author: Bradbury, J.

text:
    Maas v. Miller and Matthews.

      Insolvent debtor — Conveys all property by deed absolute in form— Contemporaneous agreement that grantee pay himself and other creditors of grantor — Transaction constitutes general assignment — Commencement of action — Sections 4982 and 6843, Revised Statutes.

    1. Where an insolvent debtor to prevent his property being seized and sold under legal process conveys substantially all of it by a deed absolute in form, and, by a contemporaneously executed written agreement, the grantee is authorized to sell and convey the same and apply the proceeds thereof, first, to reimburse himself for any advancements he may subsequently make to, or on behalf of, the grantor ; second, to pay the legal debts of the grantor, preferring one of his creditors, the transaction constitutes a general assignment for the benefit of the-grantor’s creditors.
    2. In such case, the right of creditors of the grantor to require a sale of the property thus conveyed, and a distribution of its proceeds, accrues contemporaneously with the execution of such deed and agreement, and is not affected by a subsequent settlement of the matter, made by the grantor and grantee, to which they do not consent.
    3. Section 4982, Revised Statutes, limiting the time within which certain actions shall be commenced, to four years after their accrual, does not apply to an action where the petition therein discloses a right to relief under section 6343 of the Revised Statutes.
    (Decided June 7, 1898.)
    Error to the Circuit Court of Putnam county.
    This action was commenced by the plaintiff in error in the court of common pleas of Putnam county to set aside a conveyance which he alleged to have been made in fraud of the creditors of the grantor. The court of common pleas deciding the case against him, he appealed the action to the circuit court, and upon the trial in that court the same judgment was rendered. He then brought the action to this court to obtain a reversal of the judgment of the circuit court. The facts will be found in the opinion of the court.

      George Fritz, for plaintiff in error.
    We contend that upon the admitted and undisputed facts shown by the pleading and the evidence, the finding and judgment of the lower court should have been for Joseph Maas, plaintiff, and against Nicholas Miller and Nelson E. Matthews, defendants, and each of them.
    This court has so often stated and restated the law in cases where the facts were similar to the facts in this case and the decisions have been so nearly uniform that we deem an extended list of authorities to be unnecessary.
    We, however, especially refer the court to three among the later cases in which a decision has been reached and reported by this court which we think will apply in this case. Louclenbctok v. Foster, 39 Ohio St., 203; Pendery et col. v. Allen et col., 50 Ohio St., 121; Gcoshe v. Young, 51 Ohio St., 376.

      Handy <& Ogcon, for defendant in error, Nelson E.' Matthews.
    The plaintiff in error based his action below on an assumed fraudulent conveyance, a conveyance, as he says in his amended petition, “without consideration therefor, and with intent to hinder, delay and defraud his creditors,” and, in the same document, he alleges that the said conveyance was in “consummation of a combination and conspiracy between the said Nicholas Miller and Nelson E. Matthews with the intent to hinder and delay and defraud the creditors,” etc., and he pra/ys that the said conveyance be declared void, cond set aside.

      There was no attempt by pleading to bring the action within the provisions of section 6343 of the statutes. So with that section of the statute we have nothing to do. Bagalay v. Waters, 7 Ohio St., 367.
    There was no evidence offered, so the court below found, of any actual fraudulent intent in either Miller or Matthews in the matter of the conveyance.
    Matthews paid every claim presented, and to bona fide creditors, and to the full value of the land, before the equity was released to him, and long before he had ever heard of this claim.
    The deed recited the contract.
    No one was refused permission to see the contra ct, with the possible exception of the plaintiffs’ attorney, and that was only after he had thrown the petition in this case on the counter, and asked Matthews “if it was worth anything,” and the indignant Matthews had ordered him out of the bank. The contents of that contract were no secret.
    If the court below had found that there was any fraud in this conveyance, it must also have found that the plaintiff was barred by the statute of limitations from prosecuting this suit. Combs v. Watson, 32 Ohio St., 228.
    The deed recited the contract, and it was left for record February 19, 1885. This suit was commenced in May, 1893. That was notice, in the title, of a contract, and was notice of all that an inspection of that contract would disclose.
    If he could, by the' use of any diligence, have discovered the truth, he did discover it. Angel on Limitations, (5th Ed.) section 187, note. Bump on Fraudulent Conveyances, 533, Ed. 1872; Wood v. Carpenter, 101 U. S., 135; co-op. Ed., vol. 25, 807; Lodge v. Simonton, 2 P. & W., 439; s. c. 23 Am. Dec., 36; Note: 16 Am. & Eng. Enc. of Law, 792; Ramsey v. Hardy, 43 Ohio St., 157; Dang et al. v. Ry., 41 Ohio St., 392; Townsend v. Mchelberger, 51 Ohio St., 213.
    The Zieverink case, 50 Ohio St., 208, relied upon by plaintiff in error, supports our contention. There is something on the face of that deed to excite inquiry. There was nothing here to ‘ ‘exclude suspicion and prevent inquiry.” Wood v. Carpenter, 46 Ohio St., 354.
    Again, Matthews immediately on the execution of the deed, went into possession and assumed control of the lands.
    Matthews paid full value for the land to Miller’s creditors before January, 1891, and Miller released to him his equity of redemption. This was more than two years before Maas’ claim had been heard of by Matthews.
    The parol release of the equity of Miller was sufficient. Sha/w v. Walbridge, 33 Ohio St., 1. Was a mortgage. Sun Fire Ins. Co. v. Clark, 53 Ohio St., 414.
    If by any process of reasoning the court could find this conveyance fraudulent, the fact that Matthews paid full value before Maas asserted any claim to him, would be a complete protection to Matthews. Bump on Fraudulent Conveyances, page 467, “Rescission,” (Ed. of 1872.); Thomas v. Goodwin, 12 Mass., 140; Angel on Limitations, section 470. (5th Edition.) Swift et al. v. Hold-ridge et al., 10 Ohio, 231.
    The judgment of plaintiff became dormant long before this suit was commenced, and before Maas and Matthews settled, and Maas released his equity to Matthews. It was presumed paid. 4 Ohio, 469; 6th C. C. R., 28; s. c. 3 Circ. Dec., 333.

      In no event would Matthews be deprived of his money honestly expended, and the interest thereon, and he would be preferred.
    The record shows that he paid out about $16,000 in payment of Miller’s debts, besides the money he paid Miller, and that was from one to two thousand dollars more than the propertyis now or ever was worth. A sale of the real estate would not repay him the principal.
   Bradbury, J.

The plaintiff filed in tne court of common pleas a petition in which he alleged that one of the defendants, Nicholas Miller, had conveyed to his co-defendant, Nelson E. Matthews, certain real estate in the petition described, for the purpose of hindering and delaying the plaintiff and the other creditors of Miller in the collection of their debts. The action was brought under section 6344 of the Revised Statutes which declares : “All transfers, conveyances or assignments made by a debtor, or procured by him to be made, with intent to hinder, delay or defraud creditors, shall be declared void at the suit of any creditor.” * * *

The plaintiff averred the recovery of a judgment against the defendant, Miller, and the return of an execution unsatisfied for want of property whereon to levy, and expressly averred that the conveyance made by Miller to his co-defendant, Matthews, was for the fraudulent purpose of hindering and delaying the creditors of Miller. He appended to his petition certain interrogatories which he called upon the defendant, Matthews, to answer, and to which reference will be made hereafter. To this petition the defendant, Matthews, filed the following answer:

“Now comes the defendant, N. E. Matthews, and for answer to the petition says that prior to and on the 3rd day of February, A. D., 1885, the defendant, Nicholas Miller, was indebted to various persons in about the sum of ten thousand dollars, of which the sum of about eighty-one hundred dollars consisted of judgment liens on the premises described in the petition; that among said judgment credits was the Michigan Mutual Life Insurance Company, upon whose judgment in this court for about seventy-seven hundred dollars the said insurance company had, at the November term of A. D., 1884, procured an execution and order of sale to be issued, directed and delivered to the sheriff of this county, under which order of sale the said sheriff had duly appraised and advertised all of said premises for sale; that at said last named date there was no market for said real estate, and it could not have been sold at sheriff’s sale for more than two-thirds of its actual value, which actual value thereof was then about the sum of $15,000, and it was then believed by these defendants, and by the principal creditors of said Miller, with whom said defendants consulted, that if the forced sale of said premises could be avoided and the said property could be sold at private sale upon a reasonable credit, or for cash, as the purchaser might desire, said premises could be sold for a sum sufficient to pay in full all of the said debts of said Miller, and thereupon and for the purpose of selling said property for its fair value, and applying the proceeds to the payments of said indebtedness of the said Miller, the said Miller, on said 3rd day of February, A. D., 1885, conveyed all said real estate to this answering defendant and his heirs by a dee^ trust in the nature of a mortgage, with power to sell any or all of said real estate at its fair value for each, or on reasonable credit, and, at the same time, and as a part of the same transaction-, it was agreed by and between this answering defendant and the said Miller that this defendant should accept said conveyance and should, in his own discretion, advance money and apply the same, either in procuring* an extension of the time of paying said liens until this defendant should sell said premises at their value, or, in paying the said liens off, as to this answering defendant might seem most likely to realize the highest prices for said real estate. And it was further agreed by and between this answering defendant and the said Miller that this answering defendant should sell certain notes of said Miller, then deposited as collateral security with A. Y. Rice & Co., and with George B. Cass, to secure debts then owing to said A. V. Rice & Co., and to said George B. Cass, said sale being subject to the said liens of said A. Y. Rice & Co., and said George B. Cass, and apply the surplus of said notes remaining after paying the said liens of said A. V. Rice & Co., and said George B. Cass on the said debts of said Miller ; and it was further agreed in said contract that this answering defendant should have a right, upon the sale of any or all of said property, to first pay himself out of the proceeds the amount of all such advancements of money which he had therefore made in pursuance of said contract, with interest thereon from the time of making such advancements, and this defendant avers that he accepted such conveyance, and that since the date of said conveyance, and up to the first day of January, A. D., 1891, he had sold the following parcels of said real estate, at the following prices, to wit:

N. | N. E. i Section 27,. Palmer township, Putnam county, Ohio, for $2,600.

That since the date of said conveyance and up to the 1st day of January, A. D. 1891, this answering defendant has paid of his own money in taxes and assessments on said real estate, the sum of nineteen hundred fifty-five and 84-100 dollars, which, with interest thereon at 8 per cent, up to said last date, amounted to $2,815.42; that this defendant had, up to said last date, paid out of his own money upon said liens and indebtedness, the sum of $6,549.48, which, with interest at the rate of eight per centum up to said last date, amounted to $9,370.86. This answering defendant further avers that from the date of said deed up to the 1st day of January, A. D. 1891, he made diligent effort to sell said real estate at a fair value, but only succeeded in selling the parts thereof last above described; that at said last date this answering defendant had paid in taxes, assessments and liens on said real estate in excess of the amount of said notes and of all rents, issues and profits by him received from said real estate so sold as aforesaid, the sum of $14,123.07, which said last named sum was at said last named date greater than the then value of all of said real estate, and at said last named date this answering defendant and the said Nicholas Miller had a settlement in full of all the matters and things covered by said deed and contract, and in consideration of the said advancements by this answering defendant, so as aforesaid by him made, and of the payment by this answering defendant of said taxes, assessments and liens, the said Miller then and there released his equity of redemption in said premises to this answering defendant, who is now the owner in fee simple. This answering defendant further avers that said deed from the said Miller to him recited the execution of the above described contract as a part of the consideration for said deed, and that immediately after the execution of said deed, and on, to-wit, the -day of February, A. D., 1885, this defendant procured the said deed, to be duly recorded in Vol. No. 46, page 541, in the deed records of said Putnam county, and since the said release of said equity of redemption this answering defendant has expended in the necessary repairing and improving’ of said premises and in the payment of the legal assessments and taxes thereon a large amount of money in excess of all the rents, issues and profits of said premises, and this answering defendant denies all and singular the allegations of the petition not hereinbefore expressly admitted.”

The defendant, Matthews, also answered the interrogatories that had been propounded to him, which, so far as material, are as follows:

(Fourth interrogatory): “What, if any, money or other thing- of value, did you pay or deliver to said Nicholas Miller at, or about, the time of the execution and delivery of said deed and intended to operate as a consideration for the execution and delivery of said deed?”

(Answer to fourth interrogatory): “Nothing except a certain contract hereinafter attached to these interrogatories.”

(Fifth interrogatory): ‘ ‘Did you pay any money or engage to do so to the said Nicholas Miller as consideration for the execution and delivery of said deed, and was the same or any part thereof unpaid at the date of filing this petition?”

(Answer to fifth interrogatory): H agreed to do nothing except that stated in said contract.”

(Seventh interrogatory): “What amount did the said Nicholas Miller owe you at the time of the execution and delivery of said deed to you?”

(Answer to seventh interrogatory): “None.”

(.Sixteenth interrogatory): “What, if any, property, real or personal, was the said Nicholas Miller possessed of immediately after the execution and delivery of said deed to you ?’ ’

(Answer to sixteenth interrogatory): “None, to my knowledge. ’ ’

(Seventeenth interrogatory): “Did you know that at said time ?”

(Answer to seventeenth inter rogatory): “ Yes. ”

(Twenty-first interrogatory): “Was any contract made between you and said Nicholas Miller providing for a part of the consideration for the execution and delivery of said deed from Nicholas Miller to you ?”

(Answer to twenty-first interrogatory): “We entered into a contract. The consideration is expressed in the contract.”

(Twenty-second interrogatory): “Was it in writing- ?”

(Answer to twenty-second interrogatory): “Yes.”

. A copy of which writing is in the words and figures following-, to-wit:

“This agreement made and entered into this 3d day of February, A. D., 1885, by and between N. E. Matthews and Nicholas Miller.

Witnesseth, That whereas the said Nicholas Miller is largely indebted to divers and sundry parties who are now threatening- and are about to sell certain real estate of the said Nicholas Miller to secure the payment of their claims against him, and, whereas, in order to gain time and to avoid sales of the property of said Miller under process of law, the said N. E. Matthews for and in consideration of a conveyance to him of certain real estate by the said Nicholas Miller by these presents obligates himself to procure and obtain a suspension of a certain writ of execution and order of sale of a certain judgment of foreclosure against the said Nicholas Miller in favor of the Michigan Mutual Life Insurance Company for the sum of about seventy-seven hundred ($7700), rendered and obtained at the November term, A. D. 1884, of the court of common pleas of Putnam county, Ohio, and docketed and known to said court as caiise numbered 3984 until the first day of August, A. D., 1885, and the said N. E. Matthews for and in consideration of the foregoing, agrees to pay all taxes due on all of the lands owned by and taxed in the name of said Miller, due December, A. D., 1884, and to pay all legal costs incurred by both plaintiff and defendants in said cause numbered 3989, to this date, as well as an attorney fee of seventy-five dollars to Messrs. McKenzie and Robb, attorneys at law, of Lima, Ohio.

Said deed of conveyance by the said Nicholas Miller to the said N. E. Matthews as before mentioned being for the conveyance of the following real estate, to-wit: (Here follows a description of the- property.)

Said deed being made and executed solely and only for the purpose of enabling said N. E. Matthews to procure the necessary funds to pay the said several amounts hereinbefore mentioned and such other funds as the said N. E. Matthews may from time to time advance to assist the said Nicholas Miller, and to pay upon the legal indebtedness of said Miller.

It is understood and agreed that the said N. E. Matthews shall have full power and authority by virtue of the conveyance aforesaid at any time to sell all or any part of the real estate in said deed of conveyance described, at its fair market value, for cash or otherwise, as he may deem proper; and he is hereby authorized and required to apply the proceeds of such sale or sales so to be made to the payment and extinguishment of the legal liabilities of the said Nicholas Miller. And the said N. E. Matthews hereby agrees to reconvey to the said Nicholas Miller any or all of the real estate herein before mentioned and described, not sold or otherwise disposed of in accordance with the provisions of this agreement, upon the demand of the said Miller at any time after all the legal obligations of the said N. Miller shall be fully paid and satisfied which the said N. E. Matthews may have assumed or may assume, pay, or in any way be personally liable for.

Said N. Miller is to remain in the possession of all of said premises until the same may be sold or otherwise disposed of, and said Miller is to co-operate with the said Matthews in effecting sales of said real estate; and the said Matthews agrees that whenever the said Miller shall effect a reasonable sale of any of the said premises said Matthews shall make- a deed therefor to the purchaser upon the request of said Miller, the proceeds of said sale to be applied by said Matthews upon the indebtedness of said Miller as aforesaid.

Said Miller hereby undertakes and agrees to turn over to said Matthews all the rents, issues of and profits arising from said real estate saving and excepting sufficient to provide a reasonable support for said Miller and his family, to keep up necessary repairs upon the farm and other premises and to properly provide and care for the live stock kept upon said premises. It is, however, agreed that should the said N. E. Matthews desire to, he may and shall have full authority to rent one hundred acres of said premises for a cash rental.

It is agreed that said N. E. Matthews shall have full power to settle all legal existing liabilities of the said Miller in such manner and upon such terms as he may deem fit and just.

It is agreed that all notes and credits belonging to the said N. Miller and by him deposited with A. V. Rice & Co. and George B. Cass, as collateral security for advancements by said parties made before this time to said Miller, are hereby transferred and sold to the said Matthews for the purpose of realizing the value thereof by sale or collection, subject however to any lien upon them that may exist in favor of said Rice & Co. or said Cass by reason of any previous agreement between them or either of them and the said Miller. And any and all sums so realized by the said Matthews from said notes shall be applied by said Matthews upon the indebtedness of said Miller in the discretion of said Matthews.

It is further agreed that said N. E. Matthews shall out of the proceeds of any sales of real estate he may make or moneys that he may receive by virtue of said deed of conveyance to him or by the provisions of this contract, he shall be authorized to reimburse himself for any and all advancements of money he may make for or in behalf of said Miller, and all such advancements shall bear interest at the rate of eight per cent, per annum. The said N. E. Matthews shall in no way become liable for any of the present indebtedness of said Miller except as he shall see fit to voluntarily assume the same.

It is also understood that the said N. E. Matthews may at any time reconvey said real estate or such portion thereof as may remain undisposed of to the said Nicholas Miller, and the said Nicholas Miller shall then release said Matthews from any further effort in said Miller’s behalf, or from liability on any contract for the payment of the indebtedness of said Miller.

It is further agreed that said deed of conveyance herein before recited carries with it the right to mortgage or otherwise pledge any part or all of said premises by the said Matthews for purpose of obtaining money to pay any existing indebtedness of said Miller, or any indebtedness incurred by the said Matthews in behalf of said Miller.

It is also agreed that in case of the death of said N. E. Matthews said property or so much thereof as may remain undisposed of shall be at once reconveyed to the said Miller, and the estate of N. E. Matthews wholly released and saved from any and all obligations by reason of this contract or said first mentioned conveyances; and in case of the death of said Miller, pending the adjustment of the matters and affairs covered by this contract, that the contract shall remain in force and effect notwithstanding said demise, and the said N. E. Matthews shall consummate this agreement with the personal representation of the said Nicholas Miller.

In witness whereof the parties hereto affix their signatures this day and date first mentioned.

M. P. Goetschues. N. E. Matthews,

W. H. Meete, Nicholas Miller.

The record thus discloses that the plaintiff was a creditor of the grantor, Miller, when the deed complained of was executed. That the claim has since been reduced to judgment. That execution has been issued on the judgment and returned unsatisfied, and that Miller has no property subject to levy or sale on execution. That the property was conveyed to the grantee for the purpose of preventing such seizure and sale and with a view to its ultimate sale by the grantee if that should become necessary to pay the grantor’s debts, and the application of the proceeds to such debts. Any surplus remaining after these debts were paid was to be returned to the grantor. The grantee, Matthews, thus became clothed with a trust. It became his duty to administer, in the manner agreed upon, the property thus conveyed to him. This agreement provided especially for the payment of the judgment or decree held by The Michigan Mutual Life Insurance Company. The costs made by both parties in the action in which that judgment had been recovered and a claim held by McKinzie & Robb, attorneys, for $75. No other debts were named in the agreement, and its terms, in so far as they related to the payment of Miller’s other debts, are ambiguous, but the agreement is fairly open to the construction that the parties to it did not contemplate a pro rata application of the proceeds of the property to the general indebtedness of Miller. On the contrary, the agreement is consistent with the right of Miller and Matthews and perhaps of Miller alone, to select the claims of certain other favored creditors of Miller and pay them in full to the exclusion of others. We think this brought the grantee, Matthews, within the terms of section 6343, Revised Statutes which reads as follows:

“Section 6343. All assignments in trust to a trustee or trustees, made in contemplation of insolvency, -with the intent to prefer one or more creditors, shall inure to the equal benefit of all creditors in proportion to the amount of their respective claims, and the trusts arising under the same shall be administered in conformity with the provisions of this chapter.”

As the word assignment in this section embraces every form of conveyance that will operate to transfer title to property, the deed and accompanying contract involved here constitute such an assignment as the section contemplates. Gashe v. Young, 51 Ohio St., 376; Pendery v. Allen, 50 Ohio St., 121; Brown & Co. v. Webb, 20 Ohio, 389; Harkrader v. Leiby, 4 Ohio St., 602. The inability of the grantor to pay his debts, and the danger of his property being sacrificed by means of judicial sales, were the expressed motives that induced the transaction and shows that it was done in contemplation of the insolvency of Miller. By the express terms of the agreement under which Mr. Matthews was to administer the trust, the claim of McKinzie & Robb, and the costs incurred in reducing the insurance company’s claim to judgment, are to be paid in full.

So that, leaving out of consideration the judgment of the Michigan Mutual Life Insurance Company, which had already become a lien upon the real estate in question, and also leaving out of consideration the right of the grantor and grantee to select other favored creditors of Miller, to whom payment in full might be made, and also ignoring the fact that the conveyance and contract embraced all, or substantially all the property owned by Miller, yet as the undeniable effect of the transaction was to prefer McKinzie & Robb and the costs above named, that is enough to satisfy the requirement of the statute that the assignment ‘ ‘shall have been made with intent to prefer one or more creditors.”

The grantee, Matthews, in his original answer filed in the court of common pleas alleged that, “This answering defendant further avers that from the date of said deed up to the 1st day of January, A. D., 1891, he made diligent effort to sell said real estate at a fair value, but only succeeded in selling the parts thereof last above described; that at said last date this answering defendant had paid in taxes, assessments and liens on said real estate, in excess of the amount of said notes and of all rents, issues and profits by him received from said real estate so sold as aforesaid, the sum of $14,123.07, which said last named sum was at said last named date greater than the then value of all of said real estate, and at said last named date this answering- defendant and the said Nicholas Miller had a settlement in full of all the matters and things covered by said deed and contract, and in consideration of the said advancements by this answering defendant, so as aforesaid by him made, and of the payment by this answering defendant of said taxes, assessments and liens, the said Miller then and there released his equity of redemption in said premises to this answering defendant, who is now the owner in fee simple.”

This statement constituted no defense to a decree declaring the transaction to constitute an assignment for the benefit of the creditors of the ^ grantor, Miller. The rights of those creditors to have a decree to that effect accrued to them contemporaneously with the execution of the deed, and any subsequent arrangement, contract or agreement entered into by and between Miller, the grantor, and Matthews, the grantee, should not effect these rights unless consented to by those creditors.

Upon the admitted facts disclosed by the record, therefore, the plaintiff was entitled to a decree declaring the conveyance made to Matthews to constitute an assignment for the benefit of the creditors of Miller.

The plaintiff, however, did not seem to desire this relief. He was determined to attack and destroy the deed on the ground that it was founded on fraud and collusion. And, pursuant to this determination, after he had been defeated in the court of common pleas upon this issue of fraud and collusion and had appealed the cause to the circuit court, he obtained leave to file and afterwards did file, an amended petition in which he reiterated the charges of fraud, averring “That the said Nelson E. Matthews then and there accepted the said transfer, conveyance and deed of conveyance of all said real estate without any consideration therefor and in consummation of a combination and conspiracy between the said Nicholas Miller and Nelson E. Matthews with the intent to hinder, delay and defraud the creditors of said Nicholas Miller, including said plaintiff, and that said transfer and conveyance of all said real estate is void as to the creditors of said Nicholas Miller, including said plaintiff.

‘ ‘That the title to all said real estate was transferred and conveyed to and accepted by said Nelson E. Matthews in secret trust and to be sold and accounted for and the proceeds of such sale to be secretly accounted for and secretly paid over to said Nicholas Miller for the purpose of and with the intent to hinder, delay and defraud the creditors of said Nicholas Miller, including said plaintiff.”

Perhaps the motive for the persistent efforts of the plaintiff to establish fraud and collusion, and to obtain a decree under section 6344, Revised Statutes, declaring the deed void on that account, is to be found in the circumstance that the plaintiff had given notice under that section of the statute of the pendency and object of the action. If he obtained relief thereunder, he and those who might come in, secure costs, file cross-petitions, etc., would obtain priority in the distribution of the proceeds of the property over other creditors who had no specific liens. In his judgment it may have been quite clear that he and those who, pursuant to the notice, came in, would be entitled to such priority if he brought the case within section 6344, Revised Statutes, while he may have been in doubt respecting it if relief should be granted under section 6343, Revised Statutes. But whatever his motive might have been, this course, thus pursued by him, is adverted to only as affecting his right to costs and the allowance of an attorney fee.

To the charge of fraud and collusion thus reiterated in the circuit court the defendant, Matthews, interposed a denial; and as a distinct defense averred that the cause of action accrued more than four years prior to its commencement. And the cause was tried in the circuit court on these issues and a general finding made for the defendant. This finding exonerates Matthews from the charge of fraud and collusion, and the evidence fully sustained that finding. The record discloses nothing to indicate that he did not act in perfect good faith in all that he did in the matter.

However, notwithstanding that no bad faith or fraud in fact was shown in the transaction, nevertheless, its effect was to remove from the operation of legal process the property of the grantor, Miller, and for that reason the deed was constructively fraudulent as against the plaintiff and other creditors of Miller under the rule laid down in Loudenback v. Foster, 39 Ohio St.. 203, and upon that ground plaintiff was entitled to relief under section 6344, Revised Statutes, if his action had been commenced before the statute of limitations of four years had attached. Doubtless the court of common pleas, as well as the circuit court, recognized this constructively fraudulent character of the transaction, but under the rule laid down in Combs v. Watson, 32 Ohio St., 228, denied relief because the action had not been commenced within four years from the time it accrued.

Whatever the motive of the plaintiff was in pursuing this issue of fraud and collusion, and in contesting the plea of the statute of limitations which grew out of that issue, it is manifest that the interests of the general creditors of Miller were not advanced by this course of proceeding. For, notwithstanding the issues thus joined in the circuit court, the answer of the grantee, Matthews, filed in the court of common pleas, and which disclosed the circumstances under which the property had been conveyed to him, had not been withdrawn, but remained a part of the record, as did the interrogatories and the answers thereto, including the contract prescribing the manner in which this property was to be administered by the grantee. This contract and the deed constituted one entire transaction and should be construed together, and when thus construed that transaction, as has already been stated, was in law an assignment of the property involved for the benefit of the creditors of the grantor, Miller. The issue taken upon the charge of fraud and collusion, as well as that taken upon the averment of the cause of action that accrued more than four years before its commencement, were, therefore, both immaterial in as far as the rights of general creditors were concerned.

The issue respecting fraud and collusion was immaterial in this respect, because the relief to which the plaintiff, as the representative of the creditors of Miller was entitled under section 6343, Revised Statutes, upon the undisputed facts, did not depend upon the establishment of fraud, either actual or constructive, but might properly rest on the fact that the deed and agreement created a trust. And as a cause of action arising under that section does not depend upon fraud, or fall within any other class of actions that section 4982, Revised Statutes, requires to be commenced within four years, the issue growing out of the averment that the cause of action in this case had accrued more than four years' before the action was commenced, was also immaterial.

The petition contained a prayer for general equitable relief, and notwithstanding the circuit court found those immaterial issues for the defendant, it should have rendered such judgment as the undisputed facts disclosed by the record required, and, if necessary for that purpose should have directed the pleadings to be reformed to conform to those facts. The facts thus appearing, this court will proceed to render the judgment the circuit court should have rendered. The plaintiff was entitled to this relief from the moment the defendant Matthews filed his answer in the court of common pleas and answered the interrogatories propounded to him, and doubtless it would have been granted if the plaintiff had demanded it instead of pursuing the question of fraud and collusion. Much delay and most of the cost should be attributed to this course thus pursued by the plaintiff. On this account we think he should not be allowed to recover costs made by him in the common pleas and circuit court. Nor should he be allowed an attorney fee out of the funds that may accrue from a sale of the property involved in this action.

Judgment reversed, and judgment for plaintiff in error.


source: Caselaw Access Project

author: Spear, 0. J.

license: Public Domain

text:
    State ex rel. Meader et al. v. Sullivan.

      Removal from office — By mayor, of member of equalization board— Must be according to law — Supervisors of equalization oj returns of personal property — Charges against board of undervaluation must be definite.

    1. The power of removal from office, conferred upon, a mayor, in these words : “ For neglect of duty or misconduct in office, the mayor of such city may remove any member of said board,” is a special authority, and must be strictly pursued. Such power cannot be exercised arbitrarily, but only upon complaint, and after a hearing had in which the officer is afforded opportunity to refute the case made against him.
    2. Nor has the mayor, in such case, authority to proceed to a hearing until charges have been preferred which embody facts that, in judgment of law, constitute neglect of duty or misconduct in office, and of which the accused has had due notice. And, as a requisite to its validity, the finding and order of the mayor should be so definite as to show, on the face that the power has been exercised according to law.

      3. Where the statute imposes the duty upon a board of super-' visors-(acting as a board of equalization), to equalize returns of personal property only, a charge that the board has knowingly consented to an undervaluation of real and personal property in gross, but which fails to charge any undervaluation as to such personalty, is not sufficiently definite to support a finding of neglect of duty and an order of removal from office.
    (Decided June 7, 1898.)
    Error to the Circuit Court of Hamilton county.
    The action below was in quo warranto, brought by the prosecuting attorney of the county of Hamilton, against the defendant in error, Sullivan, and John Zumstien, Louis Werner and George M. Roe. Its purpose was to oust respondents from the office of board of supervisors of the City of Cincinnati, and to induct the relators. The gravamen of the petition is that the respondents had been removed from office by the mayor of the city by virtue of section 2690m, Revised Statutes, after a hearing upon charges preferred, and yet respondents continued to intrude therein.
    Sullivan answered as follows:
    “The defendant, John J. Sullivan, comes, and for answer herein says: that he, the said John J. Sullivan, was, on the 1st day of April, A. D. 1897, duly appointed and qualified as a member of the board of supervisors of the city of Cincinnati for the term of three years from said date; and that on the 10th day of April, A. D. 1897, he entered upon the duties of said office, and has ever since been, and is now, in possession of said office, and in the enjoyment of its emoluments; and that he has, during the whole period of his service under said appointment, at all times, and in all respects, fully, faithfully and honestly discharged all his duties as such member of said board, according to law.

      “Defendant further says that on or about the 3rd day of September, A. D. 1897, there were filed with Gustav ’ Taf el, mayor of Cincinnati, against this defendant, certain written charges. And, on September 3,1897, said Gustav Taf el, mayor, served upon this defendant a copy of the said charges, and notified this defendant that said charges would be for trial and hearing at 9 o’clock A. M. on September 7, 1897, at the office of said mayor, a copy of which charges is as follows, to-wit:
    ‘Hon. Gustav Taf el, Mayor of the City of Cincinnati:
    Sir: The undersigned citizens and taxpayers of Cincinnati hereby charge John J. Sullivan with neglect of duty as a member of the board of supervisors of Cincinnati, in this, to-wit:
    ‘(B.) Said John J. Sullivan knew that the capital stock of The Cincinnati Street Railway Co. was about $15,625,000.00, and that its market value was about $19,000,000.00, and knew or should have known that the tangible property of said company, real and personal, owned by said company in the city of Cincinnati, and subject to taxation at the time the valuation of property for the current year was to be fixed was many millions of dollars, to-wit, about $10,000,000.00, nevertheless about August, 1897, he did wilfully, wrongfully and to the great prejudice and loss of other taxpayers of the city of Cincinnati, consent to and approve as a member of said board of supervisors, a valuation of said personal property of said Cincinnati Street Railway Co. for purposes of taxation for the current year at the sum of $835,230.00, and realty at about $350,000; that said valuation was a gross wrong upon other taxpayers of the city of Cincinnati, and that said John J. Sullivan knew the same to be grossly inadequate, as alleged, when he consented to and approved the same, and that by the exercise of ordinary care as a member of said board, he would have known what the undersigned aver is a fact, that the true value of said taxable property for purposes of taxation on the county duplicate was many millions of dollars, to-wit, not less than about $10,000,000.00; and that although other property of citizens subject to taxation was uniformly valued by said John J. Sullivan, for taxation at about 65 per cent, of its selling value, the property of said Cincinnati Street Railway Co. was wilfully and with intent to prefer, and be partial to, and to favor it, fixed at a valuation of about seven per cent, of its selling value.
    ‘(C.) Said John J. Sullivan knew that the capital stock of The Cincinnati Gas Light and Coke Co. was about $8,500,000, and that its market value was over' $17,000,000, and knew or should have known that the tangible property, real and personal, owned by said company in the city of Cincinnati and subject to taxation was at the time of valuation of property for the current year, many millions of dollars, to-wit, about $10,000,000, nevertheless he did about August, 1897, wrongfully, wilfully and to the great prejudice of and in gross wrong of other taxpayers of the city of Cincinnati, consent to and approve as a member of said board of supervisors a valuation of said property for purposes of taxation for the current year at the sum of $2,145,408, which was $354,392 less than the valuation of the same property for the preceding year; that said valuation was a gross wrong upon other taxpayers of the city of Cincinnati, and that said John J. Sullivan knew the same to be grossly inadequate when he consented to and approved the same, and that by the exercise of ordinary care, said member of said board would have kno wn what the undersigned aver is a fact, that the true taxable valuation of said property for the county duplicate was many millions of dollars, to-wit, not less than about $10,000,000.
    ‘Wherefore, the undersigned request your Honor to give notice of these charges, to fix a day for hearing the same and to take such further action as may be authorized by law.
    Respectfully,
    [Signed] Taxpayers Ass’n op Hamilton Co.,
    Jos. Lippert, Pres., Fred Tuke, Sec’y, and 65 other signatures. ’
    “Defendant further says that at the time set for the trial and hearing of said charges, and before any action was taken thereon, this defendant presented to the said Gustav Tafel, mayor, an application and motion, in writing, alleging the insufficiency of said charges, both as to substance and form, and objecting to a trial and hearing of them, and asking that they be dismissed, by reason of such insufficiency; a copy of which application and motion is as follows, to-wit:
    “Before Hon. Gustav Tafel, mayor of Cincinnati, Ohio, in the matter of the charges against John J. Sullivan, as a member of the board of supervisors of the city of Cincinnati.
    “The respondent, John J. Sullivan, denies each and every one of the charges and specifications above referred to, and now pending before the mayor of Cincinnati, and submits that he ought not to be required to answer them or either of them, or to submit to any inquiry into, or trial ' of them, for reasons apparent on their face as follows:
    “First. Because neither of said charges and specifications contains a case either of neglect of duty or misconduct in office, or any other case requiring such answer, inquiry or trial of said respondent.
    ‘ ‘Second. Because the specifications set forth in said charges do not sustain either of said charges.
    “Third. Because it appears that both The Cincinnati Street Railway Company and The Cincinnati Gas Light and Coke Company were required to make tax returns under sections 2714 and 2737 of the Revised Statutes, .and does not allege that either the county auditor, under sections 2781-2-3 of the Revised Statutes, nor any of the persons who signed said charges, nor any other person, ever - informed this respondent or the board of supervisors, or made complaint under section 2807 of the Revised Statutes or otherwise, that the returns of either of said corporations were in any respect untrue or evasive or that any item in either of said returns was returned too low either as to quantity or value, or that there was any wrongful apportionment thereof; nor does said charges allege that any evidence was ever presented or offered to said board of supervisors, tending to show that said returns or either of them were in any respect too low, or that the apportionment was erroneous, without which evidence said board has no power to make any addition to any return made under oath as required by law.
    “Wherefore, reiterating his denial of said charges and specifications, this respondent now asks a hearing of this application, and prays that your Honor will dismiss the charges without inquiry or investigation.
    ¥m. M. Ampt,
    E. W. Kittredge, For Respondent.
    “Defendant further says that the said mayor overruled said application and motion, and refused to dismiss said charges, and ordered said trial and hearing to proceed; to all of which the defendant then and there excepted.
    “And thereupon this defendant filed his answer, under oath, denying the truth of the facts alleged in each of said charges; and, thereupon, the said mayor, against the objection of said defendant, entered upon the trial and hearing of said charges, and this defendant avers that not a word of evidence tending to sustain the truth of the facts alleged in said charges, or either of them, was adduced or heard by said mayor; and that no statement or information of any personal or official knowledge of the mayor of any kind, tending to substantiate or prove the facts alleged in said charges, or either of them, was made or communicated to this defendant. Yet,- notwithstanding’, on September 22, 1897, the said mayor made his certain order, and caused the same to be served upon this defendant, in the words and figures following, to-wit:
    “September 22, 1897.
    “Office of the Mayor, City of Cincinnati:
    “In the matter of the charges filed by Joseph Lippert, Fred. Tuke, J. B, Morsman and others, against John J. Sullivan, as a member of the board of supervisors, of the city of Cincinnati, charging him with neglect of duty as a member of said board, I find from the evidence and also from the facts within my personal knowledge, that the said John J. Sullivan has been guilty of neglect of duty, in his official capacity as a member of said board of supervisors, and, therefore, by virtue of the authority vested in me, as mayor of the city of Cincinnati, I do hereby remove the said John J. Sullivan from his office, as member of said board of supervisors of the city of Cincinnati.
    Gustav Tafel,
    [Seal.] Mayor.”
    “Defendant further says that all the actions of the said mayor as to said hearing, order and removal, were wholly unwarranted by any facts alleged in said charge, or by any facts proven, or by the laws of the state of Ohio, and were all in fraud of defendant’s right to remain in and continue to hold said office, and to perform his duties, and to receive the emoluments thereof.
    “Defendant further avers that the mayor aforesaid was without jurisdiction, by reason of anything alleged in said charges, or either of them, and that the order made by the said mayor on the 22d day of September, A. D., 1897, as aforesaid, was wholly null and void in law.
    ‘ ‘And this defendant further answering denies each and every allegation of fact in the petition herein set forth, not hereinbefore expressly admitted; and prays the court that the petition herein may be dismissed, and for all other proper relief.”
    To this answer a demurrer was interposed by relators, which being overruled, and they not desiring to plead further, the petition was dismissed, and respondents awarded judgment for costs. The question is, therefore, whether or not the answer states a defense.

      Follett <& Kelley and S. K. Maosioell, for plaintiff in error.

      F. W. Kitt/redge and Wm. M. Arrvpt, for defendant in error.
   Spear, 0. J.

Two questions are presented. One relates to the sufficiency of the charges; the other to the action of the mayor upon them. The holding of the circuit court is rested upon the former consideration.

Section 2690m, Revised Statutes, gives authority to the mayor to appoint the board of supervisors, and also to remove. The latter authority is in these words: “For neglect of duty or misconduct in office, the mayor of such city may remove any member of said board.”

This language, taken by itself, may imply an arbitrary power of removal. But that the power is not wholly arbitrary is well settled in this state by the cases of The State v. Hawkins, 44 Ohio St., 98, and The State v. Bryson, same volume, 457. Nor can its exercise be lawfully attempted until substantial charges, involving neglect of duty or official misconduct, have been preferred. It is held in the former case, as applicable to a removal by the governor, that the charges must embody facts which, in judgment of law, constitute official misconduct, and no reason is perceived why the same strict test should not apply in the case of removal by a mayor. While it is true that the holding of office is not compulsory, and the citizen is at liberty to accept or decline as seems to him best, yet considerations of patriotism and public policy incline the disinterested citizen to accept, and it is manifestly for the interest of the state that men of character should be found willing to fill public positions. Such citizens will be less likely to do so if they are to be- subjected to arbitrary removal, or their reputations put in jeopardy by removal based upon insufficient charges. The public interests do not require action which shall be unjust to a worthy officer, or which will unfairly smirch a good character, and yet the public interests do require prompt action in case of established inefficiency or corruption. And so our statutes have provided remedies as to removals which, while they do not lodge power in the removing authority which is absolutely arbitrary, do give power which partakes of that character.

In a ease under the statute in question the mayor is the sole judge of the weight and sufficiency of the evidence given at the hearing. If he hears a complaint of neglect of duty, or misconduct in office, upon adequate charges and, upon evidence tending to establish them by him adjudged sufficient, removes the officer, his action is practically final, since no appeal lies, nor can error be prosecuted. Hence the necessity, in justice and common fairness, of his being authorized to proceed only when charges have been made which embody facts that, in judgment of law, constitute neglect of duty or misconduct in office. As said by Mechem in his work on Public Officers, section 452: “The power of removal so conferred must be confined within the limits prescribed for it, and must be pursued with strictness. Hence it can be exercised only for the cause specified and in the manner and upon the conditions fixed.” See also Commonwealth v. Slifer, 25 Penna. State, 23. And, with, equal propriety may it be added, that the finding and order should be so definite as to show, upon the face of them, that the power has been exercised according to law. This for the reason, among others, that the power exercised by the mayor is not judicial power and the presumptions which attach to the record of courts are not to be applied in the same liberal sense to the record of the mayor. In McGregor v. Supervisors, 37 Mich., 388, it is held by Cooley, C. J., that: “The removal from public office is a matter of serious consequence, and it is plain that all the facts which would justify it ought properly to be of record.”

The charges here are that Sullivan knew, or should have known, that the tangible property, real and personal, of the street railway company, subject to taxation, was $10,000,000. Yet he wilfully consented to approve the valuation of personal property at $835,230, and realty at $350,000, when he knew that the value of the said taxable property was not less than $10,000,000, with bad intent, etc. A similar allegation is made as to the property of the gas company.

But the board, acting as a board of equalization had, under the statutes, no duty to perform respecting real estate, its power of equalization being confined wholly to personal property, and why the confusing element as to real estate was incorporated in the charges must be left to conjecture. It so confuses the allegation that its meaning is fatally obscure.

There is no statement that Sullivan, or the board, undervalued the personal property, for there is no language equivalent to an averment that the personalty of the railway company was in fact of higher value than $835,230. The valuation in gross appears by the charges to have been much too low. But it may be, for anything that these charges show to the contrary, that the undervaluation was wholly on the real estate. So that, as conclusion, every word in the charges as made may have been true as therein alleged, and yet no neglect of duty would be shown.

The finding of the mayor is simply that “Sullivan has been guilty of neglect of duty.” This finding^ being general, cannot be extended by implication to involve a conclusion more comprehensive or specific than the language of the charges. And this, as we have found, means only that as to the whole property there was undervaluation. In ■other words, the legal meaning of the finding and order is, that, in the judgment of the mayor, the defendant was guilty of neglect of duty because he had permitted undervaluation of the property in gross, and cannot be held equivalent to a finding that he had been so guilty with respect to that part only of the property of which the board had jurisdiction. It seems to us manifest that, considering the arbitrary character of the power brought into exercise in this case, the charges were too indefinite to justify a trial, and that, unaided by a specific finding showing in what the neglect of duty consisted, the entire record is not sufficient to support an order of removal.

Upon the other branch of the case, it will be noted that the answer avers that at the trial “Not a word of evidence tending to sustain the truth of the facts alleged in said charges, or either of them, was adduced or heard by said mayor, and that no statement or information of any personal or official knowledge of the mayor, of any kind, tending to substantiate or prove the facts alleged in said charges, or either of them, was made or communicated to this defendant.” It will be further noted that, in his order, the mayor recites that “I find from the evidence and also from the facts within my personal knowledge, ” etc. As stated elsewhere, the power given the mayor is not judicial within the meaning of the constitution, yet, as already found, it is not to be exercised arbitrarily; that is, a hearing is to be given the accused, and he is to have the opportunity to refute what is adduced against him. So that, it would not be a proper exercise of power for the mayor to determine the truth of a charge on his own personal knowledge without making that publicly known, and offering the opportunity above alluded to. If the averment that not a word of evidence tending to sustain the truth of the facts alleged was adduced or heard by the mayor, etc., is to be taken as an averment that no testimony at all was heard, but that the mayor’s finding rested entirely on facts within his personal knowledge, uncommunicated, and it is insisted by counsel for defendant in error that such is its meaning, then clearly, upon this ground, also, should the mayor’s order be held invalid. The majority of the court, at least, inclines to regard the legal effect of the averment as a conclusion of law merely; that is, that in the opinion of the pleader the evidence did not tend to sustain the truth of the charges, and that whatever statement the mayor may have made of personal knowledge did not tend to substantiate the facts alleged. The decision, therefore, is rested upon the first proposition.

Jvdgment affirmed.

Minshall, J., dissents.


author: Williams, J.

text:
    Chase v. Brundage.

      Partnership liability — Dissolution of banking copartnership — Time certificate of deposit renewed by continuing partner — Not payment of former firm debt— Unless creditor agrees to so receive it- — Proof of agreement — Error in charge, when cured by special finding.

    1. A time certificate of deposit issued after the dissolution of a banking copartnership by a member who had become the owner and was carrying on the business of the bank, in the place of a like certificate of the firm, is not a payment of the firm debt, unless the creditor agrees to so receive it.
    2. The agreement need not be express, but may be implied from the circumstances of the transaction and conduct of the parties ; and no higher degree or greater certainty of proof is necessary to establish the agreement than is ordinarily required to prove any other fact in civil cases, A preponderance of the evidence is sufficient.
    3. The surrender of the firm certificate when that of the partner is received, with knowledge that the firm had been dissolved and that payment of its liabilities had been assumed by the partner, is evidence from which an agreement to receive it in satisfaction of the firm liability may be inferred, but is not conclusive.
    4. It is the province of the jury, and not of the court, to determine whether there was such agreement, which must be done from all the evidence; but error in the failure to submit that question to the jury by the general charge of the court or refusal to charge, is cured, where it is submitted at the request of a party by interrogatories calling for a special finding of the fact, and is determined by such special finding, returned by the jury, consistent with the general verdict.
    (Decided June 21, 1898.)
    Error to the Circuit Court of Morrow county
    Action against a banking firm for money left on deposit. Defense by one partner that he withdrew from the firm under an agreement that his copartner should retain the assets and pay the liabilities, and that thereafter the plaintiff, with notice of the dissolution and agreement, accepted in satisfaction of his claim against the firm, a time certificate of deposit, at interest, from the copartner.

      The original action was brought by William Brundage against William G. Beatty and Reuben F. Chase, late partners under the firm name of the Cardington Banking Company. The petition contains three causes of action, which are as follows:
    “The plaintiff, for his first cause of action, says that the defendants at the dates hereinafter stated, were partners in the banking business in the village of Cardington, Morrow county, Ohio, by name and style of Cardington Banking Company, with whom while they were so engaged in the said banking business by said firm name he had made deposits with and done business with as such partners prior to the dates hereinafter mentioned. On or about the 12th day of February, 1890, at the request of the said defendants, he deposited and delivered to the said defendants, as such partners at their said banking house, the sum of one thousand dollars in cash; and he also says that the same has not been paid nor any part thereof except the interest thereon to the 12th day of February, 1893, and that there is now due to him from the said defendants on account thereof the sum of one thousand dollars with interest thereon from the 12th day of February, 1893.
    And for a further and second cause of action, plaintiff says that on or about the 12th day of August, 1890, he delivered to and deposited with the said defendants as such partners and as such bankers at their said banking house, in the said village of Cardington, the further sum of four hundred and seventy-five dollars in cash; that the same has not been paid, nor any part thereof except the interest thereon to the 12th of February, 1893, and that there is now due to him from the said defendants on account thereof the sum of four hundred and seventy-five dollars with interest thereon from the 12th day of February, 1893.
    And plaintiff, for a further and third cause of action, says that on the 2d day of June, 1893, he delivered to and deposited with the said defendants as such partners and at their said banking house in the said village of Cardington, the further sum of one hundred dollars in cash; that the same has not been paid nor any part thereof, and that there is now due to him from the said defendants on account thereof the sum of one hundred dollars, with interest thereon from the 2d day of June, 1893.
    Plaintiff therefore asks judgment against the said defendants for one thousand five hundred and seventy-five dollars with interest on one thousand four hundred and seventy-five dollars from the 12th day of February, 1893, and on one hundred dollars from the 3d day of June, 1893, and for costs.”
    Beatty made no defense. Chase answered, in substance, that his connection with the firm ceased on the first day of September, 1892, when he transferred his interest to Beatty, who assumed the payment of the liabilities of the firm; that the business was thereafter carried on by Beatty in his own behalf; and, that the plaintiff,with knowledge of these facts, on the 12th day of February, 1893, received and accepted in satisfaction of his claims against the firm which are set up in his first and second causes of action, certificates of deposit issued by Beatty, payable in six months, and bearing interest until maturity. And, as to the money claimed in the third cause of action, he avers that was originally deposited after Beatty became the sole owner of the bank, and with notice that Chase was not then a member of the firm. A verdict was returned in Chase’s favor, on a trial of the issues joined by a denial of the allegations of his answer. Judgment rendered on’the verdict was reversed in the circuit court for error in the charg’e to the jury, in refusing instructions requested by the plaintiff, and in not requiring more specific answers to interrogatories submitted to the jury. The ease is brought here to obtain a reversal of the circuit court, and an affirmance of the common pleas. A further statement of the facts, and. of the alleged errors, will be found in the opinion.

      Theodore 8. White and Jabez Dickey, for plaintiff in error.
    Our position is that the record shows an agreement on the part of Brundage to release Chase and accept Beatty as his sole debtor. And this agreement, again, is not required to be made in any particular form or manner. It is required that the creditor acquiesce in, assent or agree to the arrangement between the partners, but when that is done, that is all that is required. It is a contract that requires no special formality, but is proven like any other agreement. It need not be express, but may be implied from conduct, fact and circumstances. Bank v. Oreen, 40 Ohio St., 431.
    It is shown by the record in the special findings of fact by the jury, that after the dissolution of the partnership, Brundage, the creditor, with knowledge of the dissolution, surrendered to Beatty the certificate of deposit issued by the firm and accepted a new certificate issued by Beatty alone. Bindley on Partnership (Ewell’s 2d Am. Ed.), page 248 (star paging); Evans v. Drummond, 4 Esp., 89; Reed v. White, 5 Esp., 122.

      In regard to the question of substitution of debtors and the release of retiring partners, see Clark on Contracts, page 615; Ila/rt v. Alexander, 2 Mees. & W., 484; 1 Bates’ Law of Partnership, section 528; Springer v. Shirley c& Hyde, 11 Maine, 204; Register v. Dodge, 6 Fed. Rep., 6; Bates’Law of Partnership, Volume 1, section 519; Shato v. MoGregory, 105Mass., 96; Hart v. Alexander, 2 M. & W., 484; Oaldy v. Pasheller, 10 Bligh. N. R., 548; 4 Ct. & Pin., 207; Harris v. Lindsay, 4 Wash. C. C., 98; Pitáis v. Robinson, 32 Up. Can. 2 B., 362; Bates’ Law of Partnership, Volume 1, page 537; George on Partnership, 270; Harris v. Famoell, 15 Beav., 31; Clark on Contracts, 616.

      Olds <& Olds, for defendant in error.
    We think the circuit court was clearly right in their judgment of reversal in this case, and that the court of common pleas was clearly wrong.
    In the charge as given the court refuses to give in charge that in order to release Chase there must have been an agreement in which the minds of both parties come together, and that it must have been understood by both parties that Chase was released and Beatty accepted, but proceeds to tell the jury that if certain things were done Chase was released, and their verdict should be for the defendant, and wholly ignores the proposition that there should be an agreement. We maintain that i t is for the jury to say whether or not there was such agreement; and if the court will read the charge given to the jury they will find that the court of common pleas carefully avoids that proposition, and leaves the jury to understand that an agreement is not necessary, and that it is no matter what was the understanding and intent of the parties.

      The authorities in all or nearly all the states, and especially in Ohio, say that while the conduct of the parties and other circumstances may be considered by the jury in determining whether or not such an agreement has been made, it must be an agreement; it must be the understanding and intent of both parties, and it must be clearly proven; and the jury must be able to find from the proof clearly that such an agreement has been made, and it is not the province of the court to say what circumstances will amount to an agreement, and much less is it the province of the court to say, under certain circumstances they must find for the defendant and leaving them to ignore all other circumstances in the proof.
    There are various authorities of other states sustaining our position in this case; some very respectable courts going so far as to hold that the agreement must be supported by a consideration, such as additional security or the like, but we think the question so well settled in Ohio that we content ourselves with simply citing Ohio cases, and we cite in support of our position: Merrick v. JBoury, 4 Ohio St., CO; Leach v. Church, Admr 15 Ohio St., 169; Bamson v. Taylor et al., 30 Ohio St., 389; Bank v. Creen, 40 Ohio St., 431.
   Williams, J.

It is not contended here that there is any ground upon which Chase can be held liable for the money deposited by the plaintiff on the 2d day of June, 1893. The errors for which the judgment of the trial court was reversed concern his liability upon the first and second causes of action, for the money deposited while he was a partner in the bank. It appears from the record, that the banking copartnership between Beatty and Chase was formed in 1888, and continued until September 1,1892, when it was dissolved by agreement, under which Beatty took its assets and assumed the payment of its liabilities. Beatty thereafter continued the business, in the name of the Cardington Bank, until August 16, 1893, when he failed. The plaintiff left on deposit with the firm, on the 12th day of February, 1890, the sum of one thousand dollars, and on the 12th day of August, 1890, the further sum of four hundred and seventy-five dollars. And upon these two deposits his first and second causes of action are founded. For each of these sums, the firm issued to the plaintiff, at the time the money was left with it, a certificate of deposit payable six months thereafter with a special rate of interest for that period only. These certificates were surrendered by the plaintiff at maturity, when the interest was paid, and new ones issued to him in like form for another period of six months; and, thereafter renewals were made in the same way every six months so long as the firm continued to exist. Each of the certificates bore the names “R. F. Chase, President,” and “fm. G. Beatty, Cashier,” printed at the top, and was signed “F. A. Bayer, a cashier.” On the 27th day of October, 1892, being in the month following the dissolution of the firm, the plaintiff made a new deposit in the bank, of one hundred and twenty-five dollars, and then received a certificate of deposit for the amount, in the same form as those which had been previously issued by the firm, except that the name of Chase, President, was erased by lines of red ink drawn over it. After that, on the 12th day of February, 1893, the plaintiff surrendered to the bank the last renewal certificates issued to him for the one thousand dollars and the four hundred and seventy-five dollars while Chase was connected with the bank, received the interest then due on them, and accepted new certificates for corresponding amounts payable six months from that time, and bearing a like rate of interest until their maturity. The name of Chase did not appear on these last certificates, as President, or otherwise. The evidence tended to prove that when the plaintiff accepted them he knew that Chase had withdrawn from the firm, that Beatty had assumed payment of its liabilities, and was then the sole owner of the bank, and, that the plaintiff had made inquiries concerning Beatty’s solvency and responsibility.

The court in its general charge instructed the jury, in substance, that the agreement made between the defendants on the dissolution of the firm would not affect Chase’s liability to the plaintiff, unless the latter consented to the arrangement, or acquiesced in it; but if, with knowledge of the agreement, he surrendered the certificates issued to him while Chase was a member of the firm, and received in place of them certificates issued by Beatty, with Chase’s name omitted therefrom, calling for the same or a greater rate of interest for a specified time, that would release Chase. The instruction requested, which the court declined to give, was, in effect, that Chase would not be released from liability unless the plaintiff agreed to accept the new certificates in payment of the indebtedness of the firm, or intended, in accepting them, to take Beatty for the debt and release Chase.

The instruction requested is in accordance with the rule established in this state. In Merrick v. Boury, 4 Ohio St., 60, it is held that a note given for a precedent debt of the maker will not be regarded as a payment of the debt unless the creditor agreed to so receive it. And in Leach v. Church, 15 Ohio St., 169, the same rule was applied in a case where, after the dissolution of a partnership, a note was given for a debt of the firm by one of the partners who had agreed to pay its liabilities. It is a question of fact for the jury to determine, in such cases, whether the creditor agreed or intended to receive the note or other obligation of the partner, in payment. In the cases cited it is said, that the agreement or intention to so receive it must be clearly shown; but that, we apprehend, is a consideration addressed to the judgment of the jury, rather than a rule of evidence. The agreement or intention need not be express, but may be implied from the circumstances of the transaction and conduct of the parties. And no higher degree or greater certainty of proof is necessary to establish the agreement than is ordinarily required to prove any other fact in civil cases. A preponderance of the evidence is sufficient. The new certificates of deposit issued to the plaintiff after the dissolution of the . banking firm, were the individual obligations of Beatty. They imposed no liability on Chase. And their substitution for the old ones then surrendered, in satisfaction of the firm debt and discharge of Chase from liability', being in accordance with the agreement of dissolution, Beatty’s intention to thus pay the firm debt with his individual obligation would be sufficiently obvious; and the plaintiff’s intention to so receive them might be inferred from the fact that he surrendered the firm certificates, and accepted, and has since retained, the new ones, knowing them to be the individual obligations of Beatty, who was bound by his agreement with Chase to pay the firm debts. The plaintiff might reasonably understand that, in the transaction, Beatty was acting in pursuance of his agreement to pay the debts of the firm, and be willing to rely on his individual responsibility in order to secure the continuance of the money at interest for a definite future period. These facts, however, are evidential merely; and it was the province of the jury, and not of the court, to draw the proper inferences, and from them, in connection with all the evidence in the case, determine whether there was an agreement or intention to accept the certificates in payment of the firm debt.

But, while the court failed in its general charge to properly submit this question to the jury, it was so submitted upon the written requests of the plaintiff for special findings. In pertinent and sufficiently certain responses to these requests the jury found and returned, in addition to the general verdict, that when the plaintiff received the certificates of deposit issued to him after the dissolution of the banking firm, he had knowledge of its dissolution, and of the ag’reement between the partners by which Beatty was to pay the indebtedness of the firm, and, that he then consented to release Chase, and take Beatty alone for the payment of his debt against the firm, and intended to do so. The special findings are consistent with the general verdict, and cured the error in the general charge of the court, and in its refusal of the instruction requested. They find the essential facts which fix the legal rights of the parties, and cover the questions that the plaintiff desired to have submitted to the jury by the instructions which were refused. Nor, can the findings be regarded as any the less impartial or decisive than if the jury had been instructed concerning the effect they should have on the general verdict. A new trial, with those instructions, could only result in a resubmission of the same questions of fact to another jury. And though that jury might find differently, it could only do so because it might take a different view of the weight of the evidence. There being nothing in the record to show that the findings already made are erroneous, the plaintiff in error is entitled to the judgment which he recovered in the trial court.

Judgment of the circuit court reversed, and that of the common fleas affirmed.


author: Minshall, J.

text:
    Benedict v. Peters et al.

      Chattel mortgage — Statement of mortgagee — Must be authenticated by signature of officer administering oath — Section 4154, Revised Statutes.

    The statement under oath required of the mortgagee under section 4154, Revised Statutes, of the amount of his claim and that it is just and unpaid, must be made on the mortgage and authenticated by the signature of the officer administering the oath ; and where this is not done the mortgage is of no effect as a lien against a creditor of the mortgagor, who has caused an execution to be levied upon the property.
    (Decided June 21, 1898.)
    Error to the Circuit Court of Franklin county.

      D. T. Ramsey and J. V. lee, for plaintiff in error.
    Section 4154, Revised Statutes, provides that the mortgagee, his agent or attorney, shall, before the instrument is filed, state thereon, under oath, the amount of the claim, etc.; and if given to indemnify the mortgagee against a liability as surety for the mortgager, such sworn statement shall set forth such liability and that the instrument was taken in good faith to indemnify against loss that may result therefrom.
    The affidavit seems to be properly filled out and is signed by one of the mortgagees. But it does not show on its face that the statement was sworn to, and it is not on its face a sworn statement or a statement under oath. The recital in the affidavit, “David B. Peters being sworn,” has no effect, because he could not swear himself and he could not certify that he was sworn. That must be done by an officer authorized to administer oaths. We contend that the statement on the mortgage is not prima facie a statement under oath, or “sworn statement,” commonly called an affidavit, that it does not come within the terms of the statute, and that it is void under the statute as to creditors of the mortgagor. Section 4150.
    An affidavit on a mortgage, when properly signed and certified by a notary or other officer, is only prima facie evidence of the facts certified to by the officer. But it is sufficient evidence until it is impeached for fraud, or by showing that it was not in fact sworn to, or that the party who certified was not authorized to administer oaths. Ashley v. Wright, 19 Ohio St., 291; Gambrinus Stock Go. v. Weber, 41 Ohio St., 689.
    The question of “notice to the world” is the question involved in this case and the only question.
    The mortgage would be good between the parties to it without a sworn statement and without being filed.'

      The sworn statement required by section 4154 is an affidavit. Ga/rdiner v. Parmalee, 31 Ohio St., 551; Blandy v. Benedict, 42 Ohio St., 297.
    An affidavit is a written declaration under oath. Section 5262, Revised Statutes. And must be authenticated in the same way as depositions. Section 5264.
    So, at common law an affidavit must be sworn before and authenticated by an officer authorized to administer oaths. 1 Am. & Eng. Ency. of Law, (2d Ed.) pages 909, 910 and notes.
    An insufficient affidavit can not be cured or explained by extrinsic evidence. Hanes v. Tiffany, 25 Ohio St., 549.
    Where the affidavit is insufficient, the mortgage is void as to creditors.
    A prima facie ease or evidence is that which is received or continues until the contrary is shown. 19 Am. & Eng. Ency. of Law, 83.
    The defendant offered no evidence upon the mortgag’e or the statement. The only question raised by him was as to the validity of the statement prima facie. If it was valid prima facie, no oral evidence should have been introduced.
    If the notary had properly certified the affidavit, it would not have been necessary for the plaintiff to prove the notary’s signature or the fact that he administered the oath. 16 Am. & Eng. Ency. of Law, 775.
    A notary is a public officer. There is a presumption in favor of the validity of official acts. 19 Am. & Eng. Ency. of Law, 43.
    Our contention is that if the statement had been properly certified by the notary, the statement would have been prima facie regular and valid, and no extrinsic evidence would have been necessary or proper. In that case the burden of proof would have been on the defendant to impeach the statement and the certificate.
    The introduction of oral evidence was an admission that the statement -w&s prima faoie insufficient.
    Such being the case, it was void as against the defendant below, who is a judgment creditor.

      Dyer <& Williams, for defendants in error.
    Two questions are presented by the record in this case for the determination of this court:
    First. Was the statement, upon oath, of the mortgagee, as endorsed upon the chattel mortgage in controversy herein so fatally defective as to invalidate the mortgage as against creditors?
    Second. Did the trial court err in admitting parol evidence to prove that such statement had in fact been sworn to by'the mortgagee?
    It is not contended that the affidavit is insufficient under the statute nor irregular in any particular other than the notary before whom the affidavit was taken, neglected to sign his name to the jurat. Section 4154, Revised Statutes.
    The mortgagee in the body of the statement which we are considering, and which he signed, recites that he was duly sworn. Under his signature is written, “Sworn to before me and signed in my presence this first day of November, 1894.”
    It also appears from the evidence, that the notary put his seal on the instrument. On its face, therefore, it purports to be a sworn statement, and is all the statute requires. The statute does not require that the statement should be certified by the officer administering the oath, although, no doubt, it is desirable in practice that this should always be done. Ashley v. Wright, 19 Ohio St., 291; Ihe Gambrinus Stock Company v. Weber et al., 41 Ohio St., 689.
    Certainly, every purpose which the legislature intended should be accomplished by the filing of this statement for the information of third persons dealing with the property conveyed by the mortgage is accomplished by the statement filed in this case.
    There is nothing in the mere absence of the notarial signature which would deceive or mislead a creditor as to the character of the claim of the mortgagee or as to the amount of his claim.
    We believe the conclusions of our Supreme Court in the two cases above cited are fully sustained by reason and by the authorities elsewhere. In 1 Enc. Plead. & Pr., page 311, the full requisites of an affidavit are stated to be: (a) title, (b) venue, (c) signature, (d) jurat, and (e) authentication.
    The oath challenged herein contains all these in proper form, except the authentication. 1 Enc. Plead. & Pr., 317; Kruse v. Wilson, 79 111., 233; Cook v. Jenkins db Co., 30 Iowa, 452; Stout v. Folger, 34 Iowa, 71; Jadkman v. Gloucester, 143 Mass., 380; English v. Wall, 12 Rob. (La.), 132; Fortenheim v. Claflin, 47 Ark., 49; Bergesch v. Keevil, 19 Mo., 127; McCartney v. The Branch Bank at Huntsville, 3 Ala., 709; Hyde v. Adams, 80 Ala., Ill; Wiley v. Bennett, 9 JBaxt. (Tenn.), 481; Borough of Pottsville v. Curry, 52 Pa. St., 443.
    The second question sought to be raised here is as to the alleged error of the trial court in permitting parol evidence to • go to the jury to prove that the mortgagee had in fact sworn to the statement endorsed on the back of the chattel mortgage. Certainly, under the ruling in Ashley v. Wright, supra, this evidence was property admitted. In the quotation already made from the opinion of the court in this case, we have found the court held that the absence of a notarial seal by way of authentication would thus throw the burden of proof upon the mortgagee. So, in this case, by a parity of reasoning, the absence of a notarial signature would throw upon the mortgagee the burden of proving that the statement had actually been sworn to, and of course, in order to sustain the burden of proof thus thrown upon him, it is competent for the mortgagee to show by extrinsic evidence the circumstances surrounding the execution of the document, and from this to show that it was in fact, under oath, as on its face it purported to be.
   Minshall, J.

Levi Benedict having obtained a judgment against Malón A. Peters before a justice of the peace, caused an execution to issue and be levied upon certain personal pi’operty of the debtor. Shortly afterwards David and Wilson Peters replevined the property from the constable, claiming it under a certain chattel mortgage that had been made to them by the debtor to secure an indebtedness to themselves. Benedict was duty substituted for the constable, and the case was tried on an answer denying the averments of the petition. The finding was for the plaintiff and damages one cent, and judgment rendered on the verdict for the plaintiff, after a motion for a new trial had been made*and overruled. A bill of exceptions was taken and made a part of the record setting forth all the evidence. The only question arising upon the record is as to the validity of the chattel mortgage under which the plaintiffs claimed the property as against the levy made upon the property .by Benedict under his judgment, the levy being subsequent in time to the mortgage. The mortgage was regular in all respects, except that the statement thereon under oath, required by section 4154, Revised Statutes, to be made by the mortgagee, his agent or attorney, as to the amount of his claim and that it is just and unpaid, was not certified to by the officer as having been administered by him, that is his signature was omitted. From aught that appeared the affidavit may simply have been written on the mortgage, signed b37' the mortgagee, with the usual jurat in blank, and without its having been sworn to by him before any officer. Evidence was offered and received against the objection of the defendant, and to which he excepted at the time, that the oath had in fact been made before the notary, but he had inadvertently omitted to sign his name to the certificate. And the question now arises whether this omission invalidates the mortgage as against a judgment creditor of the mortgagor, who has levied on the property. It is well settled that if the mortgage is defective as a lien against third persons, it is of no avail against the subsequent levy of an execution by a creditor, without regard to his knowledge of the improperly filed mortgage. Houk v. Condon, 40 Ohio St., 569. The requirement of good faith to acquire a preference over it, applies only to subsequent purchasers and mortgagees. Instruments whereb3T one creditor is to obtain a lien upon the property of a debtor as against others, must be construed strictly in the observance of those requirements necessary to the creation of the lien, and particularly is this so as to those things required as notice to third persons of the existence of the lien. The mischief intended to be remedied by the provisions of section 4154, was the giving of colorable mortgages by debtors for the purpose of covering up their property and hindering and delaying honest creditors in the pursuit of their legal remedies against them. The statement required by this section to be made under oath by the mortgagee on the mortgage, as to the amount of his claim and that it is just and unpaid, is vital to the spirit of the statute in the light of the mischief it was intended to prevent.- It subjects the conscience of the party to the severe test of an oath as to the amount and justice of his claim to be secured by the mortgage. It is however argued with a g'ood deal of force, that if the oath has been in fact taken,, the mischief will be as effectually avoided as if the fact were certified on the mortgage by the officer administering it. This would certainly be so in the cases where it is shown to have been done by parol testimony. But would this be so in all cases? Certainly not in those cases where the oath has not been administered; and as this cannot be known from the mortgage itself, it certainly opens the door to the making and filing of fraudulent mortgages. Such mortgages may be made and filed, and whilst the fraud may or may not be discovered and exposed by the creditors, it will serve for the time being, or may be for all time, the fraudulent purpose of the parties. In such way the creditor may be hindered and delayed by the fraudulent practice, and no other consequences will result to the parties than the exposure of their fraud and the loss of what was to be gained thereby. But where the oath is in fact taken and certified by the officer on the mortgage, the affiant may, in addition to the exposure of his fraud, be prosecuted for perjury. I am not to be understood as implying that where a false oath has been made no prosecution for perjury could be had in the absence of a certificate signed by the officer, the point is, that where the fact may be shown by parol, a certificate in due form may be fraudulently endorsed on the mortgage, and the taking of the 'oath omitted, for the purpose of hindering and delaying creditors, with no other consequences to the party than the exposure of his fraud. In this view of the case we think th¿ court erred in permitting the plaintiff to show by parol that the oath had in fact been taken, though there was no certificate signed by the officer administering it to that effect on the mortgage. The mortgage as against the judgment creditor who had levied on the property was of no effect (Houk v. Condon, supra) and judgment should have been rendered in his favor. Creditors examining the records for such liens, ,are not required to go beyond the record for the purpose of learning whether an instrument on which there is no duly certified sworn statement required by the statute, can be shown to have been properly executed in this regard. All that is required to make it a mortgage as against creditors must appear upon the instrument filed as such. It cannot be helped out by parol. Hanes v. Tiffany, 25 Ohio St., 549; Blandy v. Benedict, 42 Ohio St., 295.

We do not think that the cases of Ashley v. Wright, 19 Ohio St., 291 and Gambrinus Stock Co. v. Weber, 41 Ohio St., 689, are opposed to this view. In Ashley v. Wright, the instrument showed on its face that the statement had been properly sworn to. The notary administering- the oath had signed the certificate, but had omitted his seal. The court held that the attaching of the seal was not necessary — the seal being only required in the authentication of purely notarial acts, as in the protesting of commercial paper for dishonor. In Gambrinus Stock Co. v. Weber, the statement was not signed by the mortgagee. This the court held is not necessary, where, as in that case, the taking of the. oath was duly authenticated by the notary.

Quite a numbér of cases are cited where, in attachment proceedings, affidavits on which writs of attachment were issued, were not authenticated by the officer administering the oath, and the'omission was not regarded as fatal to the affidavit, the evidence of the fact being- supplied by parol. We do not regard these cases as of controlling effect here. An affidavit in an attachment proceeding is given for the protection of the debtor. And if it has been in fact taken, it affords the same protection to him as if duly certified by the-officer administering- it. The lien of the attachment does not depend upon the sufficiency of the affidavit, but upon the taking- of the property under the writ; and if the defects in the affidavit are waived by the debtor, third persons cannot take advantage of them. Nor is the affidavit designed as notice to third persons of the existence of the lien, that is accomplished by the seizure of the property. For these reasons the cases cited, and similar ones, are not relative to the question here.

The general rule is that an affidavit must appear on its face to have been taken before the proper officer, and in compliance with all legal requisitions. Giauq. Notary’s Man., section 32. A paper purporting to be an affidavit, but not to have been sworn to before an officer, is not an affidavit. Morris v. State, 2 Tex., 502; Cantwell v. State, 27 Ind., 505; Bank v. Hinchcliffe, 4 Ark., 444; Giauq. Notary’s Man., section 34. In the latter case, the sufficiency of an affidavit for an appeal was presented; and the court said: “In the transcript before us, the clerk has copied a writing’ purporting to be the affidavit of the attorney of the appellant, containing all the requisites prescribed by law, except the essential one that the individual purporting to make the affidavit, does not appear to have been sworn, or to have made the affidavit before any authority competent to take it. It is true that this statement appears immediately under the writing purporting to be an affidavit, “sworn to and subscribed in open court December 22,1841,” but this attestation is not subscribed or certified, either by the clerk, the judge or the court; and therefore it can only be regarded as the mere draft of an affidavit, never' sworn to by the person by whom it purports to have been made. And therefore as the record shows no affidavit, as required -by law, the appeal must be considered as having been illegally granted.” And, the same being true in this case, the mortgage relied on by the plaintiffs below, must be regarded inlaw as having no sworn statement upon it, required by statute to make it valid as against creditors.

Judgment of the owcuit court and of the common pleas, reversed, and cause remanded to the latter court for further proceedings.