author: Williams, J.

text:
    Ambrose, Adm’r., et al. v. Byrne, Ext’r.

      Judgment lien — On debtor's land at his death — Issue of execution not necessary, when — Lien takes priority in proceeds of land— Limitations as to time op action against executors.

    1. Where a judgment is a subsisting lien on the lands of the debtor at the time of his death, it is not necessary thereafter to issue execution upon it in order to preserve the lien. It is entitled to share in the proceeds of the land, when sold by the personal representative, according to its priority at the time of the debtor’s death, although execution be not issued thereon within five years from its rendition or the date of the last execution.
    2. The allowance of the claim by the personal representative, or its presentation to him for that purpose, is not requisite to the judgment creditor’s right to share in the fund.
    3. Pleading the lien by the judgment creditor in an action brought by the personal representative to sell the land for the payment of debts, is not the commencement of an action within the purview of the statute limiting the time within which actions may be commenced against executors and administrators.
    (Decided October 31, 1899.)
    Error to the Circuit Court of Franklin county.
    On the 21st day of July, 1888, Luke G-. Byrne, as executor of the last will and testament of Elizabeth J. Kent, deceased, commenced an action in the court of common pleas to bring to sale the real estate of which the testatrix died seized, for the payment of her debts, she having left no personal property of any consequence. Charles Higgins, and Edward J. Dowdall as executor of the estate of Joseph Dowdall, deceased, who, it was alleged, claimed a judgment lien on the land, were made defendants. Their lien was set up by Higgins, and Samuel Ambrose who had become the administrator de bonis non of-the estate of Joseph Dowdall, by filing the following pleading:
    “The said Ambrose, as such administrator, and the said defendant, Charles Higgins, jointly represent to the court that heretofore, to-wit: on the 24th day of October, 1876, in a certain action in this court then pending, wherein the Central Bank of Columbus, Ohio, was plaintiff and the said Elizabeth J. Kent, then in full life, this defendant, Charles Higgins, and the said Joseph Dowdall, then in full life, were defendants, prosecuted upon a certain promissory note, upon which the said Elizabeth J. Kent was principal and the said Joseph Dowdall and said Charles Higgins were her sureties, said Bank recovered a judgment against the defendants to said action, by the consideration of this court, upon said note, for the sum of $201.30, with interest thereon from that day, together with its costs therein expended, taxed at $10.10. On the 14th day of November, of said year 1876, the said Central Bank, caused an .execution to be issued upon said judgment to the sheriff of said Franklin couty, Ohio, who, for want of goods and chattels of the said Elizabeth J. Kent, whereon to levy for the satisfaction thereof, levied the same upon certain real estate then owned by the said Elizabeth J. Kent, in said county of Franklin, of which real estate the premises described in the petition form a part.
    Afterwards, to-wit: on the 20th day of April, A. D., 1880, the said Central Bank sold and assigned to the said Charles Higgins and the said Joseph Dowdall, said judgment for a full and valuable consideration, and the said Charles Higgins and the said Joseph Dowdall became the owners, both at law and equity, of said judgment. After-wards, to-wit: on the 1st day of November, A. D., 1881, said Charles Higgins and said Joseph Dowdall caused an alias execution to be issued on said judgment against the said Elizabeth J. Kent, which said execution was returned unsatisfied.
    The said Elizabeth J. Kent died in 1883, as averred in the petition, and said judgment lien acquired by said judgment and the levy of execution on said real estate, was in full force at the time of the death of said Elizabeth J. Kent, and has ever since so remained, the same not having been paid, either in part or whole, and there is due and payable thereon to this defendant, the said Charles Higgins, and the said Samuel Ambrose, as administrator as aforesaid, jointly, from the estate of said Elizabeth J. Kent, the sum of $211.40, with interest thereon from the 24th day of October, 1876. These defendants, therefore, say by reason of the sale and assignment, of the said judgment by the said Central Bank to the said Charles Higgins and the said Joseph Dowdall, that they should be, here, subrogated to all the rights of the said bank in and to the said judgment at the time of the said sale, and should now be, here, adjudged to hold both a lien at law and in equity upon said real estate to the extent of said judgment, with interest thereon as aforesaid, together with the amount of said costs.
    These defendants, therefore, here pray that the court may find and adjudge their said claim to be a valid lien on said premises, and that the said executor may be ordered to allow and pay the same out of the proceeds of said property, when sold by him, according to its priority, with other liens thereon. These defendants pray for such other and further relief to which in the premises they may be entitled.”
    The court of common pleas sustained a general demurrer filed by the plaintiff to this pleading, and dismissed the same; and that judgment was affirmed by the circuit court.

      G. J. Marriott, for plaintiffs in error.
    That the judgment was not dormant at the time of Mrs. Kent’s death is apparent. An execution issued and was levied upon said premises on November 14, 1876, which kept the judgment alive until November 14, 1881.
    The execution issued on November 1, 1881, kept the judgment alive until November 1, 1886 long after Mrs. Kent’s death on March 15, 1883. See section 5380, Revised Statutes.
    The judgment not being dormant at the time of Mrs. Kent’s death, could the lien thereof be lost, thereafter, on account of the failure to issue another execution thereon? We say not, for the policy of the law is not to allow executions to be levied upon the property of a deceased person for the payment of his debts, but on the contrary, to work out the settlement of his estate through the administration laws. Where an execution cannot be levied, the law does not require the suing out thereof merely to keep alive a judgment lien. Massie v. Long, 2 Ohio Rep., 287; Cartney v. Reed, 5 Ohio Rep., 221.
    No creditor can work out the payment of a lien for a debt upon a deceased person’s property, except through an executor or administrator.

      The executor or administrator is required to sell the real estate of the deceased to pay debts where it is necessary so to do-. See section 6136, Revised Statutes.
    From the time of the death of a party owing debts and leaving an estate, his property from that moment is in the custody of the law for administration. See section 5994, Revised Statutes.
    The statute declares how money arising from the sale of real estate by an executor or administrator to pay debts, shall be distributed. See section 6165, Revised Statutes.
    It is a fact that the judgment lien was in full force at the time of the death of Mrs. Kent, and we contend that it could not become dormant thereafter, within the meaning of that term, and thereby defeat the payment of the lien by the executor, in the distribution of the proceeds of the sale of the premises. Webster v. Dennis, 4 C. C., 313; Scott v. Dunn, 26 Ohio St., 63.
    It is true the executor did not file his petition to sell the real estate of the deceased for some five years after her death, yet this fact does not affect the question in the least. It was the duty of the executor to file his petition as soon as he discovered that the personal property was not sufficient to pay the debts. Whether he made his application therefor as soon as he should have done, is a matter of no consequence, so far as plaintiffs in error are concerned, if we are right in our contention.
    Section 5380 forms a part of the general statutes relating to civil actions in the common pleas courts and the enforcement of judgments therein against those living, but has no application to the collection of judgments against parties subsequently dead. It is general in its provisions and application, and does not interfere with the provisions of a statute relating to a special subject and providing for a particular matter.
    Section 6165, Eevised Statutes, is in the nature of a special statute, relating to a special subject, to-wit: that of the distribution of the proceeds of sales of real estate made by executors or administrators to pay debts of deceased persons.
    It does not and cannot apply to the distribution of the proceeds of sales of real estate in any other cases, and hence is special in its application.
    It is a well-known rule of construction of statutes, that where there is a general provision in regard to the method of procedure regarding several subjects, followed by a special provision as to the procedure in regard to one or more of such subjects, the special provision will govern. Tyler v. City of Columbus, 6 C. C., 228; Crawford v. McGregor, 44 Ohio St., 628.
    In the case of the revivor of a dormant judgment under section 5369, Eevised Statutes, against the real or personal representatives of a deceased judgment debtor, the statute clearly contemplates a judgment that had become dormant prior to the death of the judgment debtor. The object is to re-instate the judgment lien upon the lands upon which it operated of the deceased, as of the date of the order or the filing of the petition therefor.
    A judgment lien which had become dormant in the lifetime of the judgment debtor, could not be enforced against his real estate after his death except by revivor, at the date of which, it is revived with all of its incidents as between the parties. Norton v. Beavor, 5 Ohio, 178; Minor v. Wallace, 10 Ohio, 403; Hutchinson v. Hutchinson, 15 Ohio, 301; Tucker v. Shade, 25 Ohio St., 358.

      The death of a resident of Ohio owning real estate therein incumbered with liens, and the appointment of an administrator or executor to settle his estate, is of kindred character to the filing of a creditor’s bill to sell real estate of a judgment debtor where all of the holders of liens thereon are made parties. Judgment creditors who are made parties thereto and whose liens are not dormant at the beginning of the action, are not affected by their liens becoming dormant pending the action. Lawrence v. Belger, 31 Ohio St., 175; Dempsey v. Bush, 18 Ohio St., 376.
    The statute of limitations does not run against the revivor of a judgment until the lapse of twenty-one years after it becomes dormant. See section 5368, Revised Statutes.

      W. H. English and Luke G. Byrne, for defendant in error.
    The language employed in section 6165 does not pretend to amend, vacate or modify section 5380 in any particular, and the legislature in its passage certainly had no intention of so doing.
    Repeals by implication not favored. 12 Ohio St., 263; 15 Ohio St., 573; 34 Ohio St., 194.
    Intent to repeal statute must be explicit 46 Ohio St., 178.
    In order for the plaintiffs in error to get a decision in their favor, they must get around the provisions of section 5380. This is imperative. They undertake to do so, by or through section 6165, and we think it clear that there is absolutely no want of harmony between these two sections.
    The theory of the law is, that when a person dies his property passes, for the purpose of paying the debts of the deceased, according to tbeir priorities at his death. Priorities cannot be established, fixed or changed after the death, by anything the creditor may do, but priorities may be lost by the creditor, for failing to do what the law requires to be done by him.
    Messrs. Dowdall and Higgins had their remedy and could have revived the judgment after it became dormant, by a proceeding against the devisees of Mrs. Kent and her executor, had they seen proper so to do, by following section 5369 of the Revised Statutes. Peters v. McWilliams, 36 Ohio St., 155.
    We are not able to discover that counsel in his argument attempts to assign any cause whatever for not taking the course laid down in the Statutes to revive the judgment, and neither does he pretend to cite us to an Ohio case, or any other authority, justifying his claim that section 5380 has its exceptions and that his case comes within them. -(40 O. S., 120.)
    . Under section 5380, the continuance of the lien was limited to five years from the date of the last execution, to-wit: November 1, 1881. Before this period of five years had elapsed Elizabeth J. Kent died (in 1883), but her death, after the period of limitation had partly run, did not interrupt the running of the Statute. Granger v. Granger, 6 Ohio, 35; Irwin v. Garretun, C. S. C. R., 533; Bartlow v. Kennard, 38 Ohio St., 374.
    Our statute contains no provision by which its running is to be interrupted after it was once commenced.
    When the statute of limitations begins to run, it continues to run without interruption from any subsequent disability. 13 Ohio, 181; 20 Ohio, 250; 1 Ohio St., 478; 38 Ohio St., 374; 1 C. S. C., 533.
    When it begins to run against an ancestor it continues to run against the heir, though an infant. 1 Ohio St., 478.
    This statute is no longer viewed with disfavor by the courts. 51 Ohio St., 213.
   Williams, J.

The principal question to which the arguments of counsel have been directed is, whether the lien of the judgment set up by the plaintiffs in error was lost by their failure to have execution issued upon it within five years from the date of the last preceding execution.

On the one hand, it is contended by counsel for the defendant in error, that the judgment below holding the lien was so lost, is in accordance with section 5380 of the Eevised Statutes, which provides that: “If execution on a judgment be not sued out within five years from the date of the judgment, or if five years intervene between the date of the last execution issued on such judgment and the time of suing out another execution thereon, such judgment shall become dormant and shall cease to operate as a lien on the estate of the judgment debtor.”

On the other hand, it is the claim of the counsel for the plaintiffs in error, that under section 6165, the fund arising from the sale made by the executor should be distributed to the liens in the order of their priority as they existed at the time of the testatrix’s death. That section reads as follows: “The money arising from the sale of real estate shall be applied in the following order:

“First. To discharge the costs and expenses of the sale, and the per centum and charges of the executor or administrator thereon, for his administration of the same.
“Second. To the payment-of mortgages and judgments against the deceased, according to their respective priorities of lien, so far as the same operate as a lien on the estate of the deceased, at the time of his death; which shall be apportioned and determined by the court, or reference to a master or otherwise.
“Third. To the discharge of claims and debts, in the order mentioned in this title.”

Though these two sections are found in different divisions of the codification of the statutes, they are so in pari materia that they should be construed with reference to each other, and so that each may receive its appropriate effect. There is some apparent discrepancy between them, but it is not wholly irreconcilable. The former contains the general provision with respect to the dormancy of judgments, and the steps necessary to keep their liens alive; while by the latter, special provision is made in regard to the manner judgment and other liens shall be paid, and the order in which they shall be entitled to share, in the distribution of trust funds in particular cases. And, in accordance with a well-settled rule, the special provision may be regarded as an exception to the more general one, and as controlling in the particular class of cases to which it relates. Doll v. Barr, 58 Ohio St., 113, 120. It becomes of some importance then, to determine the proper scope of section 6165. Some confusion arises from the use of the word “operate” in the second clause; and the courts below transposed the language to read as follows: ‘‘To the payment of mortgages and judgments against the deceased, according to their respective priorities of lien, at the time of his death, so far as the same operate as a lien on the estate of the deceased:” * thus using the word “operate,” in the present tense, that is, as of the time of distribution, or. the commencement of the action to sell the land; and holding that a judgment lien not kept on foot until that time by executions issued thereon every five years, is not entitled to payment out of the fund arising from the sale of the land, although the lien was a subsisting one at the time of the judgment debtor’s death. The confusion in the section largely disappears when the letter “d” is added to the word “operate;” and that, we find was the form of the section at the time of the codification, and had been since the administrator’s act of 1831. 3 Chase, 1781, S. & C., 594. The dropping of that letter in the codification may have been accidental; but if not, we cannot presume it was intended to change the meaning and construction of the statute. In that form of the section the transposition of its language alluded to is of no importance. Reading it as so transposed, or without making the transposition, the section requires the payment of the liens out of the proceeds of the sale in the order of their priority as they existed at the time of the decedent’s death; and. that requirement cannot be complied with unless they are treated as subsisting liens on the fund, in that order, when the distribution is made. There is much reason why that should be so. The death of the debtor stops ordinary process, and administration becomes the appropriate proceding for the payment of his debts. And, though there may be cases where judgment creditors who obtained a levy on the land of the debtor before his death have been allowed to proceed thereafter to sale and confirmation, yet that is an extraordinary remedy which may complicate administration and prejudice the rights of the heir or devisee. The personal estate is nevertheless the primary fund for the satisfaction of liens, as well as other debts of the deceased; the title of the personal representative to the assets, whenever appointed, relates back to the time of the death, and in contemplation of law the estate is in process of administration from that time; the real estate, so far as may be necessary to pay any lien upon it, or other debt, becomes assets in his hands, and, the proper and usual method of subjecting it to the payment of the liens is by a proceeding* of the personal representative for that purpose. The law malees ample provision for such proceedings, and enjoins the duty of diligence on the representative, with a view of bringing the estate to a speedy settlement; and the prompt performance of that duty, the lien holder has the right to expect, and may accordingly rely on the security of his lien as it existed at the time of his debtor’s decease.

In this respect, the consequences of the transfer of the debtor’s property by operation of law, upon his decease, are much the same as those resulting when a voluntary assignment of property encumbered by liens is made by a debtor for the benefit of his creditors. In each case the trust attaches at once to the property, its administration is under the control of the court, and similar specific regulations are prescribed by statue for the disposition of the property, the adjustment of the liens, and the payment of the creditors. It was held, in Scott v. Dunn, 26 Ohio St., 63, that in the case of an assignment, “the priority of judment liens is to be determined as the liens existed at the time the assignment took effect.” The question was whether a judgment which was the superior lien on land at the time of its assignment for the benefit of creditors, lost its priority over a junior judgment, also a lien on the land, by the failure to have execution issued upon the former within a year from the date of its rendition. The year had not expired when the assignment took effect, but thereafter expired before the sale of the property by the assignee. The following is the provision of the statute, under which it was held the liens were preserved as they existed when the assignment took effect: “The probate court shall order the payment of all incumbrances and liens upon any of the property sold, or rights and credits collected, out of the propceeds thereof, according to priority, provided, that the assignee may, in all cases where real estate to be sold is incumbered with liens, or where any questions in regard to the title require a decree to settle the same, file his petition for the sale of such real estate, in the court of common pleas of the proper county, making all persons in interest parties to .such proceedings; and, upon hearing, such court shall order a sale of the premises, the payment of incumbrances, and determine the questions involved in regard to the title to the same; and the proceeds of the real estate so sold by order of the court of common pleas, after payment of liens and incumbrances, as ordered by such court, shall be reported to the probate court by the assignee, and disposed of as provided in this act.” S. & S., section 9. And the statute then in force relating to the order of liens among judgments, now section 5415, of the Revised Statutes, provides that: “No judgment on which execution is not issued and levied before the expiration of one year next after its rendition, shall operate as a lien on the estate of the debtor to the prejudice of any other bona fide judgment creditor.”

It may be observed that the statute which was held to fix the legal status of the liens on the assigned property as of the time of the taking effect of the assignment, does not do so with more certainty than are the liens preserved on the judgment debtor’s land as they existed at the time of his death, by the provisions of section 6165. And section 5115 is not less explicit in its provision that judgments shall cease to operate as liens in the given cases by failure to comply with its requirement, than is section 5380 when its provisions are not met. So that, upon the question here involved, this case seems indistinguishable in principle from that of Scott v. Dunn, supra.

It is also contended the demurrer was properly sustained, because the claim of the plaintiffs in error was not presented to the executor for allowance; and, furthermore, that it was barred, because the pleading was not filed within the time required by section 6113 of the Revised Statutes, after the executor qualified and gave notice of his appointment. Neither position appears to be tenable. The requirement of section 6115, that the executor make distribution to the lien of the plaintiffs in error according to its priority at the time of the testatrix’s death, dispensed with any necessity for its presentation for allowance, if it' were otherwise required. And pleading the lien, in the action brought by ihe executor, in order that it might receive its proper share of the proceeds of the land on which it was charged, is not the commencement of an action against the executor within the purview of the statute which limits the time for bringing actions against executors and administrators.

Judgment reversed and cause remanded.


source: Caselaw Access Project

author: Shauck J.

license: Public Domain

text:
    Stafford v. The Produce Exchange Banking Co.

      Savings and loan corporation — May reserve in its certificate lien— On stock to secure debt of holder — Such lien applies to transferee

    A corporation organized to do the business of a savings and loan company may, by an express stipulation in the certificate of stock by it issued, reserve a valid lien upon the stock to secure the debts of the holder to it; and such lien may be asserted against a transferee who receives the stock before, but does not present it for transfer on the stock book of the company until after, the original holder becomes indebted to the corporation.
    (Decided October 31, 1899.)
    Error to the Circuit Court of Cuyahoga, county.
    The cause was tried on appeal in the circuit court. Plaintiff sought a decree to compel the defendant company, a corporation, to transfer to him certain of the shares of its capital stock which had been issued by it to one C. A. Lauer and one M. Lauer, and by them assigned, the plaintiff being at the time the holder of the stock. The defendant refused to make the transfers because of the indebtedness of the Lauers to it when the certificates were presented by the plaintiff and the transfer demanded. Upon appropriate issues of fact joined the circuit court made the following finding of facts:
    First. Defendant was organized on the 25th day of September, 1889, and its articles of incorporation are in the words and figures following, to-wit: State of Ohio. These articles of incorporation of The Produce Exchange Banking Company, witnessefh: That we, the undersigned, all of whom are citizens of the State of Ohio, desiring to form a corporation for profit under the general corporation laws of said State, do hereby certify: First, the name of said corporation shall be The Produce Exchange Banking Company. Second, said corporation is to be located at Cleveland, in Cuyahoga county, Ohio, and its principal business there transacted. Third, said corporation is formed for the purpose of receiving money and other property on deposit, and to loan and invest its capital and money received on deposit by it, to do the business of a savings and loan company, and to do and peform all things connected with and incidental to the carrying out of the- purpose of the company. Fourth, the capital stock of said corporation shall be two hundred thousand dollars ($200,000) divided into two thousand (2,000) shares of one hundred dollars ($100.00) each. Second. On the 10th day of February, 1890, defendant issued to Martin Lauer, certificates for 20 shares of its capital stock in the words and figures following, to-wit: “No. 145, 20 shares The Produce Exchange Banking Company. Capital stock $200,000. 200 shares $100 each. This certifies that M. Lauer is the owner of twenty shares in the capital stock of The Produce Exchange Banking Company of Cleveland, Ohio, on which fifty per cent., being fifty dollars per share, has been paid, transferable only on the books of the company in person or by attorney on the surrender of this certificate. Not transferable by any stockholder liable to this company, as principal debtor or otherwise without consent of the board of directors.” Third. On or about the first day of March, 1890, the certificate referred to above was pledged to the Woodland Avenue Savings and Loan Company by Martin Lauer to secure an indebtedness of $5,000. Fourth. On the 28th day of March, 1891, Martin Laner became indebted to tbe said defendant bank in the sum of $2,500.00, which indebtedness remains unpaid. Fifth. On or about the 19th day of February, 1895, said certificate of stock so pledged to the Woodland Avenue Savings and Loan Company, was sold by it, and the proceeds applied upon its loan, the certificate being purchased by the plaintiff herein for and on behalf of said Woodland Avenue Savings and Loan Company, for which he now holds the same. The proceeds of the sale of said stock and other collaterals held by said Woodland Avenue Savings and Loan Company was not sufficient to pay the indebtedness of said Martin Lauer to it. Sixth. At the directors’ meeting October 7, 1889, a motion was carried authorizing Mr. Evarts, the treasurer, to at once purchase a suitable desk for his use in transacting business for the bank, and to arrange for and purchase all necessary books, stationery, etc., required. Acting under that resolution the treasurer got up this form of stock certificate, and submitted same to most and perhaps all of the members of the board; but no other action of any kind was taken by the board of stockholders. This form of stock certificate was issued to Martin Lauer and that such form of stock certificate is the only form which has been used by said defendant and the same has been accepted by all the stockholders. Seventh. Defendant at no time prior to the beginning of this action adopted any formal by law or regulation providing for a lien upon the stock of its stockholders for indebtedness of said stockholders to it. Eighth. At the time of the creation of the indebtedness of Martin Lauer to the defendant, the defendant had no knowledge of the fact that said stock certificate had theretofore been pledged to the Woodland Avenue Savings and Loan Company, or the plaintiff, had any interest, or claimed to have any interest, in the stock. Ninth. That the de-. fendant is duly organized and existing under the laws of the State of Ohio, and conducting a gen-' eral banking business in the city of Cleveland.' Tenth. That, prior to the commencement of this action, plaintiff demanded of the defendant a transfer of said twenty shares of stock standing in the. name of Martin Lauer, and the said defendant refused to transfer said stock. Eleventh. That, so far as there are any issues in the pleadings involving the stock standing in the name of C. A. Lauer, the same had been settled prior to the hearing of this case, and there is now no controversy concerning the same.
    Upon the facts so found the circuit court, being of the opinion that the defendant had legal ground for refusing to make the transfers demanded by the plaintiff, dismissed the petition. A reversal of that judgment is sought here upon the ground that it is not justified by the facts found.

      Squire, Sanders & Dempsey, for plaintiff in error.
    It will be conceded that no lien existed at common law upon the stock in favor of the defendant for any indebtedness of its stockholder to it. If it is not conceded, see sections 520 and 521, Cook on Corporations.
    It will not be claimed that there is any lien reserved to the defendant company upon its stock for indebtedness of a stockholder by any statute.
    It is a very doubtful question as to whether or not a lien may be saved to the corporation for indebtedness of a stockholder by virtue of a by-law duly enacted by the corporation. Cook on Corporations, section 522.

      If defendant in error has a lien upon this certificate it must be by virtue of the recital in the certificate of stock. This question, we submit, has never been decided by this court. Whatever may be said in regard to a lien growing out of a statute or a bylaw does not apply to the case at bar, for it is, or will be, conceded that no statute or by-law existed. There is no declaration of intention by any act of the corporation except the placing of the recital in the certificate itself. Bank v. Mason, 48 Iowa, 336.
    “In the absence of a contract or provision of its charter or by-laws to that effect, a corporation has no lien upon its shares in the hands of a stockholder to secure indebtedness from the stockholder to the corporation.” Anglo-California Bank v. Grangers’ Bank, 63 Cal., 359; Bank v. Durfee, 118 Mo., 431; Trust Co. v. Lumber Co., 118 Mo., 447; Carroll v. Savings Bank, 8 Mo. App., 249; Gemmel v. Davis, 75 Md., 546.
    If a mode for securing lien is prescribed, it must be strictly followed. National Bank v. Warren Bank, 66 N. W., 154.
    ' Code, section 1059, sub-division 7, authorizes corporations to establish by-laws and make all necessary regulations.
    Section T076 provides that a copy of the by-laws, with the names of the officers attached, must be posted in the principal places of .business..
    Section 1078 also provides that the transfer of shares are not valid except between the parties thereto unless regularly entered on the books of the company. Lee v. Bank, 2 Sup. Ct., 298; Bullard v. Bank, 18 Wall., 598; Driscoll v. West-Bradley, 59 New York, 96; Conklin v. Bank, 45 New York, 655.
    The last-named case meets the case at bar, in that a declaration upon the certificate was not binding where there was no power to make such a declaration. In the case at bar there is no statute, no bylaw, and therefore no authority existed to make such a recital and we stand as in the New York case. There was no power exercised, no by-law in existence, and, under such circumstances, the mere recital upon the face of the certificate is not sufficient to create a lien.

      Wilcox, Collister, Hogan & Parmely, for defendant in error.
    If the defendant in error is controlled and governed by the laws relating to savings and loan associations, which seems to have been the intention of its incorporators, the provision in Lauer’s stock certificate retaining a lien to the bank for any indebtedness of his, was a condition which the board of directors could lawfully attach to the transfer of his stock. Revised Statutes of Ohio, section 3799; Bank v. Higbee, 4 C. C., 22, 2 C. D., 512; Affimed by Supreme Court, without report; Thomas B. Tomb, v. Felch, 40 Bull., 186; Affirmed by Supreme Court, without report.
    The interpretation given to section 3799, of the Revised Statutes by the courts of this State, as evidenced in the case above cited, establishes beyond question that the board of directors of the defendant in error was clothed with the authority to attach such conditions to the transfer of its stock as would create a lien in its favor for a debt due by a stockholder to the corporation. By virtue of the provision of section 3799, of the Revised Statutes, the board of directors were authorized to prescribe the mode of transacting, managing and conducting the affairs and business of the corporation, and had the right to place limitations upon the transfer of stock by its stockholders, and the statute does not designate any particular way by which their action in this regard shall be evidenced.
    The question in this case, so far as we rest our contention upon the first and second propositions herein first made, is, did the board in fact act in some manner so as to create a lien?
    It is admitted that the board adopted no by-law, nor did the board by express resolution adopt the form of certificate which was issued to the stockholders ; but this form of certificate was by the treasurer submitted to most, if not all, of the directors, and this form was adopted by the board, as far as it could be adopted without an express resolution to that effect. We contend that this fact, together with thé subsequent uniform practice of issuing such form of certificate to all of the stockholders of the defendant in error, and the acceptance of such certificate by all its stockholders without objection, and the continued use of this form without objection, and the acquiescence of the directors and all the officers of the corporation, constitutes sufficient evidence of a regulation to that effect. So that it may be well said that the board of directors have prescribed this mode of transacting, managing and conducting its affairs and business in this regard. Vansands v. Bank, 26 Conn., 144; Morgan v. Bank, 8 S. & R., 72; Bank v. Pinson, 58 Miss., 421; Bank v. Ridgley, 1 Harris and Gill, 324-413.
    We are not, however, compelled to rest our cause in this case upon this, to us, decisive reasoning. The lien of the defendant in error is good upon the principals of law relating to contracts. The limitation upon Lauer’s power to assign his certificate of stock was a condition in his certificate of stock which was not prohibited by law. On the contrary it was a condition which the board under statutory authority had a right by, by-law at least, to attach to such certificate. When stock was subscribed for in this corporation, it was subscribed with knowledge upon the part of the subscriber that the corporation could, if it saw fit, attach such condition to the contract of subscription, for each subscriber was bound to know the law of the State. Therefore, when the subscriber accepted his certificate with this provision written on its face, such acceptance was equivalent to an agreement on his part between himself and the corporation that his stock should be subject to such lien. The stockholder, therefore, is bound by his contract in that behalf.
   Shauck J.

Counsel for the plaintiff cite numerous cases which are said to demonstrate that he is entitled to recover a judgment upon the facts found. Many of them are cases in which the conclusions were reached from a consideration of statutory provisions forbidding the issuing corporation to reserve a lien upon its stock to secure the debts of the holders. It seems to be sufficient to say that this is true of all the cases which relate to the attempted assertion of a lien upon their stock by national banks organized under the currency acts of 1863 and 1864, even though notice of the lien was expressed on the face of the certificate. The former act permitted such lien; the latter forbade it, but without saving the right as to banks previously organized. This is distinctly pointed out as the ground of the decision in Conklin v. The Bank of Oswego, 45 N. Y., 655. Of course the lien cannot be reserved by the corporation if it is forbidden by the statute from which it derives its existence. In numerous others of the cases cited the courts have held that a corporation issuing certificates of stock which do not show upon their face that a lien has been reserved to secure the debts of the holder will not be permitted to assert such lien, even though it be provided for in a by-law if the transferree of the stock has no knowledge of the by-law. Such a case is Bank v. Bank, 97 Iowa, 204, where the court approves its previous holding in Bank v. Haney, 87 Iowa, 101, that a by-law of the corporation providing for a lien in its favor on the stock to secure the holder’s debt and the reservation of the same lien by stipulation recited in the certificate of stock constitute a contract between the corporation and the holder, and that this lien is superior to that of an attaching creditor of the holder. The cases cited by counsel for plaintiff contain much authority for the proposition that the transferee of stock will not be required to submit to the assertion of a latent equity with respect to it, and that the equity to which he must submit is a lien either created by the statute under which the corporation is formed, of whose provisions all are required to take notice, or by a contract between the corporation and the holder whose terms are brought to the notice of the transferree. But in the present case the lien asserted was reserved by the issuing corporation by the express terms of the certificate issued to the holder. His acceptance of the certificate containing the reservation of a lien upon the stock to secure the payment of his debts was an acceptance of that condition, and the lien existed by force of a contract. That a valid lien may be so created and that it may be asserted against the transferree of the certificate containing notice of the lien reserved is held in Vansands v. The Middlesex County Bank, 26 Conn., 144; Jennings v. Bank of California, 79 Cal., 323. and in Bank v. Haney, supra. That the principles .of the law of contracts are applicable to transactions of this character has not, within onr observation, been denied by any court since the decision of Waln’s Assignees v. Bank of North America, 8 S. & R., 73. With respect to A. Pitot, Sequestrator, etc., v. Johnson et al., 33 La. An., 1286, cited for the plaintiff, it may be said that there is no such statement of the facts as will disclose the precise point decided, that the conclusion depended upon provisions of the civil code, and that the court felt constrained to follow former decisions whose correctness it more than doubted.

Counsel for the plaintiff inquire for the statutory authority to the issuing corporation to reserve a lien of this character. But since the right to enter into contracts is general, and denied only when prohibited by statute or some consideration of public policy recognized by the courts, it would be more helpful, perhaps, to inquire for the statutory provision or the consideration of public policy by which this contract is forbidden. It is quite true that with respect to the franchises which corporations exercise, and in their dealings with the public, the statute is to be regarded as the source of their authority. But it would be difficult to maintain the proposition that in their transactions with their stockholders or in the transactions of stockholders among themselves general rules do not apply if consistent with the statute. But the defendant was formed, as its articles of incorporation show, to do the business of a building and loan company. An answer to the question of counsel may be found in section 3799, of the Revised Statutes: “The board of directors may prescribe * * * * the mode of transacting, managing and conducting the affairs and business of 'the corporation.” The power exercised by the defendant to make this contract was clearly within this provision, and the statute nowhere defines a particular mode for the exercise of the power conferred. Counsel for the plaintiff say that because the defendant made its loan to Lauer, after he had pledged the stock, it was its duty to protect itself by asking for the stock. This is but another mode of denying the efficacy of the stipulation in the certificate, for if that stipulation were absent the defendant might have protected itself in the mode suggested. If we should impute to certificates o'f stock all the attributes of negotiable instruments it would' not avail the plaintiff, for the holder is always bound by the terms of the instrument which he receives. By the transfer made the plaintiff became the equitable owner of the stock. It was clearly within his power to acquire the legal title by presenting the certificate for transfer on the stock books of the defendant at a time when Lauer was not indebted to it. This right he did not choose to exercise. He voluntarily remained in the position of the holder of an equitable title and amenable to the rule that he must submit to the assertion of an adverse equity which is either superior in character, or equal in character and prior in time. He cannot be permitted-to exact from the defendant a degree of care for his interests which he did not himself choose to exercise.

Whether we consider the principles involved in the case or the adjudications with respect to them, it seems clear that the judgment of the circuit court is appropriate to the facts which it found.

Jugdment affirmed.


author: By the Court:

text:
    State ex rel. Armstrong v. Halliday, Auditor.

      County Warden as county office — Cannot be filled by appointment.

    The office of “County Warden” created by section 409, Revised Statutes, is a county office, and can not be filled by an appointment. Art. 10, Sec. 2, constitution.
    (Decided October 31, 1899.)
    IN MANDAMUS.

      F. S. Monnett, Attorney General, and G. G. Blanhner, Assistant Attorney General, for plaintiff.

      A. L. Thurman', D. B. Sharp and W. J. Ford, for defendant.
   By the Court:

This is a suit in mandamus to compel the auditor of Franklin county to draw his warrant on the treasurer of the county for the payment of certain fees, claimed to be due him as justice of the peace, made in a prosecution instituted before him by Brook L. Terry, fish and game warden of the county, against William Jacobs, for a violation of section 6968, punishing certain offenses against the fish and game laws of the State. The defendant answered, claiming that the section of the Revised Statutes, 409, providing for the appointment of a fish and game? warden in each county is void, for the reason that such offices are county offices and must be. filled by election and not by appointment; and, also, averring that there was no fund in the treasury for the payment of such costs. The questions are presented on a demurrer to the answer. It is not necessary to consider the second ground of refusal to draw the warrant, as we are of the opinion that the office created by section 409, Revised Statutes, is an elective one to be filled by the people of the county, and that the commissioners of fish and game cannot be authorized to fill it by appointment. The constitution requires all county officers to be elected by the electors of the county (article 10, section 2). The part of the section creating the office reads as follows: “The commissioners shall, at their annual meeting in January, or at any other time, appoint a fish and game warden in each county in the State, who shall hold his office for two years, unless sooner removed, and they shall also appoint a special warden for Lake Erie, and for Mercer county, Lewiston, Licking, Laramie and Sippo reservoirs of the State; each warden shall, before entering upon the discharge of his duties, give a bond to the State, with sureties to the satisfaction of the commissioners in the sum of two hundred dollars, conditioned for the faithful performance of the duties of his office, which bond shall be deposited with the commissioners; and it shall be the duty of the wardens, under the general direction of the commissioners, to appoint such assistants as they may require to assist them in policing the territory, both land and water, of their respective counties and territories, arresting wherever found in the State all violators of the laws of the State enacted for the protection of fish and game.”

Thé distinguishing characteristic of a public officer is, that the incumbent, in an independent capacity, is clothed with some part of the sovereignty of the State, to be exercised in the interest of the public as required by law. The office must be of a continuous character as opposed to a temporary employment, though the time be divided into terms to be' filled by election or appointment in accordance with the genius of our system of government; and a bond and an oath of office are generally, though not always, required for the faithful performance of the duties of the incumbent; and compensation is made either .by salary or fees, or both. Meachem, Officers and Offices, section 4; High on Leg. Rem., section 625; State v. Brennan, 49 Ohio St., 33; State ex rel. v. Jennings, 57 Ohio St., 415.

Here then are all the distinguishing characteristics of a public officer as usually defined and understood: A warden, denominated a “county warden,” is to be appointed in each county of the State; the appointment is not for a temporary purpose, the office is made continuous, though the appointment of an individual to fill it, is for a term, one, as just seen, of the usual characteristics of an office; a bond is required for the faithful performance of the duties, and these duties are of a public character — the enforcement of the laws of the state in their “respective counties,” made for the preservation of fish and game. Moreover, by other sections of the Revised Statutes (6966-2 and 6968), a county warden acts as a constable or sheriff in prosecutions instituted by him; makes arrests, subpoenas witnesses and jurors, and has charge of the jury in its retirement; and, on conviction, conducts the defendant to the jail of the county. The commissioners of the county are required to allow him a salary, not exceeding three hundred dollars annually; and, is also entitled to certain fees, such as is allowed sheriffs and constables for similar services. These wardens are not only appointed for their respective counties, but their duties are limited to “policing the territory” thereof. Hence, their duties being of a public nature and limited to their counties, they are, in every sense, as much county offi- ' cers within the sphere of their duties, as are county sheriffs; and are, therefore, elective and not appointive officers.

The appointment of “special wardens” for Lake Erie and the respective reservoirs of the State, stands on different ground, and such appointments are not necessarily affected by this decision. They are properly state officers and not required to be elected by the people.

For the reasons stated we think that the demurrer to the answer should be overruled, and the petition dismissed.

Judgment accordingly.


text:
    Alexander et al. Commissioners v. Brady, by His Next Friend.

      County Commissioners — Powers and duties — Liability for defective bridge — Petition alleging injury not sufficient, when.

    1. Section 845, Revised Statutes, does not impose upon county commissioners a liability for injuries resulting from a defective model furnished by the board of public works for a bridge over a canal belonging to the state. u

    2. A petition alleging that a defective bridge at which the plaintiff received an injury is upon a street of a municipality does not show a defect with respect to which the statute imposes a liability on the commissioners of the county.
    (Decided October 31, 1899.)
    Error to the Circuit Court of Miami county.
    The defendant in error filed the following petition in the court of common pleas:
    Freddie Brady, who brings this action by William Brady, his father, his next friend, says that he is a child of six years. He complains of William H. Alexander, Havilah Coppock and W. B. Segner, for that they are the duly elected, qualified and acting county commissioners of Miami county, Ohio, and as such are charged by law with the erection, care, management and control of the bridges in said county. He further says that prior to the date of the injury hereinafter complained of, said defendants as commissioners aforesaid erected what is commonly known as a swing bridge across the Miami and Erie canal on Water street in Troy in said county. In the erection of said bridge said defendants so carelessly and neglectfully constructed the same as to leave at the extremeity of the approaches thereto an opening so that when said bridge swung into the arc of the circle connecting it with said approaches, it left a wedge-shaped opening in such a manner that any object hanging over the end of said bridge would be caught and crushed between the end thereof and the approach thereto with great force and violence. Said bridge is so located that it is the direct passage way for large numbers of children passing from the northwest portion of the city of Troy to the Edwards School building in said city, located near thereto. On Tuesday, the 25th day of June, 1897, about four o’clock p. m., a large number of school children, among whom was this plaintiff, were passing toward and over said bridge, and at the same time a canal boat was passing northward through said bridge, and a large number of said children stopped on said bridge to ride thereon while it was being opened and closed for the passing of the canal boat. Plaintiff was standing on the west embankment of said canal and the children on the bridge enjoying the sport invited and requested plaintiff to jump or climb upon the bridge in its return swing to its proper place in the arc of the circle of the approach thereto. Plaintiff attempted to climb on the bridge while so returning, and by reason of its defective construction in the manner hereinbefore stated, his left leg was caught in said opening by the bridge end coming in contact with the approach and was bruised, broken, crushed and mangled thereby to such an extent that amputation became necessary near the body of plaintiff. Defendants well knew that said bridge was used by children of all ages passing to and from said school, and knew, or by inspection might have known, that said bridge was so defectively constructed, but failed and neglected to put the same in a proper and safe condition, or to place guards or railings about the projecting approaches thereto, or to place any person in charge thereof to see that children were protected against any injury arising from the faulty construction thereof. Plaintiff following his childish instincts, unconscious of the injury which he would sustain, sought to ride upon said bridge as aforesaid and received the injury as aforesaid. He says that by reason of the careless and negligent construction of said bridge on the part of said defendants, and their failure to put protection rails or guards about it, and failure to place a watchman or guardian there over, he received his said injury and suffered the loss of his left limb, great bodily pain and mental anguish near unto death, and is still suffering therefrom; that his injury is permanent, and by reason thereof will be compelled to pass the remainder of his life with but one leg and suffer the inconveniences, disadvantages, humiliation and shame of his mangled and crippled condition, to his damage in the sum of ten thousand dollars, for which sum he asks judgment against the said defendants.

      A demurrer to the petition was overruled. After the filing of an answer which denied the allegations of negligence and alleged that the plaintiff’s injuries resulted from his own carelessness, and a reply denying the allegation of the plaintiff’s negligence, there was a trial which resulted in a verdict for the plaintiff. A motion for a new trial was overruled and a judgment followed the verdict. The judgment was affirmed by the circuit court. The commissioners seek a reversal of the judgment upon the ground, among others, that the petition does not state a cause of action against them.

      J. Harrison Smith and A. F. Broomhall, for plaintiff in error.

      A. R. Byrkett; A. W. DeWeese and J. A. Davy, for defendant in error.
   By the Court:

Prior to the recent amendment of section 845, of the Revised Statutes, it was the established law of this state that county commissioners were not liable for damages resulting from their negligence. Their liability is, therefore, only that which the amended statute imposes. The liability is charged upon them in connection with a grant of power and is in the terms following: “The board of commissioners shall be capable of suing and being sued, pleading and being impleaded in any court of judicature, and bringing, maintaining and defending all suits, either at law or in equity, involving an injury to any public state or county road, bridge or ditch, drain or watercourse established by such board in their county, and for the prevention of injury to the same and any súch board of county commissioners shall be liable in their official capacity for any damages received by reason of the negligence or carelessness of said commissioners in keeping any such road or bridge in proper repair.” The negligence'charged in, the petition relates wholly to the dangerous condition of the bridge, because it was constructed upon a defective model. The liability .’imposed by the statute is for failure to keep such roads -and bridges in proper repair. The statute does not impose upon the commissioners any liability whatever with respect to the plan of construction of bridges over canals belonging to the State. But on the contrary, the requirement of'-section 4937, of the Revised Statutes, is that such bridge must be constructed upon a model furnished by the board of public works. The defect charged in the petition did not result from the negligence of the commissioners in the performance of any duty imposed upon them by law.

2. The terms of the statute will not admit of a construction which would impose upon the commissioners a liability with respect to any highways except those over which they have, by its terms, legal control; that is, “over any public, state or county road.” Control of the' streets of municipalities is not given to them. Such control, is by other provisions of the statutes, given to the municipalities, and the liability for negligence is an incident to the control. The allegation in the petition, that the bridge at which the plaintiff received the injury is “on Water street in Troy,” does not show that it is within the control of the commissioners or in any sense a matter with respect to which they may be negligent in the contemplation of law.

It is also insisted by counsel for the commissioners that.the undisputed facts elicited upon the trial show that the plaintiff’s injuries resulted wholly from his own carelessness. However much of reason there may be for that proposition, we do not regard it necessary to consider the question which it presents, since the points already determined seem to be decisive of the entire controversy.

Judgments of the circuit and commoñ .pleas courts reversed and judgment for plaintiffs i/n error.


author: Spear, J.

text:
    Campbell, Adm’r., v. Sidwell, Ex’x., et al.

      Lien holders — Rule as to priority — Time gives better equity, when— Adjustment between vendor's lien, mortgagee's lien and interven-judgmcnt creditor’s lien.

    1. As between lien holders having only equitable interests, if their equities are in -all other respects equal, priority of time gives the better equity. But if one has, on other grounds, a better equity than the other, priority of time is immaterial. A fortiori, if one has, in addition, the legal estate, or the right to use the legal title in support of his security, his lien will be given preference, and will not be in any way prejudiced by a lien based wholly on equitable grounds, even though the latter be first in time.
    2. A vendor’s lien will not be given preference over a subsequent botia fide mortgage lien even though a judgment lien intervenes.
    3. If, in such case, the proceeds of sale are insufficient to satisfy both'the mortgage and the judgment lien, there will be deducted from the amount due the mortgagee and paid to the judgment creditor, a sum sufficient to satisfy the judgment, and the balance be paid to the mortgagee.
    (Decided November 28, 1899.)
    Error to the Circuit Court of Belmont county.
    The action below was commenced in the common pleas of Belmont county, September 17th, 1896, by the defendants in error, Elma Sidwell, as Ex’x. of ' Plummer Sidwell, deceased, and Shepherd Davis, to obtain a decree for the sale of certain lands (about 76 acres) in that county, and to have conflicting liens marshalled and priorities determined. Plaintiff’s action was grounded upon a judgment rendered at the January term, 1896, of that court, in a suit commenced May 27, 1895, against John W. Beam et al., for $1,201.32, being balance remaining due as purchase money, and a decree finding the same to be a lien upon the property sold in the nature of a vendor’s lien.
    Nicholas Kuhn, in his answer and cross-petition, set up the recovery, February 27, 1892, by the consideration of the same court, of a judgment against John W. Beam, the then owner of the land, in favor of one Somerville, and afterward purchased by answering defendant, on which a balance remains due, which is and has ever since the date of the rendition of the judgment been a lien upon the land in controversy; that December 19, 1892, execution issued and was levied on said land; that the judgment was purchased for full value and without knowledge of any vendor’s lien.
    Campbell, as Adm’r. of Reuben Ochsenbein, the plaintiff in error, by his answer and cross-petition, set up the execution by John W. Beam and wife, February 27, 1895, of a mortgage on the lands, to secure certain notes, then executed by Beam to Ochsenbein; the delivery for record of the mortgage the same date, its record, and that the same was given for a valuable consideration and without notice of the vendor’s lien.
    At the January term, 1897, the common pleas found due plaintiff $1,273.38; that the same is a lien on the land, and ordered that, in default of payment in five days, the land be sold and the money brought into court, reserving all questions of pri-' ority.
    At the June term following, the sale being confirmed, and the proceeds of sale, $2,700.00, being before the court for distribution, a decree was rendered, ordering the payment, first of costs, second of the judgment to Kuhn, and the balance to Campbell, Adm’r. From this judgment the plaintiffs (the defendants in error) appealed.
    On trial in the circuit court, after order confirming the sale, there was found due the plaintiffs $1,-297.49, and that they had a valid vendor’s lien and the right to enforce it against the premises. Also, due Kuhn $410.25, and that is a valid lien. Also, that there is due Campbell, Adm’r., $1,376.20, and will become due $500, March 1, 1898, $500, March 1, 1899, $500, March 1, 1900, and $500, March 1, 1901, with interest on each from March 1, 1897, all constituting a valid lien on the premises. Coming to distribute the $2,700, proceeds of sale, the court found the facts stated in the petition and answers true, and ordered that, after payment of costs and taxes, there be paid, first, to' the plaintiffs the amount found due them, second, to Kuhn, the amount found due him, and third, the remainder to Campbell, Adm’r.
    Campbell, Adm’r., brings this proceeding to reverse this judgment as to priority of liens and order of distribution.

      Driggs & Heinlein and W. V. Campbell, for plaintiff in error.
    We claim that the mortgage lien is superior in equity to the vendor’s, and that in distribution of the fund should have been preferred. The mortgagee occupies the position of a bona fide purchaser for value and without notice, and a secret equity such as the vendor claims cannot prevail again him. For the purpose of making his security effectual the mortgagee, by virtue of the mortgage, was seized of the legal title. Harkaider v. Leiby, 4 Ohio St., 604; 2 Kent’s Co., 129; Allen v. Everly, 24 Ohio St., 97. This principle was completely ignored by the circuit court in its order of distribution.
    Had Beam conveyed these premises to plaintiff in error, for value, and without notice that the purchase money had not been paid, it could not be claimed that the purchaser took the premises charged with a vendor’s lien; and the case made is not different in essence from that. ‘ A lien superior in right should not be postponed to one inferior.
    The case of Day v. Munson, 14 Ohio St., 488, prescribes the rule applicable to this case, and applying that rule, it leads to this result: Take the whole fund, $2,700; deduct from it $410.25, the lien due the judgment creditor, and we have remaining $2,-289.75, applicable to the mortgage; then take whole fund, $2,700, and deduct therefrom the lien of vendor, there will remain sufficient to satisfy the judgment, but the balance being appropriated by the mortgage, nothing would remain for the vendor.
    Again, suppose the mortgagee had stepped in before trial and paid off the claim of Kuhn. Would not the mortgage lien have then been satisfied before applying any part of the proceeds to the vendor’s lien? So, according to the claim of the vendor, his lien takes precedence over the mortgage only because of there being a judgment lien for some amount; and no matter how small the amount, if the principle applies, it makes a lien superior which, under all other circumstances, would have been inferior in every respect. There is no principle of law or equity that would warrant such finding.
    The cases of Brazee v. Bank, 14 Ohio, 319; Holliday v. Bank, 16 Ohio, 533, relied upon by defendants in error, when carefully analyzed, do not support their contention.
    The order of distribution of the circuit court should be reversed.

      Jas. M. Rees and C. L. Weems, for defendants in error.
    The question is, What is the order of priority among these three liens? It is settled in Ohio, and cases need not be cited, that a vendor’s lien is superior to the lien of a subsequent judgment against the vendee. We call the court’s attention, however, to the fact that this superiority does not rest on an arbirtrary statute, but upon equity, morality and justice. The vendor’s lien is founded on value parted with. The judgment is a volunteer. The vendor’s lien is specific. The judgment lien is general. It is settled in Ohio and cases need not be cited, that a judgment is .superior to a subsequent mortgage. This is so because the statute makes it so. . It is settled in Ohio, and cases need not be cited, that a mortgage for value, bona fide, without prior notice of a vendor’s lien, is superior to it. This is not because of any moral claims, but because “ among equal equities the law prevails.” Pomeroy’s Equity, Sec. 417.
    The vendor was just as “ innocent ” as the mortgagee. We think the only recognized moral and equitable superiority among these liens, is that of the vendor’s lien over the judgment, and call attention to it because the rule of distribution contended for by plaintiff in error produces the remarkable result that this inferior judgment (inherently inferior) gets paid and the vendor’s judgment gets nothing.
    Assuming, however, that the judgment is equitably superior, as well as legally, to the mortgage, and the mortgage to the vendor’s lien, we have this state of facts: The vendor’s lien is superior in equity to the judgment, the judgment to the mortgage, the mortgage to the vendor’s lien. What is their order of precedence? — for we contend that this latter question must be met. Some principle or criterion must be adopted for ranging these liens in an order of priority. It can never be done by being controlled by the particular figures that exist in this case. (See the last sentence on page 276, 310 S., in the opinion in Babbett & Herman v. Morgan Root & Co.)

    It cannot be done by starting arbitrarily with one of these liens taking out a certain amount for it and passing it along the line in an attempt to find a resting place for it. This is illustrated by the argument of our adversaries.
    We think there is a satisfactory principle that can be invoked. That principle is the analogy of the rule, “where there are equal equities the first in order of time shall prevail.” (See Pomeroy’s Equity, Sec. 413, et seq.) It is true that no two of these equities are equal, but it is true that they happen to be so related among themselves that the three cannot be arranged in order of preference. When we try it we have a circle. The impossibility of arranging two equal equities in any order of inherent preference compels a resort to the test of time. The impossibility of ranging these three equities in any order of preference makes a resort to the same test reasonable. (See tbe paragraph an page 321 in the opinion in Brazee v. Lancaster Bank, 14 Ohio, 319.)
    Our opponents rely on Day v. Munson, 14 Ohio St., 488. It seems not to have occurred to them that in the case put of the fund being exactly one thousand dollars, and each of the three liens one thousand dollars, the rule applied in Day v. Munson would give the entire fund to the first lien (the vendor’s lien), while their reasoning would give it all to the mortgagee. This shows conclusively that there must be some radical difference between the reasoning in Day v. Munson and the reasoning of our adversaries. This difference is not hard to find. In Day v. Munson the court were not, as here, dealing with a case where the first lien was merely inferior to the third, but with a case where, as to the third lien, the first was void. Here each of the three liens exist. None is void. Each is a lien on the whole fund. Their equitable priorities travel in an endless circle. Day v. Munson, rests upon its own facts and conditions.
    The judgment of the circuit court should be affirmed.
   Spear, J.

Whether or not a vendor’s lien should be given preference over a tona fide mortgage solely because a judgment lien intervenes, is the question presented by the record in this case. To recapitulate briefly, it jnay here be stated that the land was sold and conveyed by Sidwell and "Davis, and possession given, prior to February 27,-1892; that on this last named date the judgment now owned by Kuhn was rendered, and levy of execution on the land made December 19, following, and that the mortgage of the purchaser to Ochsenbein was left for record February 27, 1895. At the date of the decree there was due the vendor $1,297.49, due the judgment creditor $410.25, and owing on the mortgage $3,376.20. The proceeds of sale are $2,700.00.

It was the judgment of the circuit court that the vendor’s lien should be given such preference, and that conclusion is sought to be maintained by counsel for defendant in error on the ground that the only recognized moral and equitable superiority among the liens is that of the vendor’s lien over the judgment, and that any determination as to priority other than preferring the vendor’s lien, works the inequitable result of paying the judgment, inherently inferior, while the vendor gets nothing.

Before discussing the real point of controversy it may be proper to consider briefly the character of the respective claims. The lien of a vendor after conveyance for unpaid purchase money, as between vendor and purchaser, his heirs and others acquiring title with notice of the equity, has been recognized and enforced in this state since its settlement, although in many of the states of the Union the rule does not prevail. It is founded upon the equitable proposition that he who has gotten the estate of another ought not to retain it without paying the full consideration. The principle does not exist at common law. The remedy is purely of equitable cognizance and the lien, as recognized in this state, is not an unqualified one, for, if it be shown that the vendor depends upon, takes, or looks to any other collateral security, the lien does not attach. As held in Williams v. Roberts, 5 Ohio, 36, where the vendor took notes with personal security, he did not retain a lien on the land; although, as held in Boos v. Ewing, 17 Ohio, 500 (by a divided court), the taking of a mortgage on the land sold to secure payment of purchase money, does not extinguish the prior equitable lien, but it remains as against a judgment obtained between the date of the mortgage and the time of record. Nór does the rule in any case give the vendor priority over a bona fide purchaser. This is upon the clear ground stated by Chief Justice Marshall in Bayley v. Greenleaf, 7 Whea., 46, thus: “To the world the vendee appears to hold the estate divested of any trust whatever; and credit is given to him in the confidence that the property is his own in equity as well as at law. A vendor relying upon this lien ought to reduce it to a mortgage, so as to give notice of it to the world. If he does not, he is in some degree accessory to the fraud committeed on the public by an act which exhibits the vendee as the complete owner of an estate on which he claims a secret lien. * * * The lien of the vendor, if in the nature of a trust, is a secret trust; and although to be preferred to any subsequent equal equity unconnected with a legal advantage, or equitable advantage which gives a superior claim to the legal estate, will be postponed to a subsequent equal equity connected with such advantage.”

We have here, then, a claim to priority on the part of the vendor based upon a condition purely equitable. The claim of the judgment creditor is fixed by statute and is purely legal. That of the mortgagee is also statutory, but it rests, also, on equitable considerations, inasmuch as he has parted with his money upon the faith of a condition, as to title and possession, existing by reason of the voluntary act of the vendor. He has not only a lien upon the property, but has a conveyance of the estate by way of pledge, and is in the position of a bona fide purchaser with a right to use the legal title for the purpose of making his security effectual. Ranney, J., in Harkrader v. Leiby, 4 Ohio St., 611; Anketel v. Converse, 17 Ohio St., 11; Allen v. Everly, 24 Ohio St., 97. It is apparent that the position of the parties before the court is not equal; indeed it is apparent that they stand in positions of marked inequality, and that the rule that where there are equal equities the first in order of time shall prevail, will not aid in determining the issue.

But it is insisted in favor of the vendor that a satisfactory principle can be invoked for application here, in analogy to that rule. It is conceded that the judgment is superior to the mortgage, and the mortgage to the vendor’s lien, and that no two of the equities are equal, but, the vendor’s lien being superior to the judgment, it is insisted that the equities are so related among themselves that the three cannot be arranged in order of preference, for when we try it we have a circle, and hence the impossibility of arranging two equal equities in any order of inherent preference compels a resort to the test of time, and when that becomes necessary such test in law is a reasonable one, and should prevail. The problem cannot, it is claimed, be solved by starting arbitrarily with one of these liens, taking out a certain amount for it, and passing it along the line in an attempt to find a resting place for it, for it cannot stay there. If an amount should be reasoned into the pocket of the mortgagee, no one could deny the right of the judgment creditor to snatch it away, and when it reached that place, no sufficient answer could be made to the vendor’s demand to take it from the judgment.

The solving of puzzles is often an interesting mental pursuit, but the duty of the court is to settle controversies between litigants rather than to disentangle perplexing mental problems. If the issues can be determined by the application to the facts of just and well settled legal principles, we need not concern ourselves whether the result fully satisfies the ingenuity of the mental juggler or not. The question is, who, among these parties, under the facts, is entitled to the proceeds of sale?

1 Pomeroy’s Eq., Secs. 413, and following, are cited as offering support to the position of counsel. It is difficult to see how this author aids the contention. He quotes approvingly and at length from Rice v. Rice, 2 Drew., 73, a purely equitable case, where the Vice-Chancellor treats the test of time in this wise. He says: “The rule is sometimes expressed in this form: ‘As between persons having only equitable interests, qui prior est tempore potior est jure.’ This is an incorrect statement of the rule, for that proposition is far from being universally true. * * * Another form of stating the rule is this: ‘As between persons having only equitable interests, if their equities are equal, qiñ prior est tempore potior est jure.’ This form of stating the rule is not so obviously incorrect as the former, and yet even this enunciation of the rule (when ’accurately considered) seems to me to involve a contradiction. For when we talk of two persons having equal equities or unequal equities, in what sense do we use the term ‘equity’? For example, 'when we say that A, has a better equity than R, what is meant by that? It means only that according to those principles of right and justice which a court of equity recognizes and acts upon, it will prefer A. to B., and will interfere to enforce the rights of A. as against B. And, therefore, it is impossible strictly speaking, that two persons should have equal equities, except in a case in which a court of equity would altogether refuse to lend its assistance to either party as against the other. If the court will interfere to enforce the right of one against the other on any ground whatever, say on the ground of priority of time, how can it be said that the equities of the two are equal; i. e., in other words, how can it be said that the one has no better right to call for the interference of a court of equity than the other? To lay down the rule, therefore, with perfect accuracy, I think it should be stated in some such form as this: ‘As between persons having only equitable interests, if their equities are in all other respects equal, priority of time gives the better equity; or, qid prior est tempore potior est jure.’ I have made these observations, not of course for the purpose of a mere verbal criticism on the enunciation of Ihe rule, but in order to ascertain and illustrate the real meaning of the rule itself. And I think the meaning is this: that in a contest between persons having only equitable interests, priority of time is the ground of preference last resorted to; that is, that a court of equity will not prefer the one to the other, on the mere ground of priority of time, until it finds upon an examination of the relative merits there is no other sufficient ground of preference between them. Or, in other words, that their equities are in all other respects equal; and that if the one has on other grounds a better equity than the other, priority of time is immaterial.” And, Mr. Pomeroy sums up, in Sec. 415, thus: “It follows from this explanation of the principle that when several successive and conflicting claims upon or interests in the same subject matter are wholly equitable, and neither is accompanied by the legal estate, which is held by some third person, and neither possesses any special feature or incident which would, according to the settled doctrines of equity, give it a precedence over the others wholly irrespective of the order of time — under these circumstances the principle applies, and priority of claim is determined by priority of time. There are, however, many features and incidents of equitable interests which prevent the operation of this rule, and which give a subsequent equity the precedence over a prior one, as will be fully shown in the next chapter. The principle embodied in this maxim lies at the foundation of the important doctrines concerning priorities, notice, and the rights of purchasers in good faith and for a valuable consideration, which so largely affect the administration of equity jurisprudence in England, though to a less extent in the United States, and which are discussed in the following chapter.” And why does it not necessarily follow, as a converse proposition, that if the legal estate is held by one of the claimants, or he has a right to use the legal title, then priority of time is immaterial? See, also, Hume v. Dixon, 37 Ohio St., 66, where it is held that the rule that as between equities in all respects equal the older will prevail does not apply when the junior equity is superior in merit. To like import is an observation of the author of Jones on Mortgages, Sec. 1078, that: “The mere fact that the vendor’s lien is the elder equity, is not sufficient to give it preference. It is only when the equities are in all other respects equal that priority of time gives the better equity.”

It is to be kept in mind that the contention here is wholly between the vendor and the innocent Iona fide purchaser. There is no dispute between the judgment creditor and that purchaser. The purchaser concedes that between himself and the judgment creditor the law gives a preference to the lat-' ter, and that is an end of it as between them. Nor does the judgment creditor deny that as between him and the vendor, considered alone, the vendor’s claim is prior. In such a situation how can it reasonably be claimed that the superior position of the mortgagee should be subordinated to the inferior one of the vendor? It must be perfectly plain (that any legerdemain which results in rewarding the negligent vendor, at the expense of the vigilant, mortgagee, would prove, if not a fraud upon the law, at least a defeat of it and a sacrifice of justice. We are unable to see any good reason for such action. The claim seems unconscionable. The vendor comes into court asking to obtain favor over one who has trusted to the condition of title and possession which he himself created. Were it not that there, is an intervening judgment no one would he bold enough to make such a claim. Though a refusal of it works to the advantage of the judgment creditor, how can the vendor be heard to complain? He is no worse off by reason of it. We think he cannot. Such result takes nothing from him, and that it takes something from the mortgagee is, using plain terms, no concern of his. When the mortgagee advanced the money and took the mortgage, the land was, in law, and according to the public records to which all have recourse to ascertain titles, the property of the mortgagor subject only to the lien of the judgment. As well put by counsel for plaintiff in error, “the mortgagee had then the right to pay off, or purchase, the judgment, and had he done so no possible claim could have been advanced by the vendor as against the mortgage.” Why should the court now put the mortgagee in a worse position than he placed himself in then? We think it should not. Nor need we mourn the result as to the vendor, arising from the satisfaction of the judgment. It is common knowledge that tradesmen, and others, as matter of ordinary commercial usage, extend credit upon the faith of title to land as shown by the public records. Credit is given to one in possession with record title, “in the confidence that the property is his in equity, as well as law.” We make no criticism upon the rule that in a controversy simpiy between a vendor’s lien and a subsequent judgment lien, the former will prevail, but it need not be matter of special regret that the rule is not always, and under all circumstances, available to the vendor. It should be enough to say that it is not available in this case because its application would work manifest injustice.

Our conclusion is that the mortgage stands before the vendor’s lien, but second to the judgment, and that in distribution, there should, after payment of costs and taxes, be first deducted from the amount due on the mortgage a sum sufficient to pay the judgment which should be paid to the judgment creditor, and the balance be paid to the mortgagee.

The precise question has not been heretofore presented to this court so far as we are aware, although questions somewhat analagous have been passed upon. Counsel for plaintiff in error cite Day v. Munson, 14 Ohio St., 488, as determining the issue here in favor of the mortgage. A distinction between the case is sought to be drawn by opposite counsel on the suggestion that in that case the first chattel mortgages were void, which cannot be said of the vendor’s lien. They also insist that the case cited rests upon its own facts and conditions. With tbis last proposition we agree. It is true, too, that the court in the report of that case remarks that the plaintiff’s mortgages, not having been re-filed, pursuant to statute, are void as to the third mortgage. There is no special significance in the term “void.” Characterizing the plaintiff’s mortgages as “void” did not discredit them- save as to the third mortgage. The case at bar, also, rests upon its own facts and conditions. Its determination against the vendor, as before remarked, results from the inherent weakness of his claim.

The judgment of the circuit court as to the distribution of the proceeds of sale will be reversed and the cause remanded to that court with direction to enter an order of distribution in accordance with this opinion.

Reversed.


author: Burket, J.

text:
    Stoke v. Whittaker.

      Serving of summons — Sectton 6496 Revised Statutes — Action against partners, non-residents of county — Service on one partner only — Effect of judgment — - Attachment proceedings.

    1. To authorize a continuance of a cause, in which an attachment has been issued, for not less than forty nor more than sixty days, and service by publication under section 6496, Revised Statutes, it must appear to the justice of the peace, that the summons issued in the action has not been, and cannot be served on the defendant in the county, in the manner prescribed by law.
    2. When it appears to the justice of the peace that the summons issued in such case has not been served upon a defendant, but it does not appear that such service cannot be made on him in the county, it is not error to issue another summons for such defendant, without continuing the cause as to him. '
    3. In an action before a justice of the peace upon an account against S. and A., partners as Stone and Allen, an attachment was issued upon affidavit that S. and A. were non-residents oí the county and state;, service of summons was made on A, property of defendauts taken upon the order of attachment, and summons returned not found as to S.; the docket was silent as to whether summons could be served on S. in the county or not; trial was had and judgment rendered against A. on the return day of the summons; the next day another summons was issued and served upon S., 'and judgment was thereafter rendered against him: Held, That the cause of action against S. was not merged into the judgment rendered against A., and that it was not error to render judgment upon the account against S.
    (Decided November 28, 1899.)
    Error to the Circuit Court of Hamilton county.
    The action was commenced by H: P. Whittaker against “Kinzea Stone and Dudley Allen, partners-as Stone and Allen.” An attachment was issued with the summons upon affidavit upon the ground that the said defendants were non-residents of Hamilton county and the state of Ohio. The summons was served upon Dudley Allen personally, and as to Kinzea Stone it was returned not found. The order of attachment was' returned showing a levy upon property of defendants, which was duly appraised and taken into the custody of a constable.
    On the return day of the summons Dudley Allen, appeared, and Kinzea Stone failed to appear, and after waiting one hour, trial was had as to Dudley Allen, witnesses examined, the attachment sustained and judgment rendered against Mr. Allen for the amount claimed by plaintiff together with costs of suit. No entry was made upon the docket on the day of trial as to Kinzea Stone, further than the entry that he did not appear.
    The next day the-justice of the peace issued an alias summons for Kinzea Stone, which was on that day duly served upon him personally. The cause was thereafter tried to a jury, Mr. Stone being-present and defending upon the merits of the case. A verdict was returned against him for a reduced amount, and judgment was rendered upon the verdict and the attachment sustained. Mr. Stone appealed the case to the court of common pleas, wherein plaintiff below filed his petition, averring that Mr. Stone retained him to render certain legal services as an attorney-at-law in an action to be instituted at the City of Chicago by Mr. Stone and one Dudley Allen, and further avering that said services and certain expenses were for the benefit of Mr. Stoné, without saying that they were also for the benefit of Mr. Allen.
    To this petition Kinzea Stone filed an answer in which the first ground of defense was as follows:
    “Now comes the defendant K. Stone, and by way of first defense, says, that on the 10th day of October, 1894, before W. F. Gass, Justice of the Peace in and for Cincinnati township, plaintiff instituted a suit against Kinsea Stone and Dudley Allen as partners under the name of Stone & Allen, and on said 10th day of October, 1894, in said cause, caused to be issued an attachment against the property of said Stone & Allen, on the ground that said defendants were non-residents of the county of Hamilton and state of Ohio; that under the direction of said plaintiff said attachment was levied on a certain horse, as the property of the said defendants; that in said action summons was issued and served on the defendant Dudley Allen, but returned not found as to said K. Stone; that thereafter, on the 15th day of October, 1894, judgment was taken against the defendant Dudley Allen in the sum of $268.00 and costs, and said action was not continued as to said K. Stone; that thereafter, October 16, 1894, in said action, an alias summons was issued against the defendant K. Stone, and served on said defendant K. Stone, and thereafter, on October 31st, 1894, a jury having been demanded by said K. Stone, trial was had and verdict and judgment given against said K. Stone, from which judgment an appeal was duly taken by this defendant K. Stone, and is now in this court, under the title and number as set forth in the caption of this case, and is the action herein. That the cause of action wherein said judgment was obtained against said Dudley Allen is the same cause of action set forth in the petition herein, and in said action said K. Stone and Dudley Allen were sued as partners under the name of Stone & Allen, and sought to be made liable as such, as appears on the transcript of the proceeding of said justice filed herein by this defendant; and the property attached in said action was the property of this defendant. That said judgment against said Dudley Allen is still in full force and effect.”
    The plaintiff below demurred to this ground of the answer, for the reason that it does not set forth sufficient facts to constitute a defense.
    The court of common pleas overruled the demurrer, and the plaintiff not desiring to reply, the court rendered judgment against the plaintiff below and in favor of Mr. Stone.
    Upon petition in error the circuit court reversed this judgment, and thereupon Mr. Stone filed his petition in error in this court, seeking to reverse the judgment of the circuit court, and asking an affirmance of the court of common pleas.

      Charles J. Hunt, for plaintiff in error.

      W. J. Davidson, for defendant in error.
   Burket, J.

It is claimed by plaintiff in error that the canse of action against Mr. Stone was merged into the judgment rendered against Mr. Allen, and that therefore the judgment of the court of common pleas was right and should have been affirmed. An order of attachment having been properly issued against the defendants, and property having been taken under ■ such order, and it appearing by the return of the constable that Mr. Stone was not found in the county, it is claimed by plaintiff in error, that under section 6496, Revised Statutes, the cause had to be continued for not less than forty, nor more than sixty days, and. the plaintiff below having proceeded to trial on the return day of the summons against Mr. Allen alone, and having obtained judgment against him, the action as against Mr. Stone was thereby terminated, and the cause of action merged into the judgment against Mr, Allen.

Said section 6496 is as follows: “If the order of attachment is made to accompany the summons, a copy thereof and the summons shall be served upon the defendant in the usual manner for the service of a summons, if the same can be done within the county; and when any property of the defendant has been taken under the order of attachment, and it shall appear that the summons issued in the action has not been, and cannot be served on the defendant in the county, in the manner prescribed. by law, the justice of the peace shall continue the cause for a period not less than forty, nor more than sixty days; whereupon the plaintiff shall proceed for three consecutive weeks to publish in some newspaper printed in the county, or if none are printed therein, then in some newspaper of general circulation in said county, a notice, stating the names of the parties, the time when, by what justice of the peace, and for what sum said order was issued, and shall make proof of such publication to the justice; and, thereupon, said action shall be proceeded with, the same as if said summons had been duly served.”

It will be noticed that in order to make it necessary to continue the action, two things must appear: one that the summons has not been served, and the other that it cannot be served upon the defendant in the county in the manner prescribed by law.

If it appears to the justice of the peace that the summons has not been served upon the defendant, but the further fact that it cannot be served upon him in the county according to law is not made to appear to him, he should not continue the case as to such defendant, but issue another summons for him. A cause before a justice of the peace is not deemed commenced until service of summons, and then the commencement dates from the delivery of the summons to the constable. In case property is taken upon an attachment, and it appears that the service of summons has not been, and cannot be, made- upon the defendant in the county, service may be had by publication, and in such cases the action is deemed commenced upon the delivery of the summons and order of attachment to the constable, provided that the proper publication is thereafter made.

In the case at bar the docket entry of the justice of the peace shows that the first summons was not served upon Mr. Stone, but it is silent as to whether a summons could be served upon him in the county in the manner prescribed by law. Without such finding, either expressly or by necessary implication, there was no authority to continue the case for service by publication.

There is nothing in the record to show why the justice of the peace failed to find that service could not be made upon Mr. Stone in the county as prescribed by law, but the presumption is that he had good and sufficient reasons for his silence as to that question. As the record stood upon the return day of the first summons, service had been made upon Mr. Allen and a return of not found as to Mr. Stone, with an affidavit that both defendants were nonresidents of the county and state. Upon this state of the record the cause of action against the defendant not served, was not merged into the judgment rendered against the one who was served. Yoho v. McGovern, 42 Ohio St., 11. If the rendition of the judgment against Mr. Allen on the return day of the summons when Mr. Stone stood upon the docket as a non-resident of the county and state, did not cause a merger — and it did not — there was no merger by reason of the subsequent proceedings in which the purpose was to obtain a personal judgment in addition to the attachment. The non-residence and being beyond the jurisdiction of the court when the judgment was rendered against Mr. Allen, prevented a merger, and this was so whether Mr. Stone had property in the county or not.

By virtue of the alias summons which was issued and served upon Mr. Stone the next day, he became a party to the action, and liable tó respond to the complaint set out in the bill of particulars the same as if a new action had been commenced against him upon his coming into the county, as was done in Yoho v. McGovern, supra, and the previous judgment against Mr. Allen could not have the effect to terminate the action against Mr. Stone.

The fact that an attachment was issued and property taken thereunder could not deprive the plaintiff from prosecuting his action and obtaining a personal judgment in addition to the relief sought by the attachment. Upon Mr. Stone coming into the county, summons could be served upon him, and there was then no occasion for making service by publication. Having thus obtained personal service upon Mr. Stone, the plaintiff below was entitled to a personal judgment against him, and not merely a judgment to sell the attached property, as would have been the case if there had been servic by publication only.

’ The question as to whether the cause of action against the defendant below was joint, or joint and several, has not been considered by the court and is not here decided.

Judgment affirmed.