author: Peck, J. Sutliff, J.,

text:
    John Hollister and John W. Smith v. John P. Reznor.
    In an action by a holder of a bill of exchange against the other parties thereon, it is competent to prove declarations made by a prior holder, before the transfer and after the dishonor of the bill, showing that the parties were discharged from liability.
    But the substance of the declarations, or sufficient of them to show their tendency and effect, should appear in the bill of exceptions taken to the ruling of the court below excluding proof of such declarations, so that the reviewing court may be advised that the party may have been prejudiced by such ruling. And, therefore, where a witness is produced on the part of the defense in such action, to prove certain conversations touching the liability of the parties to the bill, and the court sustain an objection to the competency of the proof offered.\, but not to the competency of the witness, and the bill of exceptions does not disclose^what the conversations were, which were offered to be proved, nor their tendency and effect, the reviewing court will not reverse.

      *In error to the district court of Lucas county.
    The original action was assumpsit, brought upon a bill of exchange drawn by J. W. Smith upon W. H. Sabin, payable to the order of John Hollister.
    The action was brought by John P. Reznor, as indorsee, against Smith as drawer and Hollister as indorser.
    Plea — the general issue.
    Hollister indorsed the bill in blank to William P. Reznor, who transferred it to his brother, John P. Reznor.
    The cause was tried to a jury at the April term, 1855, of the district court, on appeal, and resulted in a verdict for the plaintiff below.
    Thereupon Hollister and Smith, defendants below, moved the court for a new trial, on the ground that the verdict was against the evidence, and that the court had improperly refused to permit them to give certain evidence to the jury. The court overruled this motion, and rendered judgment upon the verdict.
    To reverse this judgment Hollister and Smith filed their petition in ei'ror in this court.
    A bill of exceptions was taken on the trial in the district court. When the bill of exceptions was signed and sealed, the words “ and before transfer to plaintiff,” which occur in the portion of the’bill of exceptions quoted below, were in it. Afterward they were erased by the presiding judge; but in obedience to a mandate •of the Supreme Court (Hollister and Smith v. The Judges of the District Court of Lucas County, 8 Ohio St. 201), said words were restored to the bill of exceptions.
    The bill of exceptions, after setting out the bill of exchange and other evidence, contains the following statement, and on which the oase turns, viz: “And thereupon the defendants, further to maintain the issue on their part, produced on the stand, as a witness, one John Bates, and offered to prove by said witness certain con-

      versations that* then and there took place between said witness and William P. Reznor, a year or two prior to the commencement of this suit, and before transfer to plaintiff, in regard to said draft, and the liability of the parties thereon. To the admission of all which evidence plaintiff objected, and the court then and there sustained said exceptions and refused to permit the defendant to prove said conversations. To all which defendants then and there excepted.”

      Tbe errors assigned are, that the court below refused to permit the defendants below to prove “ said conversation,” rejected John Bates as a witness, and overruled their motion for a new trial.

      James Murray, for plaintiffs in error,
    insisted that the admissions by tbe assignor of a chose in action, made while he is the owner thereof and before assignment, are evidence against his assignee, and all claiming under him, and cited Brown v. McGraw, 10 S. & M. 267; Jackson, Cox & Co. v. Holloway, 14 B. Mon. 137; Horton v. Smith, 8 Ala. 73; Sharp v. Smith, 7 Rich. (S. C.) 3; Blount v. Riley, 3 Ind. 471; Abbott v. Muir, 5 Ind. 444; Miller v. Bingham, 3 Williams (Vt.), 82.
    P. B. Wilcox (with whom was W. Baker), for defendant in error, argued:
    The cases cited on the other side do not meet the question. The court will find the doctrine on this subject discussed in Byles on Bills of Exchange, 352, and numerous other cases there cited. See also 2 Phil. Ev. 644, 663, 387, and notes, 446, 481; 1 Greenleaf Ev. 222, sec. 190. Ifithe court should come to the conclusion that W. P. Eeznor did stand in such position that his declarations are admissible, still, we claim, on two grounds, that no error whatsoever hath intervened, in that respect, neither in form nor substance.
    1. The bill of exceptions discloses no error whatever.
    The court below refused to allow John Bates to tell *!i certain conversations ” he had with Eeznor, in regard to “ said draft,” and the “ liability” of the parties thereon.
    But whatwere these conversations ? What did Eeznor tell Bates? Bid he say the draft was a good one ? or a bad one ? False or genuine? Or, what did he say? Bid he say the parties were liable? or, not liable? and why? or why not? or which party? or what did he say? Who knows? What ideas does this phrase, “ certain conversations” with John Bates, now convey to the minds of this court? To anybody’s mind ? What possible ideas, except that there was a man called John Bates, and that he talked, sometimes, with W. P. Eeznor?
    Now, at common law, before bills of exception were known, the error complained of must appear affirmatively on the record. Coke’s Lit. 29, b. And the record always had to show what his grief was. 1 Aikin, 380.

      And the same rule has always been applied to bills of exception since they were introduced. 1 Mason, 57; 4 Cranch, 62, 64; 1 Morris, 364; 7 Iredell, 239; 1 Kelley, 1; 2 S. & M. 473; 7 Mo. 293; & Litt. 15; 5 Johns. 467; 40 Maine, 274; 3 Comst. 322 ; 10 Texas, 503.
    The same rule is constantly acted upon in Ohio. 17 Ohio, 495. See also 14 Ohio, 473; 17 Ohio, 439; 16 Ohio, 170, 282; 18 Ohio, 28, 122; 7 Ohio, 214; 4 Ohio St. 159.
    2. All the testimony in the case is not disclosed.
    The rule of law is too well settled in this court to require references. See cases above cited. Also 14 Arkansas, 298; 3 Term, 27; 1 Aikin, 380.
   Peck, J.

The principal and indeed only ground, taken in the-argument, for the reversal of this judgment, is the alleged error of the district court, occurring at the trial, in not permitting John Bates, a witness produced by the plaintiffs in error to prove “ certain conversations” had ^between him and ¥m. P. Reznor, an intermediate owner of the bill, some time after its maturity, and while-tho bill was the property of said W. P. Reznor, touching the bill and the liability of the parties thereon. That part of the bill of exceptions, which relates to the production of said witness and the-rejection of his testimony by the court, appears in the statement of the case.

According to the bill of exceptions, the district court of Lucas-county refused to permit proof of statements made by the holder and owner of a dishonored bill, upon which other parties were-apparently liable, touching their liability upon it, when offered in-evidence by the parties thus apparently bound. If the bill of exceptions correctly delineates the action of the court and the circumstances under which the decision was had, it is difficult to-discover the principle upon which the ruling was made. It could not have been from any real or supposed legal disability on the-part of the intermediate holder of commercial paper, who has transferred it to another, by his acts and declarations before its transfer, to affect its validity in the hands of a subsequent bona fide holder; for it was a dishonored paper when it was transferred by him, and the defendant in error, its subsequent recipient, could not claim protection under that salutary principle of the commercial law.. Nor could it have been because William P. Reznor was himself a competent witness, and might have been examined in the causes (his statements as to the liability of the other parties to the bill, while in his ownership and possession, in derogation of his rights, were original, and not mere hearsay testimony. Nor could it have been because William P. Reznor, himself a witness in the case, had ■not been previously interrogated respecting these conversations. 'They were competent as original evidence, reflecting upon the legal liability of the plaintiffs in error, and might be offered by them, without previously interrogating him respecting his statements; the object being to establish the issue, and not merely to •discredit Reznor.

*We might solve this difficulty, and satisfactorily account /for the ruling of the court, perhaps, if we were at liberty to con-' ■sider the circumstances under which the first bill of exceptions was framed and then altered, and the testimony tending to show that , the conversations, if any, were in fact subsequent to the transfer of the bill by W. P. to John P. Reznor. If the conversations offered ,in evidence were, in fact, subsequent to the transfer to the defendant .in error, they were liable to rejection as mere hearsay, and if offered •to discredit- W. P. Reznor, he should have been first interrogated respecting them, and, in either case, they would have been rightfully excluded.

But this can not be done. We must take the bill of exceptions .as it now reads, to be true — importing verity, and unexplainable ■by other testimony.

And upon the record, as it now stands, two questions arise:

1. Did the court err in rejecting the testimony offered by the plaintiffs in error?

2. Was that error, as shown by the bill of exceptions, of such character and significance as requires at our hands a reversal of the judgment subsequently rendered for the defendant in error?

Every error in the admission or rejection of testimony will not, .as of course, authorize a reversal of the judgment. As a general rule, it is only in cases where, from the facts stated in the bill of exceptions, it is apparent to the court reversing the judgment, not only that error has intervened, but that that error has been prejudicial, to some extent, to the party excepting, that it will thus interfere and vacate the judgment.

Thus, in Scovern v. State, 6 Ohio St. 204, where improper questions had been permitted to be asked and answered, defendant ■objecting thereto, but the bill of exceptions did not state the answers nor the substance of them, it was hold to be “ the settled law of Ohio, that in order to justify a reversal of a judgment on error,. the record *must show affirmatively, not only that error has intervened, but that it was to the prejudice of the party taking advantage of it.” Mor is this rule peculiar to Ohio. See Whidden v. Seelye, 40 Maine, 256; Onondaga M. Ins. Co. v. Minard, 2 Comst. 98; Holmes v. Gale & Bowers, 1 Ala. 517.

In State v. Cowen, 7 Iredell, 243, evidence of certain declarations- or admissions had been improperly admitted; but the bill of exceptions did not set out the testimony of the witness. The court said, “for aught we can tell, the declarations proved by him may have been irrelevant and, so, harmless; or they may have been beneficial to the prisoner. It is necessary that the appellant should. show in his exception some error to his prejudice, otherwise the-court can not set aside the solemn verdict of the jury.”

This case and the one cited from 6 Ohio St. 204, were cases in. which the error complained of was the wrongful admission of testimony, and in which the question naturally arose whether the testimony improperly admitted had prejudiced the rights of the party against whom it was admitted; to the solution of which question it was necessary and important to know what was the purport and effect of the testimony which had been delivered to the jury, in order to determine its legal and probable effect upon the verdict subsequently rendered. While it was holden in Duffee v. Pennington et al., 1 Ala. 508, that the rule requiring it to appear affirmatively-in the bill of exceptions or record, that the party had been prejudiced, applied only to cases whore the testimony offered was ruled out on account of the relevancy or competency of the testimony itself,. and not by reason of the incompetency of the witness to testify;, and that where a competent witness was excluded as incompetent, no necessity existed in the party excepting to set out in his bill of exception the matter he expected to prove by the witness, unless; the court, before adjudging the witness incompetent, required the-party offering the witness to state what he expected to prove — the-ground of rejection in such case *being, not on account of the subject-matter he was called to establish, but his legal disability to> ‘testify at all in the case; and that in such cases the court must hold that the party offering the rejected witness was, prima facie, prejudiced by the ruling, and for that cause should reverse the judgment. The same rule, with the same qualification, was also adjudged in the Supreme Court of North Carolina, in the ease of the State v. Jim, 3 Jones (N. C.), 348. It seems to us that the distinction taken in the cases from Alabama and North Carolina, and which is also sanctioned in Kentucky in the case of Force v. Smith, 1 Dana, 151, is correct, and that the general rule laid down in Scovern v. The State, 6 Ohio St. 204, is to be taken with the qualification, that where a witness is rejected for incompetency to testify in the case, the court not having required the party producing the witness to state what he expected to prove by him, the bill of exceptions need not set forth what the witness would prove or was expected to prove, in order to show that the party producing the witness had been prejudiced. In other words, where the witness offered is rejected as incompetent to testify, the court will hold that the party offering the witness has been prejudiced by his exclusion, though the facts he was expected to prove are not stated — the ground of exclusion being one wholly irrespective of the subject-matter of his testimony.

It appears, however, from the bill of exceptions in this case, that John Bates, the witness offered by plaintiffs in error, was not re jected from any supposed incompetency in him to testify in the case, but the rejection was solely on account of the supposed incompetency or irrelevancy of the facts he was offered to prove. It was on account of the subject-matter of his testimony, and not of any legal disability in him to “testify as to facts relevant to the issue. Thus the bill states that the plaintiffs in error produced on the stand one John Bates, and offered to prove by said witness certain conversations that then and there took place between said witness and William P. Reznor, a year *or two prior to the commencement of this suit, and before transfer to plaintiff, in regard to said draft and the liability of the parties thereon; to the admission of all which evidence (not which witness) the plaintiff objected, and the court then and there sustained said exception, and refused to permit the defendant to prove said conversations.”

John Bates then was not rejected as being incompetent to testify; but the subject-matter he was called to establish, was adjudged in-com petent or irrelevant.

It being apparent from the bill of exceptions, then, that the ■ testimony was rejected solely on the ground that the facts which the witness was called to prove were incompetent or irrelevant, all the authorities above cited from Ohio, Maine, Alabama, Eorth ■Carolina, Kentucky, and others which might be referred to in New York, Pennsylvania, and elsewhere, and which are referred to by Collier, O. J., in 1 Ala. 508, require that it should appear affirmatively from the bill of exceptions, not only that error intervened, but also that that'error was prejudicial, in some degree, to the complainant.

It is also a well-settled rule of construction, that bills of exception are to be construed most strongly against the party excepting. Perminter v. Kelly, 18 Ala. 719; Andress v. Broughton, 21 Ala. 204.

And when susceptible of two constructions, that which will sustain the judgment will be preferred. Donnell v. Jones, 17 Ala. 689.

This is but another form of stating the rule that the presumption is always in favor of the validity of the judgment. 40 Maine, 274; 3 Litt. 315; 7 Mo. 293.

To apply these principles to the case at bar, let us inquire whether the plaintiffs in error have made it appear affirmatively in their bill of exceptions:

1. That the court below erred in the ruling complained of.
2. That that error was prejudicial to the plaintiffs in error.

Secondly. Is it apparent from the record and bill of exceptions, that the plaintjffs in error have been prejudiced by the ruling of the district court; or, in other words, is it manifest from the record, that the ruling of that court deprived them of any beneficial testimony ?

They wére prevented, it is true, from proving one or more conversations, which Wm. P. Reznor had held with John Bates in regard to the liability of the parties to the bill of exchange, and this is all which the bill of exceptions asserts — nothing .is stated as to the purport, substance, or effect of those con•versations. Wholly unadvised as to the substance and effect of those conversations, how can we say they would have benefited the plaintiffs in error, if John Bates had been permitted to disclose them ? For aught we know, from the statements of the bill of exceptions, Reznor, in those conversations, may have asserted that the draft was still due and unpaid, and complained of the tardiness of the plaintiffs in error. We must look to the bill of exceptions alone for the information, not only as to the competency, but also as to effect of those conversations. It was the duty of the party taking the exception, the objection being as to the subject-matter offered, to have stated in his bill the substance and tendency of the proof offered and rejected. This might be done by stating the facts he expected to establish, advising *the court of its pertinency to the issue and its materiality to himself. 1 Ala. 508, and authorities cited by Collier, C. J., to this point.

The bill of exceptions affirms that they offered to prove by John Bates, certain conversations of his with Wm. P. Reznor, in regard to the draft and the liability of the parties thereon but does not inform us what it was that Reznor said upon those occasions, in regard to the liability of the parties to the bill. Clearly, such a statement does not make it apparent to the court that the plaintiffs in error were prejudiced by not being permitted to prove conversations, the purport and effect of which are not in any degree disclosed.

Nor will the merely formal statement of the bill of exceptions, that the plaintiffs in error offered proof of the conversations, in order to maintain the issue on their part, in any degree relieve them from stating the purport and tendency of such conversations. Give to this expression its utmost latitude and it merely amounts to this, that the party expected and believed that those conversations would aid him in maintaining his issue. In this he may have been mistaken — may have altogether misapprehended the tendency and legal effect of the conversations he was desirous to prove — and a . disclosure of the substance or effect of the conversations ruled out, might render it apparent to the legal mind that plaintiffs in error were not prejudiced by the suppression of the testimony. It is the fact of prejudicial action on the part of the court, and not the expectation or belief of the interested party, which the law requires, before reversal, and as to which the judicial mind must be satisfied. It is to be borne in mind that the court below did not, in terms, rule out all declarations of Wm. P. Reznor, but only certain, i. e., particular declarations. We do not undertake to say whát would' have been the effect of ruling, that no declarations of Reznor should be given in evidence — which, in some sense, would be analogous to the rejection of a witness as incompetent. *A11 we do-say is, that where it appears that only “ certain conversations ” were ruled out, it must appear, from the record, that the party excepting was, to some extent, prejudiced thereby, and to make this apparent the tendency and effect of the conversations should be set foi’tk in-the bill of exceptions.

We are, therefore, clearly of opinion that the bill of exceptions-does not-disclose such a state of facts, in regard to the rejection of the testimony of John Bates, as will authorize this court to reverse the judgment.

It is also assigned for error that the court erred in rejecting John Bates as a witness offered on behalf of the plaintiffs in error.

This, for the reasons before stated, is not correct. It is apparent, from the bill of exceptions, that John Bates was not prevented by the court from giving testimony to any facts deemed competent and relevant by the court.

The overruling the motion for a new trial, by the district court, “ because the verdict is contrary to the evidence,” is also assigned for error.

This point is not noticed in the argument, and upon an inspection of the record, we have not been able to discover that this objection is well taken.

We are, therefore, of the opinion that the judgment of the district court, now in review, ought to be and it hereby is affirmed, with costs.

Swan, C. J., and Brinkbrhorr and- Scott, JJ., concurred.

Sutliff, J.,

dissenting. The record, as presented, imports absolute verity. The fact of its amendment may or may not explain the reason of the holding of the court below. It is, however, a fact foreign to our inquiries. The members of this court are unanimous in the opinion that the court erred in excluding the proof offered in the case by the plaintiff in error. But it is a rule of law that to entitle the party to a reversal of the judgment, there *must not only be error in the proceedings, but it must also appear to be error to Ms prejudice. Under an application of this-reasonable rule, a majority of the court have come to the conclusion that the judgment below ought not to be reversed.

In that conclusion I find myself unable to concur. I can not avoid the conclusion that, by a fair application of the rules of law to the facts of this case, the judgment of the district court ought tobo reversed; and I will briefly give the reasons that have led me-to this conclusion.

The constitutional provision that no person shall be deprived of his property but by due course of law, as well as the long-established- and well-understood principles of the common law, give to every party to a civil suit in court, a right to introduce proof in support, of the issue of fact, upon his part, on the trial. To exclude, without, cause, a competent witness, introduced to give testimony in support of the claim of the suitor so introducing the witness, is an error-which is presumed to be to the prejudice of the party so wrongfully-denied a hearing of his proof.

A bare statement of the case under consideration is an illustration-of the correctness' of the foregoing proposition.

The suit was brought upon a bill of exchange drawn by Smith,, one of the defendants below, and indorsed by the other defendant, (the plaintiff in error) as an accommodation indorser, for $2,000, upon W. H. Sabin, Esq., of Onondaga Hollow, N. Y., payable thirty-days from date, and dated at Perrysburg, Ohio, December 17,1835.

The plaintiff, John P. Reznor, who had, shortly previous to commencing the suit, obtained the bill of exchange from his brother,. William P. Reznor, insisted, upon his part, that over $1,000 remained due and unpaid thereon. The defendants, Smith and Hollister,, both insisted that the sum had been paid, and their liability fully-discharged, while the paper was in the hands of Wm. P.; and that,. *before transferring it to his brother John P. he had admitted the fact.

The plaintiff, to support his claim upon the trial (which took place in 1854), gave in evidence the bill of exchange, upon which, appeared to have been indorsed, as receipted by Wm. P. Reznor. July 9,1836, the sum of $1,546.50; and also the deposition of Wm. P. Reznor, and the deposition of one Oliver B. Finley, and rested.

The defendants thereupon introduced the witness Bates, “to-maintain the issue on their part,” as the record states, to prove « certain conversations that then and there tools: place between said witness and ffm. P. Reznor (while holding the bill of exchange), .and a year or two prior to the commencement of this suit, in regard to said draft and the liabilities thereon; to the admission of all which evidence plaintiff objected, and the court then and there sustained said exceptions, and refused to permit the defendants to prove said ■conversations.”

The defendants below had the same right upon the trial to prove the admissions of William P., who had continued to hold the bill of •exchange for more than ten years after overdue, in relation to the same having been fully paid, that they would have had if he had continued to hold it and had himself brought the suit upon it. After •so long a time had intervened, the representations of the party so holding the note might be of greatest importance. Owing to the death and removal of living witnesses, and forgetfulness from lapse ■of time, other means of proof must have become greatly diminished .and limited. Under such circumstances, it seems to me almost equivalent to a general denial to the defendant to introduce any proof upon the issue, to prohibit him from introducing the proof he offered in this case. And we all agree that the court below wrongfully excluded this proof.

But the majority-of the court think that the same rule applies to a case of wrongfully excluding competent proof *which is applicable to the case of wrongfully admitting incompetent proof. I do not so understand the rule.

Where the proof is admitted, the proof being before the court can be put on the record and its import and bearing upon the issue •shown; and if the party has been prejudiced, or thinks himself to have been, it is to be presumed that he will avail himself of this .right, and carry the proof into the record. The same remark applies to written evidence, which has been offered by a party, and •wrongfully excluded ; and in both of these cases, I admit, the party -excepting to the ruling of the court, must set forth upon the record •so much of the proof, or its import, as is sufficient to show that he has been prejudiced by such erroneous holding of the court.

But I do not understand that rule as extending to the case of the •exclusion of competent witnesses, as applied in this case. It is impossible for the court or the party to know the import and bearing •of the evidence, until it is uttered; and by excluding the witness, the court precludes the party from putting the evidence upon the ¡record. Suppose the same holding applied generally by that court to all witnesses, admitted to be competent, introduced by the defendants. This court would, of course, be unanimous, as in this-case, that the court below had erred in their holding, in the exclusion of the defendants’ witnesses, so introduced “ to maintain the issue on their part.” And yet, under the application of the-rule, as insisted upon by the majority of the court in this case, the judgment below would be affirmed, for the reason that it did not appear by the record what testimony the witnesses would have given,. if not excluded; whether it would have made for, or against the-defendants. And the court would therefore assume, that the defendants were not prejudiced by being prohibited from introducing-any witnesses on the trial.

Nor can this objection to such an application of the rule by the majority of the court be avoided, by insisting that *the party introducing a witness, might state what he expected to prove by the witness. It would, I apprehend, be a novel rule to the legal profession; not to require the objector to state his objection to a. competent witness, when he made it, but to require the party introducing a competent witness to show causo why he should not. be excluded; and this on a general objection; and without any reason for such exclusion being stated by the objector. But very' often it would not be in the power of the plaintiff to state, in truth, what a witness would testify. The witness may be a friend of the opposite party, and refuse to inform the party subpenaing him, before sworn, what he can or will testify. The party subpenaing. the witness, may have proceeded upon the information that the other party had been in the habit of communicating with the witness freely upon the subject; that the witness had been his clerk, or in such a relation at the time of the transaction as to render it probable that his testimony would be highly important for the-party introducing him; and the very fact of his refusing to hold any communication upon the subject, or inform the party producing him as a witness, in relation to the nature or extent of his-knowledge, under certain circumstances, would be good cause for supposing that his evidence would be prejudicial to the opposite party, and favorable to the party so introducing him. And yet,, under the application of the rule as applied in this case, how would. it be possible for the party introducing the witness, to avail himself of his right to his testimony, when the witness had been so wrongfully excluded ? This court, it is true, say it is error in the--court below excluding him; and we would certainly give you a chance to introduce the testimony in the case, if you had only .given us the substance of the testimony upon the record, and thus -shown us its materiality. But as it is, say the court, we do not know but the witness might have testified only to something foreign to the issue: or, perhaps, adversely to your interest; or even have obstinately stood mute ; and it therefore does not appear from the record that you have been prejudiced by this error of -excluding your proof.

Again, it not unfrequently happens that an impartial and honest ■witness is found who, for some reason satisfactory to himself, refuses to have any communication with either party or 'attorney, in relation to what he can testify; and yet, when introduced and .■sworn, his testimony is found to be of vital importance in the case. And other cases might be mentioned, where, for different reasons, the witness has made no disclosures of the nature and extent of ■the testimony he could give until expressed under oath as a witness upon the stand. But if the court wrongfully excludes the witness in such cases, and refuses to let him be sworn and testify, how can the party spréad upon the record the substance of his testimony? Neither the court nor party have any means of knowing what evi-dence is excluded in. such a case.

I think none of the cases referred to will be found to sustain the rule as applied by my brethren in this case; an'd for the reasons stated, I feel myself bound to dissent from their holding.


source: Caselaw Access Project

author: Sutliff, J.

license: Public Domain

text:
    Gordius A. Hall v. William Williamson’s Administrators.
    in a suit against a surety upon an injunction bond conditioned to pay all moneys due or to become due upon a judgment “for the sum of $2,300 and costs,” in favor of the obligee, against the principal, in case the injunction should be dissolved, under a plea of the general issue — Held,
    1. That the surety was only liable according to the express terms of the bond.
    .2. That it was incompetent for the plaintiffoto give in evidence an exemplification of a record showing a judgment for $2,346.06 and costs, although in other respects answering to the judgment mentioned in the condition of the bond.

      *3. That it was incompetent for the plaintiff to give in evidence a copy of the petition for the injunction.
    In error to the district court of Eranklin county.
    The original action was debt, brought in the court of common pleas of Franklin county, upon an injunction bond made to William Williamson, by James Hampson as principal, and Gordius A. Hall as surety.
    The case was before this court on error, on demurrer to the declaration, at the January term, 1853. 1 Ohio St. 190.
    The case is hero now on questions arising under pleas in bar.
    There is but one count in the declaration of Williamson’s administrators. It sets forth—
    That on the 12th of November, 1842, Williamson recovered a judgment against James Hampson, in the Supreme Court of Fair-field county, for the sum of $2,346.06 damages, and $52.05 costs. That on the 14th of November, 1842, Hampson exhibited his bill in chancery to the judges of said Supreme Court, then still in session, and moved said court for leave to file the same, and for an injunction “against the said William Williamson, to prevent him from the collection of the same judgment at law herein above mentioned and referred unto,” which motion was reserved for decision on the ■circuit in Franklin county. That at the December teim, 1842, of the Supreme Court in Franklin county, leave was given to Hampson to file said bill, “called a supplemental bill,” and “that an injunction should be allowed as prayed for in said bill, on said complainant Hampson executing a bond in three thousand dollars, as the statute required.” That on the 16th of January, 1843, Hampson filed his said bill, 11 in and by which said bill of complaint the said James Hampson alleged and averred the fact of the recovery, in said court, of the judgment at law aforesaid by the said William Williamson ^against him, the said James Hampson,” and prayed an injunction, etc., “to prevent him from the collection of said judgment at law.” That thereupon the said Hampson filed his injunction bond, with said Hall as his surety, in the penalty of $3,000, the bond reciting the judgment as for $2,300, instead of $2,346.06 damages, and $52.05 costs, but (as the declaration alleges) “ meaning the same judgment at law herein first above alluded and referred to.” That afterward a writ of injunction was issued. That the bill was finally dismissed, and the injunction dissolved. That execution was issued, etc.; and the breach assigned is that no part of the judgment “herein first above mentioned” has been paid.
    To this declaration there was a general demurrer. The court of common pleas sustained the demurrer, and gave judgment in favor of the defendant. And for the alleged error of that court in sustaining the demurrer and rendering judgment in favor of the defendant, the case was brought by the plaintiffs before this court, on, petition in error; and the judgment of the common pleas was reversed at the January term, 1853, of this court. 1 Ohio St. 190. Upon reversal, the cause was remanded to the common pleas, and’ Hall put in four pleas in bar, setting out the bond on oyer. A copy of the bond is set out in the opinion of the court.
    1. The first plea is that the bond was never approved as an injunction bond by the clerk in manner and 'form as required by statute. To this plea Williamson’s administrators reply, tendering-an issue to the country. Thereupon, Hall demurs specially, because — 1. No time of approval is set out. 2. The manner of approval is not shown. 3. There is no averment of an indorsement of approval.
    2. The second plea is that Hampson never filed any such bill as-is set out in the declaration.
    To this plea Williamson’s administrators demurred specially, because the plea concludes with a verification.
    3. The third plea is “ that there is not any such record *of the supplemental bill and proceedings and decree thereon, as is mentioned in said declaration remaining in said Supreme Court of the county of Fairfield.”
    To this plea it is replied. “ that there is such a record of the said supplemental bill and proceedings and decree thereon, as the said plaintiffs have in their said declaration alleged, and this they are ready to verify by a duly certified transcript of said record, and pi'ays that the same be inspected by the court here.”
    4. The fourth plea is non est factum, upon which issue was joined.
    On appeal, the district court overruled the demurrer to the replication to the first special plea, and sustained the demurrer to the second special plea'.
    As to the issue of nul tiel record, joined upon the third special plea, the court found “ that there is such a record of the supjfiemental bill and proceedings and decree thereon, as is mentioned in the declaration.”

      As to the issue joined upon the fourth plea of non est factum, the court found against the plea.
    From the bill of exceptions taken at the trial in the district court, it appears that the administrators of Williamson, to maintain on their part the issue of nul tiel record, offered in evidence a certain document purporting to be a transcript of certain proceedings in chancery in the Supremo Court of Fairfield county, between Gordius A. Hall, administrator of James Hampson, and Henry N. Hedges and 'Joash Miller, administrators of William Williamson -r and also a certain other document, purporting to be a transcript of a judgment at law for $2,346.06 and costs in favor of William Williamson against James Hampson, at the November term, 1842, of the Supreme Court of Fairfield county, although in other respects-answering to the judgment mentioned in the condition of the bond; and also parol evidence that there was no other judgment between the same parties at the same term of said Supreme Court, than the judgment first mentioned in the declaration.
    *The defendant objected to the admission of said documents on the ground of variance, and to said parol evidence on the ground of irrelevancy and incompetency. But the objections were overruled as to the documents, and they were admitted by the court But the court did not admit the parol evidence. And the court found said issue with the plaintiffs, and rendered judgment in favor of the plaintiff's as administrators of said Williamson, and against said Hall, for the sum of $3,000 and costs of suit.
    The defendant below excepted to this action of the court below, and now seeks to reverse said judgment.
    The plaintiff in error insists that the district court erred:
    1. In overruling his demurrer.
    2. In sustaining the demurrer of the administrators of Williamson.
    3. In admitting in evidence the transcripts of the record of the judgment, and of the supplemental bill in chancery, etc.; and
    4. In rendering judgment in favor of the defendants in error.
    P. B. Wilcox and N. H. Swayne, for plaintiff in error.

      Henry Stanbery and H. H. Hunter, for defendants in error.
   Sutliff, J.

The bond sued upon in this case, as shown by the record, is of the following tenor:

“Know all men by these presents, that we, James Hampson and <Gordius A. Hall, are held and firmly bound to 'William Williamson an the penal sum of three thousand dollars, to the payment of which we jointly and severally bind ourselves, our heirs, executors, and administrators. Sealed with our seals, and dated this 13th of January, 1843
“ The condition of the above obligation is such that, *whereas the above-named James Hampson hath obtained the allowance of an injunction in the Supremo Court of Fairfield county and State of Ohio, to stay all further proceedings upon a judgment obtained in the same Supreme Court by the said William Williamson against the said James Hampson, at the November term thereof, a. d. 1842, for the sum of $2,300 and costs of suit, until the matters thereof -can be heard in equity. Now, if the said James Hampson shall pay nil moneys and costs due or to become due from him, the said James Hampson, in said judgment at law, and all moneys and costs which shall be decreed against the said James Hampson in case the said injunction shall be' dissolved, then this obligation shall be void; «otherwise in full force and virtue in law. ' '
“James Hampson, [seal.]
“ Gordius A. Hall, [seal.] ”
The action was against the surety, and a recovery could, therefore, only be had against him strictly upon the contract into which, .as such surety, he had so entered. The surety upon the injunction bond, being in nowise liable upon the j udgment, and having received no consideration for executing such a bond as surety, ought not, in •equity, and could not, in law, be holden to the judgment creditor except by force of the obligation, as clearly expressed by the terms -of the bond which he had so voluntarily executed. No principle -of law is better settled, generally, and none has been more explicitly .asserted in this state, than that a surety can only be bound by the terms of his undertaking. In the case of The Bank of Steubenville v. Carroll’s Adm’rs, 5 Ohio, 207, the court say: “ No principle is better settled at the present day, than that a surety can not be further bound than by the terms of his undertaking.” And again in the case of The State v. Crooks & Shaw, 7 Ohio, 573, Judge Hitchcock, in giving the opinion of the court, uses the following language: “No principle is better settled, perhaps^-than that securities *shall not be bound beyond the scope of their undertaking.” In the ease of The State v. Medary and others, 17 Ohio, 554, in giving their opinion in relation to the liability of the sureties upon theif bond, the court say: “The bond speaks for itself, and the law is, that it shall so speak; and that the liability of sureties is limited to the exact letter of the bond. Sureties stand upon the words of the bond, and if the words will not make them liable, nothing can. There is no construction, no equity against sureties. . . . . It is not like a grant, where everything is construed most strongly against the grantor, and where the intent governs, and will be sought after from the object or extrinsic facts, to give such construction to words, as to carry into effect the intention of the parties.” Again, in the case of McG-ovney v. The State, 20 Ohio, 93, the judge delivering the opinion, in remarking upon the liability of sureties, says “ they are mere sureties, and as such, may ■demand to be brought strictly within the terms of the obligation, before they are charged.” Nor is the holding of the. courts of this state different from that of the Supremo Court of the United States, and of other states and other countries, upon this subject. See the cases of Miller v. Stewart, 9 Wheat. 702; United States v. Boyd, 15 Pet. 208; Evans v. Bradley, 17 Wend. 422; Hunt v. Smith, 17 Wend. 180; Arlington v. Merrick, 2 Saund. 403; Liverpool Water-works Co. v. Harper, 6 East, 507; Wardens, etc. v. Bostock, 2 Bos. & Pull. 175, et passim.

It is, then, certain that the liability of the defendant below was 4o be determined solely by the terms of the bond, from which alone his liability sprung. The bond was the only writing signed by the defendant upon which he could be charged with any undertaking to pay the debt, the judgment against Hampson. The terms and conditions of the bond, as therein expressed, must ascertain and determine the liability of Hall.

If that obligation, so entered into by him, made reference to ^a debt expressed by a promissory note or by a judgment, or to any subject, object, or event, as a substantive matter of the contract, proof might and ought to be admitted in relation to such extraneous matter so referred to; but no evidence, by the law of the case, could be admitted to vary or extend the liability of the defendant from the expressed condition and terms of the injunction bond.

When this case came before this court upon a former exemplification of record, the only question submitted to the court seems to have been the sufficiency of the averments contained in the declaration, replied to, as they were, by only a general demurrer.

The majority of the court inclined to the opinion that the averments.in the declaration were sufficient, under a general demurrorthereto, to entitle the plaintiff to recover, and held that the court of common pleas had erred 'in sustaining the demurrer to the declaration. Reference is made in their opinion to the case of United. States v. Maurice and others, as containing an exemplification of the rule, “id cerium est, quod cerium potest,” applicable to the case-then under consideration.

I apprehend, however, if that record had contained a copy of the-injunction bond and condition, there would have been no difference in opinion in the court holding the case then under consideration a very different one from that so referred to.

The case of The United States v. Maurice and others, 2 Brockenbrough, 96, was an action of debt, brought upon a bond executed, in the penalty of twenty thousand dollars, with the following condition : “Whereas, the said James Maurice has been appointed-agent for fortifications on the part of the United States; now,, therefore, if the said James Maurice shall truly and faithfully execute and discharge all the duties appertaining to the said office of agent as aforesaid, then the above obligation to bo void,” etc.; and • the breach assigned in the declaration was, that Margo sums-of money came into the hands of Maurice as such agent, which he was, by the duties of his said office, bound to disburse and account for,'a part of which, namely, forty thousand dollars, he had, in violation- of his duty, utterly failed to disburse to the use of the-United States, or accounted for, etc.

The defendants, the sureties in the obligation, prayed oyer of the bond and condition, and demurred to the declaration. The plaintiff joined in the demurrer.

Chief Justice Marshall, in delivering the opinion of the court, used the following language: “If, instead of specifying the particular purposes for which the money was received, the condition of' a bond refers to a paper which does specify those purposes, I know of no principle of reason or of law, which varies the obligation of' the instrument from what it would be,.if containing that specification within itself. That is certain which may be rendered certain, and an undertaking to perform the duties prescribed in a distinct contract, or in a law, or -in any other known paper prescribing' those duties, is equivalent to an enumeration of those duties in the 'body of the contract itself.”

And there is no doubt that in this case, if the condition of the bond, instead of being expressed, as it is, in the instrument, to pay a certain judgment specified in the instrument, had been to pay a judgment named in a supplemental bill referred to in the condition, at would have been equally good. But the ease presented by this record, containing, as it does, a proferí of the bond and condition, is quite different. Instead of omitting to specify the amount of the judgment in the condition itself, and referring to the supplemental bill for the amount or description of the judgment, the parties have fully expressed the amount in the condition of the bond, and have, in fact, made no reference to the bill of complaint for either the amount or description of the judgment.

But when the demurrer was overruled by this court, the record '*shows that oyer of the bond and condition had not been [26 •craved, nor -proferí of the bond made, and from the averments .made in the declaration, which were admitted by the demurrer, as expressed by the language of the declaration, the majority of the •court seem to have regarded the condition of the bond as containing .a reference to the bill in chancery for the amount. Had the copy •of the bond and condition been before the court, it would have been seen then, as it appears now, that no reference is thereby made to the bill in chancery, and that consequently the plaintiff could not legally give in evidence a copy of the bill of complaint as proof in the case.

This is evident from the fact that it is expressly stated in the ■opinion of the court, that they have carefully ro-examined the case ■of McGovney v. The State (20 Ohio, 93), and are entirely satisfied with that decision, and do not regard it as in the least conflicting with their holding in the case then under consideration.

The exemplification of' the record, as now presented in the case, ■discloses the fact that the supplemental bill, upon which the injunction was allowed, instead of correctly describing the judgment, so .as to correct the description expressed in the condition of the bond, if allowable to refer to it for that purpose, in fact contains no description of any judgment. The plea of the defendant, of nul tiel record as to the supplemental bill, and his plea of non est factum as to the bond declared upon, were well sustained by the proof. And the district court ‘evidently erred in admitting in evidence the transcripts of the record of the bill of complaint, and of the judgment, as well as in finding the issue under the two pleas above mentioned in favor of the administrators of Williamson and against the plaintiff in error, and rendering judgment accordingly. And for this cause, the judgment of the district court must be reversed.

Swan, O. J., and Brinkerhoee, Scott, and Peck, JJ., concurred.


author: Scott, J. Sutlife, J.

text:
    *Nelson Vanatta v. The State Bank of Ohio.
    Banks organized under the “ act to incorporate the State Bank of Ohio and other banking companies,” passed February 24, 1845, have no power, by reason of the restriction of the 64th section of said act to discount negotiable notes, unless their negotiability be restricted by special indorsement.
    When a branch bank assumes to discount a promissory note made payable, by its terms, to such bank, or order, no action can be maintained on such discounted note, either by such branch bank, or, in case of its insolvency, by the State Bank of Ohio. •
    But where a loan of money is effected by the supposed discounting of such paper, an action may be maintained to recover the money so loaned. The-security, being in an unauthorized form, is simply void, and does not discharge the indebtedness arising from the loan which the bank had full power to make.
    In error to tbe district court of Ashland county.
    The original action, the judgment in which is now sought to be-reversed, was brought by the State Bank of Ohio, against Nelson Yanatta and Ealph Yanatta, survivors of Jesse S. Yanatta, upon an, obligation of the following tenor:
    “Newark, Ohio, 28th April, 1852. Sixty days after date, for value received, we, or either of us, promise to pay the Licking County Bank, or order, at its office in Newark, Ohio, thirteen hundred dollars; and we hereby authorize and empower any attorney of any court of record in the United States of America, at any time after the same become dues, to appear in any court within the said United States of America, for us and in our names, and confess judgment in favor of the legal holder hereof for the said amount, interest and costs, and to release all error and the right of appeal, and waive stay of execution on said judgment. Witness our hands and seals, this 28th day of April, a. d. 1852.
    “Jesse S. Yanatta, [Seal.'
    “Nelson Yanatta, 'Seal.'
    “Ealph Yanatta, ’Seal.’

      *The petition avers that the defendants executed to the payee said obligation, at its date, and that afterward, on the 2d of June, 1852, the said Licking County Bank committed an act of bankruptcy, within the meaning of the 24th section of the act entitled “ an act to incorporate the State Bank of Ohio, and other companies,” passed February 24, 1845, under which said Licking County Bank had been organized, and that said plaintiff had thereby become the legal holder of said obligation, and entitled to collect the amount thereof, and that said obligation remains due and wholly unpaid from' defendants to the plaintiff.
    The petition also states, as a second cause of action, that on or about the 21st day of July, 1851, the said Licking County Bank loaned to the said Nelson Yanatta, Ealph Yanatta, and Jesse S. Yanatta, thirteen hundred dollars, which they promised to pay to said bank in four months thereafter; that the said Licking County Bank, on the 2d day of June, 1852, committed an act of bankruptcy, whereby, in virtue of the provisions of the act aforesaid, the plaintiff became entitled to receive said money from the defendants as the survivors of said Jesse S. Yanatta, and that the whole amount of said $1,300, and interest thereon, remains due and unpaid from said defendants to the plaintiff.
    As a bar to the first of these causes of action, the defendants answer, that the Licking County Bank obtained the said obligation by discounting the same, and that at the time it was so discounted and accepted by the bank, it was not, by the terms thereof, payable solely to said bank, but was payable to said Licking County Bank, “ or order,” contrary to the provisions of the 64th section of said act incorporating the State Bank of Ohio, and other banking companies. '
    As a defense to the second cause of action, defendants answer that at the time of obtaining the said sum of thirteen hundred dollars, they, with the said Jesse S., executed *to the Licking County Bank their obligation of that date, in tenor and amount similar to the obligation set forth in the petition, and payable four months from that date, which the said Licking County Bank then and there discounted in the regular course of their business, and paid defendants the amount thereof, less the discount, which payment is the supposed loan of thirteen hundred dollars in the second cause of action mentioned; and that said bank received said obligation in full satisfaction and discharge of said sum of money so paid to defendants by said bank; and that said obligation was, at its maturity, and at sundry times thereafter, renewed ; the last renewal being the obligation set out in the plaintiff’s petition, and constituting the first cause of action therein stated.
    To this answer of the defendants, the plaintiff demurred, claiming that the facts which it sets up do not constitute a defense to either cause of action stated in the petition.
    The cause was taken, by appeal, into the district court, where the demurrer of the plaintiff was sustained, and judgment rendered against Nelson Yanatta, sole surviving defendant, which he now seeks to reverse, for alleged error of the district court in sustaining the plaintiff’s demurrer.

      L. Gase, for plaintiff in error, argued:
    1. The note in suit is in such form as to be negotiable to any person not having notice of the particular transaction out of which it sprung, and hence is in a form which violates the spirit and language of section 64 of the State Bank act, and therefore void, unless the section is directory. But said section is not directory. 12 Wheat. 81; Smith’s Com., secs. 676, 677, 680; 1 Curwen’s R. S., preface, 11, and cases there cited; 2 Cranch, 165, 168; Angell & Ames on Corp. 97, sec. 111; 13 Pet. 587; 4 Hill, 446-448; Bank of Chillicothe v. Swayne et al., 8 Ohio, 257, 289; 13 Ohio, 20.
    2. Under the state of the pleadings, the bank could *not properly recover on the second count for “ money lent.”
    The demurrer to the answer to that count admits that the money claimed as -having- been loaned was the proceeds of a sealed note, payable to the bank or order, and discounted by the bank; and that the note thus discounted was received in satisfaction and discharge of said money so paid; and that the note in suit is the last one, in the course of renewals of the note, so discounted. The case, then, presents the case, not of the loan of money, but of the purchase of a note. See 2 G-reenl. Ev., sec. 120; 18 Ohio, 1, 18, 19; 16 Ohio, 477.

      Buckingham, & White, for defendant in error, argued:
    1. We claim that the note is valid, because its form is in strict compliance with the provisions of the 64th section of the statute in question. It was made payable to the Licking County Bank or order. It was not payable to any other person. It was therefore •payable solely to the bank. The addition of the words “or order ” .did not make it any the less so. Those words only gave to the note such a capacity that the bank might afterward require it to •be made payable to some other person, and that was lawful. But, until the bank did require the note to be paid to some other person, it was strictly — to the letter and to the spirit — payable solely to the bank.
    But if the court should be of opinion that the statute intended -that the note should be without negotiable words, we still say that the non-conformity to the direction of the statute does not make the note void, because: 1. The enactment is merely directory, and a failure to comply does not make the note void. Bank of Kentucky v. Schuylkill Bank, 1 Pars. Eq. Cas. 231; Bank of U. S. v. Dandridge, 12 Wheat. 64, 86; Smith’s Com. on Stat. Constr. 782-796; Ang. & Ames on Corp., 4th ed., sec. 254. 2. This, and every statute, is to be construed so as to carry out and not prevent the main object aimed at (2 Bla. *Com. 321), which was to save the
    bank and its creditors its assets. But to hold the note void diminishes the assets, and thereby thwarts and prevents the very object intended. See Conant v. Seneca County Bank, 1 Ohio St. 298, 309; 12 How. 84, cited in State v. Ex’r of Buttles, 3 Ohio St. 321; U. S. Trust Co. v. Brady, 20 Barb. 120, 121.
    Again, where the contract is not in substance illegal, a person who has entered into the contract and received the consideration shall not be permitted to question the capacity of the corporation to make the contract. Circleville Bank v. Bennick, 15 Ohio, 337; Mott v. U. S. Trust Co., 19 Barb. 568; Steam Nav. Co. v. Weed, 17 Ib. 378; N. Y. Life Ins. & Trust Co. v. Staats, 21 Ib. 570; 10 Eng. L. & Eq. 275; Conant v. Seneca Co. Bank, 1 Ohio St. 298.
    2. If the note is void, then the bank can recover for the money loaned. Robinson v. Bland, 2 Burr. 1077. See also other cases cited in 2 Harrison’s Dig. 3144; 19 Eng. L. & Eq. 26; 21 Ib. 163; Philadelphia Loan Co. v. Towner, 13 Conn. 249; Ang. & Ames on Corp. 193 (ed. 2); Utica Ins. Co. v. Scott, 19 Johns. 1-7; Same Case v. Kip, 8 Cow. 20; Beach v. Fulton Bank, 3 Wend. 573-582; Life & Fire Ins. Co. v. M. F. Ins. Co., 7 Ib. 34; Leavitt v. Blatchford, 5 Barb. 29; Same Case on appeal, 3 Comst. 19, 34; Pelham v. Adams, 17 Barb. 384; Curtis v. Leavitt, Ib. 358, 362.
   Scott, J.

The judgment of the district court must be affirmed unless the facts stated in the answer of the defendants below, constitute a defense to both the causes of action set out in the petition..

It becomes necessary, therefore, to examine the validity of the defense set up in the answer, with reference to each of these causes of action.

And first, is the note described in the first cause of action stated in the petition void by reason of its form, in *being made payable to the Licking County Bank, or order.

The 64th section of the act, under which the Licking County Bank was organized, is as follows: “All notes, bills, and other evidences of debt, except bills of exchange, discounted by any banking company, shall be made by the terms thereof, or by special indorsement, payable solely to said company, and no such evidence of debt shall be assignable, except for collection, or for the following purposes: First. To pay and redeem the circulating notes of such company. Second. To pay other liabilities of said company; and, after such liabilities shall have been discharged, Third. To divide among the shareholders on their stock.” Swan’s Stat. 100. Is the note in question, by its terms, payable solely to the Licking County Bank, within the meaning of this section of the statute?

The legislative intention in this enactment is quite apparent. It was, doubtless, designed to prevent bank officers, in view of the bankruptcy of the corporation, from disposing of its assets in fraud of the rights of creditors and stockholders. To secure this end it requires that the notes and bills discounted by banks shall be nonnogotiable in form, or be made so by special indorsement.

They must be made “ payable solely to said company.” In construing this clause, we are not at liberty to strike out the word “solely” as unmeaning, nor to lose sight of its manifest restrictive import.

The whole effect of the insertion of the word “ solely ” or “ only ” in the indorsement of negotiable paper, is to restrain its further negotiation. Thus, it is said by Judge Story, in his Commentaries, on Promissory Notes, “ Where the indorsement is ‘ Pay to A B only,’ there the word ‘only’ makes it clearly restrictive, and does not authorize a payment or indorsement to any other party.” This, then, being the clear and sole effect of such a restrictive indorsement, must be presumed tc be the purpose intended by the legislature in requiring such special indorsement ^whenever “the terms of the note or bill would not, of themselves, restrict its negotiability. The latter part of the same section permits the-assignment • of discounted notes and bills, other than bills of exchange, only for the use of the banking company itself, in one of' four ways: Eor purposes of collection; for the redemption of its-circulation; for payment of its other liabilities; and for distribution among its stockholders. For each of these purposes such evidences of debt might readily bo assigned without being negotiable in form.

No other construction, than the one which we think the plain, meaning of the terms employed in the statute requires, would put. it out of the power of banking corporations to defeat the intention of the legislature, by making assignments of discounted paper, in fraud of billholders, creditors, and stockholders, and at the same-time secure bona fide purchasers of such paper, against fraud and imposition. The 51st section of the act gives to the banks a general power to buy and sell notes and bills ; the restriction of section 64 relates only to the form of bills and notes discounted, and does-not expressly declare them void, on account of the prohibited form. Whether a discounted negotiable note might not therefore be valid, in the hands of a bona fide purchaser, without notice of the manner-in which it had been acquired by the bank, is, to say the least, by no moans certain. The authorities would, perhaps, justify us in saying that it would be valid in the hands of such bona fide purchaser. Angel & Ames on Corp., sec. 268; 4 Hill, 445, 459; 11 Paige, 635. But were it otherwise, the non-negotiable form in which section 64 requires discounted paper to be clothed, would give full notice to-the purchaser, and thus secure him against imposition.

And, if our construction of the G4th section be correct, We think it apparent.that its language is mandatory, and not directory merely. The act authorizes banks to discount paper only in one mode, andr of course, they can have no power to discount otherwise. They are as effectually ^limited by the statute, in regard to the mode of exercising the power conferred, as they are in respect to-the power itself. Angel & Ames on Corp., sec. 111; 2 Cranch, 165; 13 Pet. 587. Besides, to construe this section as directory only, would render it powerless to prevent the mischief which it was intended to remedy.

Construing, then, the 51st section of the act, which gives to each banking company, to be organized under it, the power of discounting notes, “ except such as it shall be by this act prohibited from .... discounting,” in connection with the limitations of the fi4th section, a majority of the court are satisfied that the Licking -County Bank had no power, under its charter, to discount the note in question, because a negotiable form was given to it, in contravention 'as well of the spirit and policy, as of the terms of the statute. And if, for this reason, the note was void in the hands of the Licking County Bank, no action, could be maintained upon it by the State Bank of Ohio, which, upon' the commission of the act •of bankruptcy, succeeded, by operation of the statute, merely to the rights of the bankrupt corporation..

It remains to inquire whether the answer discloses a defense, •equally available, in regard to the second clause of action, in which the plaintiff socks to recover for money loaned. ' The 51st and Gist sections of' the act before referred to, give to the banks organized under it, power to loan money, and to take interest in advance on .any loan made, at the rate of six per cent, per annum. The answer does not deny that thirteen hundred dollars was in fact loaned to the defendants by the Licking County Bank, less the interest which the law allowed to bo taken in advance. The power of the bank to make such a contract of loan, without taking any written evidence ■of indebtedness was unquestionable. The answer shows the transaction to have been, not the discounting of a valid business note of •a third party, but in fact a loan of money, evidenced by a note drawn in a fohn which the law prohibited, *and wbiqh was void for want of power in the bank to receive it in that .form. The substantial contract of the parties was untainted with usury, or any other illegality; the sole vice was in the negotiable form of the note. As commercial paper, this note was utterly void; the bank could maintain no action upon it; and the statute prohibited its assignment, even if valid, except for the use of the bank. Now, can the defendant be permitted to claim that this void note, in respect to which they stand pari delicto with the bank, shall ■operate as a discharge and satisfaction of a bona fide indebtedness for money loaned ? The case of Miami Exporting Company v. Clark, 13 Ohio, 1, is relied on, as authority, in favor of such a claim. The ■court was not unanimious in the decision of that case ; but without imputiging its authority, we conceive it differed from the case now before us. The vice, in that case, was usury, which tainted not only the paper sued upon, but the contract of loan itself. Independent of the note, the contract was one which the Miami Exporting Company had no power to make. But here, as wo have said, every thing is-legal, except the form, of the paper. In that case, a recovery could not have been had if no note had been taken, but here it is clearly otherwise. Indeed, it is evident, that the court in that case would not have permitted void paper to extinguish or discharge a valid, debt; for they say: “As to the point, that if the original loan, was tainted with usury, the plaintiff might recover upon the common counts, although the subsequent paper was so tainted, we believe no difference of opinion exists."

We think the whole object of the requirement of the statute, as-to the form of discounted paper, is accomplished, and indeed can only be attained by holding that securities, taken in a prohibited form, are simply void, and do not affect the independent rights or-liabilities of the parties. The mischief intended to be remedied is thus guarded against, while the bona fide assets of the bank are preserved for the benefit of billholders *and creditors. A party should not be permitted to plead his own violation of the law as a discharge from legal obligation to pay an honest debt. The authorities are numerous, both in this country and in England, in support of the principle that money loaned on a written security which the statute makes void, may be recovered in an action on the-common counts. Indeed, I am aware of no authority to the contrary, where the vice of the paper is merely in its form.

The judgment of the district court is affirmed.

Swan, C. J., and Brinkerhoee and Peck, JJ., concurred.

Sutlife, J.

I concur with my brethren in the opinion expressed in this case, that the judgment below ought to be affirmed; but I. can not assent to the reasons expressed in that opinion for the affirmance. I will therefore briefly state my views of the case:

The defendants'below urged, as a defense to each cause of action set forth in the petion, the alleged fact that an obligation was taken for money loaned by the Licking County Bank, which, in form,, was in contravention of the statute law of the state, and that the note was taken by the bank in consideration of, and in satisfaction-for, the loan.

If the obligation was, in fact, accepted by the bank in contravention of the statute, so as to be thereby rendered void, obviously an action could not have been maintained thereon by the Licking, ■County Bank; nor would the State Bank, as the assignee of that 'bank, have any superior right of action upon the obligation. And if this objection can be sustained to the right of recovery upon the •first cause of action, so long as the doctrine held in the case of the Bank of Chillicothe v. Swayne et al., 8 Ohio, 257, and in the case of Miami Ex. Co. v. Clark, 13 Ohio, 1, shall continue to bo ad-hered to, the same facts would seem ^equally ajjplicable as a •defense to the second cause of action.

Let us then proceed to examine the question upon which the whole defense rests. Is the form of the obligation sued upon prohibited by sec. 64 of the act to incorporate the State Bank of Ohio, ■etc., referred to ?

The provisions of that section are as follows:

“All notes, bills, and other evidences of debt, except bills of exchange discounted by any banking company, shall be made, by the terms thereof, or by special indorsement, payable solely to said •company; and no such evidence of debt shall be assignable except for collection or the following purposes :

“ 1. To pay and redeem the circulating notes of such company.

“ 2. To pay other liabilities of the company; and after such liabilities shall have been discharged,

“3. To divide among the shareholders on their stock.”

Hoes the obligation set forth in the petition come within the provision of this statute ? It certainly is not included in the language ■of the statute. The Licking County Bank is the only payee expressed in the terms of the obligation. The obligation is therefore payable by the language therein expressed, “ by the terms thereof . . . . solely to said company.” Such was the terms of the obligation when received by the Licking County Bank, and such, .as appears by the pleadings, are still the terms thereof.

And the provisions of the statute in this case being urged as a penal statute in effect by the defendant, to work a forfeiture of the money lent, the plaintiff was entitled to the benefit of a strict construction of the statute. The defense which the defendants seek to .avail themselves of, being one only of strictissind juris on their part, and utterly wanting in equity, must be clearly shown, in order to entitle them to the benefit of such defense.

The statute has not, in its provisions, prescribed anjform *in whieh the notes or obligations to the banking companies should be •drawn ; and the banking companies are not by the provisions of this statute, as expressed, prohibited inserting in the notes or obligations, payable to themselves respectively, after the name of the j)ayee, the words, “ or order.” Without those words the obligation would be obviously, in this case, payable solely to the Licking County Bank. With those words, no one can say that the obligation has become payable, “by the terms thereof,” to the Licking County Bank jointly with any other payee; nor has the obligation, by the terms thereof, become payable to any oilier payee; but it still remains, by “the terms thereof,” payable solely to the Licking County Bank.

Again, the language of this section of the statute does not require absolutely that the obligation should be made payable solely to the bank by the terms thereof. The provision of the statute is in the alternative. The language is, “all notes, bills,” etc., “shall be made by the terms thereof, or by special indorsement, payable solely to such companj’’,” etc. Now, if this obligation had been made by the defendants payable to Jesse S. Yanatta, or order, and had been by him specially indorsed to the Licking County Bank, the paper would have been as strictly within the letter of the provision of the statute, as if the obligation had been made payable to the bank, and without the words “ or order.” It therefore appears from the language of section 64, not only that the words “ or order ” are not prohibited, but that they are clearly, by implication, permitted. Nor is the note or obligation assignable or negotiable by the banking company, by reason of the words “ or order,’’ except in the cases provided in the conclusion of that section.

The object of section 64 is shown by the next section, which provides that “all transfers of the notes, bonds, bills of exchange, and other evidences of debt, owing to any banking company,” , . . . “ made after the commission of an act of insolvency, or in contemplation thereof, *with a view to permit the application of its assets in the manner prescribed by this act, or with a view to .the preference of one creditor to another, except in the payment of its circulating notes, shall be held utterly null and void.” It thus appears evident that the object of section 64 was to have the notes and other evidences of indebtedness received by the banking companies, either upon the face of the instrument, or by the indorsement thereon show the proprietorship of the bank to the paper, at the time of the same being discounted by the bank. The same section prohibiting the bank from assigning the paper, except for the purposes named in said section, takes away the negotiable character of the paper, except for the particular purposes specified, and tends to prevent the transfer thereof in violation of the provisions of section 64, above mentioned.

The object of both sections is evidently to thereby both protect the billliolders and creditors of the bank, by more certainly securing-the assets of the bank and compelling their application to the honest and equal payment of its creditors in the manner proscribed by said act.

Having the object of section 64 thus plainly exj>ressed, oven if it. wore doubtful whether the bank had authority to receive and collect such an obligation as this, the rules of interpretation applicable, in such cases, to give effect to the entire act so far as practicable, “ut res magis valeat quam pereatfi would require us to hold the obligation valid. It should appear very clearly that the bank is, by the terms of the section referred to, prohibited taking an obligation, in such form, before we could be authorized to give such a construction to the law as to work a forfeiture of the money lent, and “preclude the plaintiffs from a recovery in this case; especially when such a construction would evidently militate against the-object of that section, by diminishing instead of protecting and-saving the assets of the banking company.

The main object of the provision being to prevent the note and like assets of the banking company being ^diverted from their-legitimate object, that of meeting the legal liabilities of the institution, the provision ought to bo construed so as to carry out its-object. And this section 64, having taken away the negotiability of all such notes payable to, or indorsed to the banking company,. except in the cases specified, in any other cases the notes would not be negotiable, even with the words “or order.” The oar-mark put upon all this kind of paper, is the name of the hank expressed as payee or indorsee thereof. When upon the face of the note or the indorsement it is Shown to belong to the bank, all persons are thereby notified that the same can only be assignable for collection,, to pay the indebtedness of the bank, or as a dividend to shareholders of the stock of the bank. And for those three purposes the-provisions of the act, as indicated by its language and object, intended that such notes should be assignable by the bank.

The act contemplates that, for the purposes of collection, a bill, or promissory note, payable in London or Paris, or at any other place, and necessarily to bo sent there for collection, may be assignable. If payable to the bank “ or order,” and assigned to the foreign agent of the bank, it might be by him very readily collected. But if the bill or note is to be destitute of words of negotiability, of what avail is an assignment? It must still be sued in the name of the bank. In like manner, section 64 provides that the note or bill so payable or indorsed to the bank, may be assignable to pay the liabilities of the bank. But if a merchant residing in London, wore willing to accept a bill or note for $10,000, payable in London, and which the bank could procure of a debtor, in payment of notes of the bank to that amount held by the merchant, he would doubtless require the indorsement of the bill to be made in the usual form. And the very fact that the negotiability of the bill was to be distinguished, in its terms or indorsement to the bank, by the suppression of the words “or order,” might utterly defeat the negotiation of the paper in the very cases ^contemplated by the statule as lawful and proper. And even if an assignment in such a case could be effected, the taking away the negotiability of the paper must necessarily depreciate its value, and the assets of the bank would be thereby so far forth impaired, instead of improved, by the operation of the statute. For, the possibility of the maker of the note or drawer of the bill, in such a case, setting up some defense against the paper, which he could not, if it were negotiable; and the consideration that the only legal right of action upon the-paper was to remain in the bank, and perhaps by a forfeiture of its franchise, or in some other-way to bo defeated, in consequence of the paper not being negotiable, are considerations which must necessarily reduce the valtie of such paper. And thus, while the express provision of the statute is, that the paper shall be assignable for the four purposes specified, this construction of the statute greatly embarassos, and tends to prevent such assignments for either of the purposes specified. Whether, therefore, we look only to the provisions of section 64, or whether we have respect to the reason and object of the enactment as shown by the context, as well as by that section, I find myself unable to concur in the opinion arrived at by the other members of the court, as to the validity of the note. On the contrary, I am of opinion that the note or obligation set. forth in the record, by a fair and reasonable construction of section 64, is not in contravention of its provisions.

Nor can I perceive how the present case is to be distinguished .■from that of the Miami Exporting Company against Clark, if that decision is to be still regarded as law, so as to authorize a recovery ■in this case upon the common counts, if the note were void. In "the case of the Miami Exporting Company v. Edmund Clark, 13 •Ohio, 1, the only defect in the bills of exchange received for the .money loaned by the bank, was want of power, on the part of the bank, to accept such bills. The bank was only ^empowered to take six per cent, interest upon its loans; the form of its notes being neither prescribed nor prohibited in any respect. But the court held in that case, that inasmuch as the bank had received a written memorandum of the agreement for the repayment of the loan, which was not in such terms as the bank was authorized to make, therefore the same was to be regarded as invalid; and further, that although the suit was against the man who had borrowed the money, the bank could not, in that case, recover back the money under the common counts.

In this case the majority of the court insist that the bank not only had no power to accept a note negotiable in form, such as here ■sued upon, but that the bank was actually prohibited taking such a note, and that the same is therefore invalid. In this state of the case, the bank does just what it did in the suit against Clark, when the note was declared invalid; it asks to recover, on the common counts, the money actually lent, and legal interest thereon; and the court in this case, without questioning the correctness of that, permit the plaintiff to recover independent of his note, which they ■declare invalid. I confess if I were to regard this note as one prohibited by statute, and invalid, I should be unable to reconcile the decision, that this plaintiff could then recover upon the second cause of action, under the rule laid down in that case against Clark.

For when it is well known that there were no usury laws in this .•state, but that the state was, under statute law, both paying and receiving a larger interest at the same time than the Miami Exporting Company was authorized to receive, or in fact contracted for, all that is said about the contract in that case being usurious, fainted with usury, etc., is simply gratuitous. All that could be (urged in that case as a legal objection to the plaintiff’s right to recover upon the common counts, I think would very clearly exist (against a right to recover in this case, if the note is to be considered ;as made in contravention of the statute.

*But I regard the note sued upon in this case, to be in conformity with the provisions of section 64, and valid. And I therefore concur in the opinion expressed, that the judgment of the district court should be affirmed.