author: Hitchcock, C. I.

text:
    *David Glass et al. v. Isaac and Thomas Greathouse.
    In a ease in chancery where there are two defendants, and the bill is dismissed as to one and a decree against the other, an appeal by the latter does not vacate the decree as to the former; more especially where there is not that necessary connection between the defendants but that the rights of one can be determined without affecting the rights of the other.
    In such case, if the complainants are not satisfied with the decree dismissing the bill as to one of the defendants, it is incumbent on them to appeal. An appeal by the other defendant against whom a decree is rendered, does not appeal the case as to the defendant as to whom the decree dismisses the bill, nor is such latter defendant a party on appeal in the court above, so that his right may be passed upon.
    If an administrator purchase land at his own public sale, he will be held to-have purchased intrust for the heirs, and upon being refunded the amount by him paid, will be decreed to convey to the heirs. If ho has sold the land to a third person, he (the vendor) will be held to account to the heirs for its value at the time of its original purchase or otherwise, as the case may be, with interest, first deducting the amount by him paid.
    Such is the rule, whether the administrator purchase directly or through another person for his benefit.
    Bill in chancery, reserved in Highland county.
    The complainants are the heirs at law and legal representatives of Robert Glass, lato of Highland county, deceased. It is stated in the bill that said Robert Glass died in 1828, leaving personal property, and also seized of 220 acres of land in Highland county, which is particularly described in the bill, and which is the principal subject of controversy in this case. At the time of his death he left a widow, who is still surviving. It is further stated, that at the July term of the court of common pleas of Highland county, 1828, letters of administration were granted to tho defendant, Isaac .Greathouse, who accepted the trust, and at the April term of the same court, 1831, filed a settlement account with the court, showing that there then appeared in his hands $350.66, to be distributed among the widow and heirs. It is charged that this balance has never been accounted for, and the defendant, Isaac, is now called upon to account for it.
    *It is further charged, that at the same term of the court, to wit, the April term, 1831, one Jonathan Allison, of the State of Virginia, commenced a suit at law against Greathouse, as administrator, for the recovery of a certain debt against the estate, which ■pretended debt was known by the said administrator to have been paid, and that the administrator collusivoly procured', said suit to be commenced against him, with design to defraud the estate, and that at the October term of the court, 1832, although he knew there was a good defense in the case, suffered judgment to be rendered against him for the sum of $279, with costs.
    It is further stated, that at the April term of the same court, 1833, Greathouse presented a petition, praying for an order to sell the real estate before named, to satisfy said judgment, falsely representing that the aforesaid balance of $350.06, in his hands at the time of the settlement aforesaid, had been principally distributed to the widow and heirs, and that nothing remained in his hands to discharge the payment except the sum of $60.87. Such proceedings were had, that at the October term of the court, 1833, an order of sale was made, said real estate having been previously appraised at $450, exclusive of or subject to the widow’s dower. The first order was that the land should be sold for cash in hand at not less than two-thirds of the appraised value. At the March term, 1834, the administrator imported that he had twice offered the land for sale, and that it remained unsold, for want of bidders. The court then ordered the land to be sold at not less than $260. At the June term of the court, 1834, the administrator again reported that the land had. been offered, and not sold for want of bidders. Another order was then made by the court, that the land should be sold for not less than one-half the appraised value. In pursuance of this latter order, the land was again offered for sale' at public auction, and struck off to Lewis Lewis, who bid for the same $235, which *was the highest and best bid, and more than one-half the appraised value. This sale was on August 2, 1834. The sale was confirmed at the October term of the court of the same year; and on the 17th day of October, after the confirmation, Isaac Greathouse, as administrator, conveyed the land to Lewis, and Lewis on the next day, to wit, on the 18th day of October, reconveyed the same land to Greathouse, whereby the title became vested in him.
    It is further charged in the bill, that from the inception of the proceedings on the petition to sell land, down to the time of actual sale, the conduct of the said administrator was fraudulent throughout. That by fraudulent means he procured the order of sale; that by like fraudulent means ho procured the land to be appraised much below its real value; that by fraudulent means he prevented the sale, until the order was made that it should be sold at not less than one-half the appraised value; and that by fraud and collusion with Lewis, he caused the land to be struck off to Lewis, whilo in fact Lewis was acting for him, and bid in the land as his agent. As evidence of this last charge, it is stated that the amount bid for the land, and inserted as a consideration of the deed from Greathouse to Lewis, was $225, and the consideration of the deed from. Lewis to Greathouse, was $226.
    It is further charged, that on January 30,1844, Isaac Greathouse by deed duly executed, the consideration of which, as expressed, was “ natural love and affection and fifty dollars in money,” conveyed the same land to the defendant, Thomas Greathouse ; and that at the time of the conveyance, Thomas Greathouse had full knowledge of the rights of the complainants, and of the truth of the charges made against his father.
    It is further stated, that at the time'of the death of their ancestor the complainants were infants, and that some of them had arrived at full age but a few years before the filing of the bill.
    The prayer of the bill is, that the defendants may be considered *as holding the land in trust for the complainants, and that the defendant Thomas be decreed to convey the same to them; that the two defendants account for the rents and profits; and that the defendant Isaac account for the moneys in his hands, as appears by his settlement with the court in 1831; and for general relief.
    The bill was filed at the March term of the court of common pleas of Highland county, A. d. 1848.
    In his answer, Isaac Greathouse admits the death of Robert Glass, and that he was appointed his administrator. He admits there was personal property, and states the whole amount of assets which came into his hands. He admits the settlement with the court in March, 1831, at which time there appeared to be in his hands $350.66 ; but insists that, previous to that time, he had paid to the widow and guardian of the heirs of Glass, from the assets in his hands, considerable sums of money, which were not stated in the account, by the ad.vice of his counsel; and that, in truth, there 'was but about sixty dollars, belonging to the estate, in his hands-at the time of the commencement of the suit by Allison, and which he paid over to Allison after the rendition of the judgment.
    He admits the commencement of the suit by Allison, but denies that it was done by collusion; denies that he knew or was informed that the claim had been paid, or that he knew of any other defense in the case than the defense which was actually mado; alleges that in this whole transaction he acted with the utmost good faith.
    He admits the filing of a petition for the sale of the land, and that the same was sold as alleged in the bill, but denies that, when sold, Lewis purchased for him or by his procurement; and alleges that, after the sale, he purchased of Lewis in good faith, paying him one dollar additional price as a compensation for his trouble.
    He admits the conveyance to his son Thomas, and that the consideration was love and natural affection and fifty dollars. This fifty dollars he says was actually j)aid to him by his son. *He denies, all and singular, the numerous frauds charged against him in the bill.
    Thomas Greathouse, in his answer, denies that, at the time of his purchase or before, he had any knowledge of the claims of the complainants, or of any improper conduct of his father and grantor, relative to the estate, and insists that he is a bona fide purchaser for a valuable consideration, without notice.
    In the court of common pleas, there was a decree against Isaac Greathouse, and the bill was dismissed as to Thomas. Both the complainants and the defendant, Isaac Greathouse, gave notice of appeal. The appeal was jmrfected by Isaac, he giving bond according to law.
    The conclusions arrived at from the evidence are stated in the opinion of the court.
    D. Soott, for complainant:
    The claim of Allison against the estate of Robert Glass, and the judgment procured thereupon against Greathouse, as administrator, were fraudulent. Greathouse knew of Allison’s claim. How? Was it regularly authenticated and received by him, or was it rejected ? If the first, Greathouse should have paid it before distribution or settlement, and, failing to do so, ho made the suit brought by Allison his own. 7 Ohio, 21, pt. 1. If the last, Allison had his right of action against him, which he should have prosecuted within the legal limits, and before the settlement of the administrator; otherwise his action would seem to be against the heirs or distributees. 2 Ohio, 156. The failure of the administrator to give notice of the claim to the heirs of Glass is a badge of fraud. Allison recovered judgment in October, 1832, and in April following, assumed the duties of an administrator of Glass. I say assumed, for, under the statute (Chase, 1311, sec. 18), he was not authorized to petition as administrator to sell land to pay debts, after having made his final settlement with the court.
    In the spring of 1831, he volunteered to become a defendant *to Allison’s suit, for no one had then a right of action against him, except for the balance then in his hands, as found on his previous final settlement, and that not in his character of administrator of Glass. 6 Ohio, 21; 2 Ohio, 156.
    Though Greathouse was executing a usurped trust, he will be held to a faithful discharge of it. His trust was not fairly executed. He omitted to give notice to the heirs of Glass, of the claim, of his petition to sell, or of the fact that their land was to be sold ; and this he was bound, in good faith, to do. They lived in Yirginia, and should have been notified by letter or actual notice. 1 Story’s Eq., sec. 218. The evidence shows that Lewis purchased the land sold by Greathouse as administrator, merely as the agent of Greathouse, and for him. A purchase by the trustee of the particular property of which he has the sale, “per interpositam personam,” carries fraud on its face. 4 How. 552; Davone v. Fanning, 2 Johns. Ch. 252; 8 Ohio, 216, 552; 10 Ohio, 117; 9 Ohio, 57; 12 Ohio, 351; 5 Pick. 519 ; 15 Pick. 24; 5 Met. 462; 4 Binn. 7 ; 7 Barr, 48; 11 Conn. 343; Cox, 26; 3 Har. 74; 5 Har. & Johns. 147 ; 1 Hawks, 479; 2 Blackf. 377 ; Peck, 443; 1 Gilman, 615; 3 Maule & Selw. 574; 2 Story’s Jur., sec. 12, 58.
    The sale was absolutely void.  The administrator, Greathouse, acquired no property in the land by the conveyance from Lewis. He therefore could convey none to his son, who, according to the evidence, had notice that Lewis bought for the administrator. “An abuse of a trust can confer no rights on the party abusing it, nor on those who claim in privity with him.” 2 Story’s Eq., sec. 12, 58; 3 Maule & Selw. 574; 2 How. 401. The remedy of cornplainants is not impaired by lapse of time. 4 How. 561; 6 Wheat. 481; 10 Ves. 467; 1 Cox, 149 ; 10 Pet. 177.
    *N. Barkers and J. H. Thompson, for defendants:
    The first question to be determined, is this: Is the whole cause appealed up, and before the court? By the decree pronounced in the court of common pleas, the defendant, Thomas Greathouse^, was dismissed, and out of court. The other defendant, Isaac Greathouáe, afterward appealed from the decree against him. Now, as Thomas Greathouse was out of court, can any act of his co-defendant bring him again before the court? An appeal operates precisely as a continuance. So does a new trial. Suppose a case to be tried against two defendants, and a decree or judgment is rendered against one, and the other is dismissed or acquitted, and the one against whom the decree or judgment is rendered, applies for and obtains a new trial, does that bring the party who was dismissed or acquitted before the court on the second trial ? Surely not.
    This is a proceeding in personam, and not in rem; and, therefore, although the land in controversy would be hold subject to the same extent for any amount this court might decree against Isaac Greathouse, not exceeding the sum fixed by the decree in tho court below, nevertheless, as this lien is to the prejudice of Thomas Greathouse only, and he does not complain of it, who can?
    There are two questions, and but two, in this case. The first, as to the proceedings of Isaac Greathouse, as administrator, previous to the sale of the land to Lewis. The second, as to tho fairness and effect of the sale to Lewis.
    It is alleged that Greathouse, by collusion with Jonathan Allison, caused the judgment to be obtained against him as administrator. This allegation on the bill is not sustained by proof.
    * The next question is, whether the sale was fairly and legally made. It is alleged that the sale to Lewis was not real, but was^ in fact a sale to the administrator through Lewis. There is no proof going to establish tho fact. For principles of law applicable to this part of the case, we refer to 4 Ohio, 446, *and 11 Ohio, 193, particularly the latter. All the presumptions are in favor of the legality of the proceedings, and an innocent purchaser can pot be injured or implicated, except whore actual notice is brought home to him. The proof shows that Lewis was really and bona fide the purchaser; but if the court take the other view of the subject, still wo insist that can not affect 'the land in the hands of Thomas Greathouse. And what must be its effect on his father? There was no statute forbidding him to buy at the sale, and the judicial decisions relied upon were not then made. Why, then, was the purdhase made through Lewis? Eor fraud? No. But to enable the party to get a conveyance; he could not convey to himself.
    What, then, are his liabilities, if he is to be considered in the light of trustee? We answer, Nothing, if the sale was fairly made, for a Mr price, and the proceeds of the sale fairly applied; but if it was not, then he would be liable for the difference between the price obtained and a fair one.
    If, however, the court are even satisfied that Lewis actually bought for Greathouse, and that Thomas Greathouse knew that fact when he bought of his father, we submit that, under the authority of Wade v. Pettibone, 11 Ohio, 57, the complainants can not recover. The complainants lived in Brooke county, Va., and knew of the sale as early as January, 1835, if not earlier. This suit was not brought until 1847. Glass died in 1828. Some of the complainants were nearly forty years of age; and all of them were of age previous to the commencement of this suit—the youngest being twenty-two years of age.
    If the purchase in the first place was wrong, and Greathouse held as trustee, in 1847, the complainants could not assert their claim, having had notice in 1835.
    In the case in 11 Ohio, 59, the delay was twenty-five months—■ here it is thirteen years.
    By the authorities, the administrator shall not be permitted to make any profit of the estate committed to his charge by ^purchase. It is not a settled, fixed, invariable rule in equity, that all sales and purchases will be held void; but that a court of equity will look into transactions between persons in these relative situations with extreme jealousy, and if it find the slightest trace of undue influence used, or unfair advantage taken, will interfere and give redress.” See Hill on Trustees, 160-170, 535, 538. In a word, the purchase is voidable, and not void. See 5 Pick. 519; Hill on Trustees, 535, 538; 10 Ohio, 117. And a court of equity will set aside the sale, or order another sale of the premises, as the propriety of each transaction demands, in view of the facts; and the court have established three principles by which they are governed: 1. Was there fraud in the purchase? 2. Would the property have commanded a higher price at the time of the sale ? 3. Although the property might have commanded a higher price at the time of the sale, and profit has been actually made by the purchaser, yet subsequent acquiescence for a reasonable time operates as a bar to any remedy. Welch v. Perkins, 8 Ohio, 52; Dunlap v. Mitchell, 10 Ohio, 117; Wade v. Pettibone, 11 Ohio, 57. The infancy of some of the defendants is no excuse for the long acquiescence. Henry v. Conn, 12 Ohio, 194, 195 ; Scott’s Ex’rs v. Barber’s Heirs, 14 Ohio, 547. See Christmas v. Spink, 15 Ohio, 600, and also 716.

       See 6 West. Law Journal, 565; Bohart v. Atkinson, 14 Ohio, 228; Armstrong v. Hueston, 8 Ohio, 552.

       See 4 West. Law Journal, 298, Archer v. Hudson, and note. Also 384, Davies v. Lowery, 15 Ohio, 655.

   Hitchcock, C. I.

The first question submitted to the court for consideration is, whether Thomas Greathouse, one of the original defendants, is before this court. As to him, the bill was dismissed in the court below. From this decree the complainants gave notice of appeal, but they never perfected that appeal. By neglecting so to do, they lost all claim against him, unless the appeal by the defendant, against whom a decree was rendered,' vacates the decree rendered in favor of his co-defendant.

It seems to be supposed that section 6 of the act of March 12, 1845, “ to amend the act to direct the mode of ^proceeding in chancery ” (43 Ohio D. 125), may have some influence upon this subject. That section provides that “ any party to a suit in chancery may appeal his separate part of the suit; in which case, the court from which the appeal is taken, shall direct the amount and condition of the bond on appeal.” I do not suppose that this section has any reference to a case like the one now before the court. That section was intended to provide for difficulties which frequently arose in practice, as to how much of a case was removed by an appeal, where a part of those against whom a decree was entered were satisfied and a part not. In such case the question was often raised whether an appeal by one of the dissatisfied parties vacated the decree, and removed the case as to those who were satisfied. The court generally held, that where there was that intimate connection between the parties, that the rights of one could not be adjudicated without the adjudication of the rights of the others, the appeal of one vacated the whole decree. But in cases not so situated, the decree as against him alone who appealed was vacated. This statute removes all doubt upon the subject.

But in the case now before us, there was a decree against but one of the two defendants, and he appealed. From what? Unquestionably from the decree against himself, not from the decree in favor of his co-defendant. There is no necessary connection between these defendants, so that the right of one can not be determined without deciding upon the rights of the other. We are of opinion that Thomas Greathouse is not before this court.

The bill in this case charges fraud upon Isaac Greathouse in every page, and almost every sentence, but whether any has in fact been committed, must depend entirely upon the evidence, and in truth there seems to be no difficulty as to any question of law.

There are numerous depositions, and without reciting the substance of them, I propose to state rather the conclusion to which our minds are brought by their examination, than to recite the language of the several witnesses.

*It is charged that there was fraud, upon the part of Great-house, in taking out letters of administration, and in his proceedings down to the time of the settlement account filed with the court in 1831; that there was fraud and collusion between him and Allison, in the commencement of the suit by the latter in 1831, and in the failure of the former to make defense to that suit, when he knew that the claim was without foundation, and might be successfully defended against; that there was fraud in Greathouse in not ajoplying the §350.66, found in his hands at the settlement in 1831, to the satisfaction of the judgment recovered by Allison; but, instead thereof, procuring an order of the court to make sale of the real estate to make the payment; that there was fraud in his conduct, after the order of sale was made, in preventing the land from being sold for its true value; and finally, that there was fraud in his employing Lewis to purchase the land for his own use.

The first point made is, that Greathouse conducted fraudulently in procuring letters of administration, and in his proceedings in the settlement of the estate down to the time of filing the account, in 1831.

There is nothing in the evidence to show any improper conduct on the part of Greathouse down to this time. It would seem that his proceedings were in accordance with the laws and customs 'of the country. It is true that the widow states that after the death of her husband she was about to sell the personal property which was left by him and return to Viginia, from whence they had recently removed. That Greathouse advised her that it would not be safe to sell the property without taking letters of administration. That she went with him to court, and the court inquired of her whether she was willing that he should be appointed administrator, and she replied that she was. That she supposed that she was ap ■ pointed administrator with him, and so continued to believe for some considerable length of time; and that when she ascertained it was not so, she thought things were not going as they ought. Now, this is %11 the evidence thero is upon this point, and this falls far short of proof of any misconduct on the part of Greathouse.

The next charge is that there was collusion between Allison and Greathouse; that the latter declined making defense in the suit of the former against him, although he knew that a good and successful defense could have been made. There is much testimony as to the justice of this claim of Allison; and taking the whole into consideration, it is, perhaps, doubtful whether it was just or not. But there is an entire lack of testimony to show that Great-house knew of any defense that could be made. Instead of collusion between him and Allison, the evidence is that there had been no meeting, no correspondence between them until after the commencement of the suit. It is complained of him that he did not correspond with the family, residing in Virginia, upon the subject. The proof shows that one of the guardians of the children was present at the time of the commencement of the suit, so that the family wore not ignorant of its pendency. This suit was not disposed of in that haste which might have been expected had there been any collusion. It was commenced in April, 1831, and judgment entered in October, 1832. The case was defended, as the record (which is made an exhibit) shows, and at the October term, 1832, was submitted to the court on a plea of the general issue and of plene administravit, and the court found that the defendant had fully administered the assets that had come to his hands to be administered, except the sum of §68.45. And a judgment was rendered against the defendant for the sum of §279.64, to be levied of assets that might subsequently come to his hands to be administered.

The charge of fraud, with respect to this judgment, is entirely unsustained by the evidence.

The next charge is that the conduct of Greathouse was fraudu ■ lent in not appropriating the $350.66, found in his hands at the settlement in 1831, to the payment of this judgment; but, instead thereof, procuring an order for the sale of the real estate.

*Tbe sum of sixty-eight dollars forty-five cents, found by the court in his hands, under the plea of plene administravit, was so appropriated. But what became of the balance ? The evidence in the case shows. Previous to that settlement, it had been paid over to the widow and guardian of these complainants, to supply their necessities. It was thus paid over by the advice of counsel, but was not- brought into the account, because not paid subsequent to an order of court. But it was allowed to the administrator on his plea of plene administravit. There can be no -doubt that this money went to the support of the widow and heirs. And those heirs now ask this court, as a court of equity, again to charge the administrator with this sum, because the payment made was not strictly regular. We do not feel inclined to comply with this request.

Another thing should be stated in this connection. At the very time Allison commenced this suit, the guardian was present to receive the balance of this money, and it was only withheld in consequence of the commencement of that suit. The charge of fraud in this particular is not proved.

There is much testimony in the case relative to the value of the land, and great effort is made to show that it was appraised at less than its value, and that Greathouse himself prevented its be» ing sold for its true value. But the evidence shows that the appraisers were judicious and honest men ; that the property was •repeatedly offered, openly and publicly, for sale, and not sold, for want of bidders. There is not a particle of proof to show that Greathouse interfered with the appraisers, or to prevent a sale. In fact, down to the time of sale, we discover nothing in the conduct of the defendant, in the whole case, inconsistent with the character of an honest and an upright man.

But it is charged that when the sale was actually made, the purchase was made for the use and benefit of the defendant. If so, it was wrong, and although he may have acquired the legal title, he could only take it in trust for the complainants, to be trans-erred to them when he should be refunded the amount which, he advanced as a consideration for the land, *in the payment of the judgment against the estate. His situation, as administrator, precluded him from the right to make the purchase.

It is positively denied, however, in the answer, that the purchase by Lewis was made for him or his benefit. The decision of this question must depend upon the proof. It is shown by the evidence, that on October 17, 1834, he, as administrator, conveyed the land to Lewis, the purchaser, for the consideration of $225 ; and that on the very next day, Lewis, by deed of release or quitclaim, conveyed the same to him for the consideration of $226. This is a very suspicious circumstance, nor is the suspicion entirely removed by the circumstance that these deeds were made? months after the land was sold. It is further in proof that Lewis was insolvent, and not in a situation to pay for the land. In addition to this, there is evidence'in the case, both of the declarations of Lewis, who is now dead, made before the execution of the deed, and of the defendant himself, which go strongly to sustain the position that Lewis purchased for the defendant.

Taking all the circumstances, and the testimony in connection therewith, we are satisfied that this sale, although ostensibly to Lewis, was in fact to the defendant himself;-and that as against him the complainants are entitled to relief, unless there is something further in the case to exonerate the defendant.

The defendant, in his answer, insists that long after the land came into his hands he offered the complainants to give it up to them, upon being repaid the amount which he had advanced upon it; but of this there is no proof. On the contrary, John Glass, one of the sons of Robert, testifies that in 1836 or 1837, he offered, in behalf of the heirs, to redeem the land, but that the defendant would not permit it to be done. This witness, although one of the heirs of Robert Glass, is not a party in this case. He, as he says, before the commencement of the suit, transferred his interest in the estate to the complainants, undoubtedly to place himself in a position to be a witness. But his testimony

is sufficient to rebut an allegation in the answer, *which is entirely unsustained, and which, even without this contradiction, could have had no effect.

On the part of the defendant, it is claimed that here has been an acquiescence on the part of the complainants for a great length of time, and that is in fact a stale demand, which should not be enforced in a court of equity. The land was sold in 1834, and at that time most of the complainants were within age. The bill was filed in 1848—fourteen years after the sale. Here was a lapse of fourteen years after the sale. But when it is considered that some of the heirs did not arrive at full age until shortly before the filing of the bill, here has not been that lapse of time which would induce the court to withhold relief.

But a question arises as to the relief which shall be granted. The land has been sold, and, for aught we know, to a bona fide purchaser, without notice, and for a good and valuable consideration. That purchaser who, from aught that appears, now holds the legal title, is not before the court. Under these circumstances no decree can be made for the land. But as the complainants can not have this relief, we think they are entitled to compensation ; and in our opinion, the proper rule of compensation will be to charge the defendant with the value of the land at the time of sale, and credit him with the amount by him paid for it, and which amount was appropriated in part satisfaction of a judgment against the estate.

We take the appraisal as evidence of the value, believing that appraisal to have been made by good and judicious men. Had the defendant sold the land, as it then was, at an advanced price, he might with propriety have been charged accordingly.

The land was appraised at $450; it was sold for $225. The difference is $225, for which, with interest from October 18,1834, the complainants may take a decree. ' The defendant will also be charged with the costs. Decree accordingly.


source: Caselaw Access Project

author: Spalding, J. Hitchcock, C. J.,

license: Public Domain

text:
    *Sally Wood v. Robert B. Warden, Administrator of Elisha Wood.
    Where a post-nuptial agreement is made between husband and wife, by which property is set apart for her separate use, the agreement, although void in law, will he sustained in equity, unless the rights of creditors interfere.
    A note executed by the husband to the wife, acknowledging the receipt of $100 at her hands, and promising to allow her six per cent, per annum interest thereon during her life, and if she survives the maker of thd note, to he paid her or her heirs extra of her third, will be construed such an agreement.
    It is not essentially necessary that the consideration of such note should spring from the wife’s property or earnings, to entitle her to come in as a creditor against the estate of her deceased husband.
    This is a bill in chancery, reserved in the county of Hamilton.
    The complainant filed her bill in the commercial court of Cincinnati, on October 27, 1848, setting forth that in the month of August, A. d. 1847, her husband, Elisha Wood, since deceased, received in money, of her private property, the proceeds of her own labor, which he, the said Elisha, had before that time specially appropriated to her as her own, the sum of one hundred dollars; and then and there made and delivered to the said Sally his memorandum in writing to the effect following:
    That he, the said Elisha, had received of the said Sally, his wife, one hundred dollars, to be paid by him to her at six per cent, interest, yearly, as long as she, the said Sally, should live, and if the said Sally should survive him, then the amount named in said memorandum, that is to say, the said sum of one hundred dollars, with interest, should be paid to said Sally beyond her thirds, or the sums allowed to her by law, as the widow of said Elisha :
    That some time in the month of September, A. d. 1847, the said Elisha Wood deceased, leaving the complainant, his widow, surviving him, whereby she became entitled to claim, and doth *now claim, the said sum of one hundred dollars aforesaid as her own property from the estate of her own husband.
    That the decedent’s estate is perfectly solvent, and that the administrator thereof hath, in his hands, assets that may be reduced to possession and converted into money, sufficient to discharge all the claims against said estate, including the debt of said complainant.
    The prayer of the bill is, that Robert B. Warden, as administrator on the estate of Elisha Wood, be decreed to pay complainant the amount of said note and interest. The memorandum in writing, referred to in said bill, is made an exhibit, and is of the tenor following:
    “ Cincinnati, Ohio, August 16, 1847.
    “Elisha Wood received of Sally Wood, his wife. $100. with interest at six per cent, yearly, as long as she lives, and if he dies first, this note is to be paid her or her heirs extra of her thirds.
    “Elisha Wood.”
    The answer of the administrator, filed June 1, 1849, says that he is advised and believes that the said note was given without any proper consideration whatever, legal or equitable.
    That it was obtained from the said Elisha Wood by undue influence and by threats, without any expectation on the part of said deceased that the said Sally would live to claim the benefit thereof, and was rather intended to pacify an unruly wife, than to make provision for a dutiful one.
    That there are no assets in his hands belonging to said estate^ but there is real estate which may be subjected to the payment of any decree that may be rendered herein against him as administrator.
    The complainant offered in evidence the deposition of Louisa Noel, who swears to the execution and delivery of the note, by Elisha Wood to his wife Sally Wood, in her presence.
    This witness says the note in question was given in lieu of a former note of the same kind, said to have been lost. That this note is about the same in meaning and in words with the *one that was lost. Witness had seen the first note and heard it read some two or three years previous to the signing of the last one. Witness occupied rooms up-stairs, in the house in which Mr. and Mrs. Wood lived. Understood Mrs. Wood had earned the money by washing.
    Upon cross-examination, as well as in a second deposition taken by defendant, this witness says the money was loaned to Mr Wood, to pay his assessment for opening Commerce street. The note was given for the §100 thus loaned. The money was earned by taking in washing and selling milk, by Mrs. Sally Wood and two daughters of Elisha Wood by a former wife. Mrs. Wood said the money was earned by herself and these two children ; they worked for her; they all worked together; does not know who collected the money; heard her say that she had the §100; does not know the ages of the girls, nor how much work they did; heard Mr. and Mrs. Wood both say that the money for which the note was given was earned by Mrs. Wood after the marriage.
    The defendant introduced the deposition of Henry Noel, who states that he heard complainant say that she had. gotten this note from Mr. Wood for money that she had lent him. She further said it was given for $100 ; that she and his daughters had earned the money by washing and selling milk.
    No other testimony was offered.
    The commercial court made an order dismissing the bill, from which complainant appeals.
    Storer & Gwtnne, for complainant:
    Though the girls may have assisted somewhat in the work, the wife had the money, and loaned it to her husband. It was recognized by him as hers, and this note was given to insure the repayment to her. Can his design be frustrated ?
    *It is settled in Huber v. Huber’s Adm’rs, 10 Ohio, 371, that the complainant is entitled to a recovery.
    A post-nuptial contract between husband and wife, by which property is set apart for her separate use, although void at law, will be sustained in equity. Garlick v. Strong, 3 Paige, 440; Liles v. Fleming, Dev. Eq. 185.
    Even gifts between husband and wife, without the intervention of trustees, have often been supported in equity. 3 Dessau. 158; Lucas v. Lucas, 1 Atk. 270.
    In Slanning v. Style, 3 P. Williams, 337, the testator permitted his wife to make profit of his butter, eggs, etc., and borrowed £100 —the proceeds thereof. The wife came in as a creditor against her husband’s estate. That case is similar to the present.
    A. N. Riddle, for respondent:
    The money loaned was the property of Elisha Wood. Ho was entitled to the earnings of his wife and daughters by a former marriage; and the same was expended for the joint benefit of both.
    This case is unlike the case in 10 Ohio, 371. In that case, the note given by John Huber to Elizabeth Huber, was for money that came to the wife from the proceeds of her dower estate, belonging to a former husband, and the court decided that in equity, she might set it up against his administrator.
    I claim, for the respondent, that the note given by Elisha Wood to his wife, for earnings made during the marriage with him by her, and his two daughters by a former wife, is void in law and equity. Clancy on Rights of Married Women, 112.
   Spalding, J.

It was decided by this court, in Huber v. Huber’s Adm’rs, 10 Ohio, 371, that where money comes to a wife, in right of a former husband, and the second husband borrows it of her, and gives her a note for it, the note is good ; and after his death she may set it up in equity against his administrators.

*No new rule of equity jurisprudence was established by that decision. It was simply the application of sundry well-established principles to a now and interesting state of facts. In certain cases the wife has always been treated as a creditor to her husband’s estate. She has been recognized in that character in respect to her paraphernalia; as where “ the husband, in his lifetime, being under the necessity of raising money, pledges her jewels, etc,, and dies, leaving personal property more than sufficient to pay his debts. She shall have the aid of his personal estate to redeem her paraphernalia thus pledged.”

So, too, “ where real estate is devised for the payment of debts, and the executor takes tho paraphernalia, on account of a deficiency of assets in the personal funds, to pay the debts, she shall have the same right against the estate, so devised for the payment of debts, to refund to her the real value of her paraphernalia, as a creditor can have who has not paid his debt for the want of assets.” Reeve on Domestic Relations, 38. These benefits result to her, not by virtue of any agreement on the part of the husband, but by mere operation of law.

In another class of cases, where wives have made savings out of certain allowances, given to them by their husbands, for private expenditure during cohabitation, the amount will be decreed to them as against the representative of the husband; and this, too, in the absence of any agreement made for such an allowance before coverture. Clancy’s Husband and Wife, 272, 276.

It was settled at an early period, in England, that where a husband voluntarily allows his wife, after marriage, to make profit of the produce of his farm, her savings should be her own, subject, after the death of her husband, to no claims but those of creditors.

In Slanning v. Style, 3 P. Williams, 337, which has been a leading case on the subject we are now discussing, the chancellor held, that where the husband had borrowed £100 from *his wife, which she bad saved during coverture, from the sale of pigs, poultry, butter, etc., the same should be allowed to her, as a creditor, out of hia assets, although, it was objected that there was no Writing whatsoever, whereby to raise a separate property in the feme covert. The lord chancellor declared, that courts of equity had notice of these separate interests in femes covert, by the agreement of their husbands. That it was a reasonable encouragement of a wife’s frugality, and that such an agreement would be of no'avail, if it were determined by the death of the husband.”

A more general rule, and one that has been too long and too firmly settled to be easily shaken, is this : Where an agreement is made between the husband and wife, after marriage, by which prop■erty is set apart for her separate use, the agreement, although void at law, will be sustained in equity, unless the rights of creditors interfere. 3 Paige’s Ch. 452; 1 Devereaux’s Eq. 187; 3 Dessaussure’s Eq. 15815 Vt. 537.

Let an application of these juánciples be made to the facts in .the case at bar, and how stands it ? The wife of defendant’s intestate, during the existence of coverture, collected the sum of $100 from sales of milk and for labor in washing, performed for persons out of the family by herself and her two step-daughters. This sum her husband borrowed in order to pay his taxes, and delivered to her his agreement in writing, whereby, after acknowledging the receipt of the money at her hands, he stipulated to allow her an interest of six per cent, per annum as long as she lives; and agrees, in case she survives him, that the note shall be paid to her or her heirs, over and above her dower estate. What clearer appropriation of this fund, for the solo and separate use of the wife, could have been made by the husband ?

But it is insisted that the money, when it came into her hands, was not the money of the wife; and herein the case *is claimed to be unlike the one determined in 10 Ohio.

It is true that, in point of fact, the consideration of the note, in Huber v. Huber’s Adm’rs, was money that came to the wife from her first husband’s estate. It came to the hands of Huber as the money of his wife, and hence became his by force of law, as much as if he had acquired it by his own industry.

That case, however, did not turn upon the fact that the wife was the meritorious cause of the acquisition of the money; for that circumstance alone would fall far short of furnishing sufficient cause to justify a court of equity in setting up, as a valid charge upon the estate of the husband, a claim of the wife for money lent and advanced to him during coverture.

It was the ascertainment of the husband’s intention to set apart and appropriate that amount of money for the exclusive benefit of his wife that induced a court of chancery to decree payment of the note from assets in the hands of his administrators.

The judge who pronounced the opinion says : “ A note from a husband to Ms wife is a very unusual thing; and this very circumstance in this case is, in consequence of its uncommonness, a convincing argument that he intended to withdraw the money, of which it was the evidence, from his own control, and give it absolutely to his wife.”

The note, or memorandum in writing, is of no other account in settling the question in equity than to make manifest the agreement of the parties, or, more properly speaking, to show the intention of the husband to appropriate the fund to the use of his-wife.

In the case cited from P. Wms., there was no note or agreement in writing binding the husband or his representatives to rej>ay,to the wife the £100; yet, on proof made that the money was borrowed from her savings, the chancellor decreed that she should, stand as a creditor of the husband’s estate to that extent. Nor was the money borrowed in that case the %noney of the wife. It arose from the sale of the husband’s poultry, etc., made by her, with his consent, and with the understanding that the avails of the trafile should inure to her sole benefit. Nevertheless, the poultry, pigs, etc., were his, and the money realized from the sale thereof was his, to a greater extent, if possible, than the avails of the milk sold and of labor performed over the wash-tub could, be claimed to be the property of defendant’s intestate.

The single circumstance disclosed by the evidence, that the two daughters of Elisha Wood by a former marriage, helped their step-mother to vend the milk and wash the clothes, can not be made to cut much of a figure in this case. At the outside, no stronger claim can be set up for defendant, on this branch of the caso, than that the money earned by the wife and daughters belonged to the husband and father. Let this be conceded as a legal proposition, and still the complainant’s case is made out in equity, if, as we find here, the same money was afterward set apart, and appropriated by the husband to the exclusive use of the wife. If it could be determined that she had been the meritorious cause of acquiring the fund originally, it would only add strength to an equity sufficiently strong without it.

The claim set up in the answer, that the note was obtained from, the said Elisha Wood by undue influcnco and by threats, and was rather intended to pacify an unruly wife, than to make provision for a dutiful one, seems to rest entirely in the imagination of the administrator, or his attorney. There is not a particle of testimony to sustain it. On the contrary, the idea is repudiated by the principal witness in the case, when interrogated by the defendant’s counsel.

A majority of this court are of opinion that the equity of this oase is manifestly with the complainant, and will order and decree that the defendant pay the amount of the note mentioned in the bill, with interest, to complainant, as also the costs of this suit) from assets in his hands to be administered; *and that the same be made a charge upon the lands of the intestate until fully paid. Decree for complainant.

Hitchcock, C. J.,

dissenting. Not concurring in opinion with the majority of the court in this case, but believing that the bill should be dismissed, it is proper for me to state the reasons by which I am influenced in coming to this conclusion. The object of the bill is to enforce the collection, against the estate of Elisha Wood, of a note for one hundred dollars, given by him to his wife, the present complainant, about three months before his death. It is admitted by complainant’s counsel, that this note can. not, at law, be collected, and therefore resort is had to chancery. It appears from the case, that the personal assets of the estate have been exhausted; and if this claim is sustained, the lands descended must be sold to meet the payment.

Whether this claim can be sustained in chancery, must depend upon the circumstances attending the transaction. It appears that Sally Wood was the second wife of Elisha; that during their cohabitation, children of his, by a former marriage, were living with them, especially two daughters, who are named in the deposition.

On August 16, 1847, the note in controversy was executed, and in November following, the maker died. A witness who was present at the execution of the note, understood from conversation between Wood and wife, that there had been a previous note for the like sum, which had been lost; and the witness states that while they were conversing on the subject, Wood told his wife [¡o draw such a note as she liked, and he would sign it. This note was accordingly drawn and signed.

In other conversation with the parties, and especially with the complainant, witness learned that the consideration of this note was as follows: Subsequent to the marriage, and during *the cohabitation of the parties, the complainant had taken in washing, which had been done by herself and the two daughters of Wood by his former marriage, for which she received one hundred dollars, which she loaned to her husband. To one witness she stated that a part of the consideration was milk sold, for which money had been received; that the washing was done by one of the daughters, the ironing by herself, and that another daughter distributed the milk. These were the daughters of Wood, the stepdaughters of the complainant.

As a general rule, contracts between husband and wife are void, both in law and equity. Notes given by the husband to the wife previous to the marriage, and which become due during coverture, are annulled by the marriage; and although such note may remain in the hands of the wife after the death of the husband, can not be enforced against the estate of the husband. Reeve’s Domestic Relations, 86. But where the contract is of that nature that it can not be carried into effect until after the death of the husband, although entered into previous to the marriage, such contract will survive to the wife. If such be the law—if a note given before marriage, but which falls due during coverture, is by the marriage annulled, it would seem strange that a note given by the husband to the wife during coverture, should be held binding upon the husband’s estate after his death. As a general rule, it can not be so held.

But to this general rule I admit there are exceptions. The case of Huber v. Huber’s Adm’rs is one of that character. In that case the complainant had received from the estate of her former husband $100 as her share of the estate, which Huber, the husband, borrowed from her, and gave her his note. This note was enfoi’ced in equity at the suit of the payee against the estate of Huber, after his decease. It will be seen that the consideration of the note was the money of the wife, which was treated by the husband as her separate property, in borrowing the same from her, and giving his note for the payment.

Thef case of Slanning v. Style, 3 P. Williams, 337, was one *in which a widow was permitted to c.ome in ás a creditor* to her husband’s estate, after his decease. In that case, the husband had voluntarily allowed the wife after marriage, for her separate use, to make profit of various articles beyond what was used in the family, and she had accumulated one hundred pounds. This sum she loaned to her husband ; and the court hold, that to the extent of this sum she might come in as a creditor of her husband.

To assimilate the case now before this court to the one last referred to, there should have been evidence to show that Wood had allowed his wife to receive, as her separate property, money for washing and milk. There is no such evidence in the case, unless it is to be presumed from the circumstance of his having executed the note. To my mind, this is not sufficient. Without such previous allowance or agreement, the earnings of the wife must have been the property of the husband; and when he borrowed from-her, he but borrowed that which was his own.

I would not so much object to the decision of the majority of the court, had this money been the avails even of the labor of the wife. But it was not so—at least, but in part. The evidence in the case shows that the washing was done by one step-daughter, the milk distributed by another, and all that was done by the wife was the ironing of the clothes. Now. it does seem to me that it is not in accordance with the principles of equity to take from these step-daughters a part of the inheritance which descended upon them from their ancestor, to pay their step-mother for work which they themselves have performed.

I think the bill should be dismissed.


author: Caldwell, J.

text:
    *Jefferson Palm, Administrator of Frederick Bollmeyer, v. The Medina County Mutual Fire Insurance Company.
    When a contract of insurance has been completed by the party applying for insurance, doing all that is required to be done on his part, although the agent contracting on the part of the company has not power to issue a policy, the risk commences from the time of making such contract, if there be no stipulation to the contrary.
    When a contract of insurance has been made with an agent, and the applicacation, with the deposit note, has been sent on to the office of the company from which the policy is to issue, the company are liable, although the loss occurs before the arrival of the letter containing the application.
    If the contract between the agent and the person applying for insurance be fair and strictly in accordance with the rules of the company, such liability will exist, although there be printed on the blank application the qualification that the policy will issue “if approved” by the company. Such qualification only saves the company the right to objectto an unfair or improper contract.
    This is a bill in chancery, reserved in Summit county.
    The principal facts in the case are stated in the opinion of the ¡court.
    The pamphlet, “By-Law’s, Instructions to Agents, and Charter of the Insurance Company,” contains, in addition to the provisions referred to in the opinion of the court, and besides others, the following circular to agents:
    “ To--, Agent of the Medina County Mutual Fire Insurance Company:

    “ Sir : The Directors of the Medina County Mutual Fire Insurance Company wish yon to act as agent of this society. The duties of such agency are, to ascertain the value of property to he insured, the amount of risk, surveying, measuring, and making plan of building, and ascertaining the loss incurred in case of fire.”
    “In all cases the applicant should describe the property to *be insured, and sign the description and application, as it forms an important part of the contract of insurance; for which purpose the necessary blank forms, and this circular of instructions, will be furnished.
    “As to th & regulation of premiums or rates, no schedule can be given which will dispense with the exercise of a sound discretion on your part. The classes of hazards and schedules furnished you contain the rates of premium on the several kinds of property and trades, subject to the ordinary risks and exposures. But these are to be varied according to the increase of the risk attending the property insured, and the risk may be so unusually great as to prevent an insurance at all.

      “ The rates herewith are estimated without regard to collateral or external danger.
    “A brick building, with slated roof, would not be so much exposed at forty feet distance, as a wooden one of the same size at eighty feet; so that much depends, after all the directions that can be given, upon your own judgment as to the increase of premiums.
    “ You will fix such rates of premium as you shall deem just and proper, fill up and take a note therefor, and receive and indorse on the back thereof, the three per cent, which you may forward from time to time, together with the fifty cents received for each policy,, not less frequently than quarterly, or when ordered by the treasurer.
    “ You need not number the application nor note, and leave the day of the month in note blank. Let the indorsement be as fol-laws on the back : ‘ Received at date, one dollar’ (or such sum as may be paid).

      “We trust you will use your best exertions to explain the principles upon which the company is formed, and to advance its interest in your town and vicinity.
    “ It is requested that the advertisements furnished you should be posted up in public places in your vicinity.
    ^BY-LAWS.
    “And the rates of insurance on all buildings differently situated, to be in proportion as agents shall think the situation and hazard require, not exceeding twenty-five per cent, on the amount insured for the deposit or premium note.
    “Such buildings and goods as are particularly extra-hazardous, may be insured at the discretion of the board of directors, and not otherwise; and all such classes as are not named, may be insured at such rates as the board of directors may determine after application is made, and coming within the provisions of the act of incorporation.
    “Three per'cent, of the premium note shall be paid and indorsed thereon at the time of making application, one dollar for each survey and application, and fifty cents for each policy, and recording the same by the person receiving it.
    “ The general agent shall be authorized to appoint such agents to act for this company as he shall deem necessary, and take from -each agent, so appointed, a bond, with security to the directors of said company, in the sum, of $1,000, previously to acting as such, agent.”
    The premium note given by Bollmeyer, was as follows:
    “ $78. Por value received in Policy, No.-, dated the day of-, 1846, issued by the Medina County Mutual Pire Insurance Company, I promise to pay said company, or their treasurer for the time being, the sum of $78, in such portions, and at such time or times, as the directors of said company may, agreeably to their act of incorporation, require.
    (Signed,)
    “Dated, May —, 1846.”
    The property to be insured, described in Bollmeyer’s application, was not of the class designated particularly extra-hazardous. The secretary of the company testified, that if a policy had been made on Bollmeyer’s application, it would have been dated, and taken effect at noon on the day the application *was re- [532 ceivod at the office of the company, in Medina, which was after the fire; the general practice of the company having been, to date policies the day the applications are received at the office, to take effect at noon on that day, unless the time for the date of the policy in the premium note had been filled up by the agents for the policy to date a different date.
    R. P. Eannet, for complainant:
    The solo ground of refusal to issue the policy, and pay the loss, was stated upon the single point, that the application did not reach Medina until after the fire.
    The applicant had done everything on his part to entitle him to a policy. If the contract of insurance was completed before the loss, a court of equity has power to compel the issuing of the policy, and the adjustment of the loss. What, then, constitutes a contract for insurance? I answer, the same circumstances that will make a contract in any other ease, The minds of the parties must assent in person, or through agents. It may require more to be done to clothe it with the necessary legal forms, but the contract is back of, and precedes the mere final written evidence of the contract. Is the policy the contract ? No; it is only evidence-of it. If the policy were the contract, there never could be such a thing as a bill to enforce the specific performance of the contract by the delivery of the policy. The charter of the cornpany contemplates that membership, with all the rights and obligations growing out of it, may exist before the policy issues.
    Section 5 provides, “That every person who shall become a member of said company, by effecting insurance therein, shall, before he receives his policy, deposit his promissory note for such a sum of money,” etc.
    Section 6 provides, that “ every member” shall pay his share of all losses; and section 7, that “ every member ” shall be entitled to indemnity for losses. The policies that issue are all in *the past tense, and recite that the insured has become a member of the company, and obligated himself to pay the note, etc.
    In this case, the facts show that the contract was complete. The only cases in which the directors reserve the right to determine on making the contract and fixing rates, is as to property “particularly extra-hazardous”—in all other cases, by the rules and intructions of the company, their agents make the contract. Take all the instructions and by-laws together, and they amount to a standing offer to the public to insure any one upon the terms specified in the offer. When any one accepts those terms with the assent of the agent, it is an acceptance of the offer of the company, and constitutes a contract.
    The only control which the company retained in their own hands, was the same that every principal does over the contract of his agent, to see that it conforms to his instructions. If it does, he can not repudiate it; if not, he may.
    Rut there is printed on the application these words:
    “ All policies of insurance are issued from the office of the company, at Medina, upon applications sent in by agents and others; and, if approved, will bear the date of the reception of said application, unless requested by the applicant to bear date of some future day. It will be the duty of agents to make out the applications of persons who may apply to them for insurance in the company, and forward them per mail, or otherwise, to the office of the company.”
    This is merely printed on the back of the application.
    Now, it is evident that these are not the rules or by-laws of the ■company, but are intended as a condensed summary of the substance of their regulations, put in small space to be more generally circulated; and it is further evident that the clause relied upon by the defendant is an abridgment of the very by-law upon which I rely, and should receive the same construction. A reception by an Authorized agent is a reception by the company :
    William H. Canfield and Whitman Mead, for defendants:
    *It is insisted by defendants that the agent at Warren had no authority to make any contract, but that the application •was made by Bollmeyer and received by the agent of the company, to be forwarded to the office of the company, to be there approved or disapproved; and if approved, a policy to issue thereon, to take effect from the time it should be received at the office.
    This was the almost invariable rule of the company, known to Bollmeyer both by the notice printed on the application, and by having been previously insured under two different policies, both dated, and to take effect at the time they reached the office of the company, and not at the date of the application.
    McConnell, the agent at Warren, testifies that he had no power to bind the company, and frequently, and always when interrogated as to his power, said, that policies'could not issue until approved by the directors of the company.
    There is no proof that ever Bollmeyer had notice of the by-laws in relation to the date of policies, but he had notice of what was printed on his application, as he must have seen it. If he .would avail himself of a contract, he must show that the company had given power to the agent to contract, and that the agent did contract ; which has not been done. The application was a mere proposition, and if a policy had issued, it could not'have taken effect earlier than the 2d or 3d day of June, after the fire. If the policy had issued, dated at the date of the application, and Bollmeyer had been required to pay an assessment on his premium note, to meet losses before the application .and note were received at the office, but after the date of the application, what would be the language of the complainant, in defense of a suit brought by the company for the collection of such an assessment? He would point, in emphatic language, to the notice printed on the application—that policies should date and take effect at the time the application was received at the office. He would point to the general practice of the company, and to his two prior policies, and thus be relieved from ^liability.  This case is unlike the case of Perkins v. The Washington Ins. Co., 6 Johns. Ch. 485.

      Again: the complainant did not expect his insurance to commence at the time of making his application, because his premium note was not filled up, showing the time the policy was to be dated. That was left to be done by the company, according to their custom.
    M. Birchard, for complainant, in reply:
    The real issue is, what shall be the true date of the policy? The by-law, not any departure from, it, speaks the answer. Corporations speak only by their by-laws.
    It was a matter of no moment, whether the loss occurred before the papers reached Medina or not. McConnell, the agent at Warren, might have kept them several days before sending them; and when sent, if nothing variant from his instructions had been done—■ if, when sent, they were such as the directors were bound to approve, they must have issued the policy, fire or no fire. 4 Cow. 650, Woodworth’s opinion. When Bollmeyer made his application, he was bound from that date; and it is absurd to say that one party shall be bound and not the ether. 4 Cow. 645; Law Reporter, vol. 10, No. 11, p. 499.
    The date of the policy is regulated by a by-law of the company, not by any arbitrary exercise of discretion on the part of the company^ Bollmeyer was never informed by McConnell, that he could not bind the company. Bollmeyer had a right to rely upon the by-laws of the company. 9 Howard, 390.

       Suydam v. Columbus Ins. Co., 18 Ohio, 459; Neville v. Cincinnati Ins. Co., 19 Ohio, 452.

   Caldwell, J.

This is a bill filed for the purpose of charging the defendant, as insurer, for a loss occasioned by fire, sustained by Frederick Bollmeyer.

*The facts of the case, as appear from the pleadings and evidence, are these: The Medina County Mutual Insurance Company had an agency at Warren, in Trumbull county, the place of residence of said Frederick Bollmeyer. On the 27th of May, 1846, Bollmeyer applied to McConnell, the agent of the company, for an insurance on his stock of goods and groceries in Warren. The amount of insurance fixed upon the stock was $600. Bollmeyer made his deposit or premium note, for $78, with security to the company, paid $1.67, the per cent, required to be paid down, which Avas passed by the agent to the credit of the company, and at the same time paid for a policy. The application of Bollmeyer, together Avith the premium note, was mailed on May 27 or 28 (not certain, from the evidence, which of these days), to the office of the company, at Medina. The application and note reached Medina on the 2d of June, and were taken out of the office by the agent of the company, at that place, on the same clay. The property was destroyed by fire on the night of the first of June. Information of the destruction of the property reached Medina about the same time that the application and note were received by the agent at Medina, and was about the same time communicated to him. Bollmoyermade out an authenticated statement of his loss, and through their agent, presented it to the company. The company refused to issue the policy or pay the loss. McConnell, the agent at Warren, within a few days after the loss, tendered to Bollmeyer the amount he had paid, which he refused to receive. The bill prays that the company be decreed to issue a policy, and for general relief. It is contended, in the first place, on the part of defendant, that the agent had no authority to bind the company. The agent, in his deposition, states, that he never pretended, by anything that he did, to bind the company; and that whenever he was interrogated on the subject, he always stated that he had no such authority. The obligation of an agent’s acts is not to be determined so much by his own or his principal’s ^opinion, as by the acts themselves. What were the acts which the agent of the company was authorized to do ?

He was authorized to receive applications, to examine the promises, determine the character of the risk, agree upon the amount to be insured and the amount of premium, receive such portion of the premium as was to be paid in hand, and take the obligaof the party insured, with such security as he might approve, for any future liability.

The agent is the only person, from the very nature of the case, that can be presumed to have the information necessary to act for the interest of the company, and is the only person with whom the party applying has anything to do. In this instance, Bollmeyer had done everything that it was possible for him to do, on his part; all of which had been agreed upon with the agent. It is not necessary, to perfect a contract of insurance, so as to bind the parties, that a policy should have issued; indeed it is not necessary that any writing whatever should have been executed, by the signature of the parties. Like any other contract, it is only necessary that the minds of the parties should have fully met. See Duer on Insurance, vol. 1, pp. 66, 67.

It is said, however, that it is one of their rules, that the company are to approve the applications sent in by their agents, before such applications and contracts are binding, and that Bollmeyer had notice of that fact. This is based on the fact, that on the blank application, with many other stipulations, is printed the following: “ All policies of insurance are issued from the office of the company at Medina, upon applications *sent in by agents and others, and if approved, will bear date of the reception of such application, unless requested by the applicant to bear date of some future day.” We do not think the qualification, “if approved,” here inserted, reserves to the company the arbitrary right of setting aside, at pleasure, any contract that their agents may make, no matter how fair it may be, or how strictly it may comply with their terms of insurance, or with their directions to their agents. Such a construction would permit them to trifle with the community to a most glaring extent.

The company, in a case where their agent had been imposed upon, or where a contract had been made by him that would operate as a fraud on their rights, would have a right to refuse to ratify such contract, and thus clear themselves from incurring liability. And we suppose this phrase merely refers to such a state of caso. They, no doubt, like any other party, have the right to defend themselves against fraud or' mistake, and in such a case, they would not bind themselves by ratifying such contract by issuing a policy. We think this is what is referred to, and nothing more. In the case now under consideration, it is not contended that everything was not fair, and strictly in accordance with the rules of the company.

We are of opinion that the contract made between McConnell and Bollmeyer was a valid contract, binding on both parties; and that it did not require the ratification of the company.

But it is said that the contract was not, by its terms, to take effect until after the fire occurred ; in other words, that the risk had not commenced, when the loss took place. Amongst the general rules of the company, printed in a pamphlet, which contains instructions to the agents, the by-laws, charter and general rules, is the following provision, which is one of the by-laws of the company:

“All policies issued shall take effect from the day on which the application shall be dated, and the premium note deposited, unless directed by the applicant to be dated on a future day.”

Now, as seen above, the policies are to be issued from Medina ; *but by the terms of this rule, to take effect from the time the application is dated, the application is dated on the 27th of May, before the loss occurred. It is said, however, that by the stipulation, which we have given above, from the printed matter on the blank application, it is required that the policy shall have date from the time of reception of the application at Medina. Taken in the connection in which this is found, it may read either to the reception at Medina, or to the first reception of it by the agent; but when we take it in connection with the general rule, which requires that the policy shall take effect from the time the application is dated, which clearly refers to the time when it is made to the agent, we think there can be little doubt that the reception spoken of on the blank application, refers to the first reception by the agent—this requires no forced construction, and makes the two provisions harmonize. But even if such contradiction existed, it would not avail the defendant. The principle of the rule, that as between parties contracting, in a doubtful case, the construction shall be taken which'is against the party creating the writing, would apply here with peculiar force. It is said, however, and the evidence appears to warrant it, that the custom of the company was to issue the policy, to take effect on the day that tho application was received at Medina; that the defendant had received policies previously, dated in that way, and must have known such custom. This, however, does not appear to have been a universal custom, and would not do' away with the effect of their printed rules, if it were.

This case bears a very strong analogy to the case of Tayloe v. The Merchants’ Fire Insurance Company of Baltimore, 9 How. 390.

In that case, the agent of the company wrote to Tayloe, he being in Alabama, stating the terms on which the comjiany would take the risk, and stating that if Tayloe was agreed to the terms, and would send his check for the amount of the premium, that the matter would be concluded. Tayloe, on receipt of the letter, mailed his check for the amount of the ^premium. Before the letter with the check reached the company, the property was destroyed by fire. The court held, that the contract of insurance took effect from the mailing of the letter with the check, and that the company were liable for the loss.

We think in this case that the contract of insurance took effect from the 27th of May, the time of its being entered into between Bollmeyer and the agent, McConnell, and. that the company are therefore liable for the loss.

Decree accordingly.

Judge Ranney did not sit in this case, having been of counsel for one of the parties.

       Corporations may contract, by parol, within the sphere of their proper functions. Hamilton v. Lycoming Mut. Ins. Co., 10 Law J. 498; 5 West. Law J. 419; Ang. & Ames on Corp., chap. 8, sec. 7. A policy of insurance must be in writing. Cockerill v. Cin’ti Mut. Ins. Co., 16 Ohio, 164, per Bead, J. All the books upon the subject, and decisions, unite in declaring that a policy must be in writing. To hold that there could be such a thing as a verbal policy, would be contrary to all eomme rcial usage and the authority of all the books and decisions. Ib.; Stark Co. Mut. Ins. Co. v. Hurd, 19 Ohio, 149; 2 Cush. 439; 19 Law J., n. s., E. P. 222; 7 West. Law J. 529; 17 Ohio, 192.


text:
    Alfred and James Fassett v. Henry Traber et al.
    When two creditors have each a lien on the same property of their debtor, and the one having the prior lien has also a lien on another fund for the same debt on which the subsequent lienholder has no claim, such prior lienholder will be compelled, in equity, to exhaust such fund before he proceeds to subject the property on which the other creditor has his lien.
    If, after bill filed by the subsequent lienholder to compel such subrogation, the prior lienholder delivers up his claim on the second fund, to the debtor, he will be compelled, as between him and the subsequent lien-holder, to account for such fund as so much paid on his claim.

    This is a bill in chancery, reserved in Butler county.
    The material facts are stated in the opinion of the court. The bill was filed by the complainants, partners as “ Fassett & Go.,” among other purposes, to distribute the proceeds of the sale of a house and lot in Rossville, mortgaged by Henry Traber to Traber & Aubery.
    ^Traber & Aubery, after surrendering two notes on Baird, as stated in the opinion of the court, have not a sufficiency of assets in their hands, received from Henry Traber, to pay his liability to them, unless a portion of such liability is satisfied out of the proceeds of the sale of the house and lot aforesaid.
    Wm. E. Brown, for complainants, claimed :
    1. That Traber & Aubery had other securities sufficient to pay them, without their mortgage on this real estate, and to which, in equity, we can compel them to resort first.
    2. That the sale of the store to Baird, and the assignment of the Baird notes, and giving the two mortgages to Traber & Aubery, was done to defraud and delay Henry Traber’s creditors; and that Traber & Aubery were a party to the fraud.
    The following authorities were cited: 4 Johns. Ch. 19; 17 Vesey, 520 ; Mitchell v. Gazzam, 12 Ohio, 315; Swift et al. v. Holdridge, 10 Ohio, 230 ; 5 Cowen, 549 ; 10 Paige Ch. 365.
    Scott & Moon, for defendants, insisted:
    That the evidence showed that Traber & Aubery acted in entire good faith, and without any intention of combining with Henry Traber to defraud his creditors.
    They accepted two drafts merely for the accommodation of Henry Traber, drawn by Henry Traber on them, in favor of Hallowell & Co., and it was but right that he should try to make them perfectly secure. Traber & Aubery have delivered  up the notes on Baird to Henry Traber, as the condition upon which they took them failed, namely, to save said Traber & Aubery from paying their own money on their acceptances in favor of Hallowell & Co. Said Traber & Aubery have, ^therefore, nothing to rely upon for their security but the said mortgages. •’ The surrender of the Baird notes was made in accordance with a previous agreement to that effect, if not paid when due, and though surrendered since the bill was filed, the arrangement was made before.

       Bee Bank of Muskingum v. Carpenter, 1 Ohio, 21, pt. 1.

       See Swift v. Holdridge, 10 Ohio, 230; Mitchell v. Gazzam, 12 Ohio, 315, 340; Brown & Co. v. Webb, 20 Ohio.

   Caldwell, J.

This is a bill filed by Eassett & Co., who are creditors of Henry Traber, for the purpose of reaching certain .property of his, which they allege has been fraudulently transferred, for the purpose of defrauding creditors.

The facts, as exhibited by the evidence in the case, are substantially these: Ón May 11, 1849, the complainants, who reside in Philadelphia, recovered a judgment, in the commercial court of Cincinnati, against the defendant Henry Traber, for the sum of $958. On May 12, 1849, an execution was issued on said judgment, and levied on the 14th of the same month on a house and lot in Rossville, Butler county, the place of residence of the said Henry Traber.

Traber had been, for some time previous to this, doing business in Rossville, as a merchant; and, on the 11th of May, the same •day on which the judgment was recovered, and three days before the levy was made, he gave to Traber and Aubery a mortgage on the lot above referred to, and sold out his store of goods to his clerk and brother-in-law, Cornelius Baird, for the sum of $2,500. Henry Traber received from Baird, as a part consideration of the store, his two notes for $673.37 each, payable, respectively, in four and six months; which two notes were, on the same day, assigned by him to Traber & Aubery. He, at the same time, gave a mortgage to Traber & Aubery for $200, on certain household property. The mortgage on the lot, the mortgage on the household property, as well as the assignment of the notes, are claimed by defendants to have been made to secure Traber & Aubery against the acceptance of two drafts drawn by Henry Traber on them, in favor of Hallowell & Co., of Philadelphia, which drafts were drawn in March, 1849, payable in six and twelve months *from date, for $673.37 each ; and also to secure an account for money advanced and liabilities incurred by Traber & Aubery, to and for Henry Traber, amounting to between $200 and $300, and on which it is claimed there is due, after deducting some credits, near $200.

The bill'in this case was filed on June 4, 1849, charging the several mortgages and transfers made by Henry Traber to Traber A Aubery as fraudulent and void, and also charging that the sale of the store to Cornelius Baird was fraudulent, and without any consideration; that Baird was a man of no means; and that the whole proceeding should be declared fraudulent and void; and praying, in that alternative, that if the securities of Traber & Aubery should be held valid, that inasmuch as they, Traber & Aubery, had a security on two funds, the two notes of Baird and the mortgage on the personal property, in addition to the mortgage on the house and lot, they should be compelled to exhaust the other securities before they resorted.to the house and lot, on which alone the complainants had a lien.

Some time in 1850, some six or eight months after the filing of the bill (the time is not definitely stated), Traber & Aubery delivered up to Henry Traber the two notes of Báird, which they had received as collateral security; and Cornelius Baird, who is the only witness who speaks on that subject, states that that was the agreement at the time the notes were transferred; that in case they were not paid at maturity, they should be retransferred to Henry Traber. The bill calls on all the defendants to answer under oath. Henry Traber, Traber & Aubery, and Cornelius Baird, have all answered, denying all fraud in the sale and transfer of the store, as well as. in the giving and receiving the securities ; and from the view which we have taken of the case, we do not think it necessary to go into a detail of the evidence on which the complainants rely, as proof of positive fraud; nor to determine that question. The store of goods was retained by Baird until the-month of March, 1850, when he sold it to Samuel Smiley, who gave his notes therefor to the ^amount of $2,073.50, said notes being payable in October, 1850, 1851, and 1852.

In January, 1851, Smiley sold the same stock of goods to Jacob Traber, of the firm of Traber & Aubery, who paid for it by delivering to Smiley his notes given to Baird for its purchase.

The lot in the town of Rossville has been sold, by order of court, and the fund arising therefrom, with the exception of eight hundred dollars, belonging to Elliott, a prior lienholder, is now ready for distribution. And about this fund the principal controversy arises.

Now, it will be seen from the facts above stated, that Traber & Aubery received an amount of security, irrespective of the mortgage on the lot, greater than the amount of the liabilities they had assumed for Henry Traber, and bis indebtedness to them. Traber & Aubery had gotten possession, as would appear, of most, if not all the property of Henry Traber, who was insolvent. The Eassetts, who had a lien only on the lot on which they had made their levy, had a clear right to compel Traber & Aubery to resort to those other securities, on which they, the Fassetts, had no lien, and to exhaust them before they could come on the lot. This the Fassetts attempted to do, by filing this bill. Long after the bill is filed, Traber & Aubery deliver over the two notes, corresponding precisely in amount with the two drafts, to Henry Traber, the debtor. If they had retained these notes they would have been compelled to apply the proceeds to the payment of their debt; and having, after the commencement of this suit, placed the notes beyond their control, as between them and the complainants, they are bound to account for their amount. Any other holding would permit them to commit a fraud on complainants.

Nor does it at all help the matter for the defendants, that the delivery of these notes was in accordance with a previous agreement. *A creditor has a right to secure himself by obtaining a lien on the property of a failing debtor; and if done fairly, he may thus obtain a preference over other creditors. But in such a case it is necessary that the utmost good faith should be observed toward the rights of other creditors. The creditor must act solely for the purpose of securing himself, without interposing any barrier to the rights of others, except such as may be necessary to effect that object. In this case the agreement was, that if the notes were not paid at maturity, they should be delivered over to the debtor; the effect of which was, that Traber & Aubery appropriated this property as against the creditors of Henry Traber, but to operate as their security or not, at his option.

The decree of the court, then, will be, that Traber & Aubery will be held to account for, as in payment of their claim on the lot, the amount of the two notes by them thus delivered up, and also to accountfor the personal property received under the mortgage ; and the complainants will be subrogated to their rights in the fund arising from the sale of the lot.

Decree accordingly.

       Brown & Co. v. Webb, 20 Ohio.

       Ohio Life Ins. and Trust Co. v. Reeder, 18 Ohio, 35; Greene v. Ramage, 18 Ohio, 428 ; 14 Ohio, 365.

       See Mitchell v. Gazzam, 12 Ohio, 335, per Read, J. The dictum of Read, J., in its broadest sense, seems to have been doubted. Curwen’s Cases Overruled, 26; Hull v. Jeffrey, 8 Ohio, 390; Wilcox v. Kellogg, 11 Ohio, 394; and see upon this subject, and the construction of the act of March 14, 1838 (Swan’s Stat. 717), the authorities referred to in the note to Brown & Co. v. Webb, 20 Ohio.

       See Brown & Co. v. Webb, 20 Ohio.