author: J. R. Swan, J.,

text:
    The Cleveland and Pittsburgh Railroad Company v. James Kelley and others.
    1. When a contract is entered into for work at a certain price, with a stipulation that the same is to be paid for in specific articles at a certain rate or price, the debtor has an election to deliver the articles, or pay the specified amount of money, if such right of election is expressed or fairly to be implied.
    2. If such election is not expressed, and the subject matter of the contract or res gesta indicate that no such right of election was contemplated by the parties, then the general rules of law relating- to executory sales are applicable, and the contract is a single and imperative promise to deliver the specific articles.
    3. If the right of election to pay in money or the articles, at the ojition of the debtor, exists, and the articles are not delivered, the plaintiff recovers the amount of the debt and interest; but if no such election is expressed or implied, the plaintiff is entitled to the market value of the articles, with interest.
    In error to the Court of Common Pleas of Columbiana County.
    So far as the question decided in this case is concerned, the facts may be stated as follows :
    The suit in the common pleas was brought by the defendants in error to recover a balance due them for work done for the plaintiff in error, in the construction of the Tuscarawas Extension of its railroad, in pursuance of written contracts between the parties.
    Before and at the time the contracts were executed, the Chief Engineer of the railroad company announced to those who were giving in their bids for the work, that they would be required to take twenty-five per cent, of the price of the work to be done in the stock of the Extension, at par.
    In the proposals put in by the defendants in error, they specified the prices at which they would contract for the work, and then said, “ we take 25 per cent, in stock of company.”
    In the contracts referred to, the company agree to pay so much per section for grubbing; so much per cubic yard for embankment, excavation, solid rock and loose rock respectively; and so much per perch for rectangular culverts. And it is provided that “ there shall be a final estimate made of the quantity, character and value of said work, agreeably to the terms of this agreement, when the balance appearing due to the party of the first part shall be paid to them,” etc.
    At the end of the contracts, and when they were made, these words were written: “ It is understood that twenty-five per cent, is to be taken in stock.”
    It appears further from the record, that before and at the time the contracts were executed, it was talked of, and understood by both parties to the contracts, that the stock which the defendants in error were to receive under the contracts was to be taken by them at par.
    In the court below the case was submitted for trial to referees, and it was made a question before them, whether, in estimating the balance due to the contractors, they should be allowed the par value of the stock, or only the market value ; they having demanded of the railroad company the pay for their work, when the same was payable, and payment not having been made. The referees reported that the stock was to be paid by the railroad company and to be received by the contractors at par ; that they found payable to them in the stock of the company the sum of $21,986.24, but that they should recover only the amount of the market value of the stock, at the time the same was demanded and payment refused.
    To this finding of the referees, the contractors excepted, and the court below thereupon entered judgment “ that the rule of damages for the failure to pay said stock, is fixed by the contracts of the parties, and is the full sum of $21,986.24,” etc.
    To reverse this judgment, this petition in error is prosecuted.

      W. S. C. Otis, for plaintiffs in error:
    The court below, in enlarging the measure of damages awarded by the referees, committed most manifest error.
    Damages are a compensation for an injury sustained. Dexter v. Spear, 4 Mason 115.
    In those contracts in which the plaintiff is to receive for his labor, not money, but the transfer of property, the original consideration is not open to inquiry, but the value of the property which is to be transferred is the measure of damages. Strutt v. Farlan, 16 Mees. & W. 219 ; Ellison v. Dove, 8 Blackf. 571; Baldwin v. Leonard, 8 Cobb 71.
    In cases of contracts for payment in specific articles, where the articles to be paid are described in respect to quantity or amount, by number, weight, or measure, and the contract does not name any sum to be paid, the measure of damages, on failure to perform the same, is the value of the articles when the contract was broken. But in cases of contracts for payment in specific articles, when the articles to be paid are described in respect to quantity or amount, by number, weight, or measure, and the contract does also name a sum to be paid, the measure of damages, on failure to perform the same, is not the value of the articles when the contract was broken, but the sum named in the contract. Brooks v. Hubbard, 3 Conn. 58; Moore v. Hudson River Railroad Company, 12 Barb. 156.
    A contract to pay to the order of a person therein named, “ twelve months from date two hundred and fifty dollars, in brown cotton shirting, at the price of thirty cents a yard,” (Brooks v. Hubbard, 3 Conn. 58,) and a contract to pay to the order of a person therein named, “ seventy-nine dollars and fifty cents, on the first day of August, 1822, in salt, at fourteen shillings per bushel,” (Gleason v. Pinney, 5 Wend. 393,) are promissory notes, payable in specific articles, for each admits a definite, existing money indebtedness, coupled with a stipulation for a mode of payment other than in money.
    It has frequently been decided that contracts, payable “ in current Ohio bank notes ” — “ in currency ” — “ in current money ” — “ in bank notes current in the city of New York ” — “ in current money of the State ” — are promissory notes payable in money ; but all these decisions proceed upon the ground that the notes, or currency, were those of the States respectively in which the decisions were made, and were known to be of specie value. It has also been more frequently decided that contracts, payable in depreciated bank notes, are contracts for the delivery of property merely ; and that the measure of damages, on a breach of the contract, is the specie value of the bank notes when the same were payable. Robinson v. Noble's Admrs., 8 Peters 181; Philips v. Riley, 3 Conn. 266 ; Clay v. Huston's Adm., 1 Bibb 461; Anderson v. Ewing, 3 Litt. Rep. 245; Chambers v. George, 5 Litt. Rep. 335 ; Gordon v. Parker, 2 Smedes and Marsh. 485; Hixon v. Hixon, 7 Humphreys 33 ; Ogden v. Slade, 1 Texas 13 ; Farwell v. Kennett, 7 Missouri 595 ; Dillard v. Evans, 4 Pike 175.
    If a contract, because it relates to depreciated bank notes, would be construed differently from all like contracts, then it would be competent to resort to extrinsic evidence to show in what sense the words were used. Hildebrand v. Fogle, 20 O. R. 147; Barrett v. Allen, 10 O. R. 426; Lowry v. Adams, 22 Vt. Rep. 160; Knight v. N. E. Worsted Co., 2 Cush. 271; Bradley v. Steam Packet Co., 13 Peters 89; Hart v. Hammett, 18 Vt. Rep. 127 ; 1 Greenleaf Ev. 365, sec. 286 ; lb. 360, sec. 282 ; and note 4 on page 358; Story on Prom. Notes, sec. 638, 479.
    In a suit brought upon a note for payment to the Bank of Illinois of $131,480.52 in the State of Illinois indebtedness, it was held, upon a careful consideration of the authorities, that the amount to be recovered thereon was the market value of the Illinois indebtedness at the day of the maturity of the note. Smith v. Dunlap, 12 Illinois Rep. 184.
    The language of the stipulation is — “ It is understood that twenty-five per cent, is to be taken in stock.” This is a contract to take stock, not to pay it; and the phrase, uventy-fiveper cent., describes the quantity or amount to be taken.
    In a contract to pay ten thousand dollars in the stock of the Cleveland and Pittsburgh Railroad Company, the sum named would be regarded by all business men as descriptive of quantity, amount, or par value, though a more technical mode of expressing the quantity might be adopted by describing the number of shares. Indeed, no other construction could be given to the contract, whether regard be had to the common sense of mankind or the well established rules of legal interpretation. The measure of damages, therefore, on a failure to perform the contract, would be the market value of the stock when the contract was broken. This position is sustained by precedents, as well as upon principle. Moore v. Hudson River Railroad Company, 12 Barb. 156; Porter et al. v. Buckfield Branch Railroad, 1 Am. Railway Cases 185. Also, see cases before cited.
    For the neglect or refusal of the company to issue the certificates of stock, the measure of damages would be, in accordance with the rule laid down in England, New York and Massachusetts, the highest price of the stock between the time of the neglect or refusal to issue the certificates and the commencement of the suit. Shepherd v. Johnston, 2 East 211; Downs v. Buck, 1 Starkie 318 ; McArthur v. Seaforth, 2 Taunt. 257 ; Harrison v. Harrison, 1 Car. & Payne 412; Williams v. Archer, 5 Man. Gr. & Scott 318 ; Archer v. Williams, 2 Car. & Kir. 25 ; West v. Wentworth, 3 Cow. 82; Clark v. Pinney, 7 Cow. 681; Kortright v. Buffalo Com. Bank, 20 Wend. 91; Wilson v. Little, 2 Conn. 443 ; Sargent v. Franklin Ins. Com., 8 Pick. 90.

      Mason & Estep, for defendants in error.
    We claim the rule of the law to be that the damages for the breach of a contract to pay an ascertained or certain sum in specific articles, are fixed by the contract itself, and are the amount of the debt ascertained by the contract. This rule is established by authority too strong to be controverted. We content ourselves with citing leading authorities in five States: Morris v. Edwards, 1 Ohio 189; Brooks v. Hubbard, 3 Conn. 58; Grleason v. Pinney, 5 Wend. 393 ; 5 Wend. 189 ; Mason v. Briggs, 16 Mass. 453; 3 Blackford 189.
    It would be useless to deny that, in the language of Judge Hitchcock in 1 Ohio, “ if the contract be for, the payment of one hundred dollars in wheat,” or of one hundred bushels of wheat at one dollar per bushel, and payment be not made, “ the damages would be $100 ; ” or, if the contract be “ to pay $75.50 on the 1st day of August, 1822, in salt at 14 shillings per bushel,” the damages will be $75.50, although salt should not then be worth 5 shillings per bushel. It is admitted by the counsel that such is the legal effect of such obligations, because they say that they “ admit a definite existing money indebtedness, coupled with a stipulation for a mode of payment other than in money.”
    In the present case, Kelley & Co. were, by the contract, to do certain work for which they were to be paid — a part in cash and a part in stock. The price of this labor is fixed by the contract, the amount is to be made certain by the measurement provided for by the contract, the time of payment is'fixed, and it is an indebtedness declared by the contract to be in dollars and cents— a money indebtedness.

    The counsel say that there is no covenant on the part of the company to pay the stock. There is no covenant to deliver stock upon which Kelley & Co. could sue, which the court could enforce. It is not a contract for the delivery of stock, else it could be enforced. It is an agreement on the part of Kelley & Co. that they will receive part payment of an indebtedness to accrue to them, in stock, and such an agreement as they can sue upon; but they must sue for the debt, for their pay ; they cannot sue for stock, because there is no covenant to deliver it. The language of the covenant of the company is this : “ There shall be a final estimate made of the quantity, character, and value of said work, agreeably to the terms of this agreement, when the balance appearing due to the party of the first part shall be paid to them.” Tou may add, if you please, three-fourths in money and one-fourth in stock. Upon this covenant Kelley & Co. can sue.
    It is said that this is not a promissory note, payable in specific articles. It certainly is not; but the courts and writers on this subject speak of this rule of law as governing contracts for the payment of an indebtedness in specific articles. Aside from the objection that the obligation to pay in stock is not a note for specific articles, we do not see why the case of Morris v. JEdwarcls does not answer every one of the arguments of the counsel, and we are content to point to that case, and to the reasons given by Judge Hitchcock to sustain it, as an answer to the argument. If current bank notes are specific articles, we think it very certain that railroad stocks are.
   J. R. Swan, J.,

delivered the opinion of the court.

The only question which it is deemed necessary to decide in this case is, whether the court of common pleas erred in changing the measure of damages awarded by the referees, from the market value to the par value of the stock, found due by them. We do not pass upon the errors suggested by the defendants in error, in the argument of their counsel.

In contracts in which a party is to receive for his labor, not money, but the transfer of property, the original consideration is not open to inquiry; but the value of the property which is to be transferred is the measure of damages; and, in general, if a party promises to deliver at a future day a specific article, and at a certain price or rate, and the promise is broken, the vendee recovers in damages the difference between the market value at the time of the breach of the contract and the price he agreed to pay. Such agreements being simply contracts of sale, the rule of damages is well settled.

But in New England and in this State, there was a period when property of all kinds had inflated prices, beyond what it would readily command in money. During this period, a debtor found it for his interest to obtain an election, either to pay a debt in money or in specific articles, at a certain price; and contracts of that kind were very common. These contracts frequently assumed the shape of notes. Whenever the right of election on the part of the debtor to pay a debt in specific articles or money was clearly expressed in the contract, or such election was fairly to be implied, the courts had no difficulty in determining the rights of the parties, if the specific articles were not delivered; for, the election being with the debtor, if he did not deliver the articles he was presumed to have elected to pay the debt in money, and, consequently, the debt only, with interest after due, could be enforced against him. Trowbridge v. Holcomb et al., 4 Ohio St. Rep. 38; Morris v. Edwards, 1 Ohio Rep. 189; Brooks v. Hubbard, 3 Conn. 58; Perry v. Smith, 22 Verm. 301.

But these trade notes were in many cases so imperfectly drawn that the courts were frequently embarrassed in ascertaining whether the amount of the money debt mentioned in the contract was the measure by which the damages were to be ascertained, upon non-fulfillment, or the market value of the specific articles, that is, whether the debtor had an election, or whether it amounted to an imperative obligation to deliver the articles specified. Thus, in the case of Pinney v. Gleason, 5 Wend. 393, a note had been given in the following form: “ For value received, I promise to pay A. B. $79.50, on,” etc., “in salt, at fourteen shillings per barrel.” The note was given in part consideration for a house and lot, sold and transferred by the payee to the maker. The salt was worth less than fourteen shillings per barrel when the note became due.

It will be observed, that the price of the salt was fixed, and the quantity could be measured only, by the amount of the money indebtedness designated by the note; and, therefore, when the note was given, the parties had an option, either to calculate the amount of salt that would have satisfied the money debt, and draw the note as an absolute agreement to deliver a specific quantity of salt, and without even naming any price ; or to leave the money debt to stand, and designate how, and at what rate, salt would pay it. The face of the note shows that the parties chose the latter course, although they had all the elements before them to have adopted the former if they had agreed to do so.

There was a difference of opinion among the judges of the Supreme Court as to the true construction of this note; some holding that, as the defendant was indebted to the plaintiff in a certain amount, in money, and the plaintiff, having elected to take salt at a certain price, instead of money, he took his chance of the market; and that, therefore, the value of the salt, when the promise was broken, was the proper measure of damages. \

The court of errors, however, were able to find in the terms of this contract, or the circumstances under which the debt was created, that the defendant intended to have an election to pay the money or deliver the salt, and having, by default in the delivery of the salt, elected to pay the money, the plaintiff was entitled to recover the -money debt of $79.50, with interest. The construction given to the note by the court, in this case, was probably correct, (see cases supra;) but was doubted by Parker, J., in

¡ Wilson v. George, 10 New Hamp. 449 ; and see Smith v. Smith, 2 Johns. Rep. 235 ; Clark v. Pinney, 7 Cowen 681; Mason v. Philips, Addison 347 ; Edgar v. Boies, 11 Serg. & Rawle 445.

It is not, however, very material to the principle which governs such cases, whether the court erred or not in the construction of the note itself; for the true rule governing cases of this kind was adhered to ; that is, where a money indebtedness exists, and the debtor reserves the right of election to pay his debt in money or specific articles, at his convenience, and he fails to deliver the articles, he remains responsible only for the amount of the money debt, whatever may be the market value of the articles.

In Cole v. Ross, 9 B. Mon. 393, it was held, that a covenant to pay $3,333.33, “payable in good merchantable pig metal, delivered on the bank of Greenupsburg, at twenty-nine dollars per ton,” was an imperative obligation to pay pig metal. The court say: “ The expression payable in good merchantable pig metal,’ clearly points out the thing which is to be paid; it is not of the same import as the expression may be paid in pig metal. The latter, if used, would have implied an election to pay in the thing named or not, as it might suit the convenience of the obligor; the former, in direct and positive terms, makes the amount payable in the thing specified, and shows that it was really a contract for pig iron, and not for money which might be paid by the delivery of the article named; and that the sum mentioned was merely the medium by which the quantity of the thing contracted for was to be ascertained, according to the stipulated value per ton.” So in the case of Mattox v. Craig, 2 Bibb. 584, a note was given for the payment of “ eighty-nine dollars to be discharged in good merchantable brick; common brick at four dollars per thousand, and sand brick at five dollars per thousand, to be delivered at the house of,” etc. The court say that, “the expression to be discharged in good merchantable brick,’ etc., cannot be construed to give an election to the debtor to pay in bricks or not, as might suit his convenience, but plainly imports an imperative obligation.”

The decisions in these three cases are not contradictory in prin ciple, but might have been consistently decided by the same court at the same time.

I have referred to them for the purpose of showing that the only difficulty in determining the rights of parties to such contracts, is, to ascertain whether it was their intention to give the debtor an election, the same as if the contract'had in express terms stipulated that the debtor might, at his option, pay the debt in money, or in the articles specified, at the fixed rate. And the necessity of finding this intention expressed or fairly implied, and its controlling effect in determining whether the contract is imperative and single for the delivery of the specific articles, or is in the alternative, and at the election of the debtor, will probably be found in all the reported cases upon this subject.

Notes and contracts have been so drawn as to leave the question of election in so much obscurity as to produce some confusion in the application of the rule. Phelps et al. v. Riley, 3 Conn. 266 ; Brooks v. Hubbard, Ib. 60; but the rule itself has never been departed from, and has always been applied to settle the construction of the contract and the rights of parties. 2 Parsons on Contracts 490.

It will also be found, that in all these cases, the court find, either from the terms of the contract, its subject matter, or the nature of the indebtedness upon which the note or contract is based, that the parties were dealing about a money indebtedness, which it is agreed may, if the debtor choose, be paid in specific articles.

In the contract between the railroad company and the contractors in the case before us, there is no express reservation on the part of the company, of an election to pay in money instead of stock, the amount represented by the stock. The contracts being silent on that subject, we must ascertain whether it may be fairly implied, either from the form of the promise, the circumstances of the case, or the subject matter of the contract. »

In order to take this case out of the general rule, which, considering the railroad stock as an exchange for the contractors’ work, would entitle the contractors to the market value only of the stock, if not delivered, the contractors urge, that the rules of law applicable to trade notes and contracts of like kind, must govern tbe court in tbe construction of this contract; and consequently, that, on the default of the railroad company to deliver the stock, the contractors were entitled to its nominal par value, irrespective of its market value.

To sustain this position, we must find:

1st. That the parties contemplated an election on the part of the railroad company to deliver the stock,, or to withhold it, and pay in money the amount represented by the stock. To imply this, however, we must also find,

2d. That the parties contemplated a money indebtedness to the amount of the work represented by and to be paid for in stock.

It was the duty of the referees, acting as a jury, and endeavoring to ascertain whether the railroad company intended, in this case, to reserve an election to pay money, to judge of the motives and objects of the company in requiring the contractors to take one-fourth in stock; and the referees might well ask, shall we assume, from the circumstances under which the contract was made, that a railroad company, when it commences its work and requires funds to build its road, is indifferent whether its stock is taken at par, or whether the stock remains altogether unsubscribed. It may be that the referees should forget that no railroad was ever built in the United States by funds derived from its stock alone ; but should they ignore the fact that the certificates of stock are the first things that a company should and must dispose of, and the last which it desires to purchase and pay for, in money, at par ? We think not. Hildebrand v. Fogle, 20 Ohio Rep. 147. How, then, can an implication arise, that the railroad company intended to reserve an election to pay money instead of stock, in the absence of any stipulation to that effect ?

Indeed, the ground upon which it is claimed that such an implication can be made, arises from the fact, that the prices of the work are named in monetary terms, and it is insisted that these monetary terms were intended to designate and measure a money indebtedness, and therefore imply an election.

In the first place, it should be understood that the parties could not ascertain the amount of stock to be taken, until the amount of work was estimated; and .the estimate could not be made until the work was finished. Hence none but monetary terms could be used in an executory contract, in regard to the price of this work. When a trade note is given, as in the case above cited of Pinney v. Gleason, for a certain amount of money, payable in specific articles at a certain rate, it is wholly unnecessary for the parties, if they intend a single and imperative obligation to deliver the specific article, to use any monetary terms whatever, or indicate a money indebtedness ; for, a simple arithmetic rule would determine the quantity ; and because they can, but do not, state simply a promise to deliver a certain quantity of specific articles, without indicating a money indebtedness, is a leading reason why a money indebtedness is presumed, and an election implied.

But, in the case before us, as monetary terms were necessarily used, the reason for an implication that they were intended to indicate a money indebtedness in respect to the specific articles, and the reservation of an election, does not arise. But aside from this, and looking to the subject matter of the contract, let us ascertain whether it may be fairly presumed, from the manner in which the stock was brought into the contract, and arbitrarily measured at par, that a money indebtedness, in respect to the stock, was contemplated by the parties. I say at par, for such was manifestly the intention of the parties.

The contract shows, that the stock was in a road to be made. The value of the stock would, therefore, depend upon the correctness of the estimates of the engineers for its completion; the ability of the company to finish it; the capacity of the officers managing it, and the profits which might accrue in a new and yet untried enterprise. Its value was uncertain and merely speculative. It was capital stock not in esse. It had none of the ordinary elements of certainty in its value, which applies to goods.

The contractors did not propose to do the work for cash payments, and afterwards agree to take stock for one-fourth of such money indebtedness. On the contrary, and it is an important circumstance in respect to this view of the case, the railroad company, before any bids were made by contractors, stipulated that, for one-fourth of the work, the contractors should take stock at par; a condition obviously worse for the contractors, and attended with more risks than money payments. To imagine that such a condition was interposed by the company, under the expectation that the work would be done cheaper than for a like amount of money, and that the company and contractors supposed that it was preferable to money, would be shutting out all knowledge of the common transactions of men, and assuming that, in the hands of contractors, there is no difference between ten thousand dollars in money and ten thousand dollars of stock in a railroad that had no existence.

The railroad company invited bids burdened by payment of one-fourth in this speculative stock at par. The bids and prices were fixed by the contractors, with full knowledge of this proposition on the part of the company. The referees, acting as a jury, had a right to presume that the contractors, in fixing their prices for the work, took into consideration the kind of pay they were to receive, and the risks incident to payment of one-fourth in speculative stock at par. Each share of stock at par, expressed, in monetary terms, fifty dollars. But its real value being uncertain and speculative, these monetary terms did not express its real value. The contractors, however, were required to take the stock at par, that being the arbitrary value fixed by the company; and the contractors, to equalize real values and cover the risks, necessarily introduced like arbitrary monetary terms in the price of their work. In other words, it was a stock, and not a money price. Hence the amount of work which was to be paid for in stock, was not, in fact, in the contemplation of the parties, a money indebtedness, although monetary terms were used to express the amount; for the contract was undoubtedly made and the prices fixed with direct reference to the medium of payment.

Even if the speculative value of the stock had been estimated by the contractors above the arbitrary value fixed upon it by the railroad company, the price of the labor was fixed below the monetary terms used. So that in either event, the real measure of the indebtedness was not expressed.

The amounts thus expressed, both as to the stock and the prices of the work, not being the measure of a money indebtedness, and the contractors on the one hand having indemnified themselves for the risk, and the company on the other having paid for the risk, in the price of the work, it would be doing very manifest injustice to now give to the contractors, in cash, what was measured by .payment in speculative stock.

In the absence of an express reservation of election upon the part of the railroad company, to retain their stock and pay par for it, can such an intention of the company be implied under the circumstances ? To sustain such, an implication the referees must have supposed that the company, in the first place, required contractors to make bids and raise funds to build the road, and take one-fourth of the amount in the stock of the company, at par, thus enhancing the price of the work in monetary terms; and that the company at the same time proposed to treat that enhanced price as an indebtedness in money, and to reserve an election to keep the stock and pay in cash the amount of the indebtedness represented by the stock at par. It seems to us but necessary to state the proposition, to show that such an intention could not have existed.

But there is another view of the- case which we think entitled to weight. Where a contract is doubtful in its terms, and will bear two different constructions, one involving a breach of trust or improper conduct, and the other riot, the latter construction prevails. This rule especially controls when a court or 'jury are dealing with implied contracts and intentions. Now, it was the duty of the railroad company to apply its funds, whether borrowed or derived from stock subscription, to the building and equipment of the road. It was neither the legitimate business of the company, nor within the scope or object of its charter, to speculate in its own stock. It would have been an improper application of the funds of the company to substitute its money for, and to become a purchaser of its own stock-;, and an intention to thus divert the funds of the company from their legitimate objects ought not to be implied, in the absence of any express stipulation to that effect.

Eor these reasons we are of the opinion that no such election . was contemplated by either of the parties when the contract was entered into; that the law relating to trade notes and contracts of a like kind, has no application to the agreement between these parties; that it was an exchange of work for stock, in .which monetary terms were necessarily used, not for the purpose of expressing real values, but as the only mode of expressing quantities and proportions; that the fourth to he taken in stock was not a money indebtedness, but a stock indebtedness ; and, consequently, that the company could derive no benefit from the increased value of the stock, and could suffer no loss by its depreciation : the damages which the contractors suffered from the non-delivery of the stock being its market value.

The judgment of the Court of Common Pleas reversed, and the cause remanded.


source: Caselaw Access Project

author: Bartley, J.

license: Public Domain

text:
    John H. Miller and Ann C. Miller, his wife, v. Samuel Stokely and others.
    To establish an express trust ia the ease of a conveyance by deed absolute on its face, it is requisite that the evidence should be clear, certain and conclusive, in proof not only of the' existence of the trust, and that, too, at the time of .the conveyance, but also as to its terms and conditions.

    It is not sufficient that circumstances should be in proof calculated to excite a suspicion, or even a probability, in the minds of some persons, that there might have been a trust; but the proof must show the existence of the trust affirmatively, and so conclusively as to remove all reasonable and well-founded doubt.
    A deed for the conveyance of lands, absolute in its terms, and in consideration of natural love and affection, is repugnant to the existence of a trust, and if in opposition to the terms of such a deed, an express trust coupled with an interest, could ho set up and proven by circumstantial evidence, predicated on a supposed concealment or fraud, after the lapse of thirty years, it is essential that the evidence be so certain and conclusive as to exclude every rational hypothesis to the contrary, with the certainty of a positive written declaration of the trust.
    An implied or resulting trust cannot he shown against an absolute deed in consideration of natural love and affection.

      In chancery. Reserved in the District Court of Jefferson County.
    The complainants are John H. -Miller, and his wife Ann C. Miller, who is a daughter and heir at law of Thomas Stokely, deceased. The defendants are the other children and heirs at law of said deceased, including Samuel Stokely, a grantee as well as heir. The object of the bill is to have the deed from Thomas Stokely and wife to Samuel Stokely, mentioned in the opinion of the court, declared to be subject to an express trust in favor of the grantors and their heirs, and to .compel Samuel Stokely to account as trustee. None of the defendants answer but Samuel Stokely.
    The material allegations of the bill and answer, are set out in the opinion 'of the court, as are also the material facts, as found by the court.

      Stanton & McCook, for complainants and Mrs. Wilson, one of the defendants.

      B. Marsh, Wm. Kennon, Sr., Daniel Peck and Henry Stanbery, for Samuel Stokely.
   Bartley, J.

The determination of this case depends on a simple question of fact as to the existence of an express trust. On the 1st of June, 1821, about thirty years before the commencement of this suit, Thomas Stokely, in consideration of natural love and affection, and five thousand dollars acknowledged, by a receipt on the back of the deed to have been received, conveyed to the defendant, Samuel Stokely, being his only son, certain lands in Mercer and Butler counties, in the State of Pennsylvania. The deed, although somewhat peculiar in its phraseology and provisions, contains an absolute conveyance, expressed to be, “ to and for the only proper use, benefit and behoof of him, the said Samuel Stokely.” The object of this suit is to have this deed declared to have been a conveyance in trust, for the grantor. The bill sets up that the conveyance was made “ on the exprsss trust that Samuel Stokely would hold the said lands for the use of the said Thomas Stokely and his heirs ; that he would preserve them from waste and injury, and protect the titles thereto from the adverse claims of strangers, and that he would dispose of them from time to time to the best advantage, and account with the said Thomas Stokely or his heirs for the proceeds thereof, and that he would convey any portion thereof to such persons as the said Thomas Stokely or his heirs might appoint, or re-convey any that might remain unsold to the said Thomas Stokely or his heirs, on request, and that the said Samuel accepted the conveyance aforesaid, upon the trust aforesaid, and .entered upon the execution of the said trust.”

It is averred in the bill that there was a written declaration of this trust, signed by Samuel Stokely, and delivered to Thomas Stokely in his lifetime, but that the same is now either in the hands of Samuel Stokely, or destroyed! The existence of any such trust at any time, is positively denied in the answer of Samuel Stokely. No attempt is made to prove the contents of any written declaration of the trust;, by any witness who ever saw any such paper ; but the complainants seek to establish the existence and terms of an express trust in connection with this conveyance, either written or parol, by circumstantial evidence.

It is claimed on the part of the complainants, that the five thousand dollars, stated as a part of the consideration, and the receipt of which was acknowledged, were never in fact paid by Samuel Stokely. Be this as it may, no foundation can be laid in this case for relief, on the ground of an implied or resulting trust. How far natural love and affection operated on the grantor, as a part consideration, cannot be ascertained, and it would have been sufficient to sustain the deed as an absolute conveyance, if the moneyed consideration had been merely nominal. An implied or resulting trust cannot be shown against an absolute deed, in consideration of natural love and affection. The case, therefore, must turn upon the question, whether the proof has established the existence of an express trust.

To establish an express trust in the case of a conveyance by deed absolute on its face, it is requisite that the evidence should be clear, certain and conclusive, in proof not only of the existence of the trust, and that, too, at the time of the conveyance, but also as to its terms and conditions.

A deed for the conveyance of lands, absolute in its terms, and in consideration of natural love arid affection, is repugnant to the existence of a trust. And if, in opposition to the terms of such a deed, an express trust, coupled with an interest, could be set up and proven by circumstantial evidence, predicated on a supposed concealment or fraud, after the lapse- of thirty years, it is essential that the evidence be so certain and conclusive as to exclude every rational hypothesis to the contrary, with the certainty of a positive written declaration of the trust. Fleming v. Donahoe et al., 5 Ohio Rep. 255. Boyd v. McLean, 1 Johns. Ch. R. 883 ; Markee v. Pell, 1 Johns. Ch. R. 539.

The application of these rules of evidence to the case before us, removes all difficulty in its determination. The transaction in ivhich this deed originated, c.ould not have been unknown to the family of Thomas Stokely. His. wife signed" and sealed the deed with him. One of the daughters, being the complainant Ann C. Miller, signed the deed as a witness. Thomas Stokely lived some three years after the execution of the deed, and Samuel and his mother administered on his estate. The widow lived some twenty-four years after the execution of the deed, in constant and uninterrupted intercourse with her children. The evidence discloses the fact, that the ancestor, Thomas Stokely, was not inattentive to the interests of his family, and had expressed a prudent forecast in regard to keeping his family advised on the subject of his property. It appears in the evidence that, for some years prior to the execution of the deed, the lands conveyed by it had given the grantor much annoyance ; and it is not pretended that any member of his family w'as ignorant that he had once owned these lands. No witness pretends ever to have seen any written declaration of the trust; and it does not appear that anything was said about a trust, at the time of the execution of the deed. And, in 1827, when partition was made by the heirs of Thomas Stokely, deceased, of lands which descended to them, and dower was assigned to the widow', and some inequalities in the partition were adjusted upon the further partition of the dower estate, to take effect after the termination of that estate, the widow declared that the lands conveyed by this deed belonged to her son Samuel.

Under these circumstances, the complainants seek to establish the existence of an express trust by circumstantial evidence. Numerous circumstances in proof are relied on. It is not necessary here to recite them, but sufficient to say that they are not of that clear and conclusive tendency which establishes to our satisfaction the existence of any such trust. It is not at all surprising that, after the lapse of thirty years, circumstances could be shown not susceptible of clear and entirely satisfactory explanation. And it is not sufficient that circumstances should be in proof calculated to excite a suspicion, or even a probability, in the minds of some persons, that there might have been a trust. It was requisite to entitle the complainants to the relief sought, in this case, that the proof should establish the existence of the trust, affirmatively, and so conclusively as to remove reasonable’ and well founded doubt. This has not been done, and we are unanimous in the opinion that the bill must be dismissed.


author: Ranney, C. J.

text:
    Irad Kelley v. Kelso & Loomis.
    The act of Congress, of March 3,1851, “ to limit the liability of ship-owners, and for other purposes,” (9 U. S. Stat. at Large 635,) has no retrospective operation, and does not affect contracts made or obligations incurred before its passage.
    Statutes affecting substantial interests, and rights of property, have a prospective operation only, unless the contrary intention is clearly expressed.
    Whether this act extends to vessels navigating the north-western lakes — gua-e.
    This is a petition in error, to reverse the judgment of the District Court of Cuyahoga county.
    Kelley, the plaintiff in error, was the defendant in the court below, and now assigns for error, that that court overruled the defense he set up upon the facts admitted, and rendered judgment against him. The facts appear in the opinion of the court.
    C. Stetson, for plaintiff in error.

      S. B. & F. J. Prentiss, for defendants in error,
    cited Quachenbnsh v. BawJcs, 1 Denio 128 ; Bastings v. Lane, 3 Shep. 134; Forsyth v. Marbury, R. M. Charlt. 324; Garrett v. Loe, 1 Scam. 335 ; Guard v. Rowan, 2 Scam. 499; Steamboat Monarch v. Finley, 10 Ohio 385, 390.
   Ranney, C. J.

This action was brought by the defendants in error, to recover for a quantity of coal furnished the steamboat Great Western, of which the plaintiff in error was one of the owners. The coal was furnished, and the cause of action accrued, in the year 1850. About the first of January, 1851, upon proceedings in admiralty instituted in the district court of the United States for the northern district of New York, by the plaintiffs below, and other creditors of the boat, she was sold, and a portion of the proceeds applied upon the debt due to the defendants, leaving a sum still due them, for which they prosecuted this action against the present plaintiff. Upon the trial in the district court, it was admitted that the coal was furnished “ without the privity or knowledge of the defendant, except as one of the owners of] said boat” ; and he now'insists that, under the provisions of the 3d section of the act of Congress of March 3, 1851, to limit the liability of ship owners, and for other purposes,” (9 U. S. Stat. at Large 635,) he is exempted from any personal liability for the debt sought to be recovered.

This section provides, that for certain causes of action therein particularly described, incurred without the privity or knowledge of the owner or owners of any ship or vessel, their liability “ shall in no case exceed the amount .or value of the interest of such owner or owners respectively, in such ship or vessel, and her freight then pending.”

In the 7th section of the same act, it is provided, that “-This act shall not apply to the owner or owners of any canal boat, barge, or lighter, or to any vessel of any description whatsoever, used in rivers or inland navigation.” Counsel for the defendants in error insist that this act can have no application to the present controversy, because, 1st, it does not extend to vessels navigating the north-western lakes, that being, within the meaning of the law, inland navigation ; 2d, a liability for supplies furnished the vessel is not within the terms or objects of the section relied upon ; Bd, the debt sued for was contracted before the passage of the act, and is not, therefore, affected by it; and 4th, that the interest of the plaintiff in error at the time the debt was contracted, not appearing, is presumed to have been sufficient to justify the recovery.

We do not find it necessary to pass upon the several questions thus presented. In the absence of any authoritative exposition of this statute by the courts of the United States, we content our- . selves with placing the decision of this case upon a single point, too reasonable in itself, and too well settled, to require any extended comment.

It is clear that this statute was never intended to have a retrospective operation; and equally clear that, without such an effect is given it, it cannot reach the present case. Long before it was passed, the rights of the parties before us were fixed; a contract, perfect in form and substance, was made, the obligation of which could not be impaired by any State legislation. Whether any such positive restriction is placed upon the legislation of the Federal government, we do not stop to inquire; although I think it would not be difficult to show that such an interference with private rights, would be an infringement of the inviolability of private property, secured by the fifth amendment to the constitution of the United States. But, as was said by the court in Quackenbush v. Dawks, 1 Denio 130, “ There is nothing in the statute under consideration, which, either in terms or by necessary implication, makes it applicable to the case in hand; and we ought in decency to conclude that the legislature did not intend it should have the retrospective and unjust effect which is claimed for it by the plaintiff.” Yiewed in the light of the well settled rule, that statutes affecting substantial interests have only a prospective operation, unless the contrary intention clearly appears, whatever cases it may include, and whatever may be its extent, it’ speaks only for the future, and gives fair notice to those dealing with the masters of vessels, of the restricted liability imposed upon the owners. Upon any other, construction, it takes away, arbitrarily, and without compensation, a part of the security upon which the defendants had_ a right to rely, and impairs the obligation of a contract lawfully made, and upon the faith of which they must be presumed to have parted with their property. Irrespective of all constitutional restraints, it is not difficult to see that such legislation is utterly inconsistent with that jealous regard for private rights, for which our institutions have been distinguished ; and, in the absence of clear and unmistakable language, it ought never to be imputed to a legislative body. Steamboat Monarch v. Finley, 10 Ohio Rep. 384.

The judgment must be affirmed.


author: Brinkerhoff, J.

text:
    William H. Raymond et al. v. James M. Whitney et al.
    Where water-craft is seized by virtue of a warrant regularly issued under the act of February 26, 1840, “ to provide for the collection of claims against steamboats and other Water-crafts,” etc., and the same is discharged from the custody of the sheriff and delivered to the owner, on bond being given, as authorized by the fifth section of said act, the officer making such seizure retains a lien on the water craft for the benefit of the plaintiff and sureties, and a right to reclaim the same, as against all prior creditors of the craft making subsequent seizures thereof, in order that the craft may be forthcoming, to answer the judgment to be rendered under the prior seizure.
    Such judgment may, in a proceeding in chancery instituted by the plaintiff in the first seizure for the' assertion and protection of his own priority by lien, be impeached for fraud and collusion between the plaintiff and the owner of the craft, in the obtaining of said judgment.
    The fact that counsel for creditors making subsequent seizures appeared on the trial, and defended against the claim of the plaintiff, in the first seizure, may be competent evidence on the question of fraud and collusion in obtaining the judgment, but it is not, in law, conclusive of such question.
    In chancery. Reserved in the District Court of Lucas county.

      The material facts in this case, are the following:
    On the 21st day of August, 1849, Raymond, the complainant, commenced an action of indebitatus assumpsit, in the court of common pleas of Lucas county, against the canal boat “ Wave,” by name, under the water-craft law, on á claim amounting then to $660.54. The boat, her tackle, apparel and furniture, were seized on the same day, but discharged from the custody of the sheriff, by a forthcoming bond, executed by complainants Bell, Bond and Rogers, as prescribed by sec. 5, Swan’s Rev. Stat. 185, and the boat was restored to the possession of Rogers, as managing owner. Subsequently, but on the same day, three other suing, for small amounts, were commenced before D. O. Morton, mayor and ex officio justice of the peace, and the boat was seized in each case by the city marshal, and judgments were immediately rendered against the boat. On the same day, four other suits were commenced, for small amounts, before C. I. Scott, a justice of the peace, seizures made by three different constables, and judgments immediately rendered against the boat, in all of the cases. Within the next four- days, six other suits for small amounts, were commenced before Justice Scott, in which seizures were made and judgments rendered against the boat. On all of these judgments, executions were issued to the various marshals and constables, commanding a sale of the boat. Advertisements were put up, and under' most of the writs, sales were to be made on the 1st day of September, 1849.
    On that day, before the hour of sale, complainants Raymond, Bell, Bond and Rogers, filed their bill in chancery, in the court of common pleas, against all of those creditors who had obtained judgments before Mayor Morton and Justice Scott, (and in one case, where the creditor could not be served, the marshal, Babcock, holding the execution, was made defendant,) and obtained an injunction staying proceedings on those executions. The bill set out said judgments and executions, and also the proceedings in Raymond’s suit, alleging-facts bringing Raymond’s suit within the boat law, and claimed that Raymond had obtained a prior lien upon the property seized, for the amount of his demand, and was first entitled to be satisfied out of the proceeds of any sale that should be made. That upon the execution of the forthcoming bond, the property was delivered- to Bell, Bond and Rogers, as the bailees of the sheriff, and to be re-delivered in discharge of their bond, to answer any judgment that might be recovered by Raymond ; that Rogers and Lozier, the owners of the boat, were insolvent, and that any proceedings'tending to interfere with such re-delivery, would occasion irreparable injury to said bailees, and defeat said lien. That the property would not more than pay Raymond’s claim and the costs, if sold without conflict of proceedings, and that owing to the circumstances, and to the conflict of seizures and jurisdiction, with the probable litigation about the title and proceeds, in case of sale by the marshal or constables, the property must be sacrificed, if the sale was not enjoined. That neither of the justices had authority to make distribution of the proceeds, and that none could be made except in the common pleas. The bill prayed for answers, an injunction and general relief.
    At the November term, 1849, all of the defendants filed a general demurrer to the bi]l, and moved to dissolve the injunction, but the demurrer and motion were overruled.
    At the April term, 1850, a trial was had in the action of assumpsit, on a plea of the general issue and notice, Messrs. D. O. Morton and C. F. Abbott appearing and defending, in the name of the boat, for the creditors who are defendants to Raymond’s bill, and a judgment for $686 damages, was rendered in favor of Raymond. On this judgment a vendi. expo, issued, and the boat being restored to .the sheriff by his bailees, in performance of the condition of their bond, he advertised it to be sold on the Ttlp. of May, 1850. On the 6th of May, the defendants to Raymond’s bill, (excepting Babcock, Lozier and the two Colemans,) filed their cross bill against Raymond and Rogers, and enjoined the sheriff’s sale. At the June term, 1850, this injunction was dissolved, on Raymond’s motion, and he had leave to proceed with-his execution, the proceeds to be brought into court.
    June 29th, 1850, a paper was filed, purporting to be the joint and several answer of all of the defendants to Raymond’s bill, except Babcock and Lozier, but signed and sworn to by Whitney only.
    July 8th, 1850, Raymond answered the cross bill, and on the 23d of the same mónth, the sheriff received another vendi, and advertised the boat to be sold “ on Saturday, the 2d day of August next” (Saturday was the 3d.day of August. The printer made the mistake in setting up the sheriff’s notice.) On Saturday, the 3d day of August, the sheriff sold the property to Raymond, for $300 ; delivered it to him, with a bill of sale, and indorsed and returned the sale on the vendi.

    Raymond went on immediately to finish, repair and re-paint the boat, believing the sale to be regular, and his title valid, and expended in that way $167. Afterwards, and on the 2d of September, 1850, the irregularity was mentioned to him, and he, wishing to avoid complaints, immediately served a notice on all the other creditors, consenting that the boat be readvertised, and again offered for sale, upon the condition that his expenditures, after the 3d of August, should be deemed an incumbrance on the property, for which he was to be paid» Under this notice, the sheriff again advertised the property, and on the 16th of September, 1850, having first stated the sale to be subject to the terms of Raymond’s notice, proceeded to sell the property, and struck it off to complainant, Raymond, at $751, and altered his former return, so as to conform in amount to this sale. Complainant, Raymond, being absent, S. A. Raymond attended the sale for him, and bid off the property, and he swears that he understood at the time that the proceeds of the sale were to go into the sheriff’s hands, and that his brother’s repairs were to be paid for out of the proceeds.
    Nov. 5th, 1850, a replication to Raymond’s answer is filed.
    March 21st, 1851, Rogers answers the cross bill, and the same day the original complainants reply to the answer of Whitney.
    Whitney’s answer admits that Rogers and Lozier built the boat, as alleged in Raymond’s bill, and that Raymond did furnish materials to them, as there stated, but avers that Raymond was largely indebted to Rogers, and that was to apply on the boat.

      It admits that Raymond’s was the first seizure and prior lien, but claims the lien was discharged by the forthcoming bond.
    No question is raised, in this answer, as to whether any items in Raymond’s account are legal' charges under the water-craft law.
    The cross bill sets up the prior proceedings, and alleges that Raymond obtained his judgment upon no other evidence than the written admission of Rogers, and his own books, supported by the testimony of S. A. Raymond. That' when Rogers and Lozier commenced to build the boat, Raymond was largely indebted to Rogers for services and money loaned, which was, by an, understanding between them, to apply on the boat. That Rogers represented to Whitney and Woodruff that the boat would not owe over $150, when ready to run. That Raymond made similar representations to Hough and Mayhew, and that credit could be given with safety. That both the Raymonds, about the 1st September, 1849, said to Lundy and Woodruff, that complainant Raymond’s proceedings were for the benefit of Rogers, and to protect his property from sacrifice. It further alleges that not over $150 of Raymond’s judgment was due, when recovered, and that, as Rogers worked for Raymond, the whole debt must have been liquidated. That Raymond and Rogers, to defraud the other creditors, pretend that the whole judgment is due, but the contrary is charged.
    Raymond and Rogers answer and deny every material allegation in the cross bill.
    At the July term, 1852, of the court of common pleas, a decree was rendered confirming the last sale, and directing that Raymond’s judgment be first paid out of the proceeds of the sale, and if the balance of the proceeds were not sufficient to pay the costs, that then the defendants to Raymond’s bill pay the same. Further proceedings against the boat, on the Justices’ judgments, were perpetually enjoined. The decree did not allow Raymond anything for his expenditures on the boat, between the two sales. Both parties appealed ; and at the April term, 1854, of the district court, the cause was reserved for decision in this court.

      Hill, Bennett, Perigo and Pratt, for complainants.

      Hill & Pratt made the following points in substance:
    1. The statute clearly contemplates that the lien shall subsist, notwithstanding a bond to the sheriff may have been executed. The statute prescribes the condition of the bond to be given. See. 5,p. 185, Swan’s Stat.; Jones v. Steamboat Commerce, 14 Ohio Rep. 408; Stump v. Rogers, 1 Ohio Rep. 533 ; McConnell v. Scott, 15 Ohio Rep. 401; Hayes v. Ward, 4 Johns. Ch. 123; Kent v. Matthews, 12 Leigh 574, 585 ; Taylor v. Herriott, 4 De Saus. 227; West v. Belcher, 5 Mumford 187; Hinsdell v. Murry, 6 Vermont 136,150 ; Agnew v. Bell, 4 Watts 31, 33 ; Moore v. Moore, 4 Hawkins 358, 360 ; Watts v. Kinney.

    2. The cross bill does not make a case for relief in chancery against Raymond’s judgment. Stiver v. Stiver, 3 Ohio Rep. 19; Reynolds v. Reynolds, lb. 268; Abbott v. Hughes, lb. 278; Spencer v. King, 5 Ohio Rep. 182, 548; Pollard v. Collier, 8 Ohio Rep. 43; Raines v. Scott, 13 Ohio Rep. 107, 113; 2 Kent’s Com. 119, note c, 5th ed.; Rose v. Himly, 4 Cranch 241; 7 lb. 429; Crant v. McLaughlin, 4 Johns. Rep. 34; Anderson v. Anderson, 8 Ohio Rep. 108; Henry v. Vermillion cf Ashland R. R. Co., 17 Ohio Rep. 187 ; Stevens v. Bank of Wooster, 1 Ohio St. Rep. 233 ; Steamboat Monarch v. Pinley, 10 Ohio Rep. 389.
    3. The first sale passed the title to Raymond. Gwynne’s Sheriff 338; Stall v. McAlister, 9 Ohio Rep. 22 — 24. As to the repairs, see Story’s Eq. Jurisp., sec. 1237; Montagu on Lien 100 ; Gwynhe’s Sheriff 304; Payne v. Cove, 3 T. R. 148 ; Story on Sales, sec. 427.
    4. Raymond’s judgment must be paid first. The People v. Mayor's Court of H. Y., 1 Wend. 39.

      Morton & Lee, for defendants, made the following points in substance:
    1. Raymond’s lien did not continue after the bond was executed to the sheriff, and the boat discharged and delivered to the custody of the owner. It is clearly the meaning and policy of the act, to discharge the boat from the lien by the substitution of other security; and after the release of the boat upon security, the owner is reinstated in the possession of his property, and the .same may again be seized by other creditors, in the same manner as though no proceeding had ever before been instituted against the boat. Steamboat Novelty v. Clements, 14 Ohio Rep. 28.
    2. Raymond’s judgment was obtained by collusion and fraud, and may be impeached therefor.
    3. The defendants in this suit are not concluded by that judgment, for they were not parties to it, and never had a day in court to resist the claim.
   Brinkerhoff, J.

The fifth section of the act referred to in the statement of the case is as follows:

“ That the owner, master, steward, consignee, or other agent of such steamboat or other water-craft, may discharge the property seized, upon entering into bond to the officer taking the same, with two good and sufficient sureties, within the county where such craft may have been seized, in double the amount of the demand sworn to be due by plaintiff, agent, or attorney, conditioned that such property, or double the amount sworn to be due by plaintiff, agent, or attorney, shall be forthcoming to answer the judgment under such seizure.”

It must be admitted, that this statute is, in many respects, obscure and indefinite, leaving a wide scope for judicial construction, and making, in the course of proceedings under it, frequent and large demands for its exercise. We are free to say, we have felt the difficulties thus presented, and, after most diligent endeavors, have been embarrassed with doubts in all our attempts to arrive at conclusions satisfactory to our own minds. But, while the legislature shall leave the act in its present obscurity, we must deal with it as best we may.

The first question presented for our determination in this case is, whether, after the seizure of the craft, and its redelivery to the owner after bond executed as provided for in the fifth section, the officer making the seizure retains, for the benefit of the plaintiff and the sureties in the bond, a lien on the craft and a right to reclaim the same, as against prior creditors making subsequent seizures, so that the same may be “ forthcoming to answer the judgment under such seizure;” or, whether such redelivery is an absolute and complete discharge of the craft, leaving the plaintiff no remedy except on the bond taken by the officer to himself; the sureties no resource but the integrity and pecuniary responsibility of their principal; and the craft itself open and unincumbered to any subsequent seizure of a prior creditor.

The former proposition -would assimilate the proceeding to that of an ordinary delivery of property to the debtoi;, or a third person, by an officer making an ordinary levy under an execution on an ordinary judgment. Wadsworth v. Parsons, 6 Ohio Rep. 449; Ohio for use of Smith v. Fuller et al., 16 Ohio Rep. 545 ; 18 Conn. 1. The latter would render it analogous to proceedings in admiralty, under the act of Congress of March S, 1847. We are of opinion that the former proposition embodies the true construction of the act; and that the word “ discharged ” in the said fifth section, implies no more than the discharge of the craft from the actual manual custody, for the time being, of the officer. And this for the following reasons:

1. The condition of the bond authorized by the said fifth section, is substantially similar to a bond authorized to be taken by an officer making an ordinary levy, and leaving the property seized in execution, in the custody of the judgment debtor; the bond alike in both cases being conditioned for the forthcoming or delivery of the property, and not for the payment of the debt; while the bond authorized to be taken by a marshal, under the act of Congress referred to, is conditioned for the payment of the debt; or, in the words of the act, “ to abide and answer the decree of the court in such case; and such bond or stipulation shall be returned to the said court, and judgment on the same, both against the principal and sureties, may be rendered at the time of rendering the decree in the original cause.” Conkling’s U. S. Admiralty 446.

2. The tenth section of the act under which these proceedings were had, provides that after “judgment rendered, the owner or owners,” etc., “ may appeal from such judgment on entering into the required bond or recognizance, as in-other cases of appeal; and on such appeal being perfected, the officer who may have seized such property, shall restore the same,” etc. Now, “ the required bond or recognizance, as in other cases of appeal,” is conditioned for the payment of the debt or claim to be adjudged, as in cases in admiralty, and works an absolute release in all cases of the property seized or attached — the remedy on the appeal bond serving as the legal substitute for liens acquired by preceding process. And it will be observed that the word “ restore ” is here used, and not the word “ discharge,” as in the fifth section, and the same word is also used in the sixth section,directing the re-delivery of the property to the owner, in case of judgment in favor' of the craft; thus indicating either that the legislature intended to employ the latter in a much more restricted and less comprehensive sense than the former, or else that it was so very careless in the selection of its phraseology, as fully to justify the application of the last reason we shall assign for the construction we have adopted.

3. Again : This construction seems to be necessary, in order to harmonize the fifth section-with the theory of subsequent proceedings under the act, and save them from apparent absurdity. To illustrate: Suppose the craft to be duly seized and discharged by forthcoming bond, as in this case. Suppose the casé proceeds to judgment, which judgment being in rem, is against the craft by name, and against it alone, and that execution ordering a sale of the craft, and which is the only final remedy known to the proceeding, issues. Suppose, further, that the craft is not delivered to the officer either by owner or sureties, but remains in their custody, in the bailiwick of the officer holding the execution, and actually under his eye and within his reach. Now, under these circumstances, cannot the officer retake the craft, and proceed to expose her to sale, either for the payment of the plaintiff’s claim, or for the reimbursement of the sureties ? He cannot, if the discharge under the bond was an absolute discharge ; and the process in his hands, though fully capable, as a matter of fact, of efficient execution, is, by the construction of law, divested of all life and practical energy whatsoever ; and the plaintiff is turned over to seek, by a new suit, such remedy as he may have on a bond given to the officer. But in a proceeding in admiralty under the act of Congress, this inconsistency is avoided; as that act, as will be seen from the clause quoted, authorizes judgment on the bond, against both principals and sureties, at the same “ time of rendering the decree in the original cause.”

Finally. We believe that general equity, and especially the safety of innocent sureties, who are always favorite subjects of legal protection, will be best subserved by the conclusions to which we have arrived.

We are next to determine whether a judgment rendered under the first seizure, may, in a proceeding in chancery instituted by the plaintiff and sureties for the assertion and protection of their own priorities of lien, as against creditors making subsequent seizures, be impeached for fraud and collusion between the plaintiff and the owner of the craft, in the obtaining of said judgment, and with a view to defeat the remedies of other creditors. We think it may. A judgment of a court having full jurisdiction of the parties and of the subject matter, and remaining in full force, is conclusive as against parties and privies. But the defendants to this bill, and complainants in the cross-hill, were neither parties nor privies to the proceeding against the boat, and they never had a day in court. It is contended, however, that counsel for the complainants in the cross-hill, appeared in behalf of the boat on the trial in that proceeding, and that, for this reason, the judgment should conclude the complainants in the cross-bill. We are not of that opinion. The circumstance may he competent evidence on the question of fraud and collusion in obtaining the judgment, but is not, in law, conclusive of that question.

Waiving the question as to whether the facts stated in the original bill of complainants entitled them in chancery to the relief sought, we think that, as all the parties are now before the court, and as the proceedings and rights of the parties since the filing of the original bill, have become somewhat complicated, the case ought to be permitted to proceed to a final determination of their rights and claims in the premises.

But here were two sales, the plaintiff being the purchaser in both, and having, between the sales, expended money in the repair of the craft. Which sale shall stand ? and if the latter, shall the plaintiff be reimbursed out of the proceeds of sale, for his repairs ? Inasmuch as the irregularity of the prior sale arose from no fault of the purchaser; as the repairs were made in good faith, and were in themselves proper to be made; and especially as the last sale was an advantageous one for the owners and their creditors, having produced, after deducting the amount claimed for repairs, a larger sum than the first sale, we are of opinion that the claim for repairs ought to be allowed.

The case will be remanded to the district court for the determination of the questions of fact raised by the cross-bill, and for decree accordingly, on the principles here indicated.


author: J. R. Swan, J.

text:
    Charles Butler et al. v. The Heirs of Benjamin S. Brown, deceased.
    The vendee of a judgment debtor, who has not paid the purchase money, but has received a conveyance from the judgment debtor, cannot sustain a bill to quiet his title as against the purchaser of the land under a judgment rendered after the contract of sale, unless he has paid or brings into court the purchase money.
    Bill of Review. Reserved in the District Court of Lucas county.
    The original bill in this case was filed by the present defendants, as the heirs and legal representatives of Benjamin S. Brown, deceased, against the present complainants, on the 26th March, 1847, in the court of common pleas of Lucas county. Its object was, to quiet the present defendants in their title to lots 465 and 466, in the Vistula division of Toledo ; and the facts, as they appear from the pleadings and the'testimony, are as follows:

      On the 8th February, 1837, Edward Bissell and Benjamin S. Brown entered into a contract in writing, of which the following is a copy:
    “ Memorandum of agreement between Edward Bissell and Ben. S. Brown, Witnesseth : That said Edward Bissell sells to said Brown, lots number 465 and 4G6, in the Vistula division of Toledo. In consideration for which, said Brown agrees to pay to said Edward Bissell fifteen hundred dollars ; one-half thereof to bo piaid in Vistula lots, out of the Charles Butler interest, of equal value with the one-half of the value of lots 465 and 466 — the valuation on which the partition of 1835 was made, to be the basis of value ; and should said Brown not, within the present year, make such arrangements as to convey to said Bissell the lots aforesaid, then he shall pay to said Bissell a fair value therefor, or surrender to said Bissell one-half of the said lots 465 and 466. And said Brown further agrees to erect a good comfortable two-story house on said premises within the present year, the plan thereof to be according- to the plan now in the possession of said Bissell, (a city house,) provided said Bissell or John Berdan shall join him in the erection of a similar house, on the adjoining lot south.
    Witness our hands and seals, Feb. 8, 1837.
    EDWARD BISSELL, [Seal.]
    BEN. S. BROWN, [Seal.] ”
    On the 30th April, 1838, the Albany City Bank recovered judgment against Bissell, in the court of common pleas of Lucas county, for $22,564.02.
    On the 30th day of May, 1838, Bissell executed and delivered to Brown a deed conveying said lots to him in fee simple.
    Brown died in November, 1838.
    Bissell was made a witness to prove that the consideration was not actually paid at the time the deed was made, although fully acknowledged in the deed ; and also that the title conveyed to Brown was in point of fact to be held by him in trust, until payment of the consideration money, though not so expressed in the deed. His competency to establish either of these facts was denied by the original complainants.
    On the 26th day of April, 1843, and while the judgment in favor of the bank was in full force, execution was issued thereon, and on the 29th of the same month, levied, in due form, upon the lots. Such proceedings were afterwards had, that, on the 10th day of February, 1844, the lots were sold by the sheriff to the bank. This sale was afterwards confirmed by the court, and a deed executed by the sheriff to the bank. The title thus acquired was held by the bank in trust for Butler.
    On the 11th January, 1847, Curtis, as the executor of the will of Brown, and testamentary guardian of his children, executed a lease of the lots to Robert W. Titus, for the term of three years; the lessee paying the annual tax upon the lots, during his term, as rent. Under this lease Titus went into possession, and was so in possession at the time of the filing of the original bill. Previous to this time, it does not appear that either of the parties had been in the actual occupation of the premises. The lots were vacant, and entirely unimproved.
    On this state of facts, a decree was rendered by the district court, at the July term, 1852, in accordance with the prayer of the original bill, ordering that the original complainants be quieted in their title, and enjoining the bank and Butler from setting up any claim to said lots, under and by virtue of said judgment in favor of the bank.
    To reverse this decree, the original defendants filed the present bill of review.

      Young & Waite, for complainants in review.
    The testimony of Bissell was admissible. Pie contradicts no statement in his'deed.
    Neither was he incompetent on the ground of interest. No such question can arise since the act to improve the law of evidence — his-interest was against rather than in favor of the present complainants.
    A court of equity will relieve a purchaser against the effect of a judgment lien, when he has as good an equity as the judgment creditor, and prior in point of time. The purchaser’s is not the prior equity, if the lien of the judgment attaches before .performance on his part.
    The contract alone does not entitle the purchaser to relief. It is the payment of the purchase money.

    When the lien has attached, it cannot be divested, except upon payment to the vendor or to the-judgment creditor. Simpson v.
      Niles, 1 Smith’s Indiana Rep. 104 ; Atk. on Tit. 586 ; 1 Sugd. on Vend. 613 ; Basholt v. Reed, 16 Serg. & Rawle 267 ; Lane v. Ludlow’s Adm’r, reported in note to Arnold v. Patrick, 6 Paige 316 ; Pinch v. Bari of Winchelsea, 1 P. Wins. 277 ; Parks v. Johnson, 11 Wend. 442 ; Northrup v. Metcalf, 11 Paige 576 ; Bogart v. Perry, 17 Johns. 353.

      Bill, Perigo & Pratt, and Henry B. Curtis, for defendants in review.

      Henry B. Curtis, and Charles W. Hill, in argument, made the following points:
    The contract between Brown and Bissell was a sale of the lots, and being prior to the judgment against Bissell, they were not aftenoards subject to lien or levy at the suit or judgment of any creditor of Bissell.
    1. Not subject to lien. Manley v. Hunt, 1 Ohio Rep. 257; Roads v. Symmes, 1 Ohio Rep. 281; Jackman v. Halleck, 1 Ohio Rep. 318 ; Douglas v. Houston, 6 Ohio Rep. 156 ; Stauffer v. Baton et al., 13 Ohio Rep. 322 ; Minns v. Morse et al., 15 Ohio Rep. 568 ; Baird v. Kirtland, 8 Ohio Rep. 21.
    2. The lots were not subject to levy, Bissell not being in possession, and not having any possessory right, and having conveyed the legal title to Brown before the levy was made. Canton Bank v. Com. Bank, 10 Ohio Rep. 71; 2 Story’s Eq. Jurisp., sec. 977 ; Rand and wife v. Kendall, 15 Ohio Rep. 671; Highway v. Pendleton, lb. 735; Hill v. Smith et al., 2 McLean 446.
    3. The deed from Bissell recites a consideration of $6,500, which the deed says Bissell has received from Brown.
    Now Bissell could not be admitted to controvert this admitted fact, and the bank and Butler, claiming through Bissell by purchase, are also estopped. Douglass v. Scott, 5 Ohio Rep. 122 ; McChesney v. Wainwright, lb. 285; Toung v. Buckingham, lb. 308. See last paragraph in the case, p. 311, 312.
    4. The verbal agreement that Brown should hold as Bissell’s trustee, amounts to nothing. The deed merged it. (Vide Rhodes v. Symmes, 1 Ohio Rep. at page 314.)
    5. Nor can Bissell be admitted as a witness, to prove himself a cestui que use.

   J. R. Swan, J.

Bissell was a competent witness under the statute.

We are satisfied that Brown did not pay the purchase money. A majority of the court are of the opinion that the rule stated by the Supreme Court in the case of Manley v. Hunt et al., 1 Ohio Rep. 257, should not be disturbed. It has for more than thirty years been acted upon as a rule of title, to wit: that when lands have been sold, the vendor becomes a trustee for the vendee, and the land ceases to be liable for the debts of the vendor on after acquired judgments. Conceding that under this rule the bank obtained no lien by its judgment, and that Butler acquired no title under the levy and sale, still Butler, as equitable assignee of the bank, should not be placed in a worse situation in relation to these lots, and the purchase money due therefor from Brown, than if no levy or sale had been made. It is just and equitable that Brown’s heirs should pay for this property before calling upon a court of chancery to quiet their title ; and it is also equitable and just that Butler, standing in the relation he does to these lots and to Bissell, should, as assignee of the bank, so far as respects the lots and the interest of the bank in the amount for which the lots were hid off, be entitled to claim re-imbursement out of the purchase money still due from Brown’s heirs. The extent of this claim of Butler it is unnecessary to now determine. Brown’s heirs must do equity by bringing into court the purchase money, before they can demand the interposition of this court to quiet their title. It may become necessary to make Bissell a party to the suit.

Decree of district court reversed, and cause remanded.

Bartley, J., dissented.


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    The State of Ohio, on the relation of the Prosecuting Attorney of Sandusky County, v. Ralph P. Buckland, Ebenezer Lane and others.
    A judge of tho court of common pleas may, in the exercise of chamber powers, as a member of the district court, grant leave to file an information in the nature of a quo warranto.
    The authority of the prosecuting attorney of a county, to file an information in the nature of a quo warranto, is not repealed or superseded by the act relating to the duties of the attorney general, passed May 1st, 1852.
    The district court may entertain jurisdiction of an information in the nature of a quo warranto against an association of individuals, for usurping a corporate franchise, when either the office of the association, or the office of the president thereof, shall be within the county.
    Motion to quash an information in the nature of a quo warranto, reserved in the District Court of Sandusky County, for decision by the Supremfe Court.
    On the 31st day of October, 1853, George R. Haynes, prosecuting attorney for Sandusky county, by leave granted by L. B. Otis, one of the judges of the court of common pleas of that judicial district, filed an information in the nature of a quo warranto, in the district court of said county, against Ralph P. Buck-land, Ebenezer Lane, John Gardner, William N. Redfield, Eben E. Osburn, Ereeland T. Barney, Homer Goodwin, William W. Witherell, Walter E. Stone, Samuel W. Torry, and John G. Camp, charging them the said defendants with having formed an association, under tjie assumed name of the Sandusky City and Indiana Railroad Company, and usurped the franchise of a corporation for the construction and use of a railroad from Sandusky City to the west line of this State, for purposes unwarranted by law, and in derogation of the true intent and purpose of the law conferring such franchise.
    The defendants moved to quash the information upon the grounds:
    1st. That the information was filed on the relation of the prosecuting attorney of the county ;

      2d. That the leave to file the information was granted by a judge of the court of common pleas; and
    3d. That it was not alleged in the information, that the principal office of the association was in Sandusky county, etc.

      George R. Haynes, prosecuting attorney, for plaintiff.

      W. F. Stone & Homer Goodwin, for defendants.
   Bartley, J.

A judge of the common pleas has the authority, in the exercise of chamber powers, as a member of the district court of any county of the proper district, to grant leave to file an information in the nature of a quo warranto, in the district court.

The authority of the prosecuting attorney of any county to file an information in the nature of a quo warranto, on his own relation, given by the statute relating to informations in the nature of quo warranto, passed March 17, 1838, is not repealed or superseded by any provision of the act prescribing the duties of the Attorney General, passed May 1,1852.

Where such information charges the defendants, as an association of persons, with usurping or illegally exercising a franchise, and assuming to act as a corporation, without sufficient authority of law, and for the fraudulent purpose of enabling a legally constituted corporation to evade an injunction of the Supreme Court restraining it from doing an act unwarranted by law, and in violation of its corporate powers, the district court may have jurisdiction of the case, if it appear that the office of the association, or the office of the president thereof, be within the county.

Motion overruled, and cause remanded to the district court of Sandusky county.


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    James N. Dickson and others v. L. & S. Rawson and others.
    An assignment of property by an insolvent debtor to certain creditors of his, for the purpose of paying debts due to them and also other preferred creditors, is within the provisions of the third section of the act of March 14, 1838, (Swan’s Stat., ed. 1841, 717,) and inures to the benefit of all the creditors of the assignor.
    It is immaterial whether such assignment is made for the benefit of the preferred creditor, not being an assignee, or to indemnify the surety of the assignor to such creditor.
    In either case, the assignment secures the debt, and entitles the creditor to compel an application of the fund to its payment.
    The character and legal effect of such an assignment, is determined at the time it is made; and is not changed by the fact that the property assigned, turns out to be no more than sufficient to pay the assignees.
    If, at the time it is made and accepted, it subjects the assignee to account to any other creditor of the assignor, the assignment is in trust, and the assignee a trustee within the moaning of that act.
    In Chancery. Reserved in Stark county.
    The complainants, as judgment creditors of Brobst & Rudy, seek by their bill to charge L. & S. Rawson, "Woodbury, Avery & Co., and J. R. Cecil & Co., as trustees for the benefit of all the creditors of Brobst & Rudy, under the provisions of the third section of the amendment of March 14, 1838, to the chancery practice act. Swan’s Stat., ed. 1841, 717. The material facts are the following:
    On the 6th day of September, 1850, Brobst & Rudy, insolvent debtors, and in contemplation of insolvency, made an assignment, of which the following is a copy :

      “ Whereas we the undersigned are indebted to L. & S. Rawson, of the town of Massillon, in about the sum of twelve hundred dollars ; to Woodbury, Avery & Co., of the city of New York, in about eight hundred dollars ; and to J. R. Cecil & Co., of the town of Massillon, in about the sum of eight hundred dollars : Now, for the purpose of securing said creditors, as far as possible, the payment of said sums, we do hereby sell and transfer to them, the said L. & S. Rawson, Woodbury, Avery & Co., and J. R. Cecil & Co., all our stock of goods situate and being in the store now occupied by us in Navarre, in Stark county, Ohio; the said L. & S. Rawson, Woodbury, Avery & Co., and J. R. Cecil & Co., to convert the same into money. Also we sell and transfer to the parties aforesaid, all our notes, bonds, bills and accounts, to be by them collected ; and when said goods, notes, bills, bonds and accounts, shall have been converted into money, to be disposed of as follows: First, to pay the expenses of such conversion. Second, to pay said indebtedness aforesaid; or, if the said L. & S. Rawson shall retain one thousand bushels of wheat now in litigation, then the value to be deducted from the indebtedness described to them. Third, the balance to be refunded to the undersigned; but it is distinctly understood that the title to all the aforesaid property is to vest in said L. & S. Rawson, Wood-bury, Avery & Co., and J. R. Cecil & Co., and that after paying said indebtedness aforesaid, and all reasonable costs and charges, the balance, if any, shall be accounted for to the undersigned. It is further agreed, that the said L. & S. Rawson ; Woodbury, Avery & Co., and J. R. Cecil & Co., shall, after paying themselves as aforesaid, pay over to Daniel Groff any surplus that may remain in their hands, not exceeding five hundred dollars, to indemnify him as security for us to H. B. Harris.
    “ C. A. BROBST,
    “ISAAC RUDY.
    “ September 6th, 1850.”
    The property assigned turned out to be not more than sufficient to pay the debts due to the assignees, and left no surplus for Groff.

      Bierce & Pease, and Alex. Biem, for the complainants.
    Mr. Biem made the following points :
    The transfer of the property to the assignees, was an assignment in trust for the benefit of all the creditors. Mitchell v. Gazzam, 12 Ohio Rep. 315; Griffin v. Barney, 2 Comst. Rep. 371; 6 Hill Rep. 438.
    The assignees were constituted trustees for Daniel Groff; and it does not lie in their mouths to say that the property fell short, and that there is nothing left for Groff. 2 Comst. Rep. 371; 6 Hill Rep. 488.
    Groff was a creditor within the letter and spirit of the statute. If this is not so, then the law can be very easily evaded. The failing debtor need but make the surety the cestui que trust, and the thing is accomplished; the indemnity of the surety will inure to the creditor. Vail v. Foster et al., 4 Comst. Rep. 312; Curtis v. Tyler, 9 Paige Rep. 432; Bank of Auburn v. Throop, 18 Johns. Rep. 505; 1 Story’s Eq., secs. 502, 638; 11 Conn. Rep. 119; 15 Conn. Rep. 383; Green v. Bodge, 6 Ohio Rep. 80.

      A surety may obtain indemnity, but, like a creditor, he must obtain it directly to himself, without the intervention of a trustee. So far as he has a right to obtain indemnity, he is a creditor, and is to be so treated under the statute.
    The fact that the assignees were creditors, does not alter their character as trustees. They were not mortgagees merely, as is claimed by their counsel, but took the property for their own indemnity, and also in trust for Groff, and thereby became trustees for all the creditors.
    The character of the transaction is not altered by showing that there is no surplus. A surplus was provided for, and the transfer was thereby stamped with the character of a trust.
    The assignees were separate creditors of the assignors: yet the transfer is to the assignees jointly. Are they not, therefore, trustees for each other ?

      Keith & Underhill, and A. G. Thurman, for the assignees.

      A. G. Thurman made the following points:
    I. Were the clause for Groff’s benefit out of the assignment, there could be no question that the statute does not apply to it. Loremus v. O'Karra, 1 Ohio St. Rep. 49, 50; Atkinson v. Tomlinson, Ibid. 287, 241, 243; Karlcrader v. Leiby, 4 Ohio St. Rep. 602.
    The idea that because the assignees were several and not joint creditors of the assignors, the assignment created a trust, has no foundation. In Atkinson v. Tomlinson, supra, the assignees were not joint creditors, or sureties, of the assignor, and yet the assignment was held to be unaffected by the statute. So, in Karlcrader v. Leiby, supra, it was admitted that if all the beneficiaries of the mortgage had been mortgagees, the statute would have had no operation, notwithstanding they were several and not joint creditors.
    The only ground, then, for claiming that the assignment in question is an assignment in trust, within the meaning of the statute, is the clause for Groff’s benefit, he not being an assignee.
    In answer to this, I maintain:

      1. That Groff being a mere surety, and not a creditor, an assignment to indemnify him does not fall within the statute.
    2. The clause in question was a mere authority to pay to Groff out of a balance, should there be any. It was precisely what took place in Atkinson v. Tomlinson, supra. The only difference is, that here the authority is contained in the assignment, and there it was contained in an order drawn on and accepted by the assignees. But, in substance there is no difference, for the reason why the authority was contained in a separate instrument in Atkinson v. Tomlinson, was that the assignment was, upon its face, an absolute sale. That it was conditional was proved by extrinsic evidence.
    I have said that in substance there is no difference between the cases. I should have said, that if Groff is to be considered a creditor, there is none.
    II. The assets were insufficient to pay the debts to the assignees. It was impossible, therefore, that there could be anything to pay to Groff. The clause in his favor ought, therefore, to be regarded as a nullity.
    The cases cited by complainants’ counsel, from Hill and Com-stock, might, at first sight, seem opposed to this point. But they were cases arising under the statute of frauds, and in which the balance was to be paid to the assignors. They were, of course, governed by the settled rules of construction of that statute. But those rules do not govern cases under the statute now before us. These rules are very stringent, the object being to prevent fraud.

    But the statute under consideration embraces innocent as well as fraudulent assignments, and I submit that, (within its true meaning and spirit,) an assignment made in good faith, ought not to be affected by it, in consequence of a wholly nugatory clause; when, if the clause were not in it, the statute would have no operation upon it.
   Ranney, C. J.

In the carefully considered cases of Doremus v. O'Harra, and Atkinson v. Tomlinson, 1 Ohio St. Rep. 45, 241; as well as in Bloom v. Noggle, and Harkrader v. Leiby, 4 Ohio St. Rep. 45, 602, the extent, operation, and proper construction of the act of March 14, 1838, relating to the assignment of property by insolvent debtors, in trust, with the design of preferring some creditors to the exclusion of others, were fully discussed, and the conclusions of this court have been explicitly stated.

It is only necessary now to repeat, that the act does not extend to, or in any way affect, conveyances or mortgages made by a failing debtor to his creditor for the purpose of paying or securing his debts; but that it does control every transfer or conveyance of property, whether by mortgage or otherwise, made by an insolvent debtor, in- view of his insolvency, to be held by the person taking it, for the benefit of some one or more of the creditors of the debtor, other than himself. To bring the case within the operation of the statute, the conveyance must be in trust, and the person receiving the property, thereby constituted a trustee for some one or more of the creditors of the debtor, to the exclusion of others. Whether it is so in trust, and the assignee or grantee such trustee, depends upon the question whether, by the terms of the instrument-or by necessary implication, he is liable to account to the preferred creditor for the property in his hands, and for the manner in which he disposes of it. If a court of chancery, at the instance of the creditor, would compel him thus to account, the character of the transfer, and his own position, are thereby determined ; and the statute then steps in and enlarges the trust, and makes it inure to the benefit of all the creditors, and distributes the fund to all, in proportion to their respective demands.

In the caso now before us, the assignment was made by debtors confessedly insolvent, and in view of their insolvency, to a part only of their creditors. The assignees are directed to convert the property into money, and after paying the expenses and the debts due to themselves, to pay over to Daniel Groff a sum not exceeding five hundred dollars, to indemnify him as a surety of the assignors to one Harris. Neither Groff nor Harris are amongst the assignees to whom the property was transferred; and for this reason it is claimed by the complainants, that the liability to account and the character of the conveyance are determined, and the case brought within the terms of the statute.

The defense rests upon the denial that Groff was a creditor within the meaning of the statute ; and upon the establishment of the fact, that the avails of the property turned out to be no more than sufficient to pay the debts due to the assignees, and left no surplus to be applied to the indemnity of Groff.

We have carefully considered both these positions, and are of the opinion, that neither of them can avail to take the case out of the operation of the statute.

1. “ The design to prefer one or more creditors,” it is very true, must be established ; but we do not consider it necessary to inquire, whether a surety merely, before paying the debt, is a creditor within the meaning of the act; as the solution of the question could, in no possible case, be of the least materiality. The assignors must be presumed to have designed the necessary legal effect of their own act. What this was, is clearly and definitely settled. As said by Bronson C. J., in Vail v. Foster, 4 Com. R. 314: “It is a settled rule in equity, that the creditor shall have the benefit of any counter bonds or collateral securities which the principal debtor has given to the surety, or person standing in the situation of a surety, for his indemnity. Such securities are regarded as trusts for the better security of the debt, and chancery will compel the execution of the trusts for the benefit of the creditor.” See also 4 Kent’s Com. 307 ; 1 Story’s Eq., secs. 502, 638 ; Green v. Dodge, 6 O. R. 80.

In legal effect, therefore, the indemnity provided for Groff in the assignment, was a security of the debt upon which he was surety, and entitled the creditor, Harris, to bring the trustees to account, and to compel an application of the trust fund to the payment of his debt. This review of the subject, makes it entirely immaterial, in all cases, whether the assignment is made for the direct benefit of the creditor, or to indemnify the surety of the assignor to such creditor ; the obligation to account to the creditor, if not expressly stated, arising “ by necessary implication ” from the terms of the instrument.

2. We are equally clear upon the other ground of defense. Upon general principles it has come to be well settled, that an assignment for the benefit of particular creditors, and securing a benefit to the assignor before all his creditors are paid, is fraudulent and void. Goodrich v. Downs, 6 Hill 438 ; Barney v. Griffin, 2 Com. 371. And in these cases, it has been definitively determined, that the assignment cannot be aided by extrinsic evidence that the assigned property would not sell for enough to pay the creditors provided for. See also Grover v. Wakeman, 11 Wend. 187. In the case of Goodrich v. Downs, the court say : “ It is said that there will be no surplus for the debtor after paying the four creditors who are provided for by the assignment, and consequently that the deed may stand. The parties to the assignment, after having expressly provided for a surplus, are not at liberty to say that such a state of things was not contemplated at the time the conveyance was made. They are estopped by the deed to deny it. And besides, the case does not turn upon the contingency of how much or how little the property may bring, but upon the nature of the transaction.” * * * * “ Although the other trusts, if they stood alone, might be supported, the illegal trust vitiates all the rest.”

The statute, it is true, does not avoid the conveyance, but it nullifies the attempt of the debtor to confine its benefits to a part only of his creditors, and makes it inure to the benefit of all. The declaration of trust is illegal, and the statute avoids it, and compels the assignees to become trustees for all the creditors of the assignor. It is of no importance that the assignees have claims which they might have secured upon the property, if they had attempted nothing more. When they consent to become trustees for any other creditor, they become of necessity, by force of the statute, trustees for all, and in respect to all the property transferred by the assignment.” Harkrader v. Leiby, 4 O. St. R. 613. Once impressed with this character, they are subject to the supervision and control of a court of equity, and the cestuis que trust include all the creditors of the assignor. They all have a pro rata interest in the trust property, and are all entitled to the appropriate remedy to compel its application. We are, therefore, of opinion, that the character and legal effect of such an assignment is determined at the time it is made and accepted, and is not changed by the fact, that the property assigned turns out to be no more than sufficient to pay the assignees. If, at the time it is made and accepted, it subjects the assignees to account to any other creditor of the assignor, the assignment is in trust, and the assignees trustees within the meaning of the statute.

Decree for complainants.