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    McGrath et al. v. Cowen et al.

      Partnership — Appointment of receiver— Non-consent of partner— Rights ofpartners and of firm, creditors — Effect of mortgage on firm property given by one partner — Death of one partner and • continuation by surviving partner and the executor of deceased —Nature of such continued business — Proceedings in error to reverse judgment — No j ecord of finding or agreed statement of facts — Rule of presumption by court as to facts.

    1. The appointment of a receiver in an action between partners, though appearing to have been made by consent, does not es-top the defendant from taking issue on the allegations of the petition which relate to the rights of the parties or of creditors in the partnership property, nor from attacking the validity of mortgages made by the plaintiff of the partnership property without the defendant’s consent: but the existence and membership of the firm, as alleged in the petition, is not thereafter Open to dispute by the parties.
    2. A dissolution of a partnership takes place immediately on the death of one of its members ; and a continuation of the business thereafter by the surviving- partner and the executor of the deceased member, in pursuance of an agreemeut between them, is the formation of a new partnership, the terms of which, when not otherwise expressly agreed upon, may be implied from the manner of conducting the business to be the same as those of the former partnership.
    3. Where, in a proceeding in error in this court, the record does not show an agreed statement or finding of the facts, but there is a bill of exceptions purporting to contain all the evidence, and the reversal of the judgment is sought on the ground that the undisputed facts, or those proven by uncontroverted testimony, require its reversal, it will be presumed, in support of the judgment, that all facts necessary to sustain it, which the evidence fairly tends to prove, were established to the satisfaction of the court whose judgment is under review.
    4. While each partner is the agent of the other for the purpose of carrying on the partnership business in the usual and ordinary way, and has authority to bind the firm by sales and mortgages, of any or all of its property, made in the usual and ordinary course of its business, to bona fide purchasers and mortgagees, it is not within his implied authority to make a final disposition of all the tangible property of the firm, either by chattel mortgage or other method of transfer, the purpose and effect of which is to immediately terminate the partnership, and place the property beyond its control; and when such disposition is so made without the consent of a co-partner who is accessible at the time, it is a fraud on the latter, and may be avoided by him, though it be made to bona fide creditors of the firm, and to create preferences in their favor.
    5. The assertion by the non-assenting partner of his right to avoid such disposition of the partnership property inures to the benefit of the partnership creditors, who may avail themselves thereof to secure an equal distribution of the fund.
    [Decided January 26, 1898.]
    Error to the Circuit Court of Hamilton county.
    The action,below was brought by Owen McGrath against Catherine Cowen, individually and as executrix of the will of her deceased husband, to dissolve a partnership existing between the parties, and for the appointment of a receiver to take charge of the assets and wind up its affairs. The petition alleges that the plaintiff, “in the year 1868, entered into a partnership with James Cowen, since deceased, by verbal contract, for an indefinite period of time, under the firm name of Cowen & McGrath, for the purpose of conducting the business of wholesale dealers in boots and shoes in the city of Cincinnati, on consignment and for commission, and also for the .purpose of conducting in their own right the business of selling boots and shoes at retail in said city; that said partnership was at sufferance, and was so continued by the plaintiff and said James Cowen, for a period of about eighteen years, up to November, 1886, when the said James Cowen died, in the city of Cincinnati; that on December 6, 1886, the last will and testament of said James Cowen was duly probated in the probate court. of this county, under which the defendant Catherine Cowen, widow of said James Cowen, was duly appointed and qualified as executrix, and is still acting as such ; that, among other things, said last will and testament provides as follows, viz.: Item 2. ‘It is my desire that the business of Cowen & McGrath be continued as heretofore, and my executrix is authorized and required, by and with the advice of my sons now engaged in said business, to continue the same and to make any and all contracts or arrangements proper to effectuate the same. I have been associated with Mr. McGrath for thirty-three years, and I can rely upon his considerate treatment of my family in this matter. The proceeds of my share in said business to be divided between my wife and children as they may agree, or in the absence of any agreement, in the proportion named for the division of my estate.’ And in Item 3 of said will, among other things, it is provided: ‘It is my-will that no division of my property take place as long as the business of said Cowen & McGrath be continued.’ Plaintiff further states that after the death of said James Cowen, said business and partnership was continued under an agreement between the plaintiff and the defendant and under the terms and authority conferred by said will, and also under an agreement with the defendant individually, under the same firm name and in the same manner as it was formerly conducted prior to the death of said James Cowen, and that the said business and partnership was so continued from the time of .said death and, the time of the probate of said will up to the present time at sufferance and without any agreement as to the duration of the said partnership or business whatever. The plaintiff states that the business now carried on by said Cowen & McGrath consists of a wholesale establishment at No. 64 West Pearl street, Cincinnati, for the salecf boots and shoes on commission, which merchandise has been consigned to said firm by manufacturers and dealers located in Massachusetts and other eastern states and elsewhere, and that said firm has a stock of goods and merchandise now on hand belonging to said consignors, and also certain outstanding accounts representing sales from such consigned goods, which may belong to consignors ; that the other business, conducted by said firm are two retail stores in the city of Cincinnati, one at 150 West Fifth street, and the other at 272 West Fifth street, which stores contain goods and merchandise sold to said firm absolutely, and from which stores the said firm are prosecuting sales of boots and shoes at retail. Plaintiff further states that the said firm, doing business both at Pearl street and Fifth street, is insolvent, and is unable to meet its obligations either for the goods held on consignment or for the goods purchased for said retail stores; that some of the debts owing by said firm are past due, and they are unable to pay the same; that mortgages have been executed by said firm to various creditors to secure their claims against said firm upon the stock in said retail stores, and that the said mortgagees are now in possession thereof, with power to sell; that there is a large equity in said property covered by said mortgages, which should be preserved for the benefit of the creditors of said firm, and which may be seized by legal process, and may be jeopardized unless a receiver be appointed to take charge and possession thereof for the benefit of creditors, and the property in said wholesale store and the accounts arising therefrom belonging to consignors, will be jeopardized unless the same be preserved by a receiver to be appointed by the court, who shall take possession thereof for the benefit of whom it may concern; that suits are threatened against said firm, and there is a conflict between said mortgagees as to their priorities, and said mortgagees threaten to sell said property, and the same will thus be sacrificed unless sold by a receiver, to be appointed by this court. Plaintiff states that he heretofore demanded of the defendant, both as executrix as aforesaid and individually, a dissolution of said firm, which she refused and now refuses, and he now demands as of right a dissolution thereof; that he has never been able upon his demand for a dissolution, to agree with the defendant upon the terms thereof, or to secure her assent or concurrence thereto, and can not now agree with her thereon; that he has heretofore demanded of the defendant to join with him in an assignment for the benefit of creditors, by said firm, of all of its property, which she has refused and still refuses; that the rights and interests of this plaintiff and of all the creditors of said firm, and the rights of the consignors and owners of the goods and accounts in said wholesale store will be endangered and sacrificed unless all the property belonging to said firm be placed in the possession of a receiver, to be appointed by this court; that the plaintiff is entitled to have said firm dissolved and its property appropriated to the payment of its debts. Wherefore plaintiff prays that said firm fye dissolved by the order of this court, and that a receiver be appointed by this court to take charge and possession of all the property, rights and credits of said firm, and to sell the same under the orders of this court, and apply the proceeds as the court may order, and for all other and proper relief to which he is entitled in equity.”
    Upon the filing of the petition, with the consent of an attorney who had formerly attended to some business for the defendant, but who was without authority to represent her in the action, a receiver was appointed, who qualified and took possession of the property. It does not appear that the defendant was served with process; but, without taking any step to vacate-the appointment of the receiver, she filed an answer, which is as follows: “Now comes Catherine Cowen, executrix under the will of James Cowen, deceased, and Catherine Cowen individually, and by leave of court files this her answer and cross-petition herein. 1. Defendant denies each and every allegation of the petition not herein specifically set forth and expressly admitted. 2. Defendant denies that the firm of Cowen & McGrath executed any mortgages to various creditors to secure their claims against said firm upon the stock of g’oods contained in the retail stores belonging to the said firm. Defendant says that, if there be any such mortgages, the same are invalid, and have no force or effect, for the reason, among others, that they were not executed by said firm of Cowen & McGrath, nor by any one duly authorized thereto, or to execute and deliver said mortgage or mortgages ; and they further deny that any of the parties named in said pretended mortgages were in lawful possession of the property mentioned therein at the time of the appointment of the receiver herein, nor at any time; and that, if any of said parties were in the actual possession of said stock, such possession was without authority of said firm of Cowen & McGrath. 3. Defendant says that the mortgages referred to in the petition of the plaintiff herein were all executed and delivered by said plaintiff without the knowledge or consent of this defendant, and without any authority of law to execute and deliver the same; that said mortgages were not executed in the regular course of the business of said firm, nor for the purpose of obtaining any money or funds for or on behalf of said firm, nor for any purpose in furtherance of the continuation of the business thereof, but were executed solely by Owen McGrath, the plaintiff herein, and against defendant’s consent, to secure an antecedent and existing indebtedness of said firm when the same was practically insolvent. Wherefore the said defendant, Catherine Cowen, executrix, and Catherine Cowen, individually, prays that said mortgages and each of them may be declared null and void, and held for naught; that the proceeds from the sales of the property mentioned and described in said mortgages shall be distributed pro rata among all the creditors of said firm of Cowen & McGrath, and for all other and proper relief. ”
    The firm of David Cummings & Co., which was an unsecured creditor of the partnership of Cowen & McGrath, to an amount exceeding eleven thousand dollars, was made a party, and filed an answer similar to that of Mrs. Cowen. There were a number of other creditors without security. The mortgag’ees referred to in the petition also became parties, and filed answers, claiming the benefit of their mortgages, and alleging that the debts secured by them were bona fide debts of the firm of Cowen & McGrath, and that, when the mortgages were executed, the defendant Catherine Cowen was absent from Hamilton county, and inaccessible, which last allegation was denied by reply. After trial and judgment in the common pleas, the cause was appealed to the circuit court, where the mortgages were held invalid, and the proceeds of the partnership assets ordered to be distributed pro rata, to all the partnership creditors; the fund being insufficient to satisfy all.
    The mortgagees, together' with Owen McGrath, prosecute error to this court. A further statement of the facts, so far as they are deemed material in the disposition of the questions made, will be found in the opinion.

      Kramer & Kramer and Ramsey, Maxwell & Ramsey, for plaintiffs in error.
    We claim the following propositions are sustained by the authorities :
    1. There has been and is such a consensus among the authorities to the effect that a partner can not execute a general asssignment for the benefit of creditors, that it is now settled law.
    2. It has been so frequently and uniformly held that a partner, without the consent of his copartner, may mortgage all the firm property to secure a firm debt, that it may be said that it is now a rule of law that a partner has such power.
    Some of the authorities supporting the first proposition are as follows: Holland v. Drake, 29 Ohio St., 441; The H. B. Claflin Co. v. Evans, 55 Ohio St., 183; Wells v. March, 30 N. Y., 344; Loeb v. Pierpont, 58 Iowa, 469; Deming v. Colt, 3 Sanford, 284; Kimball v. Hamilton, 8 Bosw., 491; Coqu

      ally v. Weil, 47 Md., 277; Hock v. Stone, 34 Mo., 329; Dana v. Lull, 17 Vt., 390; Brooks v. Sullivan, 32 Wisc., 444; Bull v. Harris, 18 Ky., 199.
    Some of the authorities supporting the second proposition are as follows : Mabbett v. White, 12 N. Y., 443; Graser v. Stellwagen, 25 N. Y., 315; Tapley v. Butterfield, 1 Metc., (Mass.) 515; Woodruff v. King, 47 Wisc., 264; Miften v. Mosher, 7 Metc., 244; Chicago Union Bank v. Kansas City Bank, 136 U. S., 225; Arnold v. Brown, 24 Pick., 89; Lambe v. Durrant, 12 Mass., 56; Patch v. Wheatland, 8 Allen, 102; 14 R. I., 500; 3 Duer, 1; 61 Wisc., 335; 17 S. E. Rep., 946; 24 S. W. Rep., 578; 68 Tex., 400; 130 Ind., 63; 55 N. W. Rep., 662; 58 Mo., 532; Settle v. Dry Goods Co., 66 Fed. Rep., 850; Letts, Fletcher & Co. v. McMasters, 83 Ia., 449; Kaiser v. Dry Goods Co., 96 Ga., 760; White Lead Co. v. Hays, 33 N. W. Rep., 657; Same on rehearing 35 N. W. Rep., 494.
    In case of an assigment for the benefit of creditors, the assignor intends to divest himself not only of the title to his property, but of the control of it. Kohn Bros. v. Clement, 55 Ia., 593.
    An assignment is the transferring and setting-over to another some right of title or interest in things in which a third person, not a party to the assignment, has a concern and interest. There must be the intervention of a trustee. Whinner v. Hoyt, 28 N. W. Rep., 384; Cowles v. Ricketts, 1 Ia., 584 ; Froome v. Jones, 13 Ia., 594; Bank v. Crittenden, 66 Ia., 240; Havens v. Hussy, 5 Paige, 30; Loeb v. Pierpont, 58 Ia. 469; Burrell on Assignments, 43-65; 1 Am. Leading Cases, 442-462 ; Coll-yer on Partnership, section 395 ; Storey on Partnership, section 101.

      A partner can, make a mortgage covering' all the firm property. Woodruff v. King, 47 Wisc., 264, Lindley on Partnership, Vol. 1, pp. 140, 141, 2d. Am. Ed. and notes.
    The partner can not make an assignment. Storey on Partnership, section 101 and notes.
    There is no prohibition on his making a mortgage in any part of the said work. Jones on Chattel Mortgages, 4th Ed., section 46; Cobbey on Chattel Mortgages, section 433; 3 Weekly Law Gazette, 365; 3 Western Law Monthly, 306.
    Distinguishing a general assignment for the benefit of creditors from a chattel mortgage, Froome v. Jones, 13 Ia., 481; 33 Mo., 579; 58 Mo., 532.
    A general assignment can not be made by one partner because the assignment ipso facto dissolves the partnership; because the property passes once for all beyond the control of the partnership, and because there being- a trustee, a complication of duties and responsibilities is involved.
    The weight of authority is to the effect that a partner has such an absolute jus disponendi of the partnership effects that he can, in a single sale, dispose of or mortgage the wholé firm property, and this, too, though it may put an end to the partnership; 24 Pick, 89 ; 5 Watts, 22; 59 Ala., 338; 10 Mass., 481; 12 Mass., 56; 12 N. Y., 454.
    The question whether or not the giving- of mortgages by a partner of an insolvent firm and the contemporaneous appointment of a receiver, is tantamount to a general assignment, has been decided by this Court in case of Cross v. Carstens, 49 Ohio St., 548; Chicago Union Bank v. Kansas City Bank, 136 U. S., p. 223.

      The defendants in error now ask the Court to go a step further and to hold that because a partner can not make a general assignment as is decided in 29 Ohio St., 441, and the case of Claflin v. Evans, supra, he in consequence can not make a mortgage. Bates on Partnership, section 403, etseq.; 21 Colo., 803 ; 18 B. Monroe, 195.
    McGrath did not deprive Mrs. Cowen of any rights or powers in respect to the partnership. The creditors, as such, have no rights to the assets of the firm except through the partners. She could have paid off the. mortgages if she desired. She could have executed mortgages herself to prefer any creditors; and it is a mere sentiment to say that the payment of particular debts, if they be honest, by a partnership can-be a fraud upon the partners or any of its creditors. It is the first duty, the all-the-time duty, of 'h partner to pay off its debts, and if it cannot pay any money, then to secure its debts, and such of its debts as either of the partners may determine, are entitled to preference.
    In the case at bar the active managing partner, who had floated the insolvent firm along for years, through his efforts with the bank to borrow money and renew obligations, saw fit to prefer the bank. The same is true as to the other plaintiffs in error who were local shoe manufacturers in Cincinnati, and who extended credit to this firm on liberal terms and who had dealt with the firm for many years. 83 Ia., 449 ; 96 Ga., 760 ; 12 N. Y., 443; 136 U. S., 225; 68 Tex., 400; Jones on Chattel Mortgages, 4th, Ed., section 46; Harvey v. Ford, Mich., 47 N. W. R., p. 242; Roberts v. Waterman, Mich., 55 N. W. R., 662; 43 Pacific Rep., p. 35; 127 N. Y., 442; Farwell v. Cooke, 42 Ills., App. 191; 138 Ills., 571; 130 Inch, 63; 56 N. W. R., 321.
    If the non-assenting partner does not object to the decree, can creditors be heard to complain ?
    It will be remembered that Mrs. Cowen was satisfied with the decree in the Common Pleas Court, sustaining these mortgages. She took no appeal whatever and prosecuted no error. Therefore as to her the decree of the Common Pleas Court is final. The unpreferred creditors, defendants in error, David Cummings & Co., alone appealed from the decree of the Common Pleas to the Circuit Court.
    We contend that they are in no position to complain of the giving of these mortgages. Any rights which they have in the assets of this partnership can only be worked out through the partners. Sigler v. Knox Co., Bank, 8 Ohio St., 511; Huiskamp v. Moline Wagon Co., 121 U. S., 310; Case v. Beaueregard, 99 U. S., 119.
    Was this a partnership at the time the mortgages were executed?
    Owen McGrath and James Cowen were partners as Cowen & McGrath for eighteen years prior to the death of Cowen. He died nine years prior to the giving of these mortgages. Úpon his death the firm of Cowen & McGrath was dissolved by operation of law. At that time, and thereafter, Owen McGrath, as surviving partner, had the right to liquidate the business, and pay off the debts, and in so doing, he had a rig’ht to prefer any of the creditors. Bohler v. Taphan, 1 Fed. Rep., 461; 29 W. L. B., 93; Woerner on Administrators, 281, et seq.

    The business from the time of Cowen’s death was continued by McGrath under the same firm name, and some of the debts secured by these mortgages, notably the debt to the bank, were renewals of debts existing at the time of Cowen’s death.
    It is true that Mrs. Cowen remained in the store and drew a salary, but she was working in one of the retail stores as a saleslady, not as a partner, and the firm was not continued with her, notwithstanding the will of her husband that it should be, by any contract of McGrath’s whatever, either in writing or verbally, or by implication.
    It is well settled that an executrix can not enter into a partnership agreement, with or without a direction in the will as against creditors, owing to her fiduciary relation and trust capacity, so that if this was not a surviving partnership, then the business carried on under the name of Cowen & McGrath, since the death of Cowen, belonged to McGrath alone, doing business under the name of Cowen & McGrath, and the title to the property was in him alone, so that the business of Cowen & McGrath, since the death of Cowen, was either a surviving partnership, or it was the business of Owen McGrath alone.
    The mortgages, therefore, being executed in three different capacities, must be sustained.

      First — If it be a partnership, they were executed by McGrath as one of the firm, and without any fraud whatever.

      Second — If it is a surviving partnership, they were executed by McGrath, as surviving member of that partnership ; and,

      Third — If it be neither a partnership nor a surviving partnership, then he executed the mortgages in his individual right.

      Johnson & Levy and William H. Jones, for defendants in error.
    All the text writers lay down the rule with remarkable unanimity, that one partner may sell or encumber by way of a mortgage, either to raise funds or secure debts of the copartnership, its property, for the purpose of carrying on the partnership, but he cannot do it for the purpose, or with the intent, of termmating the business ; and in this connection, care must be observed not to confound the entirety of the body (that is, the whole or all of the copartnership property) with the entirety of some particular class, kind or portion of the partnership goods, or plant. Story on Partnership, section 101; Holland v. Drake, 29 Ohio St., 441; Lindley on Partnerships, Vol. 1, star p. 126; Bates on Partnership, sections 315, 317, 320; Hawtayne v. Bourne, 7 M. & W. 595; ex parte Chippendale; 4 De G., M. & G. 19.
    One partner can not pledge the entire partnership property and chattels without the assent of his copartner, to prefer the claims of a few, or even all, the creditors, and the same time give them immediate possession of the property. Pettee v. Orser, 6 Bosw., 137; Sloan v. Moore, 37 Pa. St., 217.
    It is true that Mrs. Cowen did not appeal from the decision of the common pleas court, but her legal status was settled and determined when she filed her answer and cross-petition in that court asking that the mortgages all be set aside and that the partnership assets be distributed pro rata among all the creditors. By filing her answer and cross-petition she irrevocably determined her status, and when that was done it was not necessary that she should personally follow the case through its various stages, but leave that to be done by the creditors, who are the only ones pecuniarily interested or affected by the controversy.
    Mrs. Cowen was brought into court by her co-partner, McGrath, on his petition for a dissolution of the firm and a distribution of its assets. This petition alleges the execution of the mortgages; that the mortgagees were in possession with power to sell; that there was a large equity in the property covered by the mortgages which should be preserved for the benefit of the creditors of the firm, and concludes with a prayer that the receiver take charge and possession of all the property, and sell the same under orders of the court and apply the proceeds as the court may order.
    The governing principle is this: that while a partner has the power to sell or mortgage the entire stock of the firm, it is subject to the limitation that such a sale or mortgage must be for the purpose of furthering and carrying on the business of the firm, and not of destroying or terminating it. Bates on Partnership, section 403.
    The single inquiry, therefore, is, was the power exercised to preserve the business of the copartnership, or to destroy it? Osborne v. Barge, 29 Fed., Rep., 725.
    There are a number of other cases that in prin - ciple fully sustain the doctrine of Osborne v. Barge, and to the more important of which we will now refer. Blaker v. Sands, 29 Kan., 551; Cayton v. Hardy, 27 Mo., 536; Drake v. Thyng, 37 Ark., 228; Crossman v. Shears, 3 Ont. App., 583; Kimball v. Hamilton Fire Ins. Co. 8 Bosw., 495; Dickenson v. Legare, 1 Desaus, 537; Sloan v. Moore, 37 Pa. St., 217; Hunter v. Wayneck, 67 Iowa, 555; Carr v. Hertz, 33 Atl. Rep., 194.
    Another ground for holding the mortgages executed by McGrath invalid is because they covered not only the merchandise intended for sale, but also the counters, shelving, fixtures and other chattels not intended for sale, but only for the continued use of the partnership business, and as to which, under all the authorities, he had no power as a partner to sell or pledge.
   Williams, J.

The subject of the controversy here is the validity of the chattel mortgages made by Owen McGrath, in which is involved his authority to make them against the known wishes of the defendant Catherine Cowen. One of the grounds on which it is sought to sustain them is, that when they were executed, the property covered by them belonged to the partnership which had been formed between the plaintiff and James Cowen, the business of which was then being carried on by the former, as the surviving member of the firm, who, as such, it is claimed, had the absolute power of disposition of the assets, without the concurrence or consent of the defendant. It is contended,that the petition contains proper allegations showing this to be the nature of the partnership, the character of the business, and the ownership of the property, and that the defendant is estopped from controverting them, by her consent, as appears of record, to the appointment of the receiver. Or, on the other hand, if the firm consisted of the plaintiff and defendant, the latter is estopped by the order appointing a receiver to deny the execution of the mortgages by that firm. The record, however, will admit of neither of these interpretations.

1. There can be no doubt that, upon the death of James Cowen, the partnership between him and McGrath was immediately dissolved, and the exclusive possession and control of its entire assets became vested in the survivor for „the purpose of closing up its affairs; so that, if no new partnership relation was thereafter entered into by Mc-Grath, there was none to be dissolved, nor any occasion for an application by him for a receiver. It also appears from the petition that, by the will of the deceased partner, his executrix was directed to continue the business with McGrath, and authorized to make all necessary and proper contracts for that purpose ; and that, in pursuance of the authority conferred by the will, the partnership business was continued and carried on, under an agreement between McGrath and the defendant individually, and as executrix of the will, from the death of James Cowen and the probate of his will until the time of the filing of the petition. As a partner cannot possibly continue to be a member of a firm after his death, any agreement with his executor, or other person having a beneficial interest in the share of the assets which belonged to him, for the continuation o.f the business thereafter with the surviving partner, is, necessarily, the formation of another partnership, the terms of which, when not otherwise expressly agreed upon, may be implied, from the manner of conducting the business, to be the same as those of the former partnership. “What is inaccurately called provisions against the dissolution of the partnership is an agreement that, if either party dies, Ms property shall remain in the firm and in the business, for the benefit of his children ; or that his children, or some of them, or some other person, shall immediately on his death take his place in the firm, and become a partner in his stead. All these agreements and arrangements and all that can be made for a similar purpose, are, in' fact, only bargains for the creation of a new partnership when the old one ceases to exist. And so, too, all arrangements or contracts which may be made between the surviving ¡Dartners and the representatives or appointees of the deceased have for their effect only the formation of a new partnership, which, upon some terms or other, takes the stock, and carries on the business of the old one.” Parsons on Partnership, section '343. The effect cannot be otherwise of any arrangement for a continuation of the business, between the surviving member of the firm and the executor or other appointee under the will of the deceased member, made in pursuance of the will; for, upon the death of the partner, his personal estate, including his interest in the partnership, devolves upon his executor and vests in the beneficiaries of the will, and becomes their property.

The plaintiff, in unequivocal terms, recognizes the defendant as a copartner with him in the business and property in question. He alleges in Ms petition, “that he has heretofore demanded of the defendant, both as executrix as aforesaid and individually, a dissolution of said firm, which she refused and now refuses, and he now demands as of right a dissolution thereof ; that he has never been able, upon his demand for a dissolution, to agree with the defendant upon the terms thereof, or to secure her assent or concurrence thereto, and can not now agree with her thereon; that he has heretofore demanded of the defendant to join with him in an assignment for the benefit of creditors, by said firm, of all of its property, which she has refused and still refuses ; that the rights and interests of this plaintiff and of all the creditors of said firm, and the rights of the consignors and owners of the goods and accounts in said wholesale store, will be endangered and sacrificed unless all the property belonging- to said firm be placed in the possession of a receiver, to be appointed by this court; that the plaintiff is entitled to have said firm dissolved, and its property appropriated to the payment of its debts.” If, therefore, any estoppel arises from the averments of thepetitionandtheappointmentof the receiver as therein demanded, it is such as precludes a denial by the plaintiff of the existence of the partnership between him and the defendant, and of her rights as a member of the firm. In order to have a dissolution of a partnership and a receiver, it is essential that there be a partnership to be dissolved ; and the members are necessary parties to an application for the appointment of the receiver. The appointment, therefore, is necessarily a determination of the existence and membership of the firm involved in the application, and, it may be of such other facts as are essential to the order of appointment, but no further.

2. The purpose of the appointment is to place the assets in the control of a disinterested person, to be disposed of to the best advantage of the members and creditors of the firm, so that their rights in the fund may be secured as they may be made to appear. But the appointment, though made by consent, is not a confession of all the aliegations of the petition, so as to forestall inquiry into the rights of the parties in the fund, upon issues raised by proper pleadings. The determination of questions concerning the execution and validity of the chattel mortgages, and of the rights of the parties and of creditors with respect to them, was not necessary to the order of the court appointing the receiver ; nor does the record show any adjudication of them when the order was made; nor did they properly enter into the appointment. Such questions relate to the distribution of the fund, rather than to the selection of a person to preserve it; and the proper method of presenting them is by answer or other appropriate pleadings, for which, when the appointment was made, no party in interest was in default ; and their adjudication may be appropriately had, as was the case in the court below, upon the final distribution of the fund.

3. The mortgages were assailed on the ground that the manner of their execution, under the attending circumstances, was such as to render them ineffectual to create liens on the property included in them, which was that of the partnership then existing between the plaintiff and Catherine Cowen; and on this ground they were held invalid by the circuit court. There was no finding of the facts by that court; but the case is here upon a bill of exceptions purporting to contain the evidence, which, it is claimed, is without substantial conflict, and its review is sought hereupon the theory that the undisputed facts, or those established by uncontradicted testimony, require the reversal of the judgment. In such a case, as this court is not required nor expected to weigh the evidence, it will be presumed, in support of the judgment, that all facts necessary to sustain the judgment, which the evidence fairly tended to prove, were established to the satisfaction of the trial court. And, within that rule, the material facts of the case, as shown by the record, may be stated as follows: On the 20th day of May, 1893, the co-partnership, then consisting of the plaintiff and Catherine Cowen, was engaged in the retail boot and shoe trade, having two stores on Fifth street, in the city of Cincinnati, and was the owner of the stocks of goods in both stores, and of the counters, shelving, furniture, and fixtures used in conducting the business, and was also engaged in handling boots and shoes on commission at a store on Pearl street; but the goods of that store belonged to the consignors. The firm was then, and for some time had been insolvent, in the sense that its property was insufficient to pay its debts, though it still had good credit, and was actively engaged in the prosecution of its business. On that day, which was Saturday, the plaintiff caused to be prepared, ready for execution, the four chattel mortgages in question, which cover all the tangible property then belonging to the firm, including the counters, shelving, and other furnishings and fixtures necessary for, and used in carrying on its business, and signed the same in this form: “In witness whereof, the said Cowen & McGrath, a firm, and Owen Mc-Grath, surviving partner of said firm, and Owen McGrath, individually, have hereunto set their hands, this 20th day of May, A. D., 1893. “Cowen & McGrath by Owen McGrath, Owen McGrath, surviving partner of Cowen & McGrath. Owen McGrath.”

At the same time, the plaintiff had prepared, ready for filing, the petition for the dissolution of the partnership and appointment of a receiver, which he subsequently filed, as hereinafter stated. On the day the mortgages were signed, they were placed in the hands of the mortgagees, which was the first intimation to them that there was any intention to make them. At that time none of the claims secured by the mortgages were due, except, it may be, a small part of one of them, and none of the creditors to whom the mortgages were made had requested security, or were pressing for the payment of their debts. There had been no previous understanding or agreement that those creditors were to have security, nor was there any stipulation for delay, or extension of credit, or other change whatever in the situation of the mortgagees, on account of the security offered, but the giving of the mortgages was the voluntary and unsolicited act of the plaintiff. The mortgagees, however, made the affidavit on the mortgages which the statute requires, and then immediately surrendered them to the plaintiff, who retained them in his possession and control until the following Monday morning, when, about nine o’clock, he caused them tobe filed with the recorder, and immediately thereafter filed the petition in the court below. The mortgages appear to be without a sufficient condition of defeasance, and contain a stipulation authorizing the mortgagees to take immediate possession of the property, which they did as soon as the mortgages were filed, through the attorney who then represented them, as well as the plaintiff; and the stores were at once closed, and possession delivered by them to the receiver appointed upon the filing of the petition. The avowed purpose of the plaintiff, in' the course pursued bjr him, was to terminate the partnership, place its property beyond the control of the firm, and insure the preference of the mortgagees, all of which was known to them at the time; and the whole proceeding was without the assent or knowledge of Mrs. Cowen, who resided in rooms above one of the stores, was accustomed to participate actively in the business of the firm, and, at all business hours of the day on which the mortgages were prepared and signed, was present at the store, engaged with the plaintiff in attending to the business as usual; but his actions and designs respecting these transactions were purposely concealed from her, for the apparent reason that she had re-fused to unite in a general assignment of the partnership effects for the benefit of its creditors, and the plaintiff knew she was opposed to any step which would put an end to the partnership, or interrupt its business. The property covered by the mortgages, which, as before stated, constituted substantially all theproperty of thefirm, is insufficient to satisfy the indebtedness intended to be secured by them, and there are other creditors to a large amount who are without security of any kind.

It is' obvious, from these facts that the mortgages, if sustained, amounted to a complete and final-disposition of all the partnership effects, such as at once and inevitably put an end to the partnership, by the act and according to the will of the plaintiff alone, not merely without the consent or concurrence of his copartner, who was easily accessible and could have been consulted, but in direct violation of her known wishes on the subject. In the making of such a disposition of the partnership property, neither partner has any greater right than the other to have his plan and desires observed and carried out, but each is entitled to an equal voice; and the observance of that g’ood faith which the partnership relation enjoins upon its members in their conduct toward each other requires that, before attempting such disposition by one partner, the other, when accessible, shall be consulted, and given an opportunity to protect himself by forbidding its completion, or making his objections to its consummation. And any secret arrangement by one partner, in a transaction of that kind, by which it is sought to frustrate the wishes of. the other, or deprive him of his equal right, whether designed to secure to the former some individual advantage or not, is a fraud on his copartner, and in excess of his implied authority as a member of the firm.

The implied authority of a partner in the transaction of the partnership business is not a consequence of his interest in the partnership property. That belongs to the firm, and, in case of insolvency, is regarded as a trust fund for the creditors. The individual interest of the partner amounts to nothing more than his share of any surplus that may remain after the debts are paid, and the rights of the partners, as between themselves, are adjusted. This interest each partner is free to dispose of without the consent of the others. But his power to bind them or the firm in the disposition of its property rests upon the ground of agency which arises from the presumed assent of the members in the formation of the partnership; and, in order to be binding upon them, his acts must be within the limits set by them on his authority, or as implied from the nature of the partnership business. The general rule, in the absence of special agreement or ratification, is that each partner is a general agent of the firm for the purpose of carrying on its business in the usual and ordinary way,, and what is necessary for that purpose is the limit of the authority. “The nature of every business implies certain intrinsic restrictions, to exceed which requires express authority, and which a third party dealing with a partner must observe. The powers of the partner do not extend beyond what may be fairly regarded as coming within the ordinary necessities of the business. ” Bates on Partnership, section 317. “The act of one partner, to bind the firm, must be necessary for the carrying on of its business. If all that can be said of it was thatitwas convenient, or that it facilitated the transaction of thebusiness of the firm, that is not sufficient, in the absence of evidence of sanction by .the other partners. Nor, it seems, will necessity itself be sufficient if it be an extraordinary necessity. "What is necessary for carrying on the business of the firm under ordinary circumstances, and in the usual way, is the test.” Lindley on Partnerships, "‘page 126. While, within this rule, one member of a partnership may, in the usual and ordinary course of its business, make a valid sale, or pledge by way of mortgage or otherwise, of all, or part of its effects intended for sale, to a bona fide purchaser or mortgagee, without the consent of the other members of the firm, it is not within the scope of his implied authority to make a final disposition of all of its effects, including those employed as the means of carrying on its business, the object and effect of which is to immediately terminate the partnership, and place its property beyond its control. Such a disposition, instead of being within the scope of the partnership business, or in the usual and ordinary way of carrying- it on, is necessarily subversive of the objects of the partnership, and contrary to the presumed intention of the partners in its formation. As was said by Strong-, J., in Sloan v. Moore, 37 Pa. St., 217, 223. “While a contract of partnership constitutes each of its members an agent for the others,.it is only for the purpose of carrying on the partnership, and not of destroying it. Denuding the finn-of its property is a thing not contemplated in carrying on a partnership, and consequently no agency for such a purpose is intended to be created. When, therefore, one partner is at hand, and might assent, but does not, it is quite unreasonable to presume that he has empowered his copartner to do an act destructive of the purposes for which the firm was established.” Upon the same principle, the courts hold that it is not within the power of one member of a firm to make an assignment of its effects for the benefit of its creditors, without the consent of other members who are accessible for consultation. It is not because such a transfer is called an assignment, or is made in that form, that is held to be beyond the power of the partner, but because it operates to immediately terminate the partnership and place the property beyond its control. Any other form or method of transfer which has the same effect, and is made for the like purpose, must, for the same reason, be equally beyond the partner’s implied authority. In Osborne v. Barge, 29 Fed. Rep., 725, 729, Mr. Justice Shiras said of a transaction in substance like the one under consideration that: “If a mortgage is given upon the stock in trade of a partnership, and under such circumstances that the giving thereof practically terminates the business of the firm, no reason is perceived why the assent of both partners is not as essential to give validity to such an instrument, as in the case of a- general assignment. The mortgage executed to complainants covered practically all the stock of the firm, came due in twenty-four hours after its date, and gave the mortgagees full power to take immediate possession of the property, and to sell the same for the payment of the mortgage debt. The practical effect, therefore, of the instrument, would be to terminate the business of the firm, and to hand over the .control and right of disposition of the partnership property to a third party. The right to thus destroy the life and business of the firm is not possessed by one of the partners, and, to be valid, it must appear that such an instrument was executed by the authority of all the partners.”

The difference between the question here involved and that considered at some length in the opinion in Cross v. Oarsten, 49 Ohio St., 548, 565, is manifest and substantial. There, the instruments whose validity and effect were in question were executed in pursuance of an understanding between the two members composing the firm, and were in fact executed by both. The power of one partner to perform the act without the other’s consent was not involved, while that is the precise question here presented. Though the mortgages made by the plaintiff may not constitute a technical assignment in trust, their execution was designed to accomplish all the purposes of a preferential assignment, and, if sustained, all the consequences of such an assignment must ensue; and therefore, with respect to the power of the plaintiff to execute them in behalf of the firm, contrary to the wishes of his copartner, or without her consent, the question is practically the same as in ease of a formal assignment. A general assignment, so made, for the equal benefit of the creditors, would be less objectionable in the eyes of a court of equity than a transaction like the one before us ; for equity looks with disfavor upon any disposition of an insolvent debtor’s estate which discriminates between equally meritorious creditors, and is reluctant to disturb any which insures equality among them.

The mortgagees are not in the position of bona fide purchasers, because (1,) t\iej were aware of the plaintiff’s purpose in making the mortgages, and co-operated with him in its accomplishment, and the manner of their execution and the attending circumstances were sufficient to advise them that Mrs. Cowen was not participating in the transaction ; and (2,) the mortgages were made voluntarily, without any previous agreement for security, or obligation to give it, and without any extension of credit, or time given for the payment of the indebtedness, or other change in the situation of the creditors to whom they were given. Lewis v. Anderson, 20 Ohio St., 281. But, if it were otherwise, the mortgages are not binding- on the firm, nor valid liens on its property, under the established rules for determining the rights of third persons who deal with a partner, and the obligatory effect.of his acts upon the firm and the other partners. In Lindley on Partnerships, *125,126, these rules are stated as follows : “1. That if an act is done by one partner on behalf of the firm, and it was necessary for carrying on the partnership business in the ordinary way, the firm will prima facie be liable, although in point of fact the act was not authorized by the other partners. 2. That if an act is done by one partner on behalf of the firm, and it was not necessary for carrying on the partnership business in the ordinary way, the firm will prima facie be not liable. In the first case the firm will be liable unless the one partner had in fact no authority to bind the firm, and the person dealing with him was aware of that want of authority ; whilst in the second case the firm will not be liable unless an authority to do the act in question, or some ratification of it, can be shown to have been conferred or made by the other partners.” Without attempting here a review of the cases cited by counsel for plaintiffs in error, it may be remarked of them generally, that they either lack or possess some feature of importance which distinguishes them from this case. That of Mabbett v. White, 12 N. Y., 441, which is mainly relied on in support of the mortgages, is distinguishable from a case like this in the particulars pointed out by Mr. Justice Miller, in Bowen v. Clark, 1 Bissell, 128, 136, where he says: “The court of errors of New York, in the case of Mabbett v. White, by a vote of five judges to two, expressed the opinion of the majority, that one partner had authority to sell and transfer all the copartnership effects directly to a creditor of the firm in payment of a debt, without the knowledge or consent of his copartner, although the latter is at the place of business of the firm, .and might be consulted, and that such transfer is valid, although the firm is insolvent, and thereby one creditor acquires a preference over the other creditors of the firm. This was in fact a controversy at law between creditors of the firm, and there was evidence, although contradictory, of the subsequent assent of the non-assenting’ partner. That decision virtually rejects the principle of implied agency, and, in my opinion, it can only be sustained, if at all, upon the ground which was not stated by the majority, that in a controversy at law between creditors, one creditor cannot object to the validity of such an assignment to another creditor, but that the non-assigning partner a]one can make the objection.” And this distinction was probably in the mind of the judge who prepared the opinion in Mabbett v. White, when he said : “We do not say that in no case would equity interfere in favor of the firm against a third person, in case of a contract of sale by one member. But this is an action at law between creditors, and the jury have negatived all fraud in fact on the part of the plaintiff. ’ ’

Here the non-assenting- partner makes objection to the unauthorized acts of the plaintiff; and the assertion by her, of her right to avoid the mortgages inures to the benefit of the partnership creditors, who 'may avail themselves of her equity, to secure an equal distribution of the partnership fund.

We discover no error in the record which requires a reversal of the judgment below, and it is affirmed.

Judgment affirmed.


source: Caselaw Access Project

author: Minshall, J.

license: Public Domain

text:
    State ex rel. Attorney General v. Jennings et al.

      Public office — What constitutes — Quo warranto will lie, when — Fireman not a public offi.cer.

    1. An office created by an ordinance is abolished by the repeal of the ordinance, and the incumbent thereby ceases to be an officer.
    2. To constitute a public office, against the incumbent of which quo warranto will lie, it is essential that certain independent public duties, a part of the sovereignty of the state, should be appointed to it by law, to be exercised by the incumbent, in virtue of his election or appointment to the office, thus created and defined, and not as a mere employe, subject to the direction and control of some one else.
    3. Where, in pursuance of an ordinance, a fireman is employed by the council to perform the usual duties of a fireman ; who has no control of the fire department, or its property other than in the use-of it; performs his duties subject to the chief of the department and the city council; and is paid by the month for his services, he is not a public officer; and cannot be ousted from his employment by a proceeding in quo warranto, on the ground that he should have been appointed by the mayor with the advice and consent of the council.
    (Decided January 26, 1898.)
    In Quo Warranto.

      F. S. Monnett, attorney general; J. A. Flory, S. L. James and B. G. Smythe, for plaintiff.
    This action is brought by the plaintiff in quo warranto to oust the city council of the city of Newark, Ohio, from exercising rights, privileges and franchises not conferred upon them, and from misusing their privileges and rights as such city council in appointing persons to hold offices in said city in its fire department without appointment from the mayor of said city; and in the appointment of persons to hold offices in the electric light department of said city without the appointment of the mayor of the city under the general statutes, or without the appointment of the trustees of said electric light department as provided for in the act of the legislature of May 9, 1894. 91 Ohio Laws, page 719.
    On the solution of these questions depends the decision of cases No. 5767 and 5768 in this court and they should be considered together, and they all depend upon the question: Has the city coun-
    cil the lawful right to exercise the power to hire the persons to hold these positions in the fire department and the electric lig’ht department of the city ?
    In the organization of municipal corporations in Ohio the legislature has provided a uniform code of laws to govern them.
    And such municipal corporation and its officers have only such powers as are given by these general local laws, and such implied powers only as are absolutely necessary to carry those specifically given into execution and effect. Revised Statutes, section 1678; 45 Ohio St., 118.
    The general powers conferred upon municipal corporations are contained in section 1692 of the statutes, while other special powers and modes of carrying out those provided for in section 1692 are contained in other parts of the statutes bearing on the subject.
    This leaves the only inquiry in considering each of the classes of persons whose appointments are in controversy.

      Fwsfr — Can any office be created" except by law or ordinance ?

      Second — -Are the positions held by these persons, offices, the appointments to which fall within the provisions of section 1711 ?
    The council by paragraph 30 of section 1692, Revised Statutes, is authorized by means of an ordinance £ £to organize and maintain a fire department.” This is also further provided for in section 2470. This provides for a separate department of the municipality which has its own head and corps of persons to operate it, and it must be created, organized and maintained by ordinance.
    To carry out these powers granted in section 1692, the legislature, in order to protect the public and citizens of the corporation, has provided how the persons retained to discharge these public duties shall be appointed. Sections 1707, 1710, and 1711.
    These departments being required to be created, organized and maintained by ordinances, the positions therein are to be filled by appointment or election; if by appointment,then the appointment, under the clear provisions of the above sections, must be first made by the Mayor and cannot be made by the council or a majority of the members thereof.
    The duties of the persons employed in these departments are official duties, necessary, and recognized by all of the ordinances relating to the departments as being necessary to the organizing, maintaining, and to the carrying on of the said departments. The ordinances of June 17, 1895, created the offices and called them such; required the incumbent to take an oath of office and give an official bond. The law stamps upon the positions the office and by no sort of manoeuvering can a majority of the council change it.
    An officer is one exercising the duties of a certain position that is established by law or ordinance.
    The duties to be performed must be prescribed by law or ordinance under sections 1709, 1712 and 1713. The duties they perform appertain to the state, or public at large, as distinguished from mere municipal duties, and persons occupying the position are regarded as state or public officers as well as municipal officers. 7 Am. and Eng. Enc. of Law, first ed., page — . Tiedman on Municipal Corporations, sections 333, 333a; Beach on Public Corporations, section744; Wheeler v. Cincinnati, 19 Ohio St., 19. It is the dutyof the position, and nature of that duty, which makes him an officer. Shelly v. Alcorn, 72 Am. Dec., 133 and note; State v. Kennon, 7 Ohio St,, 548; Ex Rel. v. Brennon, 49 Ohio St., 37; State ex rel. v. Wilson, 29 Ohio St., 347; 2 Burrell Law Dictionary, page 257 ; State ex rel. v. Squire, 39 Ohio St., 197; State ex rel. v. Brady, 42 Ohio St., 504. That they are officers is fully recognized in sections 2474 and 2475 of the statutes.

      Thos. B. Fulton, city solicitor; J. B. Jones and S.M. Hunter, for defendants.

      First — Did the repeal on the 23d day of June, 1897, of the ordinance of June 17, 1895, ‘ipso facto, put out of office all persons who had previously been appointed by the mayor and confirmed by the council, and were at the time of the repeal serving the city in the various offices repealed ? We think it did. Knoup v. The Piqua Bank, 1 Ohio St., 603 ; The State ex rel. v. Wright, 7 Ohio St., 333; Gano v. State ex rel., 10 Ohio St., 238; State ex rel. v. Hawkins, 44 Ohio St., 98 ; 1 C. S. C. R., 145; 37 Ohio St., 98.

      Second — Did the resolutions, passed July 12, 1867, have the effect of discharging the parties sought to be .inducted into the fire department and electric light department, independent of the repeal of the ordinances of June 17,1897?
    The discharging resolutions were in the language following:
    “ Resolved by the City Council of the City of Newark, Ohio, thatthe services of Charles Ritter, as fireman, are no longer desired and the City Clerk is hereby directed to so notify him.” Section 1685, Revised Statutes. These officers removed by the above resolutions were all appointed, and come, as we think, under the first clause of section 1685. Dougan v. District Court, 22 Am. Law Reg., (N. S.) 528.

      Third — We think the persons sought to be inducted cannot be placed in the positions, or places, they seek for the reason that they are now enjoined by a court of competent jurisdiction from holding these positions, or entering into either the fire department, or light plant, to discharge the duties of the respective places or positions.
    We claim that the firemen of the fire department and engineer, firemen and trimmers in the electric light plant are not officers under the ordinances of the City of Newark, or the statutes of the state.
    The present ordinances gives them no tenure, and they take no oath, give no bond, and have no rights or obligations different from any ■ ordinary employee. The statute certainly does not make them officers. Section 1707 provides who shall be officers in such corporations as Newark. 49 Ohio St., 33; 7 American Decisions, 179.
    The following have been held not officers: Deputy clerk probate court. 25 Ohio St., 21. Jury commissioners held not officers requiring election. 52 Ohio St., 346; State v. Gardner, 54 Ohio St., 49; The Trustees Cincinnati Southern R. R. Co., 21 Ohio St., 14; The People ex rel. Crane, and said Crane against Rider, 12 N. Y., 433; People v. Perley, 80 N. Y., 624. Quo warranto only lies against the usurper of a public office. It will not lie against a mere employment or agency. 19 Enc. of Law, 668; 14 Pa. St., 177; 30 Ala., 66; State v. Lyons, 31 Ia., 432; Attorney-General v. Salem, 103 Mass., 138; State v. Boal, 46 Mo., 528., 24 Wis., 63; 19 Enc. of Law, 680.
    The writ of quo warranto does not lie against any municipal body exercising- unlawful powers. 7C.C., 152, text, 155.
    In Great Britain, it will not lie for exercising the office of guardian of the poor for a union, under 4 & 5 Wm. IV., ch. 76; 19 Enc. of Law, 671.
    The office of governor and director of the poor of an incorporated district is not such an office as that for the usurpation of which quo warranto will lie. 3 Ad. & EL, 456; 19 Enc. of Law, 671.
    It will not lie against overseers. 1 Bott’s P. L., 324; 19 Enc., 671.
    Nor to inquire into the election of an assistant overseer. Reg. v. Simpson, 19 W. R., 73; 19 Enc. of Law, 671.
    Nor for the office of trustees under a public local act, and which officers exercised extensive public duties, and were under extensive public responsibilities. Reg. v. Hanley, 3 A. & E., 463, n.

      Nor will it lie for the office of master of a hospital and free grammar school, established by a royal charter. Reg. v. Mousley, 8 Q. B., 946; 19 Enc. of Law, 671.
    Nor for an office of great trust and pre-eminence within the borough, touching the election and return of burgesses to serve in Parliament. Rex. v. M'Kay, 6D. & R., 432; 19 Enc. of Law, 671.
    Nor for the office of church warden. 19 Enc. of Law, 671.
    Office embraces the idea of rights and powers as well as duties. U. S. v. Hartwell, 6 Wallace, 385.
    Fireman are not officers. People v. Pickney, 32 N. Y., 377, et seq.; Trustees v. Roome, 93 N. Y., 313.
    Chief clerk in the office of assessor of the City of Detroit, although independent of assessor, not an officer. People v. Langdon, 40 Mich., 673.
    Superintending architect of public works of New York not an officer. Olmstead v. Mayor, 42 N. Y. Superior Court, 289.
    A road supervisor is not a public officer. State v. Putman, 35 Iowa, 561.
    The medical superintendent of the asylum for the insane at Ward’s Island is not an officer. McDonald v. Mayor, 32 Hun., 89.
    A bridge tender is not an officer. State v. Board of Public Works, 51 New Jersey Law, 240.
    The enrolling clerk of House of Representatives is not a public officer, but a mere employee. State v. Gardner, 43 Alabama, 234.
    A pilot is not a public officer. Dean v. Healey, 66 Georgia, 503; Bunn v. People, 45 Ills., 397; Opinions of Judges, 3 Maine, 481; 19 Eng. & Am. Enc. Law, 388 and notes.
    While a public printer is not usually a public officer,' it is entirely competent for the legislature to make Mm one. Walker v. Dunham, 17 Ind., 483; State v. Brennan, 49 Ohio St., 33.

      Quo loarranto will not lie against a municipality. We contend that the statute has prescribed an absolute and complete remedy to prevent any usurpation of corporate power, by either the council or any of the city officers. Revised Statutes, sections 1777, 1778, 1779, 6761; Ohio ex rel. Board of Education v. Board of Education. Quo warranto, 7 Ohio Circuit Court, 152; 19 Enc. of Law, 674; Dillon Mun. Corp., section 720; State v. Lyons, 31 Ia., 432.
    Nor will the writ of quo warranto lie against the validity of a subscription by a munici pal corporation to railroad stock confirmed by legislative enactment. State v. Mayor, 10 Rich (S. C.,) 491.
    There is a very interesting and exhaustive note to the case of Shelby v. Alcorn, 7 American Decisions, 179, upon the difference between public office and public employment.
   Minshall, J.

It is averred by the attorney-general in the petition that James Jennings and others specifically named, having been and are now unlawfully usurping and holding the offices of “firemen” in the fire department of the city of Newark, this state, and asks that they be ousted therefrom and that Frank Alexander and others, specifically named, and entitled thereto, be inducted into the offices so usurped.

The case has been submitted to the court on an agreed statement of facts, from which it appéars that in 1895, the city council of Newark, passed an ordinance organizing its fire department; and by which it was provided that it should consist of ten firemen, one of whom should be elected as chief by the appointment of the mayor with the advi'ce and consent of the council, and provided for their compensation. The persons, whose induction is asked for, were appointed under the provisions of this ordinance. The chief is not included in thenumber and all were simply appointed as “firemen.” On June 23,1897, the council adopted an ordinance, repealing the former one, and providing for the employment of the ‘ ‘firemen’ ’ by the council, the chief however, being appointed as formerly. The section as to the firemen is as follows : ‘ ‘The said council shall employ as many assistant firemen, from time to time, as to them may seem necessary who shall receive for their services not to exceed $50.00 per month.” Afterwards the firemen appointed under the former ordinance were discharged by resolution of the council, and by another resolution the defendants were employed.

The contention of the relator is that a fireman is an officer, and therefore, under section 1711, Revised Statutes, which requires all officers, of the municipality not elected by the people, to be appointed by the mayor with the advice and consent of the council, the defendants, not being so appointed, have no right to the office, should be ousted, and the former incumbents inducted, as officers holding’ over until their successors are duly appointed and qualified. We do not adopt this view. There is no question but that the council had the power to repeal the former ordinance; and this being so, and all the offices created by it, whatever they were, being thus abolished, the incumbents ceased to be officers, for there can be no incumbent without an office. State ex rel. Flin v. Auditor of State, 7 Ohio St., 333; Gano v. State ex rel., 10 Ohio St., 238; State ex rel. v. Hawkins, 44 Ohio St., 98. So that the real question in the case is, whether a “fireman” is an officer; or, in this case, whether the firemen, for whose employment provision is madein the ordinance of 1897areofficers. For that a position in the fire department of a city may have such duties attached to it, as to constitute an office is not questioned. The chief of a fire department performs such duties as make him an officer. But the character of an office connot be attached to a position by a name merely. Whether it be an office or not, will depend upon the nature and character of the duties attached to it by law.

Many efforts have been made to define a public office; and it is only the incumbent of such an office whose rights can be challenged in a proceeding’ in quo locwranto. But it is easier to conceive the general requirements of such an office, than to express them with precision in a definition that shall be entirely faultless. It will be found, however, by consulting the cases and the authorities, that the most general distinction of a public office is, that it embraces the performance by the incumbent of a public function delegated to him as a part of the sovereignty of the state. Thus inMeachem’s Offices and Officers, section 4, it is said: “The most important characteristic which distinguishes an office from an employment or contract, is that the creation and conferring’ of an office involves a delegation to the individual of some of the sovereign functions of government, to be exercised by him for the benefit of the public; that some portion of the sovereignty of the country, either legislative, executive, or judicial, attaches, for the time being, to be exercised for the public benefit. Unless the powers conferred are of this nature, the individual is not a public officer.” So in High on Extraordinary Legal Remedies, section 625, it is said: “An office, such as to property come within the legitimate scope of an information in the nature of a quo warranto, may be defined as a public position, to which a portion of the sovereignty of the country, either legislative, executive, or judicial, attaches for the time being, and which is exercised for the benefit of the public.” And in the case of Darley v. The Queen, 12 Cl. & Fin., 520, which is generally cited as a leading case, and where the question was whether the information would lie against the treasurer of the city of Dublin, Tindal, C. J., said : “After the consideration of all the cases and dicta on the subject, the result appears to be that this proceeding by information in the nature of a quo toarranto will lie for usurping any office, whether created by charter alone, or by the crown with the consent of parliament, provided the office be of a public nature, and a substantive office, not merely the function or employment of a deputy or servant held at the will and pleasure of others, for, with respect to such an employment, the court certainly will not interfere, and the information will not properly lie.” The fact that a public employment is held at the will or pleasure of another, as a deputy or servant, who holds at the will of his principal, is held, by the judges of the Supreme Court in an opinion delivered to the legislature of the state of Maine, to distinguish a mere employment from a public office, for in such cases no part of the state's sovereignty is delegated to such employees. 3 Greenleaf, 481. The case of State ex rel. v. Brennan, 49 Ohio St., 33, is not at variance with these views. It is quite clear from what has been said that the “Stationery Store-keeper” under consideration in that case was a public officer. He was charged with the purchase and safe-keeping of the stationery required by the county. The judge in delivering the opinion, did not undertake to give an exhaustive definition of a public office; but did say, that “it is safely within bounds to say that where, by virtue of law, a person is clothed, not as an incidental or transient authority, but for such time, as denotes duration and continuance, with independent power to control the property of the public, or with functions to be exercised in the supposed interest of the people, the service to be compensated by a stated yearly salary, and the occupant having a designation or title, the position so created is a public office.” Here, and throughout the opinion, prominence is given to the fact, that a public officer is one who exercises, in an independent capacity, a public function in the interest of the people, by virtue of law, which is only saying in another form, 'that he exercises a portion of the sovereignty of the people delegated to him by law.

Applying what has been said to the case before us, and it clearly appears, as we think, that the fireman, other than the chief, employed by the council under the ordinance of June 23, 1897, are not public officers. They have no control of the fire department, nor of any of its property for any purpose, other than to use it in the extinguishment of fires whenever the occasion requires. They are subject on all occasions and in whatever they do in the course of their employment, to the direction and control of the chief of the department. They receive for their services $50.00 per month, and may be discharged at any time by the council. Hence they are simply persons in the employment of the fire department, and are not public officers of any .kind.

We are, however, cited to some cases where it has been said, as a reason for the non-liability of a city for the acts of its fire department, that firemen are officers. On examination it will be found that this is not the true reason. It assumes that a city is in no case liable for the acts of. its officers. But this is not'true in all cases. A city is liable for the wrongful or negligent acts of its street commissioner. It is true that, in this instance, it is made the duty of a city to keep its streets in repair and free from nuisances, whilst, in this state, it is not required to establish á fire department. But if it organizes a fire department, and levies a tax for its support, it would then seem to become its duty to see that it is properly organized, and that its agents carefully perform their duties in the one case as well as in the other. For it is a general principle, that, though a person may not be bound to do a particular thing, yet if he voluntarily undertake to do it, he is bound to use reasonable care and diligence in its performance, and is liable in damages to one injured from his failure to do so. There is. no statutory duty in cities to construct sewers; but if a city does, it becomes liable to a party injured by the negligence of its officers and agents, in constructing and maintaining them. Dillon, Municipal Corporations, 4th Ed., section 980. The levying of the tax and assuming to act in the premises imposes the duty. Hence the true reason for the exemption of a city from liability for the acts of its firemen, is most probably not referable to the fact that they are officers but to the fact that it would be unwise to burthen the tax-payers of a city with damages resulting’ from the negligence of its agents in such eases; in other words, is simply a limitation suggested by the policy of the law on the maxim respondeat superior, in its application to cities in such eases. In none of these cases was any effort made to determine what, in general, constitutes a public officer. In Dillon on Municipal Corporations, 4th Ed., section 976, it is said: “The exemption from liability in these, and the like cases, is upon the ground that the service is performed by the corporation in obedience to an act of the legislature; is one in which the corporation, as such, has no particular interest, and from which it derives no special benefit in its corporate capacity ; as the members of the fire department, although appointed and employed, and paid by the city corporation, are not the agents and servants of the city, for whose conduct it is liable.” So that the simple fact that a city is not liable for the acts of its fire department does not prove that all of its members are necessarily public officers ; and may, when not properly employed, be ousted from their employment by the state, as usurping on its authority in a proceeding in quo warranto. We are therefore led to the conclusion that none of the firemen proceeded against in this case can properly be termed public officers; they are clothed with none of the requisites of such an officer ; are simply in the employment of the city as laborers, and the right to be so employed cannot be challenged by quo warranto. The fact that their employment requires skill and experience does not alter the case. Skill and experience do not constitute a public office; they are simply requirements of suitableness for the place; and are no more attributes of a public office than of a private employment.

Writ refused and petition dismissed.


text:
    State ex rel. Attorney-General v. Anderson et al.

      City light trimmer and engineer not a public officer.

    A person employed by a city council to trim lights in its electrical light department, is not a public officer; neither is an engineer employed to run an engine in such department.
    (Decided January 26, 1898.)
    In Quo Warranto.

      F. S. Monnett, attorney-general; J. A. Flory, S. L. James and B. G. Smythe, for plaintiff.

      Thos. B. Fulton, city solicitor; J. B. Jones and S. M. Hunter, for defendants.
   Minshall, J.

This case was submitted with the case of the State ex rel. v. Jennings et al., on an agreed statement of the facts. The two cases are similar in facts, the only difference being that all the defendants, but one, were, under an ordinance adopted June 23, 1897, employed by the council as “trimmers” in the Electric Light Plant of the city of Newark, and the other as “engineer” in the same department. The duties imposed on them by the ordinance are manual in character and are to be performed under the direction of the superintendent of the department and the council. The provision of the ordinance as to their employment is as follows :

“Section 7. That said council shall employ, to assist said superintendent in the running of said plant, one engineer who shall receive for his services not to exceed $66.66 per month; one fireman who shall receive for his services not to exceed $50.00 per month, and as many trimmers as may be deemed necessary by said council, who shall each receive for his services not to exceed $45.00 per month, and such other persons, as in the opinion of the council may be necessary at a wage not to exceed $1.50 per day.”

There is no more reason for calling these “trimmers” and the “engineer” public officers, than there would be for calling a person employed to shovel dirt on the streets of the city, a public officer.

The writ must be refused on the authority of State ex rel. v. Jennings, just decided.

Writ refused and petition dismissed.


text:
    State ex rel. Attorney-General v The City of Newark et al.

      Power of city to adopt certain ordinance — Quo warranto to oust such power will not lie, when — Proper remedy.

    1. A suit in quo warranto against a city and its council for the purpose of testing the power of a city by its council to adopt a certain ordinance, and simply asking that the city be ousted from the power by its council to adopt such an ordinance, cannot, under our system and practice, be maintained. The remedy, in such case, is to enioin any steps that may be taken to enforce the ordinance; or to proceed in quo warranto against any person or persons who may claim to hold an office, under and by virtue of the provisions of the ordinance, claimed to be invalid.
    2. Whether such a suit could be maintained to test the right of the people of a certain locality to be a municipal corporation, Query
    (Decided January 26, 1898.)

      In Quo Warranto.

      F. S. Monnett, attorney-general; J. A. Flory, S. L. James, and B. G. Smythe, for plaintiff.

      Thos. B. Fulton, city solicitor; J. S. Jones and S. M. Hunter, for defendants.
   Minshall, J.

This is a suit brought in quoioarranto simply to test the right of a city, council to employ firemen in its fire department, and lamp trimmers, as well as an engineer, in its electrical light plant, without the appointment of the mayor, the prayer being simply, that the city and its council be ousted from the claimed' right of so employing these alleged officers without, the appointment of the mayor. The cause is submitted with two other cases, i. e., State ex rel. v. Jennings et al., and State ex rel. v. Anderson et al., reported supra, on an agreed statement of facts applicable alike to the three cases. The facts are sufficiently stated in those cases for the understanding of this one. Briefly, on June 23, 1897, the council of the city of Newark, adopted two ordinances, one relating- to the fire department and one relating to the electrical light department, of the city, by which provision was made in the one for the. employment of firemen, and in the other for the employment of lamp trimmers and an engineer, by the council without the appointment of the mayor; and, by the same ordinances, repealed the former ordinances relating- to these departments. The power of the council to adopt these ordinances with the provisions therein contained for the employment of lamp trimmers and firemen, has been affirmed by this court in the cases above referred to ; and disposes of this, but for the fact that the jurisdiction of the court in a case like this, is questioned, and requires to be disposed of before any judgment on the merits can be given.

This is the first instance in which quo wa/rranto has been brought in this state against a municipal corporation for the simple purpose of testing its powers, or, so far as we know, anywhere else. It is a matter of no consequence what a city may claim its powers to be or what ordinances it may pass, so long as no steps are taken to enforce them. Hence a proceeding simply to test the validity of an ordinance, that as yet in no way affects a right of property or person, nor can until some steps are taken to enforce it, seems not only immature but wholly unauthorized. When steps are taken that will affect the person or property of another, and the ordinance is found to be invalid, the proceedings under it will be enjoined; or where, as in this case, it creates what is claimed to be an office, and provides a mode of filling it, not authorized by law, and proceeds to fill it, the incumbent may be proceeded against in quo warranto, as was done in the preceding cases. The practice in this state has always conformed to this course and is the true one. If it were otherwise the court might be constantly called on to determine the validity of ordinances adopted by the various cities and villages of the state, whether sought to be enforced or not. In a ease brought in the Supreme Court of Iowa, State v. The City of Lyons, 21 Iowa, 432, to test the validity of a certain ordinance, the court said: “Our attention has not been directed to, nor have we been able to find, any case in the books where proceedings in quo warranto, or information in the nature thereof, has been entertained for the purpose of declaring void or annuling a legislative act, whether passed by a state or inferior municipal legislature.” But the court did not pass on the question, as it disposed of the case on the ground that there was authority for the adoption of the ordinance in question.

Whether a suit in quo wa/rranto could be maintained against a city, or the people of a particular locality, to determine its, or their, right to be a corporation need not be passed on. Such use of the writ, as observed by Dillon in his work on Municipal Corporations, was quite common in England before the revolution of 1688, of which he observes that: “The case of the city of London is the most historical example.” But he further observes: “It is believed by the author that such a remedy is not applicable to our corporations, created, as they are, by statute for the benefit not of the officers or a few persons, but of the whole body of the inhabitants residing therein, and the public.”

In State ex rel. v. Board of Education, 7 C.C. Rep., 152, it was held that quo warranto will not lie against a Board of Education to test its right to be a corporation, for the reason that these boards are the agents of the state for the purpose of carrying on the affairs of the state, and the courts have no power to do away with them. That quo ioa/rranto would lie against the individuals claiming to hold the office, but not against the office itself. The right to be a municipal corporation is said, not to be a franchise, and so not within sec. 6761, R. S. This view seems to find support in the opinion of M r. Dillon. In the case before us, the city is not asked to be ousted of the right to be a corporation, but of a certain power. But if such proceedings were commenced and prosecuted, case after case, it might be destroyed; and it might therefore, at the threshold of such a case, be well heard to say, in the language of the Jew, “You do take my house when you take the props that support it.”

Petition dismissed.


author: By the Coubt:

text:
    Deglow, Executor, v. Kruse et al.

      Two judges of circuit court form quorum—
    Two judges of the circuit court may form a quorum, but if they are divided in opinion as to the effect of evidence offered upon the trial of issues of fact, a valid final judgment cannot be rendered.
    (Decided January 26, 1898..)
    ERROR to the Circuit Court of Hamilton county.
    The plaintiff brought suit in the court of common pleas for the foreclosure of a mortgage. Upon issues of fact joined the cause was there determined, and an appeal was taken to the circuit court. In the circuit court-the cause was disposed of by the following judgment entry:
    “On this day this cause came on for hearing before Judges Swing and Smith, two of the judges of this court (Judge Cox being sick and not able to- sit in the trial of said cause), and was submitted to the court on the pleadings and evidence and was arg-ued by counsel. On consideration whereof the two said judges who heard said case, being divided in opinion as to the right of the plaintiff to recover as against the said Henrietta Kruse, the petition of the plaintiff as against her and the defendant, The Magnolia Building Association, is dismissed at the costs of said plaintiff, and as to the said Frederick W. Kruse, husband of the said Henrietta, the said petition is dismissed without prejudice to the rights of the said plaintiff on the claim asserted against him.
    “ Wherefore, it is ordered and adjudged that the said petition of the plaintiff be so dismissed, and that the said plaintiff pay the costs of this case, taxed at $-, to all of which plaintiff excepts, and thereupon the plaintiff files his motion for a new trial, which is overruled by the court to which the plaintiff excepts.”

      Emory M. Garrison and Tisdale & Grey for plaintiff in error.

      August H. Bode, for defendants in error.
   By the Coubt:

Under the circumstances shown by the record, two judges of the circuit court constitute a quorum, but if they are divided in opinion as to the effect of evidence offered upoa issues of fact, a valid final judgment cannot be rendered. A single judge of the circuit court cannot make a finding of facts. Revised Statutes, section 446.

Judgment reversed.