable ” institutions referred to ir. the statute are such only as are owned by the state, still we think that taxes levied and collected for “ the expenses of the state,” may be appropriated by the legislature for the purposes named in the act under which relators claim. The object expressed by the words “ the expenses of the state,” are sufficiently definite, and except as limited by other clauses in the act, -would embrace the whole “ revenue fund,” and a gratuity, which the state may properly bestow, is, reasonably and literally, an expense of the state, and within the object of taxation so designated.

The last objection is, that the statute in question does not make an appropriation of money in the state treasury from which a payment would be authorized. Although very loosely drawn, we think there can be no doubt but that the legislature intended to set apart and appropriate, of the moneys in the treasury and not otherwise appropriated, the sum of $20,000 to be paid to the Ohio University for the purpose of making repairs of the buildings of the university.

Peremptory writ cmwrded.


text:
    George Nagle v. William Brown.
    1. In. this state, it is not unlawful for a person, on the Sabbath day, to ride or drive, for pleasure merely, upon public highways.
    3. A person owning lands through which a public road passes, who gives his assent to the cutting down of a tree standing thereon within a few feet of the traveled track, is guilty of obstructing the highway, if the tree falls within the road and is suffered to remain therein to the hindrance or inconvenience of travelers.
    8. A condition attached to such assent that the tree should not be felled into the road, does not relieve the owner from liability.
    Error to the District Court of Lorain County.
    The original action was brought in 1876, by Brown against Nagle and others, in the court of common pleas of Lorain county, for injuries to the plaintiff, his wife, and team of horses, by reason of obstructions in a public highway. The petition averred that on or about October 15, 1874, the defendant “wrongfully caused to be cut, felled and placed in said highway, a large tree, brush and rubbish, across and in said highway, whereby the plaintiff, lawfully passing in and along said highway in a carriage in which were himself and wife and two children, drawn by a span of horses, on or about the 14th day of March, A. D. 1876, was then and there, by reason of said tree, brush and rubbish,” without any fault on his part, greatly injured, &c.
    The defendant, Nagle, by his answer, admitted the existence of the public highway, the obstructions thereon, and the injury of the plaintiff, but denied each and every other allegation in the petition. He also alleged that the plaintiff was injured while driving for pleasure upon the Sabbath day, and that his own carelessness contributed to the injury.
    A verdict having been rendered for the plaintiff, the defendant, Nagle, moved for a new trial on the ground that the verdict was contrary to the evidence. The motion was overruled, and all the testimony was embodied in a bill of exceptions. Judgment was rendered on the verdict.
    The testimony tended to prove that the obstructions in the road were upon the lands of the defendant, where they were suffered to remain from the fall of 1874 to the time of the injury. The obstructions were placed in the road under the following circumstances, as testified to by the defendant, Nagle, himself:
    “ I remember the night the tree was cut; Gable came to my house; I was in bed; Gable said they had a coon on the tree, and a young dog, and wanted to see the dog catch the coon; I said they night cut the tree if they would not cut it in the field or across the road; I went out to the tree; was there when it fell; I remained about twenty rods away, so the tree would not hit me; the tree stood two feet from the fence; there was meadow field there; I had nothing to do with chopping the tree; simply looked on to see it was not fell in the meadow or road; I did nothing about getting it out of the road; told them to get it out of the road; the top was piled up in a corner of the fence.”
    On cross-examination witness said : “ I was there when the tree fell; I cannot say that they did anything toward removing the tree after that night; they cut out a passage way of twelve feet that night; the log lay in the comer of the fence; Forthover and I took the tree away Tuesday after accident; Gable said if I would give him a log he would take the tree away; no one but Gable came to my house : I first saw Bates and Osterman at the tree; I did not see what they were doing; they were at work at the tree pounding it; they were chopping the tree; I did not object to their falling it in the meadow; I do not remember that anything was said there; I said they must not fall it in the road ; if did, must clear it away; 1 heard nothing about the little tree.”
    The judgment of the court of common pleas having been affirmed by the district court, it is now sought to reverse the judgment below, upon the ground chiefly, that the verdict was contrary to the weight of the evidence.

      George P. Metcalf and Johnson <& McLean, for plaintiff in error.

      G. W. Johnston, for defendant in error,
   McIlvaine, J.

It is not unlawful, in this State, to travel upon public highways, for pleasure merely, upon the Sabbath day. The due and legal observance of the Sabbath day is regulated by statute. Act of March 30, 1864, Swan & Saylor, 289. In addition to common labor (works of necessity and charity only excepted), the statute makes it unlawful for any person of fourteen years or upward to be found on the first day of the week, commonly called Sunday, sporting, rioting, quarreling, hunting, fishing or shooting.” Beyond these inhibitions the observance of the day is left to the conscience and religious convictions of the citizen; and in our judgment the innocent and healthfirl exercise of riding or driving is not within the meaning of the terms of inhibition. The only possible doubt is as to the meaning of the word sporting;” but, whatever may be included within the meaning of that word, we do not believe that the legislature intended to inhibit the quiet, peaceful and invigorating exercise of either walking or riding upon the Sabbath day, although no urgent necessity or charity may prompt the exercise.

By the act of April 15, 1857 (S. & S. 880), it is declared that “ the obstructing or incumbering by fences, buildings, structures or otherwise, -any of the public highways, or street, or alleys of any city or village, shall be deemed nuisances,” and “Any person injured in his health, comfort, property,-or the enjoyment of his estate, by any nuisance, may maintain against the party guilty of the same, an action for the recovery of damages, as in other cases.” The obstruction of the highway mentioned in the original petition was clearly a nuisance within the meaning of this act, and the only question made is, was the plaintiff in error “ guilty of the same.” Upon the testimony before them, the jury were justified in finding that the part of the highway obstructed was upon the premises of the plaintiff in error; that the tree which made the obstruction was his property; that he consented that it should be cut down, and that it would not have been felled but for his consent. He thus became as guilty of the nuisance as if he, himself, had felled the tree into the road. The condition attached to his consent, that the tree should not be felled into the road, did Dot exonerate him from blame. It was his duty to the public to see that the condition was performed. If those persons to whom he gave authority to cut the tree did not remove it from the road, it was his duty to remove it.

We also think that the jury were justified in finding that the plaintiff below did not contribute to his injury by his own negligence.

Judgment affirmed.


author: Johnson, J.

text:
    Elizabeth Stevenson et al. v. Elizabeth Morris.
    1, An injury to the person of a married woman, by an assault and battery, is a violation of her personal rights, and a right of action accrues to her for such an injury, which is, by the act of 1861, concerning the rights and liabilities of married women (S. & S. 889), and by subsequent amendments, the separate property of the wife, and under her sole control.
    2. An action to recover for such an injury is an action concerning her separate property, under section 28 of the code, in which a married woman may sue alone.

      3. An authenticated mandate from the district court of the judgment remanding the cause to the court of common pleas for further proceedings, cannot he impeached in the latter court, by showing that the clause remanding the case was not part of the order of the district court, but was added to the judgment, without its authority. The proper remedy is to apply to the district court to correct its records.
    4. In an action for an assault and battery, with a general prayer, damages for a permanent injury, the natural and necessary consequence of the unlawful act, may be recovered without being specially pleaded.
    5. In such an action by a married woman, she cannot testify to instructions and advice given her by her husband before the act was committed, in the absence of the accused, as to how she should act in case she was assaulted.
    6. Although the jury may, in an action to recover damages fora malicious personal injury, allow a reasonable fee to plaintiff for the services of her attorney in the action, yet such allowance, and the amount thereof, rest in the discretion of the jury, to be determined under all the circumstances of the case, but neither party can call witnesses to prove the value of such services.
    Error to tbe District Court of Adams County.
    March 13, 1873, William Morris, and Elizabeth, his wife, commenced an action against David Stevenson and Elizabeth, his wife, to recover damages for assault and battery, committed by Mrs. Stevenson on Mrs. Morris, August 30, 1872.
    The petition included special damages for the expense of care and nursing, and concluded with a general prayer for damage to plaintiffs.
    June 22, 1873, an amended petition was filed on leave of court, in the name of Mrs. Morris, omitting the husband’s name, and omitting the special damages, and concluding with a general prayer for her damages.
    The defendants, husband and wife, answered for the wife, that the acts committed were done in necessary self-defense.
    A trial resulted in a verdict and judgment for plaintiff, which was reversed by the district court in 1874.
    The following is a copy of the mandate filed with the clerk of the common pleas court, after such reversal.:
    “District Court, September Term, A. D. 1874.
    “ This day tins cause came on to be heard upon the petition, transcript and record, and errors assigned, and was argued by counsel, and tbe court being fully advised in tbe premises, do find that there is error, and do order and adjudge that the judgment in the court of common pleas in favor of Elizabeth Morris, against the said David Stevenson and Elizabeth Stevenson, be, and the saméis hereby, reversed and held for naught. And it is further ordered that tMs canse le remanded to the court of common pleas for further proceedings.”
    A motion was made in the common pleas to correct this • mandate, but no action seems to have been taken on the motion.
    April 3, 1875, the plaintiff filed a formal motion, to strike the name of her husband from the petition and record in the case, which was sustained, and defendants excepted.
    The defendants then filed five several defenses:
    1st. That at the time of the alleged assault and battery, and at the time of tire plaintiff’s amendment, omitting the husband’s name as a co-plaintiff, she was and still is a married woman, and the wife of said William Morris, hence they pray to go hence, &c.

    2d. That the district court in reversing the first judgment in 1874, did not remand the ease back to the common pleas for a new trial or other proceedings, but that some ten days after the term of said court, the plaintiff, without leave or order of court, or without consent, procured the clerk of said court to add to the judgment of reversal actually entered, the words: “ And it is further ordered that this cause be remanded to the court of common pleas for further proceedings.”
    3d. The same defense as the second, with the averment that said added words are false, fraudulent and forged, and form no part of the judgment of the district' court.
    4th. That the plaintiff first assaulted the defendant and that she did the acts complained of in self-defense.
    5th. A general denial of each allegation of the petition.
    The plaintiff demurred to the 1st, 2d, and 3d defenses, and replied to the 4th.

      This demurrer was sustained as to each, of said defenses, and exceptions were noted.
    A verdict on the remaining issues was rendered for the plaintiff, motion for a new trial overruled, bill of exceptions taken -and judgment rendered on the verdict.
    The district court affirmed this judgment, and the case is here to review the action of that court.
    Sundry questions, raised during the progress of the trial, were saved in the bill of exceptions. These will be stated in the opinion.

      F. D. Bayless and Evans dá JVaylor, for plaintiffs in error:
    Two questions are raised by the first, second, third avA fourth assignments of error, that may be taken and considered together:
    Pirst—Can a married woman sue alone in an action for damages resulting from an injury to the person by battery ?
    Second—If a married woman can sue alone in such case, is the fact that she is a married woman, and the action is concerning her separate property, or grows out of the violation of her personal rights, necessary allegations to be made in the petition and proved on the trial of the case ?
    Section 28 of the Code, as amended March 30, 1874 (71 Ohio L. 47), as far as it applies to this case, is the same as it was prior to the amendment, and stands with reference to a married woman suing and being sued alone (“ when the action concerns her sepai ate property”), as amended April 18, 1870. 67 Ohio L. 111.
    “ That section was not intended to enlarge or change the liabilities of the wife, but merely to change the form of remedy.’ ’ Jenz v. Gugel, 26 Ohio St. 527.
    At common law an action for an injury to the person of the wife during coverture, by battery or for any such injury, should be brought by the husband and wife jointly. 2 Hilliard on Torts, 501, ¶ 3; Pomeroy’s Remedy & Remedial Rights, 228, ¶ 191. This rule is not changed by the code in actions for damages, resulting from a battery. Pomeroy’s R. & R. Rights, 282, ¶ 237. Id. 290, ¶ 244.
    Section 2 of an act concerning the rights and liabilities of married women, as amended March 30, 1870 (67 Ohio L. 48), has no reference to the remedy, but simply fixes what property shall be deemed personal property of the wife. It must ie property, and not an injury to the person.
    The demurrer of plaintiff below ought to have been overruled as to second and third defenses. Plaintiff’s remedy was by motion, in the district court, to correct entry on petition in error to this court, if district court failed to render the judgment, or make the order required by section 526 of the. Ohio code of civil procedure.
    Demurrer, searching the record, ought to prevail as to plaintiff’s petition as amended—when she changed the action from that of William and Elizabeth Morris, husband and wife, to that of Elizabeth Morris v. Defendants. It was a new and different suit, and barred by the statute of limitations, as appears from the records. 2 S. & C. 949. Statute runs from time injury was committed. 4 Ohio, 331.
    As to 5th and 6th assignments of error. The evidence of Mrs. Morris, contained in bill of exceptions No. 1, was improperly admitted to go to the jury, and the objections of defendants ought to have been sustained:
    1st. Such evidence is only admissible when it is averred in the pleadings that by reason, of the injuries the plaintiff was lame, sick, &c., and was disabled from following and performing her usual business. Swan’s Pleadings and Practice, 297, 322, see forms ; Nash’s Pleadings and Practice, 579, 580, see forms.
    2d. The evidence as to a loss of general health ought not to have been received, because plaintiff does not aver a loss of general health or permanent injury or disability. 2 Greenleaf Ev. 73, 74, ¶ 89 ; 1 Hilliard on Torts, 194.
    The evidence of Mrs. Morris ought not to have been received. It was a communication between husband and wife, and not in the known presence of a third person. It was permitting her to repeat to the jury her own general declarations.
    The court erred in admitting the evidence of Mr. Collingsi
    1st. Evidence that tends to fix damages in dollars and cents is given with reference to special damages, and such damages
      must be claimed specially by the pleader, as, for instance, doctor bills, nurse hire, loss of time, board bills, &c., but no one would think of attempting to plead, specially, a reasonable attorney fee.
    2d. This court has at least indicated that no evidence can be received in cases of this kind as to attorneys’ fees. The fact that the plaintiff would necessarily be subjected to expenses of. that kind was, and is, a circumstance in the case, patent before the jury for their consideration. Roberts v. Mason, 10 Ohio St. 278, 283.

      J. M. Wells, R. T. Naylor and Wm. Anderson, for defendant in error:
    Section 2 of the act of April, 1861 (S. & S. 369), as amended April 30, 1870 (68 Ohio L. 48), abrogated the common law rule as to the property rights of married women, and under it damages for violation of her personal rights, by assault and battery, are her separate property, for which she may, under section 28 of the Civil Code, sue alone.
    The demurrer of the plaintiff below to the second and third defenses set forth in the defendant’s amended and supplemental answer, was properly sustained by the court.
    The second and third defenses are not available, because it is an attempt to impeach the judgment of the district court collaterally. The judgment of a court of competent jurisdiction over the subject-matter and the parties, is, however irregular, informal, or summary, valid until reversed, and cannot be attacked or questioned collaterally. Biglow’s Exr’s. v. Biglow’s Admr’s., 4 Ohio, 138; Buell v. Cross, 4 Ohio, 237 ; Douglass v. McCoy, 5 Ohio, 522; Foster’s Lessee v. Dugan’s Exr’s., 8 Ohio, 87, 107; Adams’ Lessee v. Jeffries, 12 Ohio, 253; Boswell’s Lessee v. Sharp, 15 Ohio, 447; Cochran’s Heirs Lessee v. Loring, 17 Ohio, 409 ; Newman’s Lessee v. Cincinnati, 1Ohio, 323; Reynolds v. Stanberry, 20 Ohio, 344.
    The motion to dismiss "Wm. Morris, husband of plaintiff below, was addressed to the sound discretion of the court, and the court having sustained the motion committed no error. Matters of discretion are not reversible on error unless there has been an abuse of discretion. Civil Code, §137 ; Kemper v. Trustees of Lane Seminary, 17 Ohio, 293, 329; Legg v. Drake, 1 Ohio St. 286; Spice v. Stemrack, 14 Ohio St. 213 Stover’s Heirs v. Bounds’ Heirs, 14 Ohio St. 107, 110.
    The evidence of the plaintiff below, Elizabeth Morris, set out in bill of exceptions No. 1, was certainly competent to show the effect of the wound on her person, as to pain, suffering and health. These results are personal to her. She alone has to bear the pain, suffering and loss of health produced by the wound, and she alone has a right of action, for a violation of one of her natural rights.
    The testimony of Mr. Collings was admissible. Roberts v. Mason, 10 Ohio St. 277; Hilliard on Torts, 408, 409, and cases cited; Sexton v. Todd, Wright, 319; Stevens v. Handley, Wright, 122. But if incompetent it was not prejudicial to defendant below but rather to plaintiff below.
   Johnson, J.

The first error relied on is that a married woman cannot sue alone for an injury to her person.

At common law the rule was :

“ When an injury is committed to the person of- the wife during covertwre, by battery, slander, &c., the wife cannot sue alone in any case; and the husband and wife rrmst join if the action be brought for the personal suffering or injury to the wife, and in such case the declaration ought to conclude to their damage, and not to that of the husband alone; for the damage will survive to the wife if the husband die before they are recovered.” Chitty Plead. 73.

Since the adoption of the Code of Civil Procedure, we look to that, to determine who are proper parties to an action.

By section 28, as originally enacted, and as amended in 1880 (67 O. L. 111), and in 1874 (71 O. L. 47), and as it now is, when the action of a married woman concerns her sepa/rate property, she may sue and be sued alone.

Section 2 of the act of 1861 (S. & S. 389), as amended in 1871 (68 O. L. 48), made a radical change in the rights of married women, as to what constitutes her separate property.

By these statutes, rights of action belonging to a woman at her marriage, or which may accrue to her during coverture, growing out of any violation of her personal rights, are declared to be her separate property.

A right of action for assault and battery is a right growing out of a violation of her personal rights, and therefore the separate property of the wife.

Hence, being her separate property, she may sue alone for the injury.

II. Bid the court err in sustaining a demurrer to the second and third defenses.

These defenses sought to impeach, in the court of common pleas, a duly-authenticated mandate of the judgment of the district court, sent down to the clerk of the former court, and filed and entered as a part of its records, by an allegation that the clause remanding the case was no part of the judgment of the district court, but was falsely and fraudulently added to the judgment after the district court adjourned.

This mandate imparted absolute verity, being in due form and properly authenticated. If the allegations were true, relief should be sought in the district court. That court had full authority, on a proper showing, to grant the relief. While the judgment of the district court, as appears by its records, stands unreversed or unmodified, its mandates to an inferior court founded thereon must be obeyed, and cannot be impeached in the lower court by contradicting the authenticated record of it.

III. By the amendment striking out the husband’s name, it is claimed that a new cause of action was commenced, which was barred by the statute of limitations.

The assault was committed August 30, 1872. This amendment was made June 22, 1873, so that, as a matter of fact, the legal point is not made by the record, as the amendment was made within one year from the time the cause of action accrued.

IY. On the trial the plaintiff being on the stand as a witness, was asked to state what effect, if any, the wound which defendant had made had continuously ever since had, as to pain and suffering. An objection to this question was overruled, and the witness answered that when she did certain kinds of work, and after, it hurt her.

In answer, under like objection, to a question as to its effect on her general health, she said it injured her from general work, and when she does work her side hurts her.

To this question and answer the defendant objected.

It is claimed that evidence as to loss of general health was inadmissible, because there was no allegation of a permanent injury.

The petition alleges that the defendant maliciously assaulted her with a large knife, and cut, beat and wounded her, with intent to kill and murder. The prayer is for general damages.

In such cases, it is not necessary to aver specially any matters which are the legal and natural consequences of the tortious act. All such consequences, every man is presumed to anticipate. Therefore under the usual allegations of assault and battery, the plaintiff may give in evidence any facts showing damage, that naturally and necessarily result from the act complained of.

If, however, consequences result from the act, not necessarily flowing therefrom, the law does not imply damages therefrom, hence they should be alleged in order to recover therefor.

This necessity of pleading special damages, as distinguished from natural or direct damages resulting from the act, did not exist in the case at bar. The injury arose from a wound inflicted with a deadly weapon. It was calculated to inflict a permanent injury, and the plaintiff therefore might recover for all the immediate, natural and direct consequences of the act.

If the jury were satisfied the wound caused a permanent injury to the plaintiff, all the damages, whether temporary or permanent, are recoverable, without being specially alleged.

Y. The plaintiff, while still a witness, was asked by her counsel, what instructions her husband gave her, on the morning of the day the assault was made, about keeping Mrs. Stevenson away from her house, and about how she should conduct herself that day.

She answered:

“ My husband told me not to go on her premises nor in her way, and if she came there to molest me again, or attack me, to take the old shot-gun and shoot her. I said I won’t do it, for I might kill her. He told me then to stay away and not go on the bank and keep her out of my yard, and if she offered to come there to take the old shot-gun and shoot her. I again said I won’t do it. I do not know that any one was present,” and, thereupon, said defendants objected to the admission of said testimony, which objection was overruled by the court, to all of which opinions, rulings and judgments of the court the defendants except.

This was clearly inadmissible. It was a communication between husband and wife when no one was present, directly reflecting on the question of who was the aggressor. One of the defenses was, that the plaintiff first assaulted the defendant, and that the latter acted in self-defense. This conversation between husband and wife, when the defendant was not present, was doubtless offered for the purpose of reflecting upon that issue. It tended to support the claim of the plaintiff that the assault was malicious, and that the plaintiff was not guilty of the first assault.

YI. The plaintiff further to maintain the issue on her part, placed Henry Oollings, an attorney at law, upon the stand, who was asked in chief, the following question :

Ques.—“ What would be a reasonable attorney fee for prosecuting a case of this character ?”
Ans.—“ A reasonable attorney fee in this ease—it having been heretofore tried twice, in the common pleas and in district court by petition in error—would be $250 to $300. In case reversal was brought about by error or want of skill on the part of plaintiff, the fee might be the other way.”

To this question and answer defendant excepted.

In Roberts v. Mason, 10 Ohio St. 277, it was held that in an action to recover damages for a tort, which involves the ingre, clients of fraud, malice, or insult, a jury may go beyond the rule of mere compensation, and award exemplary or punitive damages, and that in such a case, they may, in their estimate of compensatory damages, take into consideration and include reasonable fees of counsel employed to prosecute the action.

• In that case, there was no evidence before the jury on the subject of counsel fees, and the learned judge remarks: “ nor do we think such evidence ought to have been given or received. But the fact that the plaintiff would necessarily be subjected to expenses of that kind was properly taken into consideration and allowed, as a circumstance in the case patent before them.”

Finney v. Smith, 31 Ohio St. 529, affirms the doctrine of the syllabus, in Roberts v: Mason, in holding that in cases involving the ingredients of fraud or malice, counsel fees are to be allowed as compensatory damages.

The settled doctrine in this State is that counsel fees, in cases of this class, may be an' item of compensation, which the jury may, in its discretion, allow.

In Roberts v. Mason there was no evidence as to the value of counsel fees, and the court say, nor do we think such evidence ought to have been given or received.” Counsel claim that this remark, although purporting to be the opinion of the whole court, is obiter merely.

In that case it was necessary, in order to sustain the judgment, to hold that the jury might, without evidence, allow counsel fees, and the reason why that was so is given by the court, namely, that the fact that the plaintiff had been subjected to this expense, was patent before them. This would be a sufficient reason for not proving the fact that counsel was employed, and had rendered services, because that is patent to ■ the j ury, yet it would hardly be a satisfactory reason why the value of those services should not be proven, as that is a fact not patent in the case. Still we think the opinion then expressed, that such evidence should not be received, rests upon sound principles, and correctly states the only rule practicable in the trial of such causes.

In Fairbanks v. Witter, 18 Wis. 287, it is said, that if counsel fees are to be allowed by the jury, it must be on the principle that such fees are in the nature of expenses incurred, and therefore as compensation, rather than as a penalty, and this is the logical deduction from the cases of Roberts v. Mason, and Finney v. Smith, supra.

The able discussion of the question between Professor Green* leaf and Mr. Sedgwick as to the true rule of damages, in cases sounding in tort, or rather whether, in any case, punitive damages, as distinguished from compensation, could be allowed, turned at last, largely upon the legal meaning of those terms; that is, whether, when the elements of fraud, malice, &c., mingle in the controversy, the damages, which the jury may give, in addition to mere compensation or such as are generally allowed, was to be classified as compensation for the greater injury, or as a penalty. In this state we have in these cases, classified counsel fees as compensatory damages.

Counsel fees being in the nature of consequential, rather than special damages, fall within the general rule already cited that they are recoverable, without being pleaded.

The cardinal rule, that the evidence must be confined to the issue, requires that collateral issues, such as the value of counsel fees, in an action of tort, should be excluded.

If the plaintiff can present such an issue he cannot be limited as to the number of witnesses he may call, nor can the defendant be denied the right to call countei’-witnesses to the same question. The issue legally before the jury is thus perverted into a contest as to the value of the services of plaintiff’s counsel, in the very case they are trying. The counsel whose fees are the subject of controversy, necessarily labors to show the highest value, though in fact he may be under a contract for a fixed price, much less than he can prove; while opposing counsel may depreciate these services, by showing that the value fixed is excessive, and by showing want of professional skill in the management of the case. To illustrate the incongruous nature of this controversy, the case, at bar affords an apt illustration. The first judgment for the plaintiff was reversed by the district court. Should plaintiff recover for these services ? That depends on whether the reversal was occasioned by the want of skill of liis counsel, or by a blunder of the court. These questions would be material and would open an unseemly controversy.

Again, such an allowance by the jury rests in their discretion. It does not depend on the value of such services, but on whether the case is one in which it may bé made. In allowing such fees the courts of this state have gone further than the courts of many other states, but in doing so, it was not intended to enlarge the issues to be tried by the jury. To permit such evidence would be to tender a verbal issue, on which each party would have the right to be heard, which was unknown at common law, and which would open a wide door to embarrassing and unpleasant controversy. It would in volve no question of fact material to the case, but would call for the professional opinion of experts in such matters, based upon controverted questions in the case. This would involve an inquiry into the ability of plaintiffs counsel, the value of his services and the degree of skill with which he is managing the case on trial. In the practical administration of justice, the evidence should be confined to the issue, otherwise the court would be led into a labyrinth of difficulties. In leaving this matter to the discretion of the jury under all the facts before them, without proof of this character, we only follow the analogy of the law in all such actions, where, without actual proof of the amount of damages, the jury may in their estimate allow such an amount as will be adequate for the injury under all the circumstances. Counsel fees are not to be allowed, as of course, though proved, when the plaintiff recovers, as is the case where special damages, such as surgeons’ services and expenses of nursing, &c., are claimed, but only as an item of estimated general damages to be included in the discretion of the jury.

Judgment reversed, and cause remanded.