author: Digkman, J.

text:
    Larwell v. Hanover Savings Fund Society.
    A corporation incorporated under the laws of this state for the purpose of mining coal, and having power under the act of March 23, 1875 (72 Ohio Haws, 69), to borrow money on the credit of the corporation, not exceeding its authorized capital stock, and at any rate of interest not exceeding that for which natural persons are allowed to stipulate under the laws of this state, procured a loan from a savings fund society, a corporation organized under the laws of Pennsylvania, The coal company made its note payable six months after date, for the amount ' of the loan, indorsed by four persons as sureties, and the same was discounted by the society at its place of business in Pennsylvania, at a rate of interest greater than 8 per cent, per annum, and the proceeds in currency were there paid and delivered to the coal company — Held:
    1. That under said act of March 23, 1875, a mining company borrowing money, with interest to be paid thereon, is placed upon the same footing with natural persons as to the rate of interest for which it may stipulate; and a stipulation by the company for the payment of interest beyond the rate allowed by law will not avoid the contract, except as to the excess of interest over the legal rate.
    2. That in an action on said note by the savings society against the principal and sureties thereon, said act of March 23, 1875, will not be a bar to the recovery of the amount of money actually advanced by the savings society, with interest thereon at the rate of 6 per cent, per annum.

      3. The statutes of another state and also any peculiar construction which the courts of such state may have placed upon them, when they come in question in the courts of this state, must be proved by evidence as matters of fact.
    4. Where a savings fund society, incorporated under the laws of another state, loans money on a promissory note, with sureties thereon, at a higher rate of interest than is allowed by its charter; and where, under the laws of said state, there is not a forfeiture of the loan, but only of the excess of interest above the legal rate, the society, in an action on the note in this state against the maker and sureties, may recover the principal and interest thereon at the rate authorized by its charter.
    Ekrob to the District Court of Perry County.

      George B. Smythe, with whom was O. II. Killer, for plaintiff in error.
    I. The Newark Coal Company had no power or capacity to make the usurious contracts, and therefore the contracts are void. Bank of OMllicothe v. Swayne, 8 Ohio, 257; Creed v. Bank, 11 Id., 489; Miami Express Co. v. Clark, 13 Id., 1; Morris v. Way, 16 Id., 469; Bank of Wooster v. Stevens, 1 Ohio St., 233; Vannata v. State Bank, 9 Id., 27; Union Bank v. Bell, 14 Id., 209; Green’s Brice’s Ultra Vires, 159, 160; Pearse v. B. B. Co., 21 How., 441; Boot v. Goddard, 3 McLean, 102; Boot v. Wallace, 4 Id., 8; 1 Daniel Neg. Inst., 283-4; Earners Loan and Trust Co. v. Perry, 3 Sandf. Ch., 339; Taylor v. People, 66 111., 322; Dennison v. Gilson, 24 Mich., 187; Fowler v. Scully, 22 Smith (Pa.), 461; Kill v. Green, 23 Id., 198 ; 5 Phila. Rep., 18; Lowell v. Daniels, 2 Gray, 161; Withrow’s Corp. Cases, 250; 35 Ohio St., 578.
    II. The signing of the note by the defendant sureties made a contract on their part that carried with it, by implication, as one of its terms, that it should be negotiated by the coal company within its corporate powers, which were limited to a rate of interest not exceeding 8 per cent. Its delivery to the plaintiff, under a contract to pay interest at a greater rate, was an essential variation of the terms of the contract of the sureties, and therefore they are released. Kail v. Williams, 9 Ohio St., 17; Bacon v. Chesney, 1 Stark. N. P., 192; Simmons v. Keating, 2 Stark, 426; Miller v. Stewart, 9 Wheat., 680; Kali v. Kawley, 5 Bing., 54; Kvans v.' Whyle, 5 Id., 485; Theobald on Prin. and Surety, 156.
    The transaction in question was not only ultra vires, but it was illegal in the state which created the corporation— the Savings Society. Act of ApNl 14, 1835 (Pa. Laws of 1834-5, pp. 271-3); Id. of 1838-9, pp. 375, 376; 5 Phila. Rep., 18; and see Keene v. Qoleman, 39 Pa., 299; Fowler v. Seully, 72 Id., 446 ; TJ. S. Bank v. Owens, 2 Pet., 538; 19 Ohio St., 260; 1 Id., 253; 7 Id., 387; 3 Denio, 70; 37 Cal., 543.
    But if good in Pennsylvania it was not in Ohio, where by its terms it was to be performed. 1 Daniel Neg. Inst., 669, 657-8; 13 Pet., 65; 1 How., 182; 17 John., 511; 6 Paige, 627; 10 Iowa, 461; 15 Ind., 33; 5 John., 227; 3 Conn., 253, 266; Story on Conflict of Laws, § 879; 2 Parsons on Cont., 37, 558,. 590, 592; 13 Pet, 519, 589.

      J] Buckingham, for defendant in error.
    In Ohio a manufacturing corporation may borrow money and make mortgages just as an individual may. 29 Ohio St., 330; 7 Ohio, pt. 2, p. 31.
    When the contract of a corporation is not illegal, but is merely unauthorized, or ultra vires, and it has received the fruits or benefit of the contract, it cannot make the defense of want of corporate power. 27 Ohio St., 354; 29 Id., 330; 16 Id., 612; 47 Ind., 407; 22 N. Y., 258; Green’s Brice’s Ultra Vires, 372 note, 619 note; Sedgwick Stat. Const., 73; 63 N. Y., 62; 98 U. S.-, 627, 629; 10 Hun., 378.
    A corporation of one state may lend money in another state at a rate of interest higher than is allowed it by the law of its own state. Kimmerly v. Knight, 21 Wis., 340.
    For the same reason, it would seem tfyat it might lawfully borrow at a higher rate, and such is the logical result of the two cases. Am. Bible Soc. v. Marshall, sufra; Newburg Pet. üo. v. Weare, 27 Ohio. St., 354; Bank v. Prether, 12 Id.. 502. 504.

      The circumstance that the persons who plead this defense are sureties makes it no better; if the contract is valid, it binds all; if the principal debtor is estopped, the surety is also estopped.
    In matters of contract a surety is estopped just as the principal debtor is estopped. Shroyer v. Richmond, 16 Ohio St., 455; Kelley v. State, 25 Id., 567; Bigelow Estop., 272; Rosa v. Butterfield, 38 N. Y., 665; Banlc v. Morris, 4 Thomp. Cas., 182; Be Roe v. Smith, Id., 690; 1 Parsons Cont., 494; 3 Bigelow on Estoppel, 272; 3 Ohio St., 302; Rossmore v. McFarland, 9 Id., 379; Strong v. Barling, 9 Ohio, 201; Rahter v. Bank, cited above.
    When a statute prescribes a rate of interest, and simply forbids the taking of more, and more is taken, the contract is good for what might lawfully be taken and void only as to the excess. Farmers’ Bank v. Beering, 91 U. S., 35; Fxch. Bank v. Sexton, 3 Phil., 64; Wylcoff v. Longhead, 2 Dal.; Craig v. Pleiss, 2 Casey, 271; and in Pennsylvania the rule is the same as to corporations as to individuals. Phil. & S. R.R.y. Lewis, 33 Pa. St., 33-88; Fixch. Bk. v. Sexton, 3 Phil., 64.
    The statutory imposition of a penalty upon the performance of an act does not necessarily vitiate a contract connected with it. Rahter v. Bank, 92 Pa. St., 393; Strong v. Barling, 9 Ohio, 201.
    As a general rule where a statute designed for the protection of the public prohibits in express terms the making of a contract, the contract is void; but if the law which prohibits the contract also limits the effect or declares the consequences which shall attach to the making of it, that rule does not apply. 9 Ohio St., 379; 9 Ohio, 201; 92 Pa. St., 393.
    If a defendant plead a defense founded on the law of another state where the contract was made, it is on him to aver in his pleading and prove the law of that state. Thompson v. Ketcham, 8 Johns., 190; Male v. Roberts, 3 Esp., 163; Klinck v. Price, 4 W. Ya., 4'.
    The note is not void by the laws of Ohio, because it was made and delivered, and the transactions in relation to it had and consummated in Pennsylvania.
    Questions relating to the execution, interpretation and validity of a contract and to the power and capacity to contract are to be determined by the law of the place where the contract was made. Seudder v. Union Nat. Banlc, 91 U. S., 406; Story ConfL Laws, §§ 101, 102, 241; 2 Pars. Bills and Notes, 349-350.
    If the contract was made in one state and is payable in another the parties may elect to conform to the laws of either state, and if conformable to either, it is valid. Kilgore v. Dempsey, 25 Ohio St., 413; Cromwell v. Saeh, 96. U. S., 51. 2 Pars, on Bills and Notes, 336, &c.
    No reason is perceived why the rule should not be the same when one party is a corporation.
    But if the contract in some respect does not conform to the law of either state, its validity and the consequences of its illegality are to be determined by the laws of the place where it was made. Andrews v. Pond, 13 Peters, 65; Mix v. Ins. Co., 11 Ind., 117; Hamielc v. Andreivs, 9 Port. (Alab.), 9 ; 1 Pars. Bills, &c., 378, 380 ; Hiatt v. Griswold, 5 Fed. Rep., 573; Tilden v. Blair, 21 Wall., 241; Bowen v. Bradley, 9 Abb. N. Y. Pr. (N. S.) 395.
   Digkman, J.

The Hanover Savings Fund Society, a corporation organized under the laws of Pennsylvania, and located in Hanover, in that state, commenced the original action in the court of common pleas of Perry county, against the Newark Coal Company, a corporation organized under the laws of Ohio, as maker, and John C. Larwell, William Shields, Edward M. Downer, James H. Smith and Thomas J. Davis, as endorsers of a promissory note for five thousand dollars, dated December 18, 1878, payable in six months after date, and discounted by the Savings Fund Society. The note was signed by Larwell, Shields, Downer and Smith as sureties only; and was delivered to the Savings Fund Society at its place of business in Pennsylvania; and was there discounted by it at a rate of interest exceeding six per cent, per annum, to wit, ten per cent, per annum; and the proceeds thereof were there paid and delivered to the Coal Company.

The Coal Company and Davis filed no answer to the petition. The other defendants answered, and set up as defenses, 1st. That they signed the note as sureties; that the Savings Fund Society had not the corporate power to receive as interest for any loan more than six per cent, per annum ; that its discount of the note in question, at a greater rate, was in violation of the laws of Pennsylvania, and of its articles of incorporation; and that the contract of loan, was therefore void, for w'ant of'the Society’s legal capacity to make the same. 2d. That the Coal Company being a corporation organized for manufacturing and mining purposes, had not the power, under the laws of Ohio, to borrow money at a higher rate of interest than that for which natural persons are authorized to contract, and that the note by it executed, and discounted by the Savings Fund Society, was therefore illegal and void.

The issues were tried to the court, and judgment was rendered for the plaintiff, for the amount actually advanced on the note, with interest thereon at six per cent, per annum. The judgment was affirmed by the district court, and this court is asked to reverse the judgment of affirmance.

The Hanover Savings Fund Society was incorporated by the legislature of Pennsylvania, by act of April 14, 1835. By Section 4 of the act of incorporation, it is provided, that the corporation shall be authorized to invest its funds in public stocks, or real securities, or in the discount of notes, or personal securities; provided that the rate of discount at which loans may be made by the institution, shall not exceed one half per centum for thirty days. And, by Section 1 of an act passed June 27, 1839, which is entitled a Supplement to an act to incorporate the Philadelphia Savings Institution, and for the better regulation of savings institutions and loan companies, it is provided, that it shall not be lawful for any savings institution or loan company within the commonwealth, to charge or receive as interest, commission or otherwise, for any loan or discount, more than at the rate of six per cent, per annum on the sum loaned or discounted. And if any member, director or officer of any savings institution or loan company shall advise or consent to any violation of the provisions of the section, or shall knowingly suffer them to be violated, he shall forfeit and pay for each offence, the sum of one hundred dollars. The Pennsylvania statute, passed May 28,1858, regulating the rate of interest, provides, “ That the lawful rate of interest for the loan or use of money in all cases where no express contract shall have been made for a less rate, shall be six per cent, per annum.” And when a greater rate has been contracted-for or reserved, the debtor will not be required to pay the excess over the legal rate, and at his option he may deduct the excess from the amount of the debt; or, when he has voluntarily paid the whole debt with interest in excess of the lawful rate, he may recover such excess by action. This statute inflicts no pains, penalties or forfeitures for charging or receiving more than the lawful rate of interest. If the parties contract for a, greater rate than six per cent., the contract is only voidable as to the excess. Lebanon National Bank v. Karmany, 98 Pa. St., 65.

It is submitted in behalf of the defendant in error, that by the established construction and interpretation of the statutes of Pennsylvania, contracts for the loan of money by incorporated savings institutions at a higher rate of interest than six per cent, per annum, are to be placed upon the same footing with those of natural persons, and instead of being illegal and void, are valid to the extent of the amount actually advanced, with interest thereon at the lawful rate. The statutes of another state, and also any peculiar construction which the courts of such state may have placed upon them, when they come in question in the courts of this state, must be proved by evidence as matters of fact. Smith v. Bartram, 11 Ohio St., 690. On the trial in the court of common pleas, to prove the existing law of Pennsylvania governing savings institutions in making loans on interest, both sides produced evidence, in the shape of printed copies of statutes, and books of reports of cases adjudicated in the local tribunals; and the plaintiff introduced the depositions of witnesses learned in the law, and of long and extensive practice in the courts of that state. In the light of the evidence thus furnished by the record, we are not disposed to reject the conclusions arrived at by the court below — that the taking of more than six per cent, per annum interest by savings institutions in Pennsylvania does not wotk a forfeiture of the loan, but. only of the excess of interest above that rate ; that the officers of such institutions may be sued for a penalty of one hundred dollars for a violation of the act in taking illegal interest; but, that the principal with six per cent, per annum interest thereon, is not impaired, and may be recovered by action. There being, therefore, under the laws of Pennsylvania no forfeiture of the loan, but only of the excess of interest above the legal rate, the Savings Fund Society, in an action in this state, on the note in litigation, against the maker and sureties, may, if not prohibited by any statute of this state, recover the principal and interest thereon, at the rate authorized by its charter.

But, the Newark Coal Company, it is said, had not, under the laws of Ohio, the legal power and capacity to borrow money at a rate of interest exceeding - eight per cent, per annum, and that its contract with the defendant in error was therefore illegal and void. This coal companj’- is a corporation organized for manufacturing and mining purposes. Under the act of March 23, 1875 (72 Ohio Laws, 69), “Any company heretofore or hereafter incorporated under the laws of this state for the purpose of manufacturing or mining, or any corporation organized for religious purposes, shall have power to borrow money on the credit of the corporation, not exceeding its authorized capital stock, at any rate of interest not exceeding that for which natural persons are or may be allowed to stipulate under the laws of this state, and may execute bonds or promissory notes therefor in sums not less than one hundred dollars, and to secure the payment thereof may pledge the property and income of such company.” Without the aid of an enabling statute, the coal company might have borrowed money without express authority in that behalf, as a power incidental to its enterprise, provided the nature of its undertakings was such as to render borrowing necessary for the proper conduct of the same. The modern doctrine is, to consider corporations as not only having such powers as are specially granted by the act of incorporation, but such as are necessary for the purpose of carrying into effect the powers expressly granted.' 2 Kent’s Comm., 298. Generally, they have authority to borrow money to carry out the objects for which they are created, and to execute their obligations therefor. When not prohibited by law from doing so, and without any express authority in their charters for that purpose, they may make negotiable promissory notes, when such notes are given by them for any of the legitimate objects for which they were incorporated. Indeed, it seems to be now well settled by the weight of authority, as said in a recent work on corporations, that a power granted to a corporation, to engage in a certain business, carries with it the authority to act, precisely as an individual would act, in carrying on such business, and that it would possess for this purpose the usual and ordinary means of accomplishing the objects of its creation in the same manner, as though it were a natural person. Field on Corp., sec. 271; Hays et al. v. Galion Gas Light & Coal Co., 29 Ohio St., 330; Moss v. Averell, 10 N. Y., 449; Green’s Brice’s Ultra Vires, 115.

■ In full view of the exercise of these extended and well recognized incidental corporate powers, the legislature, in sec. 3235 Rev. Stats., has provided, that except for dealing in real estate or carrying on professional business, corporations “ may be formed for any purpose for which individuals may lawfully associate themselves,” If the legislature had gone further, and added the words, “and may borrow money at any rate of interest not exceeding that for •which, natural persons may stipulate under the laws of this State,” it would be unreasonable to hold, that the-statute meant to permit merchants and traders, for example, to go through the form óf a corporate organization, and as it were borrow themselves rich by obtaining loans at. more than eight per cent.. interest, and then under the shield of law repudiating the payment of interest and principal.

If a corporation, in the exercise of its implied powers, may borrow money and give its promissory note therefor, it may stipulate for the payment of interest, and must be subject to at least the same limitations that are imposed upon natural persons. But, suppose it borrows money and stipulates to pay a higher interest than eight per cent, per annum, shall the lender thereby forfeit not merely the excess of interest above the legal rate, but the entire principal and interest? Such a bargain between natural persons, it is conceded, would not be void, but o.ur courts would recognize the contract as binding, and reform the terms, and give judgment for the principal and six per cent, interest. Miami Exporting Co. v. Clark, 13 Ohio, 20. A different rule, we do not think, applies to manufacturing and mining companies «under the act of March, 1875. When the legislature empowered such companies to borrow money, at any rate of interest not exceeding that for which natural persons are allowed to stipulate, we are unwilling to hold, that it was the legislative intent to permit such companies not only to evade the payment of the excess of interest above the legal rate, but to go further than natural persons can go, and repudiate the entire contract as illegal and void. Such an intent becomes more improbable when we consider, that “corporations organized for religious purposes” are placed by the statute, in all respects, upon the same level with manufacturing and mining companies. We are therefore of opinion, that a mining company borrowing money, with interest to be paid thereon, is placed upon the same footing with natural persons as to the rate of interest for which it may stipulate; and a stipulation by the company for the payment of interest beyond the rate allowed bylaw, will not avoid the contract, except as to the excess of interest over the legal rate.

But, although the contract between the Coal Company and the defendant in error is not to be treated as illegal and void, yet, it is contended, that it was at least without authority; that the company is a creature of statutory law, and derives all its powers and capacities from the law of its creation; that to borrow money at a rate of interest greater than eight per cent, per annum, is not within the powers conferred by the act of March, 1875, and therefore no recovery can be had by the Savings Fund Society. The facts stand undisputed, that the Coal Company did borrow the sum of five thousand dollars from the Savings Fund Society, to be used in its business of mining coal; that no portion of the money has ever been paid; and that it is now sought to repudiate the loan, on the ground of a want of corporate power to borrow money at more than eight per cent, interest. In the case of Bank of Chillicothe v. Town of Chillicothe, 7 Ohio, 31, it was held, that where a town corporation is invested with the powers usually conferred upon such bodies, a contract for borrowing money for tbe use of the town is obligatory, and binds the corporation for repayment, although no express power to borrow money be given in the law of incorporation. Hitchcock, J., in delivering the opinion of the court, in words of great force and adapted to the case at bar, says, “ The language of the defendants to the plaintiffs is in substance this: True, you loaned to us this money, you did it at our earnest solicitation, we have used it for our own benefit; but we have no power to borrow, we violated our charter in so doing, and we will take advantage of this our own wrongful act, to protect ourselves from the payment of that which is your honest due. No rule of decision which will lead to such manifest injustice ought to be adopted without careful examination and much deliberation.” The attempt of a corporation to avoid the payment of its debts, by setting up its usurpation of power or the plea that a contract which it has deliberately made, and of which it has received the full benefit, is void for want of corporate power to make it, does not commend itself to favorable consideration. The tendency of the courts, based upon the strongest principles of justice, is to enforce contracts against corporations, although in entering into them they may have transcended their chartered powers, when they have received the consideration and the benefit of the contract. And it seems to be now the well established rule, that where a contract, not illegal, has been executed and fully performed on the part either of the corporation or of the other contracting party, neither Avill be heard to object that the contract and such performance Avere not within the legitimate powers of the corporation. Hays v. Galion Gas Light & Coal Co., 29 Ohio St., 330; Ex parte Chippendale, 4 DeG. M. & G., 19; Fishmongers' Company v. Robertson, 5 McG., 131; Whitney Arms Co. v. Barlow, 63 N. Y., 62; Bradley v. Ballard, 55 Ill., 413.

It is claimed in behalf of the plaintiffs in error, that the judgment of the district court should be reversed, upon the authority of Bank of Chillicothe v. Swayne, 8 Ohio, 258, and a series of cases following in approval, and ending with Kilbreth v. Bates, 38 Ohio St., 187, in which banks and institutions exercising banking powers loaned money at usurious rates of interest. Those cases, as well as that of Ohio ex rel. Laskey v. Board of Education, 35 Ohio St., 519 — a case of borrowing money at a rate of interest exceeding the statutory limitation of eight per cent. — rest upon their OAvn peculiar merits. They refer to a class of corporations totally unlike mining companies in character, duties, objects and relations to the public. By reason of the restrictions and prohibitions in the charters or acts of incorporation which gave them birth, it was held in the eases above referred to, that where the banks or banking institutions took more than the rate of interest prescribed, the contract of loan was avoided — that it Avas not simply ultra vires, but illegal and void. We are not disposed to call in question the decision in the case of Bank of Chillicothe v. Swayne, supra, but we are of opinion, that the application of its controlling principle should not be extended to the act of March 28, 1875, for enabling manufacturing and mining companies to borrow money at the rate of interest permitted to natural persons. Such an application is not demanded by the language, S23irit or purposes of that act.

From the foregoing considerations it will follow, that the Newark Coal Company is not discharged from liability, on the promissory note by it made to the Hanover Savings Fund Society. It is claimed however by the plaintiffs in error, Larwell, Shields, Downer and Smith, that although the Coal Company may be liable, they, being sureties only on the note, are exonerated, as the alleged usurious contract is not their contract. In First National Bank of Columbus v. Garlinghouse et al., 22 Ohio St., 493, it was decided, that the discounting of a note for the principal maker, at a usurious rate of interest, will not discharge the sureties, where there is no intention to juactiee a fraud on them, and in the absence of any express agreement or understanding between the sureties and the principal of which the creditor had notice, that the note was not to be used unless it could be discounted at the legal rate of interest.' In such case, the sureties must be held to have trusted the principal as to the terms on which the note might be discounted. There being no facts disclosed by the record which render that decision inapplicable to the case at bar, we are of opinion, that the above named sureties are not relieved from liability on the note, by the contract of the Coal Company to pay interest thereon in excess of eight per cent, per annum.

The judgment of the district court must be affirmed

Judgment accordingly.

[Martin, J., dissents as to the fourth proposition of the syllabus, because its conclusion as to the law of the other state is not warranted by the record.]


source: Caselaw Access Project

author: McCauley, J.

license: Public Domain

text:
    Hitesman v. Donnel.
    An insolvent debtor duly executed and delivered a mortgage of lands to a trustee, to secure a bona fide indebtedness to his wife. The name of the trustee was omitted in the granting clause, and also in the covenants of the mortgage; but the grant was to-and his assigns forever, in trust, for the use and benefit of his wife, her heirs and assigns. In the clause of defeasance was a copy of a promissory note signed by the debtor and payable to the assignee for the use and benefit of his wife. The mortgage was duly recorded, and afterwards other parties obtained judgment liens on the lands. Held:

    1. That the mortgage, taking all its parts together, furnishes the means to supply the omission of the name of the grantee, and it was not error to so reform it as to supply this omission.
    2. That the mortgage created a valid lien on the lands from the date when it was filed for record.
    S. A mortgage thus made, to secure a bona fide indebtedness of the mortgagor to his wife, does not enure to the benefit of all the creditors of the mortgagor.
    Eeeor to the District Court of Warren County.
    The plaintiff in error on the 5th day of June, 1879, filed his petition in the common pleas to subject the lands therein described to the payment of a judgment against Theophilus Donnel, making numerous other lienholders parties, among whom was the defendant in error, Harriet Donnel, the wife of Theophilus Donnel. The lien of the plaintiff and those of all the defendants were subsequent to the mortgage of the defendant, Harriet Donnel. What was done in the common pleas in the case, the record does not show; but at the April term, 1880, of the district court the case was tried on appeal, when the court found the facts of the case as follows: That in the year A. D. 1868 the said Theophilus Donnel obtained a loan from his wife, the said Harriet Donnel, of funds belonging to her separate estate to the amount of fifteen hundred dollars ($1,500), which sum he promised to repay her with interest; that' he did not at that time deliver to her any note or other writing evidencing said indebtedness; that on the 10th day of February, 1879, while he owed his said wife said sum of money and interest, he found himself considerably involved, unable to pay the claims of all his creditors, including the said claim of his wife. And his said wife desired and requested that he should secure her said claim; that said Theophilus Donnel then and there agreed to secure his said wife by executing to her his note secured by mortgage on his real estate; that upon the advice of their counsel it was determined not to make the note and mortgage directly to her, but to have the intervention of a trustee; that thereupon it was agreed between the said Theophilus and the said Harriet that one Michael Roat should be the trustee to hold said security-for said Harriet; that on said day a note and mortgage were drawn by their attorney, of which said note and mortgage the following are true copies, to wit:

      Know all men hy these presents:

    That I, Theophilus Donnel, of Warren County, in consideration of Twenty-four Hundred Dollars heretofore received by me from, my wife, Harriet Donnel, out of her separate property and by me appropriated, as and for her separate money, in the purchase and payment of the price of the real estate herein described, the receipt whereof is hereby acknowledged, do hereby grant, bargain, sell, and convey to tlie said______________ _______________________________________________and his assigns forever in trust for the use arid benefit of said Harriet Donnel, her heirs and assigns, the following described real estate,__________________________________________ _________________________(description of premises)__________________________ ____________and all the estate, title and interest of the said Theophilus Donnel either in law or equity, of, in and to said premises; together with all the privileges and appurtenances to the same belonging, and all the rents, issues and profits thereof; to have and to hold the same in trust for the said Harriet Donnel, her heirs and assigns forever. And the said Theophilus Donnel for himself, and for. his heirs-, executors and administrators doth hereby covenant with .the said_________________________________ ________________________Trustee, as aforesaid, and his assigns, that he is the true and lawful owner of the said premises, and hath full power to convey the same; and that the title so conveyed is clear; free and unincumbered; and further that he will warrant and defend the same against all claim or claims of all persons whomsoever. Provided, nevertheless, that the said Theopliilus Donnel shall pay, of cause to be paid at its maturity a promissory-note hereby secured, and which note is as follows:
    “ Three months after date I promise to pay to Michael Roat for the use and benefit of Harriet Donnel Twenty-four Hundred Dollars, for value received by me from her of her separate estate, with interest from date.
    “ February 10th, 1379. THEOPHILUS DONNEL.”

      In Witness Whereof, the said Theophilus Donnel and Harriet Donnel, who hereby releases her right and expectancy of dower in the said premises, have hereunto set their hands and seals this tenth day of February, in the year of our Lord one thousand eight hundred seventy-nine.
    THEOPHILUS DONNEL, (Seal.)
    HARRIET DONNEL, (Seal.)

      Signed, sealed and acknowledged in the presence of us.

    Peter Doughman,
    Charles Tigar.

      The State of Ohio, County of Warren, ss.

      Be it remembered, That on the tenth day of February, in the year of our Lo'rd one thousand eight hundred and seventy-nine, before me the subscriber, Peter Doughman, a J. P. within and for said Warren County, personally came Theophilus Donnel, the grantor in the foregoing mortgage deed, and acknowledged the signing and sealing thereof to be his voluntary act and deed for the uses and purposes therein - mentioned. And the said Harriet Donnel, wife of the said Theophilus Donnel, being examined by me separate and apart from her said husband, and the contents of said mortgage being by me made known and explained to her as the statute directs, declared that she did voluntarily sign, seal and acknowledge the same, and that she is still satisfied therewith, as her act and deed for the uses and purposes therein mentioned.

      In Testimony Whereof, I have hereunto subscribed my name and affixed my seal on the day and year aforesaid.
    PETER DOUGHMAN, J. P. (Seal.)
    In and for Warren County, Ohio.
    That subsequent to the drawing of the said note and mortgage, and on the 10th day of February, 1879, in the absence of their attorney, a justice of the peace was called in before whom said mortgage was signed, sealed and acknowledged without filling up the blanks left for the name of the trustee; that the matter of the said blanks was spoken of at the time, but that it was concluded by Donnel and the justice of the peace that as the mortgage had been drawn' by an attorney it .was probably right, and that it had better be executed as it was, and Donnel said he would show it to his attorney and if necessary that it could be corrected; that Donnel at the time of the execution of the mortgage believed it to be sufficient in form to effect the security intended thereby to be given to his said wife; that the papers were shown to the said attorney on the next day while he was in the act of leaving the station on the train, who remarked after a casual glance that the mortgage seemed “ all right; ” that soon thereafter, to wit: on the 11th play of February, 1879, the mortgage was duly filed for record; that said note and mortgage were executed by said Theophilus Donnel for the purpose of preferring the claim of said Harriet Donnel secured thereby; that neither before nor at the time of the execution of the note and mortgage was the said trustee, Michael Roat, consulted.as to his acceptance of the trust; that subsequently, and two or three days after the execution aforesaid, said Theophilus Donnel presented the note to said Roat and explained to him the nature of the trust, who accepted said trust and at the same time'delivered the note to said Theophilus Donnel for safe keeping, who has had the possession thereof since and up to the time of the-bringing of this suit, and that no part of said note has been paid. That when said mortgage was filed for record, the same was, by the recorder, indexed as a mortgage from Theophilus Donnel to Harriet Donnel, and that the defendants, other than said Harriet Donnel, claiming, and having liens on said lands hereinafter set forth had, before acquiring their said liens, no notice of said mortgage, and the lien thereof, other than that afforded by the record of said mortgage, but said plaintiff had notice thereof before acquiring his lien in his petition set forth.
    Upon this finding the court proceeded to correct and reform the mortgage of Donnel and wife, so as to supply and insert therein the name of Michael Roat as grantee, and thereupon entered a decree for the sale of the land, directing that out of the proceeds of such sale the lien of Roat as trustee be first paid, and that the other liens be afterwards paid according to their priorities..
    A petition in error is filed here by the lienholders other than Michael Roat, to reverse this decree.

      W. F. Ellsrotk and C. M. Thompson, for plaintiffs in error.
    The reformation could not be made of the mortgage to the prejudice of judgment creditors. Van Thorniley v. Peters, 26 Ohio St., 471; White v. Penman, 1 Id., 110; Erwin v. Shuey, 8 Id., 510 ; White v. Penman, 16 Id., 60;' Bloom v. Ffoggle, 4 Id., 45.
    The failure to insert the mortgagee’s name makes the instrument totally defective, and is certainly as essential an element of a proper execution as the omission of a witness. Is not the failure to insert the name of a grantee as much a defective execution by implication of the law, as the signing of the instrument is by express terms ? Both make the instrument nugatory, and require a court of equity to make it operative and effectual, and until that time legal and vested rights of innocent parties are not affected by it.
    We claim that when there is an absolute want of some essential part of a deed or mortgage, there is neither a patent nor latent ambiguity, and extrinsic evidence has nothing to apply to its proper subject matter. In short the instrument is no mortgage or deed until made so by a court of equity, and from that time only does it affect the rights of third parties. Hood v. Brown, 2 Ohio, 266; May-ham v. Combs, 14 Id., 428; and eases above cited.
    The record of the instrument gave no legal or constructive notice to affect the rights of third parties. Jennings v. Wood, 20 Ohio, 261; Pringle v. Bunn, 37 Wis., 449; 16 Ohio, 60; 20 Id., 261; 4 Id., 45; 26 Ohio St., 474; 16 Id., 552.
    The conveyance inured to the benefit of all the grantor’s creditors. Conrad v. Paneost, 11 Ohio St., 685; Pichson v. Paw son, 5 Id., 218; Hide v. Olds, 12* Id., 591; Harhroder v. Eeiby,á Id., 602; Rev. Stats., § 6343.

      W. S. Williamson, for defendant in error.
    We maintain that courts of equity will interfere, to correct mistakes, not only between the original parties, but also those claiming under them, whether as heirs, legatees, devisees, assignees, voluntary grantees, or judgment creditors — that courts of “equity will correct all errors and defects, and treat the instrument according to the intention of the parties.” Swan & C., 694; Davenport v. Sovil, 6 Ohio St., 459; Goshorn v. Purcell, 11 Id., 641; Smelters v. Rainey, 13 Id., 568; Adams’ Equity, 406; Story’s Equity, vol. 1, sec. 165; Simmons v. North, 3 Smedes & Mar. R., 67; Wall v. Arrington, 13 Ga., 88; White v. Wilson, 6 Blackf., 448; Gouverneur v. Titus, 6 Paige Ch. R., 347; Strang v. Beach, 11 Ohio St., 283; Whitehead v. Broion, 18 Ala., 682; Rhodes v. Outcalt, 48 Miss., 367; Young v. Cason, 48 Id., 259.
    We claim that Harriet Donnel stands in the relation of a bona fide purchaser for value, said mortgage being executed for the purpose mentioned therein, and she therefore has a superior equity. A subsequent judgment creditor does not stand as a purchaser, and is not entitled to the privileges of that position. He is remitted to the rights of the mortgagor, and he acquires a lien only upon the interest of the mortgagor, and must yield to every claim that could be successfully asserted against the mortgagor. Jones on Mortgages, vol. 1, sec. 458; Anketel v. Converse, 17 Ohio St., 11; Tousley v. Tousley, 5 Id., 78.
    It is the purpose and intention of the parties that governs. Perkins v. Dibble, 10 Ohio, 434.
    Deeds omitting words of grant are held good. Bridge v. Wellington, 1 Mass., 219.
    The fact that a name other than the grantee’s appears in a place in the deed where the grantee’s name ought to be, does not warrant the finding that the conveyance was to such other person. Hawriek v. Jackson, Texas, 188Q; 16 Id., 204; 9 Id., 445; 3 Gilb., 239;
    Where the intention of the parties can be gathered from the instrument, the court will carry that intention into effect. 1 Mass., 135; 6 Id., 32; 7 Id., 384; 15 Pick., 27; 19 Id., 446.
    The mortgage did not inure to the benefit of all the mortgagor’s creditors. Lloyd v. Fulton, 1 Otto, 479; Payne v. Troyman, 68 Mo., 339.
   McCauley, J.

The mortgage was duly executed and recorded. The only defect in it was the omission of the name of the grantee. . But the grant was to-and his assigns in trust for the use and benefit of Harriet Donnel, her heirs and assigns. And the covenants were to-, trustee as aforesaid.

In the clause of defeasance, the promissory note of Theophilus Donnel to Michael Roat was payable to bim for the use and benefit of Harriet Donnel. It is quite plain that the granting elause and the promissory note set out in the defeasance have reference to the same trustee and the same beneficiary, and thus is furnished the means of making definite and certain all that is wanting to make the mortgage a complete instrument.

If the name of the grantee had been omitted from the mortgage by mistake or inadvertence, the defect would be one that could be corrected by proof aliunde. Strang v. Beach, 11 Ohio St., 283; Goshorn v. Purcell, Id., 641.

Counsel for plaintiff in error insist, on the authority of Van Thornily v. Peters, 26 Ohio St., 471; Erwin v. Shuey, 8 Id., 510; and White v. Denman, 16 Ohio, 60, that the mortgage was fatally defective.

These were all cases involving the effect of defectively executed mortgages, in which it was held that a mortgage to operate of its own force must be executed, according to the statute prescribing the form and requisites of such instruments. This mortgage presents a question wholly different from the one determined in those cases. And containing within itself the means to make it definite and certain, we think there was' no error in so reforming it.

It is contended that the mortgage from the husband, who was insolvent at the time it was given, to a trustee for the us.e of his wife secured to her a preference over other creditors and should inure to the equal benefit of all the creditors of the husband.

If the husband had given a mortgage to one of his creditors who was under no disability to take it to secure a debt, suck a mortgage would have been valid both at law and in equity. If the wife was a bona, fide creditor, as found by the district court, and might take security for her debt, she Avas entitled to security in a form, and in effect, as available to her as that taken by any other creditor, to him for his debt.

A mortgage directly from the husband to his wife, while it would have dispensed with a trustee and would not have been within the letter of the statute, would have been void at law, and subject to the uncertainty of being upheld in equity. Her security in this form would have been something less than that which might have been taken by a creditor not under disability. Assuming her right to take security in a form as ample as might have been taken by any of the creditors of her husband, this security was given in the only way in which it could have been done without impairing that right. The mortgage was in legal effect equivalent to an assignment under section 6343 of the Revised Statutes, Harkrader v. Leiby, 4 Ohio St., 603, and Avould have inured to the benefit of all the creditors of the mortgagor if the beneficiary had been anyone other-than his wife.

The office of the trustee under this mortgage was not to hold the security of the mortgage merely for the benefit of creditors; but to hold it for a creditor who could not have taken or held it for herself. The mortgage was the legal mode of giving security by the husband directly to the wife.

We are of opinion therefore . that there rvas no error in the judgment of the district court in so holding.

Judgment affirmed.


author: DxckmAN, J.

text:
    Doherty v. Stimmel.
    The owner of a lot of land sold and conveyed the same — his vendee as a part consideration for the conveyance, agreeing at the time, to assume an unrecorded mortgage of indemnity on the premises, executed by the owner seven months before. The vendee,' on the day he received his deed, left it for record, and on the day following, the mortgagee filed for record his mortgage of indemnity. The vendee, several months thereafter, sold and conveyed the premises to B., and took from him his notes for the balance of the purchase money secured by mortgage on the premises, and for a valuable consideration, assigned the notes and mortgage to S. before due. B. and S. had no actual notice or knowledge of the mortgage of indemnity, when they acquired an interest in the property. Seld :

    1. The mortgage of indemnity did not become a lien upon the premises.
    2¡ S. took the mortgage assigned to him, subject only to such equities, if any, as existed between the vendee and B.
    3. The conveyance to B. was not aflrectecl by any equities existing between the vendee, his grantors, and the owner of the mortgage of indemnity.
    Error to the District Court of Franklin'County.

      Wilson §• Stoddart, for plaintiff in error.
    We submit that after Doherty’s mortgage bad become a lien upon the real estate of Hopkins by reason of the pay-* ment thereof becoming a part of the purchase money, and tbe distinct agreement of Hopkins to pay the same, and after- the mortgagee, Doherty, had done all that the law required to make his mortgage valid against third parties by filing- the same for record in the recorder’s office of the county where the real estate is situated, that then no subsequent purchasers could claim to hold the land in question clear of the Doherty mortgage.
    It is claimed by the defendant, Bean, in his answer and cross-petition, that he did not have actual notice of the existence of the Doherty mortgage or of the verbal understanding between Hopkins and Meacham. This is immaterial, for Bean had constructive notice by reason of the fact that the mortgage had been filed for record and he might have bad actual notice had he but searched the records. And further, from all that appears in Bean’s answer and cross-petition, he had actual knowledge of the written agreement.
    It will hardly be questioned that Hopkins could make Doherty’s mortgage a valid mortgage lieu as against himself by a written contract for a valuable consideration to that effect. And if Doherty’s mortgage was valid against Hopkins, then it was superior to the mortgage lien which Hopkins might have under the mortgage from Bean for the following reasons:
    (1.) The mortgage was first in time.
    (2.) The Doherty mortgage was made a superior lien by Hopkins’ agreement to pay the same.
    (3.) The Doherty mortgage, if considered as a lien for purchase money, was superior against Hopkins to any lien which Hopkins might have or create.
    (4.) The Doherty mortgage was filed in equity. A court of equity considering the true relations of the parties would certainly not have allowed a debtor to be paid from a fund to the exclusion of his creditors, the fund being insufficient to satisfy the claims of both, when the debtor for a valuable and sufficient consideration had agreed that his creditor should be paid from the same fund.

      John G-. Me Gruff ey, for defendant in error.
    The statute in force at the time of the transaction mentioned in this case and governing it is found 1 S. & C., 465 to 469, and particularly see section 7 thereof.
    As to'when a mortgage takes effect as a lien see 8 Ohio St., 471; 1 Id., 110; 14 Ohio, 418; 13 Id., 148.
    When Doherty filed his mortgage for record, August 9, 1876, the title to the premises, covered by the mortgage, had passed from the mortgagors (Meachams); and there was, then, nothing to which the mortgage could attach; and Bean takes the title from Hopkins as clear as the record showed it to be, August 8, 1876, when Hopkins received it, subject only to the then recorded mortgage of Kingrey.
   DxckmAN, J.

The original action was brought in the court of common pleas of Franklin county, by Wesley Doherty, against Elijah Meacham, Mary E. Meacham, and A. J. Hopkins to foreclose a mortgage of indemnity, on a lot of land in Columbus, Ohio, executed and delivered by the Meachams to Doherty. W. Kingrey, Wilson J. Bean, and Michael Stiinmel, were made parties defendant in the common pleas. • As disclosed bjr the pleadings, and an agreed statement of facts filed in the case, the mortgage of the above described premises was made to Doherty on the fourth day of January, 1876, and was by him filed for record August 9, 1876. On the eighth day of August, 1876, the Meachams conveyed the same premises to defendant, Hopkins, and on the same day, Hopkins left his deed for record. On the thirteenth day of January, 1877, Hopkins conveyed the premises to defendant, Bean, who, the same day, executed a mortgage back to Hopkins for a portion of the purchase price; and this mortgage was filed for record January 18,1877, and was a few days afterward— January 22, 1877 — with the notes which it was intended to secure, assigned and delivered to defendant, Stimmel. Hopkins knew at the time he made the purchase from the Meachams, of the mortgage to Doherty, and promised in a written agreement, as a part of the consideration for the conveyance, to assume the mortgage of Doherty, and released the Meachams from any liability on the covenants of warranty in their deed to him. The defendants, Bean and Stimmel, had no actual notice or knowledge of Doherty’s mortgage, when they became interested in the property, and no knowledge that the purchase money was not all paid by Hopkins, and only knew of the first mortgage lien of Kingrey, on the premises.

In the court of common pleas, upon overruling the plaintiff’s demurrer to the answers and cross-petitions of "defendants, Bean and Stimmel, the plaintiff not desiring to further plead, the cause came on to be heard upon the petition, the answers and cross-petitions, and the evidence, and with the consent of all the parties, .was submitted to the court. The court thereupon found, that the mortgage to Doherty did not become a lien upon the premises in the petition described ; and further found, that the sum of 1817.50 was due the defendant Stimmel, from the defendant Bean, upon the note set out in Stimmel’s answer and cross-petitiop — it being one of the notes which the mortgage- from Bean to Hopkins was intended to secure. And the court ordered, that the master commissioner, from the proceeds of the sale of the premises sold by him under the former orders of the court and not included in the former order of distribution, pay the balance oyer to Stimmel, after paying certain taxes and assessments upon the premises, and certain taxed costs of the suit. The decree of the court of common pleas was affirmed by the district court, and this court is asked to reverse the judgment and decree of the district court.

It has been settled by repeated adjudication in this state, that an unrecorded mortgage does not vest in the mortgagee any interest in the premises, either legal or equitable, as against subsequent purchasers, and that too, whether such purchasers had notice of the unrecorded mortgage or not. The rule is a statutory rule, deduced from a construction of the express and peculiar phraseology of the statute, and though in some instances a stern adherence to it might seem a hardship, it has become a rule of property, and should not be disturbed. Until delivered to the recorder of the proper county, to ‘ be by him entered on record, a mortgage can have no effect, either at law or in equity, against third persons; and as said by Ranney, J., in Bloom v. Nogle, 4 Ohio St., 55, “if notice is permitted to supply the place of the registry, the whole field of constructive notice immediately applies; or, if it is made to depend upon actual notice, the inquiry is still attended with all the danger and uncertainty incident to parol evidence, when used for the1 purpose of affecting written instruments,1 and disturbing titles.”

The purchase of the premises therefore by Hopkins, with full knowledge of the unrecorded mortgage to Doherty — in the absence of his written agreement to assume its payment —would have vested in him an estate free from the mortgage incumbrance. But, the registry furnished no information to third persons, that Hopkins had assumed the payment of Doherty’s mortgage, or had ever heard of it at the date of his deed. When Bean purchased the property, and executed and delivered the notes and me tgage for the balance of purchase money, it is true, that Doherty had left his mortgage for record, but Bean had no actual notice of that fact. If charged with constructive notice by'virtue of the record, he must have discovered by examination, that on the day, Hopkins received and deposited his deed with the recorder, his title to the premises was clear and unincumbered, with the exception of the senior mortgage to Kingrey. If on that day, B.ean had purchased the premises, no question could have arisen between him and Doherty, as Hopkins was then, for aught that appeared, the source of an undisputed title, subject to the last mentioned lien.. But conceding that at the time of his purchase, Bean was notified of Doherty’s mortgage and of its record subsequent to the date of the deed to Hopkins, with no other evidence before him save that of the registry, he would have known that such subsequent record could not relate back and impair the title already vested in Hopkins. The registry alone would have informed him, that Hopkins had acquired title on the 8th of August, 1876, while Doherty by his own delay had voluntarily postponed his legal rights to those of Hopkins and his assigns. Looking to the statutory rule as having relation to the rights of property, the material inquiry by Bean was, as to the legal interest of Hopkins in the premises; and the registry itself, without other evidence, revealed nothing whereby Hopkins was prevented from transmitting to his vendee the same rights of property ' which he acquired on the day he received his deed.

The agreement in writing entered into between Hopkins and the Meachams, whereby he assumed to pay Doherty’s mortgage, and to release his grantors from liability on the covenants of warranty in their deed to him, gave rise to equities between the parties to that agreement and the plaintiff in error. But, in our view of this case, it is unnecessary to consider, how far a purchaser who assumes a mortgage becomes as to the mortgagor, the principal debtor, and the mortgagor a surety, or, whether the mortgagee may treat both as principal debtors, and have a personal decree against both. As it is not claimed that knowledge was in any manner brought borne to Bean, of his grantor’s agreement to assume the outstanding mortgage of indemnity to the plaintiff in error, we do not think Bean’s title should be prejudiced, by any latent equities arising out of that agreement.

It is not denied, that the defendant in error, Stimmel, was the purchaser for a valuable consideration of the notes and mortgage assigned and delivered to him. If any equities existed at the time of his purchase, bétween Hopkins and Bean, the mortgage must be deemed to have been taken by Stimmel, subject to those equities. But, we have not discovered that any such equities existed. Subject to Kingrey’s senior mortgage, the defendant in error, Bean, acquired a good title to the property conveyed to him, and the mortgage of indemnity made to the plaintiff in error did not become a lien thereon.

We are therefore of the opinion, that there was no error in the decree of, the court below, applying a portion of the fund arising from the sale of the real estate in controversy, towards the payment of the mortgage assigned to Stimmel.

The judgment of the district court must be affirmed.

Judgment accordingly.


author: Nash, J.

text:
    Harris v. Wilson.
    In an action upon a promissory note, signed by a married woman together with her husband, brought for the purpose of charging her separate estate, the petition averred among other things that she “ then and thereby intended and agreed that her said separate property should be liable for the money named in said promissory note, and that she promised then and there that her said separate property was and should be held bound and liable for the payment thereof.”
    As her first defense in her answer, she denied “that by the execution of the note she intended or agreed that her separate property should be liable for the money named in the note, if the same Was not or should not be paid by her husband,” and denied “that she promised then and there, or at all, that her separate property was, or should he held liable for the payment of the note.”

      Held: That a demurrer to this defense was properly overruled.
    Eeeoe to the District Court of Licking County.
    This action was brought for the purpose of charging the separate estate of Mary D. Wilson with the payment of a note signed by her husband and herself. The petition alleged as facts that Mary D. Wilson was seized and possessed of real and personal property as a separate estate, and that jointly with her husband she executed and delivered the promissory note, a copy of which is set out. These averments were followed by allegations that “ she then and thereby intended and agreed that her said separate property should be liable for the money named in said promissory note, and that she promised, then and there, that her said separate property was and should be held bound and liable for the payment thereof.”
    To this petition Mary D. Wilson filed an answer containing two defenses. As her first defense she denied “that by the execution of the note she intended or agreed that her separate property should be liable for the money named in her note' if the same was not or should not be paid by her husband, and that she promised, then and there, or at all, that her separate property was, or should be, held liable for the payment of the note.”
    To this defense the plaintiff demurred, and the only complaint of error in this case is in the action of the court of common pleas in not sustaining this demurrer, and of the district court in affirming the judgment of the court of common pleas.

      L. B. Harris, for plaintiff in error.

      H. B. Sprague, for defendant in error.
   Nash, J.

The only question in this case is, “ was the demurrer properly overruled?” It has been determined by the supreme court that a married woman, who is possessed of a separate estate and signs a promissory note as surety for her husband, is presumed without further proof to intend thereby to charge such estate. This presumption may be overcome by proof of facts or circumstances surrounding the execution and delivery of the note which show that such was not her intention. Avery v. Van Sickle, 35 Ohio St., 270; Williams v. Urmston, Id., 296; Hershizer, Adams & Co. v. Florence, 39 Id., —. It is settled bjr what kind of evidencé this presumption may be overcome, but it remains a question of fact to be determined by the court in each case. We are of the opinion that this issue may be made by an averment in the petition that by the signing of the note the married woman intended thereby to charge her separate estate and a denial of the allegation in the answer. Such an answer is good upon demurrer, but a court upon a motion, for that purpose made, might properly require the answer to be made more definite and certain by setting forth the facts surrounding the transaction which show that she did not intend to charge her separate estate.

The petition in this case not only contained the averment of which we have spoken, but also the additional allegation that Mrs. Wilson promised, then and there, that her said separate property was and should be bound and held for the payment of the note. Both allegations were denied in the first defense.

We do not commend the pleading in this case as perfect, but simply say that the issue was so made that there was not error in the overruling of the demurrer.

JucLgment affirmed.


author: Nash, J. Granger, C. J., and McCauley, J.,

text:
    J. M. Loren et al. v. Joseph M. Hillhouse.
    April 26, 1877, H. indorsed and transferred to L. & Oo. the promissory-note of S. & S. for the sum of $700, dated March 1, 1877, and due in six months. In consideration therefor, L. & Co. delivered to H. a piano valued at $450, and $50 in money. They also' agreed to pay H. $50 in six days and $150 when the note should he collected. One month before the note became due, L. & Oo., for a value consideration, sold and indorsed it to M. without recourse. On the nineteenth of September, 1819, H. commenced an action against L. & Oo. to recover $150 with interest from August 2, 1811. He did not aver that the note had been collected.

      Held: H. could maintain the action.
    Error to the District Court of Franklin County.
    In April, 1877, Hillhouse entered into an agreement with J. M. Loren & Co. by which he agreed to, and did endorse and transfer to them a promissory note made payable to him by Mary S. Spencer and I’m. H. Spencer, for the sum of seven hundred dollars. The note bore date of March 1st, 1877, and became due six months after date. In consideration for this J. M. Loren & Co. gave to Hillhouse a piano of the value of four hundred and fifty dollars and fifty'- dollars in money. They also promised to pay fifty dollars in six days, which was done, and one hundred and fifty dollars “ when the note was collected.”
    Oh the 2d day of August, 1877, and before the note became due, Loren & Co. for a valuable consideration sold, transferred and endorsed the note to J. M. Montgomery, without recourse.
    September 16, 1877, and- before the last assignee had collected the amount due upon the note from the makers, Hillhouse commenced an action against J. M. Loren & Co. to recover from them the one hundred and fifty dollars. To the petition a demurrer was filed, and overruled by the court of common pleas. The district court affirmed this judgment.

      Watson Burr and JRalston McNaughton, for plaintiff in error,
    claimed that the action could not be maintained, and cited 1 Wharton on Contracts, § 598; Chambers v. Jaynes, 4 Pa. St., 39; Tyng v. U. S. S. $ T. Boat Co., 1 Hun, 166; Snell v. Cheney, 88 111., 259; Torlcer v. Arnoux, 76 N. Y., 397; Wilson v. Clarh, 20 Minn., 867; Shaw v.
      Turnpike Co., 2 Pen. & Watts (Pa.), 458; Cutler y. Powell, 5 Term, 320; 1 Story on Contracts (5th ed.), §§ 40, 47.

      D. K. Watson, for defendant in error,
    cited, 22 Mo., 124; 19 Wallace, 560; 24 Maine, 278.
   Nash, J.

The courts below held that Hillhouse had a right of action against J. SJ. Loren & Co. upon the 2d day of August, 1877, when for a valuable consideration and without recourse they assigned the note to J. M. Montgomery. The majority of this court approve of the conclusion reached by the common pleas and district courts.

. At the time J. M. Loren & Co. agreed with Hillhouse to receive the note and to pay him one hundred and fifty dollars, when it should be collected, they became the trustees of Hillhouse for the collection of the note and for the payment of the proceeds to him to the extent of one hundred and fifty dollars. As soon as they, for a valuable consideration, assigned the note to Montgomery, without recourse, they lost all control over it and placed it beyond their power to execute their part of the trust, to wit: to pay to Hillhouse the amount named out of the proceeds when collected. From the moment they parted with the power to perform their part of the trust thejr were liable. To hold otherwise might be a great hardship in a case that can easily be supposed. •

B. has A’s note for $5,000, due in one year. B. assigns, the note to C. upon the payment of $2,500, and C’s agreement that he will pay the remaining $2,500 when the note is collected. C. assigns the note. to D. and receives the full amount, $5,000, therefor. D. concludes that the note is a good investment, and arranges with A. that it shall not be paid when due, but extends the payment thereof for five years thereafter. If the theory of the plaintiff in error be true, B. will be kept out of the use of his $2,500, for five years, and C. will enjoy the use of twenty-five hundred dollars, which do not belong to him, for the same period.

In the absence of an averment to the contrary it is reasonable to suppose that when J. M. Loren & Co. assigned the note to Montgomery they received full value, $700, therefor. If this is so they have been paid in full for the piano, the $100 advanced has been returned, and they have one hundred and fifty dollars which do not belong to them. It would not be just to hold that they had a right to use and enjoy this money until the assignees of the note saw fit to collect it.

Judgment affirmed.

Granger, C. J., and McCauley, J.,

(dissenting). The parties expressly agreed ■ that the $150 was to be paid “when said note was collected.” To collect a note is a very different act from either a pledge or a sale of it. The contracting parties were business men, and presumably familiar with all these acts so likely to be done in connection with a note, and with the words by which each act is usually described. If Hillhouse wished to retain a right to receive the $150 in case Loren & Co. “sold,” or “realized,” on the note, he could easily have inserted the proper word, or words, if that was the real contract. Construed according to the ordinary meaning of the words, the contract meant that Hillhouse was to receive the $150 whenever the whole note was collected from the makers, or from him as indorser. If called upon to respond in that character, by Loren & Co., he could have “set off” the $150. If the whole note had been collected from him as indorser by a purchaser for value, before due, without notice, he could then have sued Loren & Co. for the $150.

The cases cited by counsel where parties were allowed to collect before the happening of the event by which the time of payment was to be determined, are cases where it was evident from the contract that actual payment was intended to be made, and the event referred to as fixing the time for payment became impossible, without the fault of the payee, or was delayed by the act or fault of the holder.

In this case the collection remained easily feasible. Judg ment was rendered against Hillhouse as indorser on March 15, 1878, only six months after the note fell due. All that Hillhouse had to do, was-to pay the judgment and at once sue Loren & Co. for the $150.. On September 5, 1877, it was his duty, under his indorsement to make full payment of the note to the then holder. If he had fulfilled his own contract he would have been then entitled to sue Loren & Co. for the $150. By the judgment here complained of, although actually in default himself, he was held entitled to sue on September 16, 1877. He so sued in September, 1879. But as the note has never been collected; as the petition does not attempt to aver that collection had become impossible without Hillhouse’s fault, we think the demurrer to the petition,should have been sustained, and that the judgments below should be reversed.


text:
    Wilson v. Pelton.
    1; An action against a county treasurer under section 5848 of the Revised Statutes to recover back taxes paid, which were illegally assessed, cannot be maintained when the taxes were paid voluntarily, and without . protest or objection.
    2. Where such taxes were paid after the twentieth day of December, and the treasurer, prior to the payment, had made no effort to collect them, or to enforce payment by any process authorized for that purpose; but received the taxes when payment was offered in the usual course of his official business. Held: That payment thus made was voluntary.
    Error to the District Court of Cuyahoga County.
    This action was brought in the court of common pleas of Cuyahoga county, by the plaintiff in error, to recover back taxes which he had paid to the defendant in error as county treasurer, and which he claimed had been illegally assessed.
    Plaintiff in error in his petition alleges “That he stood charged with the sum of $13,130-i1^g- as a tax levied and assessed upon his personal and chattel property, for the year 1875, for state, county and municipal purposes; that, in fact, only $4,784 had been levied upon said personal and chattel property for said year,-and that the same had been levied for state and county purposes by the general assembly and the county commissioners of said county. That the county auditor of said county, in making up the duplicate aforesaid for 1875, pretended to include in said sum of $13,130^^, so placed therein as aforesaid, and in order to make up said last mentioned sum, the sum of $8,345^f, as being levied for said year by the city council of the city of Cleveland, but in fact neither the same nor any part thereof, was so levied by said city council, or any other person or persons or body corporaté, but the same was so placed on said duplicate and charged against this plaintiff without any authority whatever by said defendant, and this plaintiff was required and compelled by said defendant to pay the same, and did so pay the same on the 31st day of December, 1875.”
    The defendant answered the petition: “ That it is true that on the county duplicate of said county, for the year 1875, said plaintiff stood charged with the sum of $13,180as a tax levied and assessed upon his personal and chattel property for said year for state, county and municipal purposes. He says further, that said levy was based upon a return made by the said plaintiff, and was regularly and lawfully made, and that the sum of $13,130-Jj55-, paid by the said plaintiff on the 31st day of December, 1875, was justly due him as treasurer of said county, and was paid by said plaintiff without objection or protest, and the same was paid over, by the defendant, to the state, county and city authorities, less his percentage, without notice of the claim of plaintiff.”
    The bill of exceptions shows that no evidence was offered on the trial in the common pleas except what tended to show on the part of the plaintiff, that in levying that part of the amount above stated which was levied by the city of Cleveland, the city levied an amount exceeding that which wms authorized by law. And what tended to show on the part of the defendant, that the tax levied by the city was levied by authority of law, and by proceedings which were regular.

      Samuel JE. Williamson, for plaintiff in error.
    Illegal taxes paid may be recovered although paid without protest. 2 S. & C., 1151; Stephan v. Daniels, 27 Ohio St., 527; Amesbury W. .$• C. Mfg. Co. v. Inhabitants of Amesbury, 17 Mass., 461; Boston S. G. Co. v. Boston, 4 Metc.,T81; Atwell v. Zelujf, 26 Mich., 118 ; National Bank v. Watkins, 21 Id., 483.

      Kain, Sherwood Bunts and Stone Hadden, for defendant in error.
    Taxes voluntarily, paid cannot be recovered. Allentown v. Saeger, 20 Pa. St., 423; Board of Health v. Taylor, 31 Id., 73 ; Marriot v. Hampton, 7 Tenn. R., 269; 2 Smith’s Leading Cases, 237 and note ; Bailroad Co. v. Cummins, 98 U. S., 543; Galveston City Co. v. Galveston, ■ 56 Tex., 494; Town Council, of - Cahoba v. Burnett, 34 Ala., 400; JElston et al, v. Chicago, 40 111., 514 ; Storer v. Mitchell, 45 Id., 214; Baltimore v. Lejferman, 4 Gill, 425; Mays v. Cincinnati, 1 Ohio St., 268 ; Smith v. Beadfield, 27 Me., 145 ; Navigation Co. v. Tappan, 16 Blatchf., 297 ; Ligonier v. Ackerman, 46 Ind., 552; Dillon Mun. Corp., sec. 751, note.
    The fact that the party at the time of making payment files a written protest does not make the payment involun-" tary. 98 U. S., 543; 16 Blatchf., 297; Dillon M. C., sec. 751, n. p., 860; 66 Ala., 194.
    But when may a-party be said to be under an immediate and urgent necessity to pay ?
    The law at the time the plaintiff in error paid the taxes now sought to be recovered provided that “when one half the taxes (personal) charged against any entry shall not be paid on or before December 20, next after being charged, or the remainder on or before June 20, next thereafter, the county treasurer shall proceed to collect by distress or otherwise as may at the time be provided by law, together with five per cent, on the amount so delinquent.” Rev. Stat., sec. 1094; 2 S. & C., p. 1476, sec. 114.
    Is the fact that the treasurer was at the time of payment, to wit, December 31, 1875, authorized to proceed by distress, or otherwise, to collect the tax, although he had taken no steps to do so, sufficient to constitute compulsion ? Raisler v. Mayor fc. of Athens, 66 Ala., 194 (1880); Swanstown v. Grants, 63 111., 165; Elliott v. Swartwout, 10 Pet., 137; MeOrichart v. Pittsburg, 88 Pa: St., 133.
    But to authorize a recovery the tax must have been paid under protest. The object of a protest is to take from the payment its voluntary character and thus preserve to the party a right of action to recover it. 4 Wait’s Actions and Defenses, p. 494; 7 Id., p. 403; Bálcer v. Cincinnati, 11 Ohio St., 534; Elliot v. Swarüvout, 10 Pet., 137; Smith v. Readfield, 27 Me., 145; Ligonier v. Acherman, 46 Ind., 552; Busby v. Nolan, 39 Id., 234; MeOrichart v. Pittsburg, 88 Pa. St., 133; Raisler v. Mayor c., 66 Ala., 194; Rogers v. Grreenbush, 58 Me., 391.
    In Busby v. Nolan, supra, it is said that one who pays without protest is estopped from disputing the validity of the tax.
    As to the nature of the protest, see Rogers v. Gfreenbush, 58 Me., 391; Meeh v. MeOlure, 49 Cal., 623. '
   McCauley, J.

The plaintiff alleges in his petition that he was required and compelled by the defendant to pay the taxes he seeks to recover back. The defendant in his answer alleges that the taxes were paid by the plaintiff without objection or protest and, after payment, the taxes were paid over to the city of Cleveland without knowledge of the claim of the plaintiff. This allegation of the answer is not denied by the plaintiff, and no evidence is offered on either side to show the precise circumstances under which the tax was paid.

Conceding that the part of the tax levied by the city was in excess of the amount authorized by law to be levied, and that payment of it could have been successfully resisted, and if payment had been enforced that it might have been recovered back, this case presents the question whether, when a tax has been paid without objection and afterwards it turns out that the tax or part of it was illegal, it may be recovered back.

The right to recover in cases of this kind depends, aside from the question affecting the validity of the tax, mainly upon the manner in which the payment of the tax was enforced. Where the tax was paid, as in Stephan v. Daniels, 27 Ohio St., 527, to prevent the sale of lands as delinquent, for non-payment of taxes, or where payment has been enforced by legal process of any kind, which threatened the seizure or sale of property to satisfy the tax, after payment, it may be recovered back.

But where the tax is paid without objection, the fact that it is afterwards ascertained that it was illegal does not authorize a recovery of the tax. 88 Pa. St., 133; Sanborn v. Commissioners, 97 U. S., 181; Railroad v. Commissioners, 98 Id., 541.

The treasurer took no steps to collect the tax of the plaintiff, but held the duplicate and received the tax when it was offered. It is contended that the fact that the treasurer held the duplicate and by law could, in case the tax was not paid, enforce payment by summary process, is to be regarded as a collection enforced by process. It has been held in many cases that where the tax is paid to an officer holding a warrant for its collection the payment is involuntary. Preston v. Boston, 12 Pick., 14; Nichodemus v. East Saginaw, 25 Mich., 456; Atwell v. Zeluff, 26 Id., 118; Glass Co. v. Boston, 4 Metc., 181.

But in no case has it been held that the fact that the treasurer could by law enforce payment was to be regarded as a menace to the taxpayer, which of itself rendered all payment involuntary and enforced.

This view was urged upon the supreme court of Pennsylvania in the case of McCrickart v. Pittsburgh, 88 Pa. St., 133, but the court refused so to hold and announced the rule to be, that where there is no mistake or fraud, a volunfcary payment can not be recovered back merely because one party was under no obligation to pay and the other had no power to receive.

We think these powers given to the treasurer, without effort on his part to resort to the enforcement of them, do not have the effect to make the payment involuntary. If they did, it would be difficult to see how any payment could be voluntary.

Counsel for plaintiff in error rely largely upon the case of Stephan v. Daniels above referred to, to maintain a right of recovery in this case. The principles determined in that ease which are supposed to have a controlling influence are, that the statute of 1856, S. & C., 1151, now Revised Statutes, section 5848, created new statutory rights of action not theretofore existing, and that to authorize a recovery in such case two things must be shown, — first that the tax is illegal, and second that it has been collected by those authorized by law to make the collection.

As to the first consideration, that the statute created new rights of action, an examination of the case shows, by the comparison there made of the provisions of the statute with the law as it then was in such cases, that it merely provided a remedy in a class of cases in which, without it, there was practically no remedy. And only so far as it provided a remedy not then available it created new rights of action.

The fact, if it be such, that the statute created new rights of action is not a material consideration in such cases, unless it had provided that taxes might be recovered bade upon the single fact that the tax was illegal, which it does not.

Aside from the fact that the tax is illegal, the right of recovery is left at large by the statute, subject to all questions of waiver, estoppel or other defense — which may be urged with the same force in this class of cases, as in any other in which such defenses are pertinent. A statute creating new rights of action does not, because it has that effect, exclude proper matters of defense. The statute providing an action for causing death by wrongful act, created rights of action not theretofore existing. An administrator can recover assets of an estate in the hands of a former administrator of the same estate only by force of a statute. It would hardly be thought, because these actions are statutory, that all matters of defense are therefore excluded. Hence the conclusion above stated, that the fact that new rights of action are thus given, does not in any way affect the case on its merits, does not restrict the right to plead and prove any state of fact that on legal principle ought to defeat a recovery.

The facts necessary to be shown % as determined in the case above referred to, that the tax is illegal and that it has been collected by those authorized by law to make the- collection, as that language was there uéed by the court, were not shown in this case. The court, speaking of the means used to make the collection, say: It being admitted that the tax is a nullity it only remains to inquire if it has been collected under process of law. And then the court proceed to inquire whether the facts attending the collection were such as made the payment of the tax involuntary and enforced — and that is the material question determined in the case and upon which the decision rests.

In pursuing this inquiry, if the facts before the court had shown, as they do here, that the tax had been voluntarily paid, there can be no doubt that'the conclusion reached would have been the exact reverse of what it was.

We think therefore that it was competent for the treasurer to make the defense, that the tax had been voluntarily paid, and that the plaintiff in error by such payment, waived all objection he might have urged against the illegality of the tax in an action to enforce its collection.

Judgment affirmed.


author: Granger, C. J.

text:
    Maple v. Railroad Company.
    1. A judgment against an agent for a fraud committed while acting within the scope of his agency, on which no collection or payment has been made, is no bar to an action against the principal for the same fraud.
    2. In such a case the fact that the principal was wholly ignorant of the fraud, is immaterial.
    S. If the petition properly states the cause of action, and avers that the fraud was not discovered until within four years before the suit was begun, an answer charging that the cause of action did not accrue within four years before suit because the fraud was not committed within said time, is insufficient.
    Error to the District Court of Putnam County.

      T. E. Cunningham, for plaintiff in error.
    1. The plea of former recovery against the agent no bar. Hopkins v. Lee, 6 Wheat., 109; Herman on Estoppel §§ 90, 98, 99, 101; Felts v. Felts, 5 Cush., 566; Abel v. Gelder, 36 N. Y., 573; Hanks v. Drake, 49 Barb., 189.
    2. The statute of limitations. Section 15 of the code as amended April 13,1867, S. & S., 541; Hank v. Minnock, 19 Ohio St., 462; Mayne v. Griswold, 3 Sandf., 465; 1 Edward’s Ch., 343; N. Y. Code, § 91, sub. 6; Fost v. Farrington, 41 N Y., 164; 19 Ind., 79.
    3. As to liability of principal for acts of his agent, see Wood on M. & S., § 282; Adams v. Cole, 1 Daly ,(N. T. C. P.), 147; 80 N. Y., 162; B. B. Co. v. Kirby, 14 How., 487; B. B. Co. v. Dunn, 19 Ohio St., 162; Bailway Co. v. Bailey, 40 Miss., 453; 1 Blackstone, 431; Story on Agency, §§ 452, 358 ; Cooley on Torts, 119,123; 2 Addison on Torts, 437, § 1197; Greswold v. Haven, 25 N. Y., 596; Davis v. Bennis, January, 1870, Am. L. Times, 50; 40 Barb., 257.

      B. D. Marshall, for defendant in error
    1. An answer pleading the statute of limitations is good on demurrer. Sturges v. Burton, 8 Ohio St., 215; Combs y. Watson, 32 Id., 228.
    I submit two propositions that seem to me too clear for intelligent controversy: First — If Gennett’s acts, as such agent, were within the scope of his authority as agent of defendant, then there was no joint liability. Ciarle v. Fry, 8 Ohio St., 358. Second — If they were not within the scope of his authority as such agent, then this defendant could not be held unless it had authorized the wrong, received the benefits derived from the wrong, or ratified or approved the wrong.
    The judgment against the agent was a bar to an action against the principal. Wharton on Agents, § 473; Priestly v. Fernie, 3 H. & C. Ex., 997; Seelen v. .Ryan, 2 Cin. Sup. Ct. Rep., 158; Administrator of Chambers v. Ohio Life Insurance and Trust Co., 1 Disney, 327, 330, 331; Meelcer v. Claghorn Cunningham, 44 N. Y., 349; Jones v. FEtna Insurance Co., 14 Conn., 501; Patterson v. Gtandesquin, 15 East, 62.
   Granger, C. J.

Maple’s petition in the common pleas averred that one John D. Gennett, as agent for the Cincinnati, Hamilton and Dayton Railroad Company, at times between January 14, 1870 and April 5, 1876, collected from him, on freight bills of the company, 1307.80 more than was due thereon; that the company, by said agent, “fraudulently overcharged above the regular and special rates for said freight, all without the knowledge and consent of the said plaintiff, by adding a percentage of pounds in weight to the bills presented to the plaintiff, in excess of the true weights upon the books of said company, all of which was fraudulently done.” And “that he never had any knowledge of ” said fraud “until the month of April, 1876.” The action was begun September 30th, 1878.

The second, third and fifth defenses in the answer as amended read as follows:

2. Said defendant for further defense says that the said causes of action in the said plaintiff’s petition set forth did not accrue to the said plaintiff against the defendant within four years next before the commencement of this action. Wherefore the same is barred by the statute of limitations in that behalf, in this that its frauds complained of, if committed by said agent, were committed by him as such agent at a time then four years prior to the commencement of this action in this court.

3. Said defendant further answering says that said plaintiff heretofore, to-wit: at the September term, 1876, of the court of common pleas of Putnam county, Ohio, recovered a judgment against the said J. I). Gennett upon proceedings therein before had in said court in a certain action wherein said. Simon Maple was plaintiff and J. D. Gennett was defendant, and which said judgment was for the sum of $307.80 principal and dollars interest and costs of suit, and said defendant avens that said judgment so rendered was for the same subject matter and cause ox action as the first cause of action in the plaintiff’s petition herein set forth. That said judgment remains in full force and effect, wherefore said plaintiff has no right to have or maintain his suit1 against the said defendant upon said first cause of action.

5. That said defendant had no knowledge of any charges made by said J. D. Gennett in excess of the regular rates of freight, and collected by him, as charged in 'the petition herein, and the same was without the authority or consent of the said defendant, nor did the said defendant ever receive any portion of the said excessive charges, or in any way receive any benefit therefrom, or ratify the same, but on the contrary was entirely ignorant of any acts of the said Gennett in regard to such over-charges in excess of the regular rates for freight, and never in any way ratified or accepted the same or any part thereof. Wherefore the said plaintiff should not have or maintain his said action against said defendant.

To each of said defenses the plaintiff demurred. The common pleas overruled all the demurrers and gave judgment for the defendant. The plaintiff excepted, and asked the district court to reverse the judgment. As that court affirmed the common pleas, he now asks a reversal of both courts.

The petition contained other causes of action, and the answer other defenses, but we notice only the fact that the fourth defense raises the same question as the third, although pleaded to other causes of action. A demurrer to it was also overruled.

The second defense says that the cause of action .did not accrue within four years because the fraud was not committed within four years. This mode of putting it admits the truth of the averment in the petition that the fraud was not discovered until April, 1876. As wp think the statute did not begin to run against Maple until he had discovered the fraud, the plea was not broad enough to cover the case stated by the petition, and the demurrer to it should'have been sustained.

The third defense presents an interesting question. In presenting and collecting the freight bills Gennett acted “within the scope of his authority.” The company held him out to its customers as its representative in that matter. - So long as the bills he presented did not by the weights or prices noted therein furnish fair reason to question their truth, a customer of the company had full right to rely upon them as being the demands of the company upon him. On these pleadings 'we must presume that the bills gave no indication of the fraud.

This defense admits that the fraud was the act of the company by its agent. If. they conspired together to commit the fraud they were joint tort feasors; could be sued jointly or severally. Iii such a case a judgment, without satisfaction, against one, could not be pleaHed in bar by the other. Is the rule different because the company was ignorant of the fraud, and is liable only because Gennett was acting within the scope of his authority? Was Maple bound to elect between agent and principal, and having carried his election to judgment against Gennett did he thereby release the company? No case precisely in point has been cited and we have found none. We are referred by counsel for the company to Priestly v. Fernie, 3 Hurlstone & Coltman Ex., 997; Patterson v. Gandesquin, 15 East, 62; Jones v. Ætna Ins. Co., 14 Conn., 501; Meeker v. Claghorn, 44 N. Y., 359; Seeley et al. v. Ryan Co., 2 Cin. Sup. Ct. Rep., 158, and a case in 1 Disney. The case in Disney gives no aid here. The one in Cin. Rep. decides that the principal and agent were not jointly liaise in that suit, and required the plaintiff to elect which one he would pursue in that action, so that the other might be stricken out. The _ other cases cited were suits upon contracts so made by the agent that the contractee might elect whether the agent, or the principal, should be considered the party with whom he had a contract; and the courts held, that, having carried the election as far as a judgment, the creditor had fixed the contract, and the parties thereto, permanently. Bramwell, J., in the ease in 3 H. & C., 997, places his decision upon the ground just stated and upon the additional consideration that the judgment against the agent altered the situation of the principal. But Gennett has no right to sue the company because of Maple’s judgment against him. He can base no action upon the result of his own wilful fraud.

We are also cited to Wharton on Agency and Agents, sec. 473. The author cites Priestly v. Fernie, above referred to, for the rule he states, but adds “there is much reason for the position that the mere taking judgment against the agent under such circumstances ” (as in the case cited) “ should not, when the judgment is unsatisfied extinguish the debt.” The case before us presents stronger reasons than the one referred to by Wharton for holding that the liability of the principal continues. Unless Maple’s recovery against Gennett affected the rights of the railway company, we can see no reason for holding that recovery a bar in its favor. So long as Gennett wholly fails to pay that judgment; so long as Maple makes no collection thereon, Gennett must remain liable to make good to the company the damage occasioned by his misconduct as its agent. Nothing but satisfaction by him, or by his property ; or the statute of limitations, can release him without the consent of his principal. We hold that-the demurrer to this defense should have been sustained.

The text books — Story on Agency, sec. 452; Addison on Torts, vol. 2, sec. 1197, — agree that when the agent acts “ within the scope ” of his agency, the facts that the principal was ignorant of the fraud; did not receive any profit therefrom; and never ratified it, do not relieve him from liability for the fraud. The fifth defense was therefore insufficient.

Judgments below reversed; demurrers to 2d, 3d, 4th, and 5th defenses sustained and cause remanded.


author: Martin, J.

text:
    Commissioners of Union County v. Greene.
    Iii virtue of proceedings under the two-mile assessment pike act (§§ 4S29, ef seq., Rev. Stats.), the commissioners of Union county duly ordered the improvement to be made.
    Afterwards and before any contract was made or assessment ordered, section 4S42 of said act providing for the apportionment of the expense upon the real property, was amended by the act of April 15, 1880, which took effect upon its passage, and by which the rule of apportionment was materially changed. ,

      Held: That the amendatory act applied to the proceedings, and the assessment made in conformity to its provisions, is right.
    Error to the District Court of Union County.
    Greene, the defendant in error, was plaintiff in the common pleas. His action was against the commissioners and treasurer of Union county to enjoin the collection of an alleged illegal assessment made on his lands, in certain proceedings before said commissioners, for the improvement of a county road known as the Dover and Perkins road.
    At the January term of the common pleas, 1881, a trial upon the issues joined resulted in judgment against him.

      The district court on appeal heard the case on an agreed statement of facts and gave judgment for Greene, decreeing that a preliminary injunction which had been allowed be made perpetual.
    To reverse this judgment this proceeding in error was instituted. On the trial in the district court a bill of exceptions was taken embodying the agreed statement of facts, which need not be set out here, as the facts sufficiently appear in the opinion of the court.
    A. T. Carpenter and John M. Brodrick, for plaintiffs in error.

      J. L. Cameron and J. M. Kennedy, for defendant in error.
   Martin, J.

The proceedings before the county commissioners were for the improvement of a road pursuant to secs. 4829, et seq., Rev. Stats., commonly known as the two-mile assessment pike act. The petition was filed with the auditor on the 15th day of January, 1880; and the order of the commissioners directing the improvement to be made was entered on their records on the 4th day of March, 1880.

Before a contract for the improvement was made and before the appointment of a committee to assess the cost of construction, the statute under which the proceeding was brought was amended by the act of April 15th, 1880 (77 Ohio Law, 239). The amendment was of sec. 4842, which prescribes the rule to be observed by the committee of three freeholders in making an apportionment of the estimated expense upon the real property named in .the order.

In making the apportionment the committee applied the rule prescribed in the amendatory act. Their report with slight modifications was confirmed. The amount assessed against the lands of Greene was #280; and an installment thereof was on the driplicate in the hands of the treasurer when suit was brought.

It is admitted that the assessment is correct if the amendatory act is applicable to the proceedings. If not applicable, it is quite excessive. No other objection is taken to the proceedings, and in all other respects they are admitted to be legal. Thus, the only question presented in the record is, does the amendatory act apply to the proceedings in question, which were pending at the time of its passage, and in which no apportionment of expenses had been made ? We answer in the affirmative.

Original section 4842 amongst other things directed the committee, in making the apportionment, to take into con sideration all previous assessments or special taxes made upon such property for the improvement of the same road. The amendment directs them to take into consideration all such assessments and taxes for the improvement of any road.

In this case some of the lands had been assessed for the improvement of an intersecting road. And under the amended act these latter would be proportionately relieved of the burden and the taxation of the unassessed lands correspondingly increased.

The amendatory act does not in express terms provide that it shall apply to pending proceedings. And for that reason it is claimed on behalf of Greene that, under section 79 Rev. Stats., it does not apply. That section reads:

“Sec. 79. Whenever a statute is repealed or amended such repeal or amendment shall in no manner affect pending actions, prosecutions or proceedings, civil or criminal, and when the repeal or amendment relates to the remedy it shall not affect pending actions, prosecutions or proceedings, unless so expressed; nor shall any repeal or amendment affect causes of such action, prosecution or proceeding existing at the time of such amendment or repeal, unless otherwise expressly provided in the amending or repealing act.”

The actions, prosecutions and proceedings referred to in the first clause of this section are such as are grounded on a cause of action which may survive a repeal of the act providing them. This is apparent from the other clause of the section relating to causes of such action, prosecution or proceeding. The proceeding referred to in the section is one provided for or relating to the enforcement of a cause of action existing before such proceeding was conimenced, and capable of surviving a total repeal in general terms of the statute authorizing it.

It cannot be seriously claimed that the proceeding under review is of that description.

In our view the terms “ actions, prosecutions or proceedings ” are used in the statute with reference to judicial matters, and relate to the prosecution or defense of civil and criminal actions, and can have no just application to the statutory proceeding under consideration.

In the next place it is urged on behalf of the defendant in error that a construction which makes the amendment applicable to pending proceedings renders it retrospective, and in conflict with the provision of the constitution against retroactive laws. (Const., art. 2, sec. 28.) The legislature is not required to provide any particular proceedings as a pre-requisite to conferring jurisdiction on the county commissioners. The constitution commits the entire subject to its discretion; and it may resort to any arbitrary mode. The commissioners ordered the improvement in strict con-, formity to the statute, and acquired full jurisdiction over the subject.

What remained to be done was the letting and supervision of the work and the apportionment of the expenses. These were simply public duties. No reason is apparent why the prescribed mode and rule of their performance is not subject to legislative modification and control. The change brought about by the amendment related solely to the apportionment of the taxes. It operated on the same lands and affected the same persons. It was purely remedial in its operation on pending proceedings.

Our supreme court have repeatedly in well considered adjudications announced as a settled rule that a statute simply remedial in its nature is not within the mischiefs intended to be guarded against by the constitutional inhibition against retroactive laws, and is not in conflict therewith.

It follows that the judgment of the district court was erroneous.

Judgment reversed,.