author: Burket, J.

text:
    The National Bank of Columbus v. The Tennessee Coal, Iron and Railroad Company et al.

      A written instrument in form of deed of conveyance of land — Is in legal effect a mortgage, when — Not effective as to third parties until delivered for record — Priority of lien in contest between grantee and judgment creditor of grantor.

    1. A written instrument duly witnessed and acknowledged, with granting clause in due form as an absolute deed of conveyance of real estate, had the following habendum and trust clause:
    “To have and to hold said premises with all privileges and appurtenances unto said the National Bank of Columbus, its successors and assigns forever; in trust, nevertheless, and upon condition that said Alexander G-. Patton is to hold possession of said premises as fully as if this conveyance had not been made, until said the National Bank of Columbus shall require and make a sale thereof, as hereinafter provided, that is to say; This conveyance is made for the purpose of securing to said the National Bank of Columbus the sum of twenty-five thousand ($25,000) dollars, with interest thereon now past due, and evidenced by the promissory note of said Patton heretofore executed and delivered to said bank, dated October 19, 1891, and it shall be lawful for said the National Bank of Columbus, after six months notice in writing, at any time within five years from the date hereof, in case said principal sum of twenty-five thousand ($25,000) dollars and the unpaid accrued interest thereon shall not he paid on demand, after the notice aforesaid, to sell said land at private sale or public auction, for cash or on credit, and apply the proceeds to the payment of whatever amount may then he due said hank on account of said indebtedness, principal and interest, and the surplus, if any, after such payment, shall be paid over to said Alexander G. Patton, and no payment or receipt of interest, or on account of said principal shall he taken, held or construed as an extension of time for payment of said past due indebtedness; and further it is agreed and promised by said the National Bank of Columbus for itself, its successors and assigns, that if said Patton shall pay said indebtedness and the interest thereon at any time, with or without demand, this deed shall he null and void, and a proper quit-claim deed of all interest in the premises aforesaid shall be executed by said bank to said Alexander G. Patton, his heirs and assigns forever.” A judgment was recovered against the grantor in the court of common pleas of the county where the real estate described in said instrument was situated. In a contest between such judgment creditors, and the grantee in said instrument, as to the priority of lien upon said real estate: Held — That said instrument is in legal effect a mortgage, and did not take effect, as to third parties, until delivered for record; that said judgment became a lien on said real estate from the first day of the term of court at which it was rendered, and said day being prior in time to the date of the delivery of the mortgage for record, the judgment was the prior lien.
    2. Where a vested interest remains in the grantor in a deed with a trust clause, such deed, as to the rights of third persons, is a mortgage, and is required to he recorded as such.
    3. Under section 5374, Revised Statutes, all vested interests in lands and tenements may he levied upon and sold upon execution to pay debts.
    (Decided May 8, 1900.)
    Error to the Circuit Court of Franklin county.
    The agreed statement of facts iB in substance as follows:
    On October 19, 1891, Alexander C. Patton, one of the defendants in error, made to the plaintiff in error his promissory note, in the words and figures follow-in?. to-wit:

      “$25,000.00. Columbus, O., Oct. 19, 1891.
    One day after date, we promise to pay to the order of A. Gr. Patton, twenty-five thousand and no hundredths dollars, at the National Bank of Columbus, Ohio. Value received.
    Alex. G. Patton.
    Indorsed: A. G. Patton.”
    On October 31, 1891, Alexander G. Patton and his wife executed and delivered to the bank the following instrument:
    “warranty deed.
    “Know all men by these presents: That Alexander G. Patton, of the county of Franklin, and state of Ohio, in consideration of the sum of twenty-five thousand dollars to him paid by the National Bank of Columbus, a corporation organized under the laws of the United States, the receipt whereof is hereby acknowledged, does hereby grant, bargain, sell and convey to the said The National Bank of Columbus, its successors and assigns forever, the following real estate, situated in the county of Franklin, in the state of Ohio, and in the city of Columbus, and bounded and described as follows: (Descriptions omitted.)
    “To have and to hold said premises with all privileges and appurtenances unto said The National Bank of Columbus, its successors and assigns forever; in trust, nevertheless, and upon condition that said Alexander G. Patton is to hold possession of said premises as fully as if this conveyance had not been made, until said The National Bank of Columbus shall require and make a sale thereof, as hereinafter provided, that is to say: This conveyance is made for the purpose of securing to said The National Bank of Columbus the sum of twenty-five thousand ($25,000) dollars, with interest thereon now past, due and evidenced by the promissory note of said Patton heretofore executed and delivered to said bank, dated October 19, 1891, and it shall be lawful for said The National Bank of Oolumbus, after six months notice in writing, at any time within five years from the date hereof, in case said principal sum of twenty-five thousand ($25,000) dollars and the unpaid accrued interest thereon shall not be paid on demand, after the notice aforesaid, to sell said land at private sale or public auction, for cash or on credit, and apply the-proceeds to the payment of whatever amount may then be due said bank on account of said indebtedness, principal and interest, and the surplus, if any, -after such payment, shall be paid over to said Alexander G. Patton, and no payment or receipt of interest, or on account of said principal shall be taken, held or construed as an extension of time for payment of said past due indebtedness; and further it is agreed and promised by said The National Bank of Columbus for itself, its successors and assigns, that if said Patton shall pay said indebtedness and the interest thereon at any time, with or without demand, this deed shall be null and void, and a proper quit-claim deed of all interest in the premises aforesaid shall be executed by said bank to said Alexander G. Patton, his heirs and assigns forever.
    “In witness whereof, the said Alexander G. Patton and Mary G. Patton, his wife, who hereby releases her right of dower in the premises, have hereunto set their hands this thirty-first day of October, in the year of our Lord one thousand eight hundred and ninety-one.
    “Alexander G. Patton,
    “Mart G. Patton.”

      This instrument was duly witnessed and acknowledged.
    On October 13, 1894, The Tennessee Ooal, Iron & Railroad Company, being a creditor of Alexander G-. Patton, doing business under the firm name of the Patton Manufacturing Company, commenced its action aginst him, in that form, in the Franklin common pleas, and such action was pending, on issue joined therein, until July 2, 1896, when the plaintiff therein recovered a judgment against Alexander G. Patton for the sum of $1,631.34, with interest thereon, from the date thereof, and costs. That term of the common pleas began April 7, 1894.
    Between the 1st and the 14th days of May, 1896, the bank took actual possession and control of said real estate and thereafter retained the same until the sale thereof under the order of said common pleas court, Alexander G. Patton had been in possession thereof from October 31, 1891, pursuant to the stipulation in said instrument.
    On May 14, 1896, the bank having held said deed from the date of its delivery unrecorded, the property, therein described, was transferred on the duplicate in the county auditor’s office, and on the 18th day of that month the deed was filed with the county recorder and was thereafter duly recorded in the record of deeds of said county.
    On May 18, 1896, after the filing of the deed for record, the property and business of said Patton went into the hands of receivers under the orders of different courts, in fact, of the courts of different states, and still remain in the hands of receivers.
    The company had no knowledge of the deed before it was filed.
    On September 17, 1896, execution issued on said judgment in favor of the company and a levy thereof was declared and returned by the sheriff as made on the real estate described in said deed.
    Pursuant to an order of the common pleas court said lands were sold for the sum of $19,370.00 and the proceeds of such sale brought into that court and distributed, except about $2,300.00 retained to meet the issue on the subject of distribution, raised and pending between the bank and the company.
    At the date of said levy of execution Mr. Patton had no other property subject to levy of execution. The unpaid balance of the bank’s $25,000 claim, after the partial distribution, was and is some $7,000, and the judgment of the company was and is wholly unpaid. The bank claims the undistributed fund, $2,299.36, by virtue of its deed. The company as against said instrument, claims a preference, or first lien on said fund, to the extent of its judgment, interest and costs. ’ ,
    The issue was heard in the common pleas and decided in favor of the company. On appeal to the circuit court the same judgment was rendered, and the bank now brings the record here seeking to reverse the judgment of the circuit court.

      J. T. Holmes, for plaintiff in error.
    The issue between the bank and the company may be stated in various forms; it comes down at last, however, upon the undisputed facts, to a question which may be thus framed:
    Did the legal title to the premises described in the deed of Patton and wife pass, by force of its terms and provisions, into the National Bank of Columbus?
    The bank affirms; the company denies.
    Or thus:

      Did the company’s judgment against Patton become a lien on the real estate described in the deed to the bank as of the first day of the April term, towit, April 7, 1896?
    The company affirms; the bank denies.
    If the bank held the legal title to the lands, under favor of the deed, the lien of the judgment in favor of the company against Patton did not, and could not, attach thereto for that, such liens affect legal titles only; they do not attach to equitable rights or titles.
    If the bank held the legal title to the land, on the issues made by the pleadings and the facts, whether or when its deed was recorded, or not, is wholly immaterial, and it is entitled to the fund as its property.
    If it did not hold the legal title under the deed; if the fee simple remained in Patton and the instrument was an ordinary mortgage, then the company’s judgment became a lien on the land as of April 7, 1896, and has passed with its precedent character to and now obtains against the fund.
    The deed to the bank has some of the features of a mortgage, but it is more than a mortgage by its terms and provisions.
    The bank took the fee with full power to convey it to a purchaser at either public or private sale under sis months’ notice.
    The instrument of conveyance is not in the general or the special form of a power merely to sell real estate. There is no mention or provision of such a power, as a power, in the deed. In other words, it is important to note that the power to sell is not conferred as a specific thing. It passed to the bank with, and as one of the inherents of, the fee and in no other form can it be found actively and actually Tested in the grantee. That it was so Tested cannot he successfully gainsaid.
    If the six months’ notice was an indispensable condition precedent to the exercise of the power of sale, then, it is true that the bank could not exercise it after the first day of May, 1896, for want of time within which to give the notice. This fact did not affect the title held by the bank, howeTer; it did not 'reimvest Patton with any part of the fee, or with any part of the power to conTey the fee, which had passed to the bank.
    A mortgagee, strictly so-called, in Ohio, has no power to conTey the fee of the mortgagor’s property pledged to him.
    The mortgagor holds the legal title, at least until condition broken, and his interest is liable to leTy and sale on execution. Moore v. Rittenhouse, 15 Ohio St., 314; McArthur v. Franklin, 16 Ohio St., 206.
    The doctrine that a mortgagor’s interest in mortgaged property is subject to leTy and sale under execution is of long standing in this state. Ely v. McGuire, 2 Ohio, 223; Phelps v. Butler, Id., 244; Miami, etc., Co. v. Bank; W., 249; Bank v. Bank, 10 Ohio, 71.
    This has beén because the mortgagor, as the cases show, has been held to retain the legal title to the mortgaged premises.
    As will appear in the discussion, much stress will be laid on three words of this paragraph, to-wit, “null and Toid.” They will be treated again and again as though their force obliterated from the document the words which follow immediately, commencing with the copulative conjunction “and.” They were appropriate words, not strong enough to cut down the title which had passed in trust to the bank and destroy the provision and the necessity for a re-conveyance, but, to operate as a check on the grantee in the hands of the grantor whenever, if ever, he should pay the debt. Then he could say to the bank: “You now have no beneficial right in my property; you hold nothing except the naked title in fee, the trust around which has been hulled off. I want my property.” On the transaction in such position, this language would have lain in the grantor’s mouth, put there by the legal effect of express stipulation “null and void,” and he could, upon declination or hesitation, have gone into equity to enforce the return of the title which the stipulation provided should be re-conveyed to him. Roads v. Symmes, 1 Ohio, 281; Jackman v. Hallock, 1 Ohio, 318; Baird v. Kirtland, 8 Ohio, 21.
    Although there were two instruments in this 8 Ohio case, it is exactly in point, on the legal or equitable status, with the case at bar. Loring v. Melendy, 11 Ohio, 355; Haynes v. Baker, 5 Ohio St., 253; Gorrell v. Kelsey, 40 Ohio St., 117.
    The case of Martin v. Alter, 42 Ohio St., 94, in one view comes quite near to the case at bar in its facts and its law.
    If the legal title to this property was in Colonel Patton and never passed to the bank, the lien of the judgment, in legal effect, is, as already stated, substantially as defined by the company’s pleading.
    What conld the sheriff have sold under the execution which he attempted to levy, by virtue of the company’s judgment, in September, 1896? The situation was widely different from that of a levy by the judgment creditor in the Martin-Alter case. There he would have levied on the legal title and upon sale would have passed the legal title to the lands to a purchaser. Here the fee had passed as part of the security and, as in Baird v. Kirtland, supra, it was beyond the reach of a legal lien. If the fee had passed to the bank, for its protection, it was beyond an execution, and the omission to record the deed could not change its character or prejudice the holder. A purchaser of the real estate, after six months from the execution and delivery of the deed, might obtain a prior right by obtaining and recording his deed, but a judgment creditor is not in any sense such purchaser. Tousley v. Tousley, 5 Ohio St., 78.
    ’ If we are not in error, the reported case in Ohio, which comes nearest in principle to the case at bar, is Morris v. Way, 16 Ohio, 469; Birchard v. Edwards, 11 Ohio St., 84.
    A trust is created in our deed. As already suggested, it related to — embraced—something, and that something was the fee, the legal title, for the benefit and protection of the bank, the trustee. It was something which, under the notice, the bank could, without additional conveyance to it, have conveyed to a public or private purchaser, as its grantee; it had that thing when the trust deed was delivered to it and at no time forfeited or aliened it and that thing was to be re-deeded to Patton, his heirs and assigns, on payment of the debt. Such a posture of the legal title was regarded by the parties to the trust deed as necessary to the protection of the trustee. Rife v. Geyer, 59 Pa. St., 393.
    One looked in vain through the discussion of counsel for authority or reasoning which showed that Patton held, or had power, after 1891, to grant the fee of the property. 26 Am. & Eng. Ency. Law, 860.
    The deed, the title, in the case at bar fall within the first class mentioned by Judge Dillon. It was a parting with the fee to the trustee absolutely for the purpose of raising a fund to pay the debt. The debt was past due and expressly not extended or to be extended. The limitation of notice did not qualify the title held and which the bank’s deed would have conveyed to a purchaser. Woodruff v. Robb, 19 Ohio, 212; Hoffman v. Mackall, 5 Ohio St., 130; Kemper v. Campbell, 44 Ohio St., 210; 2 Pom. Eq., Sec. 995.
    The bank had paid and Patton had received its $25,000, good and lawful money. In the light of the facts as they then appeared to bank and grantors and as they appear from the standpoint of the present time, the bank was entitled to the fee in equity and justice and if under notice it could have sold and conveyed it, in law it took the fee to the property for all the purposes of the trust created and declared by the deed, and Patton held nothing that could be liened by a judgment.
    The case at bar does not fall within the definition of the judge, page 423 of the opinion, in Sun Fire Office v. Clark, 53 Ohio St., where he says:
    “The mortgage being simply a security for the debt, is extinguished by its payment without- any reconveyance.”
    As' germane to more than one phase of our case, I stop to quote at this point the definition entire of the last Law Dictionary issued from the press.
    1 Bouvier. “Defeasance. An instrument which defeats the force or operation of some other deed or of an estate. That which is in the same deed is called a condition; and that which is in another deed is called a defeasance. Comyns. Dig. Defeasance.
    This case is in equity and not at law.

      A condition of defeasance may consist with the passage of the fee simple title. 50 N. H., 552; 50 Mo., 284; 6 Met., 415.
    The “null and void” used in this deed is to be read and reconciled with the reconveyance clause with which it is intimately and immediately connected. No case is recalled in which this court has made itself more definite and certain than in Arnold v. Fuller, 1 Ohio, 467.
    The books say that technical accuracy applies the words “null and void” io contracts that are of no effect whatever. Van Schaack v. Robbins, 36 Iowa, 203.
    The legal effect of the “null and void” clause in this deed was to render the deed inoperative and set in motion the right to the reconveyance provided for when and if the debt was paid in full.
    Under the maxim noscitur a sociis “null” and “void” are equivalents.
    Null is defined “of no legal force or effect; void.”
    Void is defined “having no legal force; entirely null; incapable of .confirmation or ratification.” Standard Dictionary; Turner v. Ins. Co., 16 Fed., 454; Hinckley v. Insurance Co., 140 Mass., 47; 28 Am. & Eng. Ency. Law, 473; Terrill v. Anchauer, 14 Ohio St., 80.
    Standing alone, where the legal effect of the words is settled by judicial interpretation, they are properly given that effect. Standing in a context, where that effect is not demanded by judicial determination, they must be read with the context and given that force and effect, and that only, which their collocation and “the four corners” of the written instrument authorize and require, under the rules of construction.

      The authorities and cases touching the “null and void” feature of the deed, in connection with the re-conveyance condition, leave it clearer, if that he possible, that they may easily stand together, and each must be given its appropriate meaning, purpose and office in the instrument.
    Technically, as we have seen, the words, under the definitions and cases, do not apply, and, under the rule tersely expressed in the New Hampshire case requiring that they be taken in a legal sense subject to large qualifications in view of all the circumstances calling for their application, and the rights and interests to be affected in a given case, and under the rule of interpretation that “an instrument must be so construed, if practicable, that the whole may stand; ut res magis valeat, quam pereat”; Ashland Mut. Fire Ins. Co. v. Housinger, 10 Ohio St., 12—the words “null and void” cannot be allowed silently, or otherwise, to destroy the reconveyance provision and the latter must be given its plain and obvious meaning and force. Broom — L. M. *541.
    It has not been supposed that any of the Ohio cases covering the rules of interpretation — and they are numerous and clear — need be cited; they are very familiar to judges and all good lawyers in the state. Most of them are grouped in 1 Bates’ Complete Digest, Columns 488-492.
    Two or three citations may not be inappropriate, however. Chamberlain case, 15 Ohio St., 24B; Mc-Clelland v. Bishop, 42 Ohio St., 124.
    As to the legal and equitable principles involved there can be but little controversy. The debate will be over their application. The crucial point lies here; is the instrument a deed of trust or a mortgage? Did the legal title pass to the bank in trust, or remain in the grantors? Wright v. Bank, 59 Ohio St., 80.

      Booth, Keating & Peters, and .James M. Butler, for defendants in error.
    Whatever may be the rule elsewhere, in this state a judgment lien takes precedence of an unrecorded mortgage. The following shows how clearly an eminent text-writer has summed up the Ohio doctrine: 1 Jones on Mortgages, pp. 393, 395, sec. 465; Building Association v. Clark, 43 Ohio St., 427; Betz v. Snyder, 48 Ohio St., 492; Mayham v. Coombs, 14 Ohio, 429; Jackson v. Luce, 14 Ohio, 514;; White v. Denman, 1 Ohio St., 131.
    The railroad company had no notice or knowledge of Patton’s conveyance to the bank until it was filed for record on May 18, 1896.
    The conveyance by Patton to the bank was a mortgage within the intention and the letter of section 4133, and consequently it as without any effect against the railroad company until it was delivered to the recorder for record.
    Any analysis of the instrument will disclose the essentials of a mortgage.
    1. The terms of this conveyance, down to and including the habendum, are the same as usually appear in warranty deeds. But this similarity does not affect the argument on either side, because those terms are in common use in both deeds and mortgages.
    2. It will be observed that we are not contending that this conveyance should be declared a mortgage for equitable reasons. In this deed there is no separate independent agreement. No testimony has been offered, no extraneous evidence introduced, to show the object and purpose of the parties in delivering and accepting the conveyance. The conveyance, complete in itself and embracing the whole contract between the parties, is presented to the court. Its provisions furnish the evidence of a legal mortgage. No equity case is presented to the court. Patton’s conveyance should be squared by the statute.
    3. It was never intended that the bank should take absolute title to, or possession and control of, the property. Not only did the instrument not clothe the bank with the right to possess, control or enjoy the property, but also, out of abundant caution, it was expressly stipulated that the bank should not be clothed with these indicia of absolute title and OAvnership.
    4. The instrument was executed and delivered for the purpose of securing the grantor’s debt.
    No more appropriate language could be found by which to say that Patton had borrowed $25,000 from the bank, and that he Avas mortgaging his property to the bank for the purpose of securing the payment of the loan.
    5. The conveyance contained a defeasance clause, the unfailing test of a mortgage. As in a mortgage, the title never passed to the grantee, as against third parties, and it was never intended that is should.
    6. The instrument contains an additional provision.
    This provision is simply a power of sale, and the whole instrument becomes a mortgage containing a poAver of sale. But the power of sale makes the instrument none the less a mortgage in the contemplation of our statutes.
    7. Giving to the foregoing provisions their obvious effect, it is apparent that there could have been, and that there was, no default under the mortgage for at least six months subsequent to its execution and delivery. In other words, neither the bank nor any other person claiming by or under the mortgage had the slightest claim upon the property for at least six months. Patton was to hold possession of the premises as fully as if the conveyance had not been made, “until said The National Bank of Columbus shall require and make a sale thereof, as hereinafter provided.” But this sale could not be made by the bank until after six months’ notice in writing, and upon a failure to pay the principal with accrued interest on demand. It is a significant fact that the deed forever barred the grantee from taking possession of the property conveyed. 2 Pingrey on Mortgages, pp. 1225,1227; 1 Jones on Mortgages (5th edition), sec. 62; 26 Am. & Eng. Ency. Law, 860, 861; 26 Am. & Eng. Ency. Law, foot-note, p. 860; 1 Jones on Mortgages, sec. 62, p. 40; 2 Pomeroy’s Eq. Jur. (2nd Ed), 1459; Wolfe v. Doe, 13 S. & M. (Miss.), 103; 2 Jones on Mortgages (5th Ed.), part sec. 1769, p. 654; 2 Beach on Trusts and Trustees, sec. 629, p. 1440; 2 Beach on Trusts and Trustees, sec. 661, p. 1517; Team v. Baum (Sup. Court of S. C., 1896), 25 S. E. Rep., 275; McLean v. Paschal, 47 Tex., 365, Eaton v. Whiting, 3 Pick. (Mass.), 484.

      Newman v. Samuels, 17 Iowa, 528, will be found a clear recognition of the correct doctrine, and a reliance upon Woodruff v. Robb, 19 Ohio, 212, a leading case in our own state.
    Another leading case is Turner v. Watkins, 31 Ark., 429; Bennett v. Union Bank, 5 Hump., 612; Brantley & Bro. v. Wood & Bro., 97 Ga., 755.
    The Ohio law applicable to this case is settled. Perkins v. Dibble, 10 Ohio, 434; Martin v. Alter, 42 Ohio St., 94.
    In addition to the three cases we have just discussed, there are two decisions of this court which should be critically examined: Hoffman v. Mackall,
      5 Ohio St., 124; Kemper v. Campbell, 44 Ohio St., 210.
    And finally, in the case of The Sun Fire Office of London v. Clark, 53 Ohio St., 414, goes further than is necessary to sustain our position in the case at bar.
    We are not asking that this conveyance be declared a mortgage for equitable reasons. In the pending case there is no separate independent agreement. No testimony has been offered — none could have been offered, in any way showing or explaining, or tending to show dr explain, the intentions of the parties to the instrument. A conveyance complete in itself is presented, an instrument embracing the whole contract between the parties. If the instrument withifi its four corners bears the evidence of a legal mortgage, such as the statute contemplates, the railroad company wins. If the whole instrument constitutes a deed, the bank wins. Consequently cases wherein the conveyances were absolute with separate independent contracts of condition or defeasance are not controlling. Connected with this is the no less important principle that the rules applied by a court of equity in working out the respective rights of the grantor and the grantee in a conveyance are not the rules that obtain when the rights of an innocent third party under the registry law áre to be determined.
    In other words, it was claimed that the deed provided that Patton’s possession should continue, until the bank “shall require possession and make a sale thereof.” Such an argument refutes itself.
    This and other language found in the brief indicates that counsel believes that, because the bank might have conveyed the fee to a purchaser, it necessarily had the fee. Such a conclusion destroys the purpose of the well-known power of sale in a mortgage. The fact that the bank, under the instrument, had the power to sell the property and to convey the fee, is neither controlling nor indicative. This court has held that a mortgage under the statute is none the less a mortgage because it gives the grantee the right to sell the property and to convey the fee. The naked mortgage and the mortgage with the power of sale superadded have the same legal effect, are subject to the same principles, to the same requirements as to registration and to the same rules concerning judgment, execution and levy. Indeed, the very purpose of the power is to enable a person to convey that which he does not possess. The whole argument has been crystallized in one of the briefs in Eaton v. Whitney, 3 Pick., 484.
   Burket, J.

As the statutes of this state stood before the revision of 1880, “lands and tenements” could be levied upon and sold to pay debts, sec. 420 of the Code of Civil Procedure, and statutes prior thereto. Under those statutes it was held that an equity could not be levied upon and sold to pay debts, and that a judgment did not create a lien upon an equity. Baird v. Kirtland, 8 Ohio, 21; Morris v. Way, 16 Ohio, 469; Loring v. Melendy, 11 Ohio, 355, and many other cases.

The statute was amended in 1880, sec. 5374, so as to make “lands and tenements, including vested interests therein,” subject to levy and sale for the payment of debts.

Manifestly the interest which Mr. Patton retained in the surplus of the value of the real estate over and above the amount required to pay his note, and which was to be returned to him by the terms of the instrument, was a vested interest, and therefore subject to levy and sale to pay his debts.

By the next section, 5375, it is provided that “Such lands and tenements, within the county where the judgment is entered, shall be bound for the satisfaction thereof from the first day of the term at which judgment is rendered.” “Such lands and tenements,” in this section, embraces the same as “lands and tenements, including vested interests therein,” in the preceding section. It is therefore clear that the judgment in question became a lien upon the vested interest of Mr. Patton in the lands covered by this instrument, from the first day of the April term, 1894, of the court of common pleas, that is, April 7, 1894, and that the lien of the judgment attached, by relation, under the statute, to such vested interest as he then had in said lands.

Let us next inquire what vested interest he then had in the lands upon which a lien could attach in favor of the judgment creditor, and against Mr. Patton and his grantee, the bank.

Section 4106, Revised Statutes, provides how “A deed, mortgage, or lease of any estate or interest in real property” shall be executed. The instrument in question was either a deed or mortgage. It was not a lease. The plaintiff in error claims that it was in legal effect a deed, while the defendant in error claims that it was in legal effect a mortgage. The statute does not define either a deed or a mortgage, but seems to take it for granted that those terms are well understood and need no definition. It must be clear that this instrument is not simply a deed, as that word is usually understood, because a deed conveys full title for a certain consideration without any interest remaining in the grantor in the realty conveyed. True, there may be conveyances by deed upon conditions, but in all such cases the grantor retains no vested interest in the estate or interest conveyed. and if it ever returns to him, it returns upon breach of a condition, and in such cases his interest is contingent and not vested. A conveyance may also be made by deed in trust for the benefit of creditors, and in such cases the title passes under the deed to the trustee, even though the surplus, .if any, after payment of all debts, comes back to the grantor. But even in such cases it is usually regarded safer to make the grantor a party to the proceedings to sell the real estate conveyed by the deed of assignment.

While the instrument in question is not a straight, ordinary deed, it is claimed to be what is known as a trust deed, or deed in trust conveying the title to the bank, and out of Mr. Patton, so as to be good against the world, without record, except as against a subsequent bona fide purchaser without notice.

The question whether this instrument is a deed in legal effect as claimed, or a mortgage, is not without difficulty. The granting clause is that of an absolute deed of conveyance, and so is the habendum down to the word “forever;” and then, after a semicolon, comes the following:

“In trust, nevertheless, and upon condition that said Alexander G. Patton is to hold possession of said premises as fully as if this conveyance had not been made, until said The National Bank of Columbus shall require and make a sale thereof, as hereinafter provided, that is to say; this conveyance is made for the purpose of securing to said The National Bank of Columbus the sum of twenty-five thousand (|25,000) dollars, Avith interest thereon now past due and evidenced by the promissory note of said Patton heretofore executed and delivered to said bank, dated October 19, 1891, and it shall be lawful 'for said The National Bank of Columbus, after six months notice in writing, at any time within five years from the date hereof, in ease said principal sum of twenty-five thousand ($25,000) dollars and the unpaid accrued interest thereon shall not be paid on demand, after the notice aforesaid, to sell said land at private sale or public auction, for cash or on credit, and apply the proceeds to the payment of whatever amount may then be due said bank on account of said indebtedness, principal and interest, and the surplus, if any, after such payment, shall be paid over to said Alexander G. Patton, and no payment or receipt of interest, or on account of said principal shall be taken, held or construed as an extension of time for payment of said past-due indebtedness ; and further, it is agreed and promised by said The National Bank of Columbus for itself, its successors and assigns, that if said Patton shall pay' said indebtedness and the interest thereon at any time, with or without demand, this deed shall be null and void, and a proper quit-claim deed of all interest in the premises aforesaid shall be executed by said bank to said Alexander G. Patton, his heirs and assigns forever.”

Everything contained in this trust part, of the instrument is inconsistent with, and irreconcilably opposed to, a deed passing title from Mr. Patton to the bank. He retains possession of the premises until the bank shall require and make a sale of the property. The conveyance is made for the purpose of seeurmg to the bank $25,000 evidenced by a past-due note. If not paid within five years the bank may sell the real estate after six months notice, and apply the proceeds upon the note, and pay the surplus, if any, to Mr. Patton. No extension shall be made, and if Mr. Patton shall pay the debt at any time, the deed shall be null and void, and the bank shall execute a quit-claim deed to Mr. Patton, his heirs and assigns forever.

If the instrument had been intended to pass title and not operate merely as a security, the bank would have taken immediate possession of the premises; it would not have stated that the conveyance was for the purpose of security; it would not have provided for a power of sale, because a grantee in an absolute deed may sell when and as he pleases; it would not have agreed to pay any surplus to Mr. Patton; it would not have agreed that upon payment of the debt the deed should be null and void; and it would not have agreed to make a quit-claim deed.

The trust part of the instrument is throughout in legal effect the same as the condition, or defeasance clause in a mortgage. Possession is retained by the grantor (mortgagor), the instrument states that it is for the purpose of security; a power of sale is given to the grantee (mortgagee); the surplus, if any, is to be paid to the grantor (mortgagor) ; upon payment of the debt the deed is to be null and void, and a quit-claim deed is to be made. Those are the ear-marks of a mortgage, and both upon principle and authority this instrument must be held to be a mortgage in so far as it concerns the rights of third persons. Martin v. Alter, 42 Ohio St., 94; Perkins v. Dibble, 10 Ohio, 434; Woodruff v. Robb, 19 Ohio, 212; Brantley v. Wood, 97 Ga., 755; Bennett v. Union Bank, 5 Humph., 612; Turner v. Watkins, 31 Ark., 429; Newman v. Samuels, 17 Iowa, 528; Eaton v. Whiting, 3 Pick., 484.

On principle and authority, the , rule seems to be, that if by the terms of such an instrument the grantor retains a vested interest in the premises, the instrument, in view of our recording acts, must be held to be, in legal effect, as to the rights of third persons, a mortgage; but if no vested interest remains in the grantor, the instrument will be regarded as a deed.

It is usual in deeds of trust made by railroad companies and other corporations, to independent trustees, securing bonds to be sold to raise funds, to make them in form so as to pass title, and with a power of sale; yet such instruments are held to be, in legal effect, only mortgages, and that when one such trust deed has been made, the company may make others, that in legal effect the company retains a vested interest as mortgagor in possession, and that upon default such trust deeds may be foreclosed as mortgages. A case in point in our own state is Coe v. Railroad Co., 10 Ohio St., 372.

Much stress is laid by plaintiff in error upon the promise in the instrument in question, upon payment of the debt, to make a quit-claim deed, and it is urged that that provision shows that the title passed. We do not so construe it. The instrument was evidently intended to serve as a mortgage security to the bank, but to be so far in the form of a deed as to permit its record in the record of deeds instead of mortgages, and it was so recorded. Under these circumstances, upon payment of the debt by Mr. Patton, the instrument, even though made null and void by such payment, could not be released as a mortgage upon the margin of the deed record, without leaving a blur upon the title, and therefore for the protection of the title in case of payment, the provision for a quitclaim deed was very properly inserted. But that provision did not make the instrument a deed, but was á strong confirmation of its being a- mortgage, because it showed that the grantor still had a vested interest in the property, the title to which he was careful to protect. The intention was to secure the bank and shield Mr. Patton. That intention failed of its purpose, as is often the case, when the rights of third parties intervene. In such cases courts disregard mere forms, and consider the substance and legal effect of the transaction.

It is urged that as Mr. Patton was to hold possession of the premises until the bank should “require and make a sale thereof,” he was to hold possession until the bank should require possession and make a sale. The instrument will not bear that construction. The meaning is that he should hold possession until the bank should require a sale, and make a sale thereof.

The power of sale, instead of showing the instrument to be a deed passing title to the grantee, has the contrary effect, and aids in showing the instrument to be a mortgage, as no such power is necessary in a deed which passes title, because the deed, by its own vigor, carries with it a power of sale to the grantee, while a mortgage does not carry such power unless expressly granted therein. The power of sale in this instrument is in the nature of a power of attorney to sell and convey lands, in which case the legal title remains in the grantor until the power is executed.

The only purpose to be served, or advantage to be gained, by a power of sale in a trust deed or mortgage, is to enable the trustee to take possession of the property and sell it under the power, and thereby cut off the vested rights of the grantor without the aid or delay of a proceeding in court. The grantee may, however, refuse to exercise the power of sale, and invoke the aid of a court to make the sale as upon foreclosure; and where subsequent liens have attached, such a course becomes necessary, because a sale by the trustees would convey a title burdened with such subsequent liens. Until a sale shall be made, either under the power or by the order of court, the grantor will retain his vested rights in the property, and such rights will be subject to liens the same as his other lands and tenements.

The agreed statement of facts also shows that about the middle of May, 1891, the bank took possession of the property and held possession thereafter until the levy of the execution thereon, and the plaintiff in error urges this fact as a point in its. favor. But this possession does not appear to have been by virtue of the instrument in question, but under some other arrangement between Mr. Patton and the bank. But even if it had been made under and by virtue of this instrument, it could not have aided the bank, because this possession was late in May, after the judgment had attached as a lien on April 7 of the same year. True the judgment was not recovered until in July, but it related back and became a lien from the first day of the term, April 7, and the rights of the parties are the same as if the judgment had in fact been recovered and entered on the first day of the term, though not recovered until July, and the conveyed the same to a purchaser on the day the bank took possession, the lien of the judgment would have attached to the property as of the first day of the term. If Mr. Patton had sold his property and lien would have continued against the property in the hands of such purchaser. It is because of this statute that when transactions in real estate take place during a term of court, search of the records must be made for pending actions.

The instrument in question being therefore in legal effect a mortgage, Mr. Patton owned and held the legal title, and the judgment in favor of the defendant in error became a lien on the property covered by the mortgage on April 7, 1894, and the mortgage being then not filed for record, the judgment has priority over the mortgage, and must be first paid.

Judgment affirmed.


source: Caselaw Access Project

author: Minshall, J.

license: Public Domain

text:
    The Dueber Watch Case Mfg. Co. v. Daugherty et. al.

      Transferee receives certificate of stock — To qualify him, to become director — He agreeing to reconvey stock on ceasing to be director — Transferee pledges certificate, as principal on note, to secure surety — Equity of surety held superior to that of company.

    1. A surety on a promissory note became such on the agreement of the principal to transfer to him as collateral security against loss, a certificate of stock he then held, within a short time. Held, that the surety thereby acquired an equity in the stock which he could enforce for his indemnity against all persons having notice.
    2. The rule that he who is prior in time is'prior in right, applies only between equities that are equal in merit; if the junior equity is superior in merit and was acquired without notice of the prior equity, it has priority.
    3. For the purpose of qualifying a certain person to be one of its directors, a corporation issued to him a certificate of its stock, he agreeing to reconvey it on ceasing to be a director. The trust was a secret one; and the person so holding the stock, agreed to assign it to another, as collateral security, on the latter’s becoming his surety on a note, and the latter did so on this promise and without notice of the terms on which the stock was held. Held; that as between the company and the surety, the equity of the latter is superior in merit.
    4. The holder of an equity may, by clothing himself with the legal title, secure priority over an earlier equity, where he acquired his equity without notice of the earlier one, though, at the time he acquired the legal title, he had such notice.
    (Decided May 8, 1900.)
    Error to the Circuit Court of Stark county.
    This was a suit by plaintiffs below claiming to be pledgees of certain stock, against the company issuing it, for a sale of the stock and an application of the proceeds to their claim, the company itself claiming to own the stock and refusing to recognize the plaintiff’s right to it by a transfer on the books of the company. Judgment was rendered in the common pleas in favor of the plaintiffs, which, on error, was affirmed by the circuit court. The evidence is all contained in a bill of exceptions taken in the common pleas. It appears that on November 23, 1891, the plaintiffs, Daugherty and Michner, for the accommodation of John A. Coburn and James W. Dulaney, endorsed a note for $1,000, payable to the City National Bank of Akron; and that Coburn agreed and promised at the time, in order to secure the plaintiffs against loss, that he would transfer and assign to them a certain certificate of stock he then owned in the company; and that on January 7, 1892, he did assign and transfer the stock to the plaintiffs with authority to have the same transferred to them on the books of the company. The plaintiffs were compelled to pay the note and have been only partially indemnified; there is still due them something over $200. The issues in the case arise upon the following answer and cross-petition of the company:
    “Said Coburn had and held said share of stock upon the following terms, and not otherwise:
    “At the time of the transfer to said Coburn of said share of stock the said Coburn was then living in the city of Canton, and for the purpose of qualifying said Coburn to act as one of the directors in said corporation, there was transferred to said Coburn four shares of the capital stock of said corporation, to be by him held for said purpose, and for which said Coburn paid no manner of consideration whatever, and the same was to be surrendered to the company when said Coburn’s services as a director were not required. Said transfer to said Coburn was in fact without action of said corporation by its board of directors or stockholders. Said Coburn did act as one of the stockholders for a time, but on or about January, 1892, said Coburn left the city of Canton, and state of Ohio, and ceased to be eligible as a director, and because of non-residence was disqualified from acting as such.
    “Said Coburn promised to return and reassign said shares of stock, but failed to do so. At the time and before the plaintiffs acquired said stock, if they have any interest therein, the said plaintiffs were advised and well knew that said Coburn had no interest in said stock, that he had paid no consideration for the same; that lie had agreed to reassign the same as aforesaid, and had no interest or equity therein, but the same belonged to said defendant, The Dueber Watch Case Manufacturing Company, and, except as herein admitted, this defendant denies the allegations of the petition.
    “The defendant prays that said four shares of stock, including the one claimed by the plaintiffs, may be decreed to belong to the defendant. The Dueber Watch Case Manufacturing Company, that said plaintiff and said John A. Coburn may be decreed to have no interest therein, that they be ordered to assign and transfer the same to the said defendant corporation, or in default thereof said decree operate as a conveyance, and for all proper and just relief.”
    A reply was filed denying for want of knowledge most of the allegations, particularly that at the time they acquired the stock they were advised and knew that Coburn had no interest in the stock. The evidence, however, clearly discloses that whilst at the time the note was given and the agreement to transfer the stock as collateral was made, November 23, 1891, the plaintiffs had no knowledge of the claim of the company to be the equitable owner of the stock,
      yet at and some time before it was transferred to them by assignment they had snch knowledge.
    It was shown at the trial that the object of the company in issuing a certificate of stock to Coburn was to comply with the statutes of the state, which require a majority of the directors of a corporation for profit to reside in the state. It was such a corporation, and the issuing of the stock to Coburn alone enabled it to comply with the statute, he being a resident. Unless Coburn was a stockholder, the company had no right to be a corporation and do business in the state as such. So that on the claim of the company Coburn was simply a nominal stockholder, with no real interest whatever in the stock held by him.
    . Lynch & Day and R. A. Harrison, for plaintiff in error.

      Clark, Ambler & Clark and A. A. Thayer, for defendants in error.
   Minshall, J.

These questions arise upon the case: 1. Did the agreement to transfer give to the plaintiffs any equitable interest in the stock? 2. If so, was their equity superior in merit to that of the company? 3. Did the assignment of the stock made January 7, 1892, with knowledge of the claim of the company, give them a superior right to the latter, though the equities were equal? 4. Can the company, under the circumstances disclosed by the answer, be heard to make a claim to the stock against an innocent third person?

At the time the parties became sureties for Co-burn and Dulaney, Coburn agreed that the stock he then held should be transferred as security to them against loss; and this induced them to become sureties on the note. The promise was a written one as follows: “The collateral described by Mr. Dulaney will be turned over to Mr. Michner at any time desired — this week. (Signed) John A. Coburn.” We do not, however, attach any importance to the fact that it was in writing, beyond the fact that it indicates with certainty the agreement of the parties. It is not necessary, as we think, to determine whether this agreement constituted a present pledge of the stock. Strictly speaking, stock being of an incorporeal nature, is not capable of being pledged, as there cannot be a delivery of intangible property. It may be, and frequently is, hypothecated, which is a pledge in a secondary sense. An hypothecation is defined as a right which a creditor has over a thing belonging to another, and which consists in a power to couse it to be sold, in order to be paid his claim out of the proceeds. Bouvier Law Die. “Hypothecation.” Whatever the agreement between the parties should, in legal propriety, be termed, it was such an agreeihent. as could have been specifically enforced, because designed to afford security against liability as sureties assumed on faith of the promise, and this gave to them an equity in the stock, that would avail against all persons with notice. Gibler v. Trimble, 14 Ohio, 323.

The question then arises, was this equity superior to that of the company based on its agreement with Coburn for a reassignment of the stock? It is the undoubted rule that as between equities that are equal in merit, the one that is prior in time is prior in right. So that before the priorities of competing equities can be determined, their respective merits must be considered, and if it be found that the latter equity is superior in this regard, it must be awarded priority in right. Hume v. Dixon, 37 Ohio St., 66; Campbell v. Sidwell, 61 Id., 179. In Hume v. Dixon, supra, the learned judge in delivering the opinion, adopting what is said by the vice-chancellor in Rice v.Rice, 2 Drew., 73, says: “The true meaning of this rule (that prior in time is prior in right) is that time, as a ground of equity, is to be last resorted to as between equities, and that a court of equity will not prefer one to another, on the ground of time, until it has been found, by an examination, that there is no other sufficient ground of preference, and that if one has on other grounds a better equity than the other, time is immaterial. In examining the relative merits of opposing equities, no technical rule, nor one of partial application, should be applied; but the same broad principle of right and justice, peculiar to courts of equity, should guide the chancellor.” The contest in this case was between one who had a vendor’s lien and one who subsequently purchased and paid for the land, but who, by reason of a defect in the execution of the deed, held simply an equitable title. Prom this case it appears the fact, that one has placed it in the power of another to deal with his property as his own is inferior in right to one who has been misled thereby. Speaking of the facts, the judge says: “Here Dixon voluntarily placed in the hands of Kirkpatrick the legal title. He clothed him with the power of sale. He was in a degree accessory to the act of selling to Mrs. Hume. Instead of taking a mortgage and placing his lien on record, so that all might know of it, it was kept secret.”

Whilst every case must be decided upon its own peculiar facts, and it will be difficult to give a more definite rule than is given in Hume v. Dixon, adopting the principle of that case and the solution of this one is not difficult. Por purposes of its own, and which we need not here comment upon, it placed the legal title to the stock in question in Coburn. He held a certificate to the effect that he owned it. On the faith of what this certificate purported and on the promise to transfer it in a week as collateral security, the plaintiffs accommodated the principals on the note by becoming their sureties. The principals have not fully indemnified them. Unless they are permitted to avail themselves of this collateral they must suffer a loss. To permit, under the circumstances, this secret equity, if it may properly be termed one, to be asserted as prior in right to that of the plaintiffs, tends to shock the natural sense of justice. One who, for his own purposes, places the legal title to his property in another, must take the hazard of any loss that may result from his dealing with it as his own, so far as innocent third persons are concerned. On principles of natural justice his equity is inferior to that of any person who acquires in good faith any title to the property.

It is now generally conceded that the assignment of a certificate of stock with power of attorney to have it transferred on the books of the company, gives to the assignee the status of a legal owner of the stock. It conforms to the practice and general understanding of the commercial world. Pomeroy Eq., sec. 710; Railway Co. v. Bank, 56 Ohio St., 351, 383. Hence, on January 7, 1892, when the stock was assigned by Coburn to the plaintiffs and delivered to them, they became clothed with what is regarded as the legal title, or, in other words, held as against the company a title by estoppel to the stock superior to any right of the company to set up in its own favor a secret equity. Cook on Stockholder, sec. 416. It is true that at this time they had knowledge of the claim of the company, but had no such knowledge at the time the agreement was made for the transfer. And here it will be observed that the claim of the company is not that of an innocent purchaser for value. Its claim is that of a mere equity for a reconveyance, prior in time, to the equity of the plaintiffs. The contest is simply between equities. In such cases the settled doctrine is stated by Pomeroy to be, “That if a second or other subsequent holder, who would otherwise be postponed to the earlier ones, obtains the legal estate, or acquires the test right to call for the legal estate, he thereby secures an advantage which entitles him to priority. It is absolutely essential, however, that he should have acquired his equitable interest without any notice of the prior claims.” Pomeroy Eq., Sec. 727; also Sec. 729. Adams Eq., 161,162. The language of the last author is: “It has been already stated that in order to avoid the postponement of the latter equity, freedom from notice is indispensable. The notice, however, here referred to, is a notice existing at the acquirement of the equity, not a notice at the completion of the right. The latter purchaser or encumbrancer, on payment of his money, becomes an honest claimant in equity, and is entitled, if he can, to protect his claim. But he is not bound to look for protection until he has ascertained that danger exists; and his right to obtain it will continue, notwithstanding the institution of a suit to settle the priorities of the conflicting claimants.” The plaintiffs seem to be clearly within the rule here stated. They had no knowledge of the company’s claim when they acquired their equity, and had a right to protect it by taking an assignment of the stock for that purpose, which they did on January 7, 1892, though at that time they had knowledge of thecompany’sclaim. This gives to them an unquestioned priority over the company, and the right to a sale of the stock for the satisfaction of their claim. Gibler v. Trimble, supra. This case clearly supports the doctrine that where the equity is acquired without notice, the owner may protect himself against an earlier equity by acquiring the legal title, though, at the time of so doing, he had notice of the earlier equity.

We are not disposed to go into the fourth question, further than to observe that the transaction by which the stock was issued to Coburn reflects most unfavorably upon the merits of the company’s equity, if one exists which could be protected under any circumstances in a court of equity. The transaction was a fraud upon the law and contravened the declared policy of the state, if Coburn was intended to be a nominal, and not the real owner in fact, of the stock placed in his name. Cases to the effect that one may be made eligible as a director by simply placing shares in his name, which he does not own, are not in point here. In this case the purpose was to make one a director, who was a resident of the state, and, without his being such resident, the increase of stock — the purpose desired — could not have been obtained. It is hardly to be allowed that a court of equity would, under such circumstances, assist a company in recovering its stock against one who had acquired an interest in it, acting in good faith and without knowledge of the facts.

Affirmed.


author: Williams, J.

text:
    Kelly v. The Carthage Wheel Co.

      Employment for year — Guarantee of certain amount — Interpre- . .tation as to time and terms of contract — Renewal of contract by implication — Measure of damages for unjustifiable discharge of employe.

      1. In order to constitute a contract of employment for a year, it is not essential that the agreement shall contain express words of employment for that specific period. The intention of the parties in this respect, as in all others, must be gathered from the whole instrument, or agreement.
    2. A written' offer made by an operative to a manufacturer, to perform work and make certain articles at the latter’s factory, at specified prices, contained the following stipulation:
    “In making this agreement or contract, I will want you to guarantee me $3,000 per year, a proportion of this amount to be paid me each pay day and a settlement to be made at the end of each year, and if I should make more than the above guarantee, the difference be paid me at the end of each year when settlement is made.” The offer was accepted as made. Held, the acceptance of the offer created a contract for a year.
    3. Where, under such contract, the employe is continued in the same service of the employer after the expiration of the year without any new or different arrangement, a contract for another year, upon the same terms, arises by implication of law; and when, before the end of that year the employe is discharged without justifiable cause, a right of action acrues to him against the employer for breach of the contract.
    4. Where, by such contract, the employe was not required nor authorized to make any specified number or quantity of the articles therein mentioned, nor operate the factory to any given capacity, and no obligation was imposed on the employer to supply material or means for the manufacture of any quantity or number of such articles, nor keep the factory in operation for their manufacture, the measure of damages, in an action by the employe for his wrongful discharge, is the proportionate amount of the guaranteed yearly compensation, for that portion of the unexpired year remaining after his discharge.
    (Decided May 8, 1900.)
    Erroe to the Superior Court of Cincinnati.

      Action for damages by employe for wrongful discharge before expiration of contract of employment. Judgment for plaintiff. Reversed in general term. Judgment of reversal reversed.
    The action below was brought in the superior court of Cincinnati, by the plaintiff in error, against the Carthage Wheel Company, the defendant in error, to recover damages alleged to have been sustained by reason of his wrongful discharge before the expiration of his contract of employment with the company. The plaintiff recovered a judgment, which was reversed in general term, and the case is here on error to obtain a reversal of the general term, and affirmance of the special term.
    A sufficient statement of the case is contained in the opinion.

      Wilby & Wald, for plaintiff in error.
    Did the plaintiff below fail to show a cause of action? Or, in other words:
    Did the evidence warrant the finding that there was a yearly hiring? i. e., that Kelly’s contract of employment was by the year, or from year to year, and not at will?
    The trial court held that there was evidence of a yearly hiring. The general term held that the hiring was at will. 5 O. N. P., 310; 8 Dec., 549. Though the contract mentions no term for the duration of the service, yet it, with the other evidence, shows clearly that the parties intended the employment should last from year to year.
    We had supposed the law- upon this subject to be settled in this state by the decision of this court in Bascom v. Shillito, 37 Ohio Se., 431; a case quite similar to the case at bar.

      According to the English cases and some of the authorities in this country, the inference from a contract for no definite time, may be that a yearly hiring was intended.
    ..Story on Contracts, Section 962c.
    1 Parsons on Contracts, 518; Smith on Master and Servant, 41; Smith’s Mercantile Law, 532; Shouler’s Domestic Relations, 607.
    But in the case at bar we depend on no such slender inference as would be sufficient under this rule. Here we have not only the express stipulation for compensation by the year, but other facts, which sustain the finding of the jury and the judgment of the trial court.
    That a stipulation in a contract of hiring, fixing the rate of compensation for a definite time, may govern the interpretation of the contract as to its duration, or in other words, that a yearly hiring may be inferred from a contract stating the compensation to be so much per annum, is laid down in the text books and has been so held by the courts of England and America whenever the question has been squarely presented to them for decision. 14 Am. and Eng. Ency. Law., 762; 2 Story on Contracts, 5 Ed., sec. 1291; 1 Addison on Contracts, 8th Ed., p. 633; Smith on Master and Servant, 86 and 89; Wood on Master and Servant, 265; 2 Chitty on Cont., 841 (11th Am. Ed.).
    This rule as to the inference which will be drawn from the reservation of annual wages is again more than we need in the case at bar, because we have here, in addition to the language of the contract fixing the compensation, other circumstances which in Bascom v. Shilito, were held to be relevant and admissible in aiding the jury to determine the intention of the parties.

      Tatterson v. Suffolk Mfg. Co., 1870, 106 Mass., 56; Norton v. Cowell, 65 Md., 359, 1886; Fawcett v. Cash, 5 B. and Ad., 908; King v. Birdbrooke, 4 T. R., 245; Beach v. Mullen, 34 N. J. L., 343; Franklin Mining Co. v. Harris, 24 Mich., 115; Horn v. Western Land Association, 22 Minn., 233 (1875) ; Emmons v. Elder-ton, 4 H. L. C., 625; Strauss v. Gross, 1893, 2 Tex. Civ. App., 432; Kellogg v. Citizens’ Ins. Co., 94 Wis., 554; Dickinson v. Norwegian Plow Co., 96 Wis., 376.
    To the same effect are the English cases, from some of which we quote: Turner v. Robinson, 5 B. & Ad., 798; Down v. Pinto, 9 Exch. Rep., 327; Emmons v. Elderton, 4 H. L C., 624; Ridgeway v. Hungerford Market Co., 1 H. & W., 224; Foxall v. International Land Co., 16 L. T. R., 637; Buckingham v. Canal Co., 46 L. T. R., 885.
    If the hiring was by the year, or for at least a year, it was renewed for another year by the holding over without any new arrangement.
    This rule is well settled. Its application has been admitted all through this litigation by our learned adversaries, and it was expressly recognized, by the general term early in the opinion. 5 Ohio N. P., 311; 8 Dec. 549; Adams v. Fitzpatrick, 125 N. Y. 124; Ingalls v. Allen, 132 Ill., 170; Wallace v. Floyd, 29 Pa. St., 184; Ranck v. Albright, 36 Pa. St., 367; McCullough v. Carpenter, 67 Md., 554; Simms v. Wayne Co., 58 Mich., 503; Iron Co. v. Richardson, 5 N. H., 294; Herman v. Littlefield, 109 Cal., 430; Weisse v. Board of Supervisors, 51 Wis., 564; Sewing Machine Co. v. Buddy, 48 Ill., 189; Nicholson v. Patchin, 5 Cal., 475.
    In the three cases last cited the action was by the servant for an increase of salary after the holding over, but under the rule stated he was held to the terms of the original agreement, which had been renewed by implication, from the contract of the parties.
    Was error committed in permitting the plaintiff below to introduce evidence tending to prove what profits might have been realized by him upon the wheels which were manufactured by the company subsequent to his discharge?
    On the general question of the admissibility of evidence as to prospective profits; Taylor v. Bradley, 39 N. Y. 129; Masterson v. Brooklyn, 7 Hill, 61.
    This court recently had before it in Wellston Coal Co. v. Franklin Paper Co., 57 Ohio St., 182, a case of this class where it was necessary to go to the prior events for the evidence of the probable profits.
    This decision by this court establishes undoubtedly that the testimony of the number of wheels produced prior to Kelly’s discharge was competent to go to the jury as tending to show what would have been made after his discharge during the time his contract had to run. The testimony shows that 51,959 sets of wheels were made during the eighteen months prior to the discharge while Kelly was in the employ of the wheel company, an average of 18,319 sets of wheels for every six months during that period. The verdict of the jury was apparently computed on a production of only about 16,000 sets of wheels.
    The three following cases are also of the class, in which it was necessary to refer to the past profits, for evidence tending to show what the probable future profits would have been: Bagley v. Smith, 10 N. Y., 189; Dart v. Lambier, 107 N. Y., 661; Raynor v. Blatz Brewing Co., 76 N. W. R., 313.
    Probable profits, as shown by those for previous years from the conduct of the same business in the same place, by the same party, may be recovered as damages for breach of the lessor’s agreement to repair, whereby continuance of the business is prevented.
    Case of a lease of a theater and saloon, and a breach of lessor’s covenant to repair. Richmond v. The Railroad, 40 Ia., 264; Wakeman v. Wheeler & Wilson Co., 101 N. Y., 205; Wells v. Alexandre, 130 N. Y., 642; Mueller v. Bethesda Mineral Water Co., 88 Mich., 390; 1 Sutherland, 133 (old ed.), pp. 141-2 (second ed.); Shell v. Plumb, 55 N. Y., 592; Goldman v. Wolff, 6 Mo. App., 490; Wallace v. Tumlin, 42 Ga., 462; Philadelphia R. R. v. Howard, 13 How., 307; United States v. Speed, 8 Wall., 77; United States v. Behan, 110 U. S., 338; Karrick v. Hannaman, 168 U. S., 328.
    It was held that the inference in such cases was that there would be a profit in the future. Simpson v. London Electric Ry. Co., 1 L. R. Q. B. D., p. 274.
    Moreover, the evidence, the legality of which is now under consideration, being that named in the second finding of error by the general term and there described as “tending to prove what profits might have been realized,” etc., was all of it admitted without any objection or exception by the wheel company, and therefore its admission could not legally be made the ground for the reversal of the judgment of the trial court. Many of the courts have said that because the damages in such a case are difficult of proof, is no reason why the party who has been wronged should be said to have no remedy.
    Nor can it now be argued upon any ground other than that then stated to the trial court by counsel for the wheel company, that the testimony in question should not have been received. Hinde’s Lessee
      v. Longworth, 24 U. S. (11 Wheat.), 199; 1 Fed. Dec., 125; Burton v. Driggs, 87 U. S. (20 Wall.), 125 at 133; Wroe v. State, 20 Ohio St., 471; Thayer v. Luce, 22 Ohio St., 62; Sigafus v. Porter, U. S. C. C. App., 84 Fed. Rep., 430; B. & O. R. R. Co. v. Hellenthal, 88 Fed. Rep., 116; Mitchell v. Marker, 66 Fed. Rep., 139; Toptitz v. Hedden,, 146 U. S., 252; United States v. Sharpleigh, 54 Fed. Rep., 126.
    Finally, we submit that there is good authority for the correctness of the suggestion made by the trial court. In other words, some of the cases hold that under certain circumstances direct testimony as to prospective profits may be given: Rhodes v. Baird, 16 Ohio St., 573; Manning v. Fitch, 138 Mass., 273.

      Marsh & Richie, for defendant in error.
    The only contract between the parties is the one evidenced by the letter of the plaintiff in error, and is a contract at will.
    A contract as to its duration must be, for a definite, determinate period, or it must be at will. If it be not one it is the other.
    To make a contract for a definite period the parties must agree as to the time when the contract relations shall begin and when they shall end. The beginning and ending are as much a part of and the subject of contract as any other terms that may be found in the contract. Any contract in the making of which the minds of the parties have not met and agreed upon both the beginning and the ending of the contract relations is necessarily one at will, no matter what expectations as to duration may have existed in the minds of the contracting parties.- Applying this test to the written contract of the parties herein, construed in the light of the circumstances and situation of the parties at the time it was entered into, it would seem that nothing could be clearer than that the parties did not enter into a contract for a definite term. While it is clear they did agree upon the time of beginning, they did not agree upon the time of its ending. The contract was wholly in writing, prepared by the plaintiffs in error, and its meaning and intent as to whether the parties contracted for a fixed term for its duration must be determined by the writing itself. Its construction must be determined by the court, aided by such extrinsic evidence as may be competent to enable the court to put. itself in the situation of the parties. It was error in the trial court to submit the question of the construction of the contract herein involved to the jury. Monnett, Admr., v. Monnett, 46 Ohio St.. 30.
    We submit that the contract construed in the light of the situation and circumstances of the parties shows clearly that neither of the parties had any idea or intention of fixing the duration of the contract or the time of its expiration.
    Kelly was an expert wheel-maker and an independent contractor for that kind of work. Mr. Burrows was president of the defendant company, a going concern, which, it is reasonable to presume, would carry on the business for an indefinite time— many years, in fact. Mr. Kelly was to take full charge of and run the factory on contract work. For a year? No. For two years? No. For ten years? No. But for a long but indefinite period. Mr. Kelly testified that it took him at least eight months to get his force organized to enable him to carry on his work under his contract with any show of profit. This was known to him at the time he entered into the contract. In view of these facts and circumstances it is totally unreasonable to suppose or infer that Mr. Kelly and Mr. Burrows mutually understood and agreed that the contract should run for- one year only and their contract relations be dissolved at the expiration of one year. This would be the case if the parties intended to enter into a term contract. It is unreasonable to suppose that Mr. Kelly for so short a time would have left another position to take the one he did, when such contract was liable, under his own showing, to have been a losing one to him.
    The writing itself does not contain a single word intended to fix or limit the duration of the contract.
    The term “$8,000 per year,” of itself, is evidently designed to fix the rate of compensation. The latter part of the clause, to-wit, “a settlement to be made at the end of each year,” shows that these terms were used not for the purpose of fixing the duration of the contract or marking a time for its termination, but for the purpose of fixing the times and periods when he was to adjust his balances and get his pay. The use of the word “each” in this clause is totally inconsistent with the idea of an intention to limit the contract to one year from date. It seems to be clear what the parties intended. They agreed when the contract should begin, but they did not agree when it should end. Their expectation was undoubtedly that it would run for a year, but there was no agreement or intention that it should end at a year; that it was to be a contract that would probably be in force for many years, but how long they did not not know nor did they agree to define. It was purely a matter of expectation, but expectation does not make a term contract. If a contract should be terminated sooner by the action of one party or the other than was expected, the court can afford the party complaining or disappointed no relief.
   Williams, J.

There appears to be no substantial conflict in the evidence, nor material controversy about the facts. The defendant, a corporation, was the owner of a plant for the manufacture of buggy and wagon wheels, situated near the village of Carthage, Ohio, and the plaintiff was a practical wheel-maker. The contract between these parties was entered into by the verbal acceptance on the part of the defendant, through G. H. Burrows, its president, of the following written proposal of the plaintiff:

“Carthage, Ohio, April 5, 1892.

Mr. G. H. Burrows,

Cincinnati, Ohio.

Dear Sir:—

For the privileges and prices herein named, I will agree to take charge of and run your factory at Carthage, by or on contract work.

I want full charge of the factory, and management of the business as far as manufacturing goes. I mean by this that Iwant charge of the buying of all merchandise, supplies, etc., or rather that I must be consulted as to what we buy, where we buy it, and what we should pay for it.

I want full charge of all employes. I mean that all help employed or paid by you will be subject to my orders just the same as those employed and paid by me, except in one instance, or rather one capacity, and that is, that the man or men you may have to inspect and receive the wheels, him or them to have full say, and right to demand a good standard grade of work and I will insist on him not receiving, unless it is right, as my responsibility ceases as far as the work is concerned, when he receives it. I will he personally responsible and will answer to you for the general management of the business. My aim will be that wiiat benefits the business, benefits me. I don’t ay ant you to get the impression that I am trying to dictate everything. You know that every business must have a head, and Carthage factory is not large enough for more than one.”

Here follow's a descriptive list of w-heels proposed to be manufactured, with price for each class or description of Avork, which, being long, and unimportant in the disposition of the case, is omitted. The contract then proceeds:

“I w'ould expect you to pay for the following help: Shipping and handling wiieeds after they are received. Inspecting or receiving Avheels, also all office help and night watchman.

In making this agreement or contract, I will Avant you to guarantee me $3,000.00 per year, a proportion of this amount to be paid me each pay day and a settlement to be made at the end of each year, and if I should make more, than the above guarantee, the difference be paid me at the end of each year wffien settlement is made.

Yours Truly,

P. J. Kelly.”

The acceptance of this proposal wrns made sometime between its date and the first day of May, following, at Avhich time the plaintiff, under the agreement thus made, entered into the employment of the defendant, and so continued until the 3d day of November, 1893, wiien he Avas informed his services Avere no longer needed. The only cause assigned for his discharge Avas that, owing to the then prevailing depression of business the defendant could not afford to pay the prices named in the agreement, and it was necessarytoreducethe prices in order to compete with other like products in the market. The defendant had .previously requested thfe plaintiff to reduce Ms prices, and he consented to make a reduction, but not an amount satisfactory to the defendant. The plaintiff has been paid all that was due him up to the time of his discharge; and the damages he seeks to recover in this action are made up of §1,500.00, being one-half of the amount of the guaranty of §3,000.00 referred to in the contract, and which he claims for the six months following the date of his discharge, and the further sum of §2,000.00 which he claims he could have made as profits under his contract during that period, in addition to the sum so guaranteed, making in all §3,500.00, for which, with interest, from November 1, 1893, he asked judgment. On the trial, to prove his profits, the plaintiff gave evidence tending to show the number of wheels that were turned out at the defendant’s factory during the six months following his discharge, and testified that his profits, if he had been allowed to make them, would have exceeded the amount he claimed in his petition. Evidence was also given tending to show the number of wheels made, and the plaintiff’s profits on them, prior to his discharge. The jury gave the plaintiff a verdict for §4,095.00, being the full amount claimed, with interest. The reversal by the general term, of the judgment rendered on the verdict, was upon the grounds, (1) that the contract did not constitute an employment for any definite time, and therefore, the plaintiff was subject to discharge at the will of the defendant, and (2) that the evidence to prove profits on wheels made after plaintiff’s discharge was inadmissible.

We are unable to concur in the first ground stated upon which the judgment recovered by the plaintiff was reversed; and are disposed to adopt the construction of the contract advocated by the plaintiff, which, on the trial was, and here is, that under it his employment was for at least one year; and that, having continued in such employment after the end of' the first year without any new arrangement, a contract arose for the second year upon the same terms. There seems to be a want of harmony in the decisions in regard to the effect of a contract of hiring at a specified rate of compensation per year, some holding that such stipulation imports a hiring for a year, and others the opposite. We find it unnecessary here to consider that question. It is settled that express words that the contract shall continue for a year are not essential to constitute an employment for that period. Bascom v. Shillito, 37 Ohio St., 431. And, in the interpretation of contracts of this kind, as well as of all others, none of their provisions should be ignored or overlooked, that serve to indicate the intention of the-parties. The language of the contract in question, by which the defendant agreed to guarantee to the plaintiff the sum of $3,000.00 per year, is not an agreement to insure a compensation at a specified rate per year, but is an undertaking that the plaintiff shall receive the gross sum of $3,000.00 for a year; and the further language that a portion of this sum shall be paid to the plaintiff “each pay day, and a settlement to be made at the end of each year,” and that if the plaintiff should make more than the sum so guaranteed the difference should be paid to him “at the end of each year,” plainly imports that the settlements referred to should embrace - the transactions of an entire year, through which the employment was to extend, and amounts to a contract for such employment during that year. Of the many cases which sustain that construction, but a few that are most directly in point will be noticed here. In Emmens v. Elderton, 4 H. L. C., 624, the agreement was that the plaintiff, the solicitor of the defendant, should “receive and accept a salary of £100 per annum in lieu of rendering an annual bill of costs for general business transacted by the plaintiff,” as such attorney and solicitor for the defendant. It was held, Coleridge, J., page 663, that: “The stipulation is for a salary of £100 by the year, not at the rate of £100 for a year, and it is unreasonable to infer that any less period of duration, or no period at all, was contemplated.” Following this case, it was heid in Horn v. Western Land Association, 22 Minn., 233, that: “An Appointment of an attorney ‘at a salary of $1,000 per year, payable quarterly’ and an acceptance of such appointment ‘upon the terms offered’ constitute a consummated contract of employment for at least a year. Neither party, without the other’s consent, can lawfully rescind such contract, without cause, during the year.” The court said: “The contract of employment was by the year at a fixed salary for such period, and not for an indefinite period at the rate of so much per year. This construction accords with what, must reasonably be supposed to have been the. intention of the parties, considering the nature of the employment and the character of the services agreed to be rendered.” In Norton v. Cowell, 65 Md., 359: “An offer was made by letter to give employment to the person to whom the letter was addressed, upon terms which were fully stated; and the letter concluded, ‘Your wages will be $100.00 per month with all hotel and other expenses, and if you give me satisfaction at the end of the first year, I will increase your salary accordingly.’ ” ■ The proposal contained in the tetter was accepted. The court held: “that the letter and its acceptance, by legal construction, constituted a contract of hiring for one year, and the party hired having been discharged without justifiable cause, before the expiration of the year, was entitled to recover the balance of the year’s wages, he having been paid to the date of his discharge.”

It is generally accepted as an established rule that, where there is a contract of hiring for a year and at the expiration of that time the employe is continued in the same service of the employer without any new or different arrangement, a contract for another year, upon the same terms and conditions, arises by implication of law. In Adams v. Fitzpatrick, 125 N. Y., 124, it is held that: “Where one enters into the employ of another, under a contract for one year’s service, at a yearly salary, and continues in the employ after the expiration of the year, the presumption is that the parties have assented to a continuance of the service for another year at the same salary.” . A mini-her of authorities on this point are collected in the brief for the plaintiff in error. They rest upon the same principle that when a tenant holds over after the expiration of a lease for a year, without objection by the landlord, a tenancy is created for another year upon the terms of the original lease. Railroad Co. v. West, 57 Ohio St., 161.

The discharge of the plaintiff before the end of the second year, upon which he had entered, appears to have been without legal cause, and a right of action thereupon accrued to him against the defendant for a breach of contract.

The proper measure of the plaintiff’s recovery, however, as we interpret the contract, was largely exceeded by the amount awarded him by the verdict and judgment in special term. The plaintiff was neithér bound nor authorized to make any specified number or quantity of wheels, nor to operate the factory to any given capacity. And, it is a conspicuous feature of the contract, that it imposes no obligation on the defendant to supply material or means for the manufacture of any quantity or number of wheels, nor to keep the factory in operation for their manufacture. The only provisions of the contract on the subject are contained in the clauses numbered 1 and 2 already quoted. It will be noticed that the final and only obligatory provision in the first clause, as therein explained, is that the plaintiff should be consulted concerning what material should be bought, where it should be bought, and the prices that should be paid; and the binding provision of the second clause is, that the plaintiff should have control of certain help employed by the defendant. By neither provision was the defendant bound to buy any material, nor supply any help, nor keep its factory in operation. What should be done in these respects was left entirely to the defendant’s own option. It might, as it chose, suspend the operation of its factory as often, and for such periods of time as it deemed best, or supply just such material and means for running it, or none at all, as should be deemed proper by the defendant. The protection afforded the plaintiff by the contract, in either case, was the amount of compensation guaranteed to him for the year; and that constituted the only source of his compensation when the defendant, in the exercise of its option in that respect, should decline.to furnish him the means and opportunity to manufacture the designated articles in such quantity that, at the stipulated prices, would amount to more than that sum. This appears to be the construction which the parties placed upon' their agreement. The evidence shows that during the first year the factory was entirely shut down for a considerable time, and was run irregularly most of the remainder of that year, and it was not in operation over six weeks of the first half of the second year, that is, up to the time of the plaintiff’s discharge. And the testimony of the plaintiff on this subject was to the effect that he recognized the right of the defendant, under the contract, to shut down the factory at any time, and if the defendant did not see fit to start up, he relied entirely on the guaranty for his compensation. This being so, it seems unimportant, with respect to the compensation of the plaintiff, whether he is relieved from the performance of work under the contract for a given time, by the suspension of operations of the factory, or by the termination of his employment for a like period. Substantially, the consequences resulting to the plaintiff in the latter case are not different from those of the former. The supposed product of the factory that might have been turned out by the plaintiff during the six months following his discharge, if the defendant had furnished him during that time the help and material he desired, could not properly be made the basis for estimating his damages, for, as has been seen, the defendant was under no obligation to provide him with such means of manufacture, or the use of the factory for that purpose, and unless the defendant voluntarily chose to furnish these, the plaintiff’s only compensation was that fixed by the guaranty; and, that the defendant did not so choose. Is shown by the fact of the plaintiff’s discharge. Nor, for the same reason, could the plaintiff’s damages be estimated upon the basis of the output of the factory under the management and by the labor of others whom the defendant saw proper to employ. It was only when the plaintiff, with the means and opportunity which the defendant should choose to furnish him, should, in the language of the contract, “make more” than the amount of the guaranty, that he was entitled to demand more. So that, but for the provision of guaranty contained in the contract, the plaintiff’s damages would have been nominal merely. Hence, having been paid in full to the time of his discharge, the proper measure of his damages is the proportion, for the sis months foliowing his discharge, of the guaranteed yearly compensation, which amounts to fifteen hundred dollars, on which he is entitled to interest from May 1, 1894. Our view of the case renders it unnecessary to consider the competency of certain testimony given by the plaintiff to prove what he claimed would be the profit he could have earned during the last sis months of the contract, though it is clear, we think, that if the case were one in which such profits could be allowed, the testimony, in several material particulars, was incompetent, and the objections were sufficiently made.

As the contract itself furnishes with certainty the legal measure of the plaintiff’s damages, the judgment of the general term will be reversed, and that of the special term modified by reducing the amount to $1,500.00 with interest from May 1, 1894, to the first day of the term at which the judgment was rendered; and the judgment for that amount will bear interest from that time.

Judgment accordingly.


author: Shaucic, C. J.

text:
    Keever et al. v. Hunter et al.

      Lands descending to children of intestate — Subject to indebtedness to estate, when.

    When the lands of an intestate descend to Ms children, there . being no personal estate for distribution, the interest of each child in the lands is subject to his indebtedness to the intestate.
    (Decided May 8, 1900.)
    Error to the Circuit Court of Ashland county.
    Hunter brought suit in the court of common pleas of Ashland county against Aaron Keever and nine others who were the surviving children and heirs at law of Henry Keever, who had died intestate seized of the premises in controversy. The object of the suit was to obtain a decree subjecting the undivided one-tenth interest of the defendant, Philip Keever, in the lands of which his father had died seized to the payment of a judgment which the plaintiff had recovered against him and upon which execution had been issued and levied upon the lands. By cross-petitions the other defendants in error sought similar relief with respect to judgments which they had recovered against Phillip. The claim of the plaintiffs in error, the defendants below, was that by-reason of advancements which he had received from his father and debts which he owed his father exceeding in the aggregate one-tenth of the value of the lands left by his father, Phillip took no interest therein. The case was tried in the circuit court to which it had been appealed. The facts appearing from the admissions of the parties and the findings of the court are as follows :

      Henry Keever dies intestate and seized in fee of the lands described in the petition. The ten original defendants are his surviving children and heirs' at law. He left sufficient personal estate to pay the debts and the costs of administration, but no more. In his lifetiine he had made equal advancements to his children, but he had paid debts with respect to which he sustained the relation of surety for the defendant, Philip, amounting to much more than one-tenth of the value of the land. His other children were not indebted to him. Judgments had been recovered against Philip and excutions levied by the original plaintiff and the cross-petitioners as alleged by them. Philip was and is insolvent and a non-resident of the state. The administrator is not a party to the suit. The circuit court decreed that unless said judgment should be paid by a day named the undivided one-tenth of said lands should be sold for their satisfaction.

      Laser & Huston, for plaintiffs in error.

      Geo. A. Nicol, and Winbigler é Goshorn, for defendant in error.
   Shaucic, C. J.

The circuit court found that the sums which it is admitted that the father had paid in discharge of his liability as the surety for the son were not advancements from the former to the latter. This conclusion would result from the obvious consideration that said sums were paid involuntarily and that upon their payment an immediate right of action accrued to the father as the result. As a result of the father’s payments the son was, at the time of the father’s death, his debtor to an amount which ex- ' ceeded the value of a share in the real estate of which the father died seized. The circuit court also concluded that since this was not technically an advancement, but a debt, a share descended to the son as though he were not debtor to the estate notwithstanding the facts that he was a non-résident of the state and insolvent and there was no personal estate from which, on distribution, the indebtedness •might be deducted.

That this conclusion is correct is the contention of counsel for the defendant in error. ‘ -Jjdany of the cases cited in its support consider whether the sums paid by the father were gifts or advancements, and they decide nothing more than that gifts cannot be deducted from the share. Some of them, however, are to the effect claimed by counsel. But in so far as the reports inform us as to the grounds of the conclusions reached, they either deal with facts substantially different from those disclosed by the record before us, or proceed upon legal considerations not reconcilable with our policy with respect to the subject of descent and distribution. A proposition necessarily involved in the decision of the circuit court is that in a case of this character a son who owes a debt which is payable at all events occupies a better position than one who has received an advancement which is not payable otherwise than as it may serve to diminish his inheritance. The conclusion does not contribute to the equality of inheritance which is made so prominent in the legislation and the decisions of this state. The statute upon the subject of advancements distinguishes gifts by way of advancement from other gifts. It does not make a gift by way of advancement more onerous to the child who receives it than is a debt to the child who owes it. It is not important whether, to secure equality in cases of this character, we adopt the doctrine of equitable set-off, as has been done by some courts, or, for that purpose, regard the debt as an advancement, as has been done by others. The ground of decision is that it is inequitable and at variance with the policy defined in our statutes to permit one to share in an estate which is diminished by his default and to the prejudice of those whose rights are equal to his. A consideration of the provisions of our statutes adds force to the conclusion which Judge Woerner has drawn- from an analysis of the cases: “The distinction between debts owing by an heir and advancements made to him by the intestate is sharply drawn; in some states debts so owing cannot be deducted from the share of the heir in the real estate, and from the personal estate only by way of set-off, but the true principle seems to be that a debt owing by an heir constitutes part of the assets of the estate, as much as that of any other debtor, for which he should account before he can be allowed to receive anything ont of the other assets; and it is so held in the United States.” American Law of Administration, sec. 71.

It is suggested that the conclusion of the circuit court is required by the consideration that the debt is due to the administrator of Henry Keever, while the land descends to his children. It is quite obvious, however, that the administrator not being a party here is not precluded from selling the real estate if that be required for the payment of the debts of the decedent; and that as to what may remain after the payment of debts, the persons interested in descent and distribution are the same. That the consideration suggested should not prevent the equal sharing of the property of the decedent by his children is quite apparent from section 4171 of the Revised Statutes, which provides in substance that if an advancement is made in real estate the value thereof shall be taken to be a part of the real estate to be divided, and that if in personal estate it shall be taken to be a part of the personal estate to be distributed, and if in either case it exceeds the heir’s share of the estate of like character it shall be deducted from the other.

The question here considered was involved in the case of Martin et al. v. Martin, Administrator, 56 Ohio St., 333. The question there debated by counsel and decided by the court was whether the children of Alexander Martin, deceased, should submit to a diminution of the estate which they derived through him in consequence of his indebtedness as he would have been if he had survived to assert the claim in his own person. The law was there conceded by counsel, and assumed by the court, to be precisely the reverse of that of the holding of the circuit court in this case.

Judgment reversed and judgment for plaintiff in error.