author: Davis, J.

text:
    Davy et al., Partners, v. The Fidelity & Casualty Insurance Company.

      Contract for fee of attorney — Contingent upon amount recovered— Valid — Provision against compromise by .client — Invalid—■ Vitiates entire contract.

    1. While a contract for an attorney’s fee contingent upon the amount to be recovered by judgment or settlement is ordinarily valid, yet when such contract contains a stipulation that the client shall not compromise or settle his claim without the consent of the attorney, it is champertous and voidable at the option of the client, and its illegality will avail as a defense in any action against a third party which is based on the contract.
    2. In such case the illegal stipulation cannot be ignored and the other provisions of the contract enforced.
    (No. 10094
    Decided June 9, 1908.)
    Error to the Circuit Court of Miami county.

      The plaintiffs in error were plaintiffs below, and on the 22d day of October, 1904, filed their petition setting forth that they are partners engaged in the general practice of the law in Miami county, Ohio; that the defendant is a corporation engaged in the accident and life insurance business; that on and after the 14th day of December, 1903, one Margaret R. Slagle had a cause of action against the defendant growing out of a policy issued to her husband, Jacob Slagle, insuring him against disability or death resulting from accident, and while said policy was in force her said husband was injured in a railroad accident, from which injury he died; that the plaintiffs at the request of said Margaret R. Slagle prepared proofs of the sai'd death, loss and claim and examined into the facts incident to the injury and death of her said husband, advised her as to her rights, and, on the 23d day of July, 1904, entered into, a contract in writing with her whereby she employed the plaintiffs as her attorneys to prosecute suit against the defendant to recover for the said death loss under the said policy, and in consideration of the services which the plaintiffs had already performed for her concerning the said death loss, and the further agreement on the part of the plaintiffs to bring suit against the defendant for sajd Margaret R. Slagle to recover from the defendant the said death loss of ten thousand dollars, or so much thereof as should be found due her by the verdict of a jury or decision of the court, and further agreement to prosecute the case through all the courts to which it might be carried, said Margaret R. Slagle agreed that forty per cent, of the amount realized from the defendant in said case, either by judgment or settlement, should be paid to the plaintiffs for their services, and the said Margaret R. Slagle thereby made an equitable assignment to the plaintiffs of an undivided two-fifths interest in said cause of action and of the proceeds to be realized therefrom either by settlement or judgment; that the plaintiffs began such an action against the defendant, and that on or about the i6th day of August, 1904, they entered a notice on the appearance docket in said cause and likewise gave a notice in writing to the defendant of their agreement with the plaintiff ánd of the terms thereof; that on the 14th day of October, 1904, the said Margaret R. Slagle, without the knowledge and consent of the plaintiffs, made a settlement of said cause of action with the defendant and presented to the clerk of the court an entry setting forth that said cause had been settled and dismissed and caused said entry to be approved by the court and said cause thereby dismissed; that no part of plaintiffs’ compensation for said services have been paid, and that said Margaret R. Slagle is insolvent, and that by reason of the premises the defendant is indebted to the plaintiffs for the amount of. the compensation due them under their contract with the said Margaret R. Slagle. The plaintiffs further set forth as a second cause of action, after adopting all of .the allegations and statements of fact contained in the first cause of action, that in the written notice given by the plaintiffs to the defendant of their said contract with Margaret R. Slagle the plaintiffs also made a demand that the defendant retain from • any settlement it might make with Margaret R. Slagle of said cause of action the said forty per cent, due the plaintiffs under their contract, and that the same should be paid directly to the plaintiffs; that the defendant, on or about the 14th day of October, 1904, paid to the said Margaret R. Slagle a large sum of money to settle said cause of action and dismiss said cause, the exact amount being unknown to the plaintiffs, but said defendant failed and neglected to account for and pay to plaintiffs the share due to them under their contract with' Margaret R. Slagle, or any part of it; wherefore plaintiffs pray the court to decree said settlement as to the plaintiffs to be collusive, fraudulent and void and that a discovery be had of the amount paid by the defendant to said Margaret R. Slagle under said collusive settlement, either directly or indirectly, for the alleged settlement and dismissal of said case, and that the court decree the defendant a trustee for said two-fifths of said cause of action or the proceeds thereof and that an accounting be had and the court ascertain the amount due to the plaintiffs from the defendant and render a judgment in plaintiffs’ favor and against the defendant for the amount so found due, and, further, that the court grant to the plaintiffs all other and further relief to which they may be entitled under the premises.
    The defendant answered, and after sundry denials of allegations of the petition, admits that said Margaret R. Slagle and the plaintiffs entered into a written contract employing the plaintiffs to prosecute the said claim under said policy against this defendant in consideration of forty per cent, of the amount recovered against this defendant, but the defendant avers that the said contract was contrary to public policy, illegal and void, and sets out a copy of said contract, which is as follows “Troy, Ohio, July 23, 1904. This memoranda made this 23d day of July, 1994, by and between Margaret R. Slagle, of the first part and J. A. Dar^y and L. E. St John, of the firm of Davy & St. John, of the second part, Witnesseth: That the said Margaret R. Slagle does hereby retain and employ said Davy & St. John as her attorneys to prosecute her two certain and separate actions for money due her, on contract, one ag'ainst the Aetna Life Insurance Company, of Hartford, Conn., for $10,000, and one against the Fidelity & Casualty Company, of New York, for $10,000, for the loss of life of Dr. Jacob Slagle by reason of accident or caused by accident occurring' to him on December 14, 1903, said companies having insured the said Dr. Jacob Slagle against loss of limb or life
    “Said attorneys are to prosecute and agree to prosecute the said separate causes of action through all the courts beginning with the court of common pleas of Miami county, Ohio, on behalf of the said Margaret R. Slagle, and do and perform for her and on her behalf all that is necessary to be done in prosecution of said actions against said companies.
    “Said attorneys are to employ such other and additional help and counsel as to them seems necessary.

      “Said attorneys receipt to the said Margaret R. Slagle for $100 retainer fee received herein and it is agreed by the parties hereto that the compensation of said counsel and attorneys shall be contingent upon their success in the prosecution of said causes of action against said companies or compromise of the said claim against the said companies. It is agreed by the parties hereto that for the services already rendered and to be rendered on behalf of the said attorneys in prosecution of said causes of action against said companies through all the courts as above specified, that said attorneys shall receive for their compensation forty per cent, of any and all sums recovered against said companies by the said Margaret R. Slagle either at the end of a judgment and execution, or at the end of a more voluntary payment, or if said causes of action shall be compromised and settled; that said Margaret R. Slagle shall receive sixty per cent, of the amount so recovered and the said attorneys for their compensation shall receive forty per cent, of the same. This forty per cent, to include the compensation of any and all counsel employed by Davy & St. John to assist them.
    “It is agreed by the parties that in the taking of depositions or in attending court at Columbus, Ohio, or in performing other labor or services in said cause, said attorneys shall pay their own personal expenses as a part of their duty in this matter. But the payment of a notary and witness fees and for printing of records and briefs, such expense shall be paid by the said Margaret R. Slagle.

      “Said attorneys further hereby agree to furnish the said Margaret R. Slagle any and all information at all times in reference to the said cause of action that she or her agents may call or ask for, and to give their very best service and attention and legal ability in the prosecution of said cause, and that all of the parties hereto hereby agree that all propositions of settlement or compromise shall be first submitted by one to the other before any action or agreement shall be taken thereto. And that it is understood that said counsel and said Margaret R.- Slagle shall not compromise or settle the cases without the approval and consent of the others. Witness our hands.
    “(Signed) “Margaret R. Slagle.
    “Davy & St. Joi-in.
    “J. A. Davy.
    “Troy, Ohio, July 23, 1905.”
    This contract was not denied in the reply, but therein the plaintiffs admit that said contract contained a provision that all propositions of settlement or compromise received by either party to said contract should be submitted to the other party to said contract before any action is taken or agreement made and no compromise to be made without the approval and consent of the parties; that said provisions are separable and the provision in relation to settlement was a mere incident to the main provisions of said contract relating to plaintiffs’ employment and their compensation; and that neither the defendant nor said Margaret R. Slagle acted under said provisions relating to settlement, but on the contrary settled said litigation as though no such provision was in said contract.
    Thereupon, on the 29th day of June, 1905, the defendant moved the court for judgment in its favor upon the facts appearing upon the face of the pleadings, and the cause coming on for hearing upon said motion, and the court, being fully advised in the premises and having .heard argument by counsel, rendered judgment in favor of the defendant and against the plaintiffs. Said judgment was afterwards affirmed by the circuit court.

      Mr. William H. Gilbert and Mr. Leonard H. Shipman, for plaintiffs in error.
    Parties may settle without consulting their attorneys unless it is done for the purpose of depriving the attorney of his fees. Honest settlements between parties to litigation are commendable and to be encouraged. Collusive and fraudulent settlements made for the purpose - of taking advantage of attorneys are reprehensible and when made the attorney may recover of the defendant. 4 Cyc., 1019 and 1020; Randall v. Van Wagenen, 115 N. Y., 527, 12 Am. St. Rep., 828; Aspinwall v. Sabin, 22 Neb., 73, 3 Am. St. Rep., 258; Coughlin v. Railroad Co., 71 N. Y., 443, 27 Am. St. Rep., 75; Talcott v. Bronson, 4 Paige, 501; Pickard v. Yencer, 21 Plun, 403; Wilber v. Baker, 24 Hun, 24; Coleman & Newsome v. Ryan, 58 Ga., 132; Jones v. Morgan, 39 Ga., 310, 98 Am. Dec., 458; Carpenter v. Myers, 90 Mich., 209.

      The cause of action in favor of Slagle arose on a contract in the form of the. insurance policy. This cause of action was in itself assignable. The owner could assign and create equitable interests in such cause of action to her attorneys and the interest must be respected by those having' notice. Reece v. Kyle, 49 Ohio St., 484; Cameron v. Boeger, 93 Am. St. Rep., 173.
    If we concede, for the purpose of argument, that the stipulation with respect to compromise and settlement is illegal it does not, in our view, change the result. All other parts of the contract are legal and constitute a complete contract between the parties. If the legal part can be separated from the part claimed to be illegal, then the legal part of it should be carried out irrespective of the illegal provisions.
    A contract between an attorney and a client that the latter will not compromise any suit without consent and approval of the former is not against public policy. Lipscomb v. Adams, 193 Mo., 530, 112 Am. St. Rep., 500.

      Mr. A. F. Broomhall, for defendant in error.
    An attorney can acquire no interest in a cause of action before judgment which will prevent the parties from settling the case without indemnifying the attorney.
    The law recognizes the interest of an attorney in a judgment which he has assisted in obtaining for his client; but this is quite a different proposition. When a judgment is rendered, the litigation is at an end. Before it is rendered it is the policy of the law that it should end. It certainly would not have that tendency, if litigants were permitted to settle their cases only when the attorney, who had a pecuniary interest in the litigation, gave his consent. Key v. Vattier, 1 Ohio, 132.
    The law tolerates no lien, in or out of the legal profession, which will prevent litigants from compromising controversies. Weakley v. Hall, 13 Ohio, 167; Stewart v. Welch, 41 Ohio St., 483.
    The court has never failed where it has found a provision in a contract between attorney and client, that the case could not be settled without the attorney’s consent, to declare the contract void and refuse the attorney all relief based upon it. Pennsylvania Co. v. Lombardo, 48 Ohio St., 1; Brown v. Ginn, 66 Ohio St., 316; Emslie v. Glass Co., 1 C. C, N. S., 603.
    All other authorities which apparently modify the severity of the early rule as to contingent fees, leave untouched the proposition, that a provision against compromise, vitiates a contract, except to emphasize the fact that the court will not tolerate such transactions.
   Davis, J.

The theory upon which this action is based is that an attorney may not only contract with his client for a contingent fee, but that he may at the same time and upon the same consideration acquire such an interest in his client’s cause of action before judgment as to prevent the latter from settling his case without consent of the attorney. If this theory is sound the motion for judgment on the pleadings should have been overruled; otherwise it was properly sustained.

It is, beyond question, the law in this state that attorney and client may lawfully agree upon compensation to the attorney contingent upon the amount to be recovered, either by settlement or by judgment; and it is also settled that such contract may be a valid consideration for an assignment of an interest in a judgment already obtained, such as might be enforced in equity, P. C. C. & St. L. Ry. Co. v. Volkert et al., 58 Ohio St., 362; but as we remarked recently, Pennsylvania Co. v. Thatcher, ante, 175, an attorney’s lien before judgment has not been heretofore distinctly recognized in this state and it has hitherto remained an open question, and one of much doubt, whether an attorney may before judgment acquire such an interest in the subject-matter of his client’s claim or cause of action as that the defendant to such claim or cause of action is bound to take notice of it. The questionable character of such a proposition arises from two considerations. First, an interest in a cause of action would seem to imply the right to be consulted in negotiations for settlement and the right to prevent a settlement which might be acceptable to the client. Second, an interest in the proceeds of a settlement is an interest in a fund which has no existence until the settlement is agreed upon and the money paid over, and therefore the attorney’s interest is in the fund in the hands of the client. In the case in hand, although the plaintiffs aver in their petition that their client “thereby,”- that is by the contract in writing, “made an equitable assignment to the plaintiffs of an undivided two-fifths interest in said cause of action and of the proceeds to be realized therefrom, either by settlement or judgment” ; yet it appears from the contract itself, which is set out in full in the defendant’s answer, that there was no express assignment of an interest in the cause of action or of the proceeds to be realized therefrom, but that, there was an express agreement that the client should not coiyipromise or settle the cases without the approval and consent of the others.

It appears, therefore, that whatever may be the form of the contract, whether it contains an express assignment of an interest in the subject-matter of the client’s claim, or an implied assignment thereof, or no assignment at all, the really vital question in all of these cases is this: Does the contract contain an express or implied limitation upon the right of the client to compromise and settle his claim with his adversary. without the consent of'anybody else? When such a limitation appears in the contract, the contract is voidable at the option of the client and its illegality may be pleaded as a defense in any action founded on the contract; and the defendant to the suit concerning which the contract was made.'may, with or without notice of the contract, compromise with the plaintiff without the knowledge or consent of the plaintiff’s attorney and will not be liable to the attorney for his part. North Chicago St. R. R. Co. v. Ackley, 171 Ill., 100, reversing the judgment of the Appellate Court in the same case, 58 Ill., 572; Boardman & Brown v. Thompson, 25 1a., 487.

This court has spoken on this subject so frequently and definitely that there ought to have been no misunderstanding of its position. Key v. Vattier, 1 Ohio, 132, resulted in a judgment for the defendant upon a demurrer to the declaration. The plaintiff declared upon a contract in which the plaintiff agreed to prosecute suits for the recovery of property, to pay the costs and be compensated by a part of the property to be recovered and it was further stipulated between the parties “that if any compromise should be effected, the same should be the joint act and consultation of the parties to said indenture.” At the conclusion of the opinion is the following clear and unmistakable statement:

“The stipulation in the contract, on which the opinion and judgment of the court are chiefly predicated, and to which they have directed it to be confined, is that which prevents Vattier from compromising and settling the matters in controversy, without the consent and concurrence of the other contracting parties. This point being considered sufficient the court forbear to give an opinion on any other. As the provision on the subject of cost is not set out in the declaration, and the defendant has demurred without oyer, that feature in the contract has not been considered.”

So that Key v. Vattier is a decision upon the precise question now under review. The court was equally explicit in Weakly v. Hall, Exr., 13 Ohio, 167, when it said:

“It is unnecessary, perhaps, to say anything in reference to the lien which is set up in the replication, and which, it is insisted, could not be discharged by the release of Weakly to Hall. But we take this occasion" to say that the law of Ohio will-tolerate no lien in or out of the profession, as a general rule, which will prevent litigants from compromising, or settling their controversies, or which, in its tendencies, encourages, promotes or extends litigation. We think the replication is bad, and the demurrer is sustained. Judgment for defendant.”

The question was again before this court in Lewis v. Lewis, Admx., 15 Ohio, 715, and it was again said that:

“A contract with an attorney to prosecute a suit containing a stipulation, that the party should not have the privilege to settle or discontinue it, without the assent of the attorney, would be so much against good policy, that the court would not enforce it. Much less will a court raise an implied contract, in order to encourage and foster litigation.”

In Brown v. Ginn, Trustee, 66 Ohio St., 316, the court, Spear, J., delivering the opinion, said:

“Again, if this paper effected the object, and was a real transfer of these accounts to the attorney, the several parties of the second part thus parted with all right to control the litigation or to compromise it without the consent of the attorney, and this inability was made doubly so by the fact that no one of the second parties had any sort of interest in the portion of the demand which rested upon the services of any other. Upon all the authorities such an arrangement _is champertous, and will not be maintained by the courts. * * * So that if the agreement vested in the attorney the legal title to the accounts so as to constitute him the real party in interest, and thus enable him to bring an action in his own name, such action cannot be maintained because against public policy, while, if he is not, within the meaning of section 4993, the real party in interest, the case would fail for that reason.”

We have brought together these quotations from former decisions in order to present a conspectus, which demonstrates that this court has always maintained a consistent and unambiguous attitude in regard to contracts of the kind which we have in this case. Some further instructive illustration may be -found in Pennsylvania Company v. Lombard, 49 Ohio St., 1, opinion by Minshall, J., 5-6; Stewart v. Welch, 41 Ohio St., 483; and remarks of Okey, J., in Diehl v. Friester, 37 Ohio St., 477.

These cases also show that the illegal stipulation renders the whole contract illegal and indivisible; and that whenever the illegal stipulation was inserted, it so far tainted the whole contract that no relief whatever was granted upon the contract. It could not well be otherwise. If the plaintiffs may waive the clause as to consent, ratify the compromise made by the client and recover from the defendant, when both parties to the compromise have acted on the theory that the contract is illegal and voidable, then the doctrine of the cases which we have cited, means nothing in practice; for it may be evaded in every case. If notwithstanding the illegal restriction upon the right to compromise, an attorney may nevertheless acquire such an interest in his client’s cause of action that the defendant thereto is answerable over to him after a compromise effected with the client, the real party in interest, then the doctrine of the cases is a mere figment and may as. well be ignored; for the attorney will thereby have gained as much as if the veto on his client’s right to compromise had been sustained. It does not seem to us that the contention of the plaintiffs is supported by law or considerations of justice. 15 Am. & Eng. Ency. Law (2 ed.), 988 and note 4.

Affirmed.

Price, C. J., Shauck, Crew, Summers and Spear, J. J., concur..


source: Caselaw Access Project

author: Spear, J.

license: Public Domain

text:
    Chamberlain v. Stecher, Admr.

      Legatee or devisee appointed executrix — Fails to comply with Section 2731-1, Revised Statutes — Inheritance tax law — Administrator de bonis non may be appointed — Although bond given by executrix — Lava of wills.

    1. Where, by a will executed in this state,, there passes to one not related to the testator, personalty and real estate situate in this state, and such legatee and devisee is appointed sole executrix, and after acceptance of the trust resigns without compliance with the duties enjoined by section 2731-1, Revised Statutes, and following, known as the collateral inheritance tax law, it becomes the duty of the probate court to appoint an administrator de bonis non with the will annexed to comply with the requirements of such statute and complete the settlement of such estate.
    2. The giving of bond by such executrix as residuary legatee is not a substitute for the presence of the legal representative to complete the settlement of the estate, and affords no ground for refusing to appoint an administrator de bonis non, nor for removal after such appointment.
    (No. 10604
    Decided June 9, 1908.)
    Error to the Circuit Court of Wyandot county.

      The controversy out of which this error proceeding arises had its.origin in the probate court of Wyandot county by the filing therein by the plaintiff in error, Flora E. Chamberlain, of a motion for the removal of George A. Stecher, here defendant in error, as administrator de bonis non with the will annexed of George Van Pool, deceased. The motion was overruled. On appeal to the common pleas that court sustained the motion and ordered the administrator removed. On error to the circuit court by the administrator that court reversed the judgment of the common pleas, and Flora E. Chamberlain brings error.

      Messrs. Finley & Gallinger and Mr. Benjamin Meek, for plaintiff in error.

      Mr. H. H. Newell, prosecuting attorney, and Mr. D. C. Parker, for defendant in error.
   Spear, J.

It is shown by the record that Flora E. Chamberlain is the sole legatee and devisee under the will of George Van Pool, deceased, and the sole executrix named therein. Said will was duly admitted to probate and record by the probate court of Wyandot county on May 8, 1904, and Flora E. Chamberlain was then appointed by said court sole executrix. She was in no way related to the testator. George Van Pool was at the time of his decease a resident of Wyandot county. He died leaving no next of kin or heirs at law. On or about May 22, 1905, the executrix tendered her resignation to said court which was accepted. At that time the personal property of the estate unadministered was of the amount and value of $3,107, and the real estate was of the value of $22,555. Upon tendering her resignation the executrix gave a small bond as residuary legatee, but filed no inventory. April 18, 1906, the prosecuting attorney of Wyandot county made application to the probate court for the appointment of an administrator de bonis non of the estate of Van Pool on a representation that the estate remained unsettled and the duties of the executrix unperformed by reason of the fact that the collateral inheritance tax due the state and county had not been paid, although the same had been long past due and demand had been made therefor upon the executrix. Due notice having been given a hearing was had May 8, 1906, and the defendant in error, George J. Stecher, was appointed such administrator de bonis non with the will annexed, and thereupon gave bond as required by the order of the court. The motion for the removal of Stecher followed shortly thereafter.

In support of the contention that the circuit court erred in sustaining the judgment of the probate court in refusing to remove the administrator de bonis non it is insisted by counsel that the tax not being a tax upon property but merely upon the right to receive property, is not a debt against the estate, but is a claim against the beneficiary; that there is no power given the probate court, either by the collateral inheritance statute or otherwise, to appoint an administrator for the purpose of collecting the tax, and that no administrator is necessary in the collection of the tax because the suit, if one is brought by the prosecuting attorney, will be against the beneficiary who is the real party in interest and hence the proper one to defend.

This proposition appears to us to ignore the scope and effect of the constitution and the statute. It does not at all follow that because there is no direct statutory warrant for the appointment of an administrator de bonis non for the special purpose indicated, there is no power in the court to make such appointment. The general power of appointment of administrators given by section 8, article IY of the constitution, inheres in the probate court until the business of the settlement of the estate is concluded, until the executor or administrator has fully performed all the duties enjoined upon him by law in the discharge of the trust. Hence it is not essential that it be made to appear that debts as such remain unpaid; it is enough if it be shown that the legal duties of the trusteeship to the state have not all been performed. The statute (section 273i-i, Revised Statutes, and following), imposes specific obligations and enjoins specific duties on executors and administrators. As there provided, and as held in Executors v. The State, 72 Ohio St., 448: “The right to inherit shall be taxed. The tax shall become due and payable immediately upon the death of the decedent, and shall at once become a lien upon said property, * * * and all administrators, executors and trustees shall be liable for all such, taxes” until the same shall have been paid. The administrator having in charge or .trust any property subject to such tax shall deduct the tax therefrom, or collect it from the legatee, and shall not deliver any speciñe legacy or property subject to the tax to any person until he has collected the tax. If charged on real estate the heir or devisee shall deduct the tax therefrom and pay it to the executor or administrator, and the payment must be enforced by the executor or administrator. They are also given power to sell real estate where necessary to pay the tax. It is further made the duty of the executor or administrator, whenever any real estate of the decedent shall pass to another while subject to the tax, to give the probate judge notice of that fact. Where the tax has been paid under circumstances showing that it ought not to have been paid the executor' or administrator shall refund such taxes. And finally, as though to insure compliance by the executor or administrator with the preceding requirements, it is provided that no final settlement of the account of such administrator shall be accepted or allowed by the court unless it shall show, and the court shall find, that all taxes imposed by the provisions of the act, upon any property or interest therein, have been paid. An administrator de bonis non being one appointed where there is a vacancy in the administration by the resignation, removal or death of the first executor or administrator before the estate is fully administered and before a final accounting and discharge, it follows that an administrator de bonis non is a proper and necessary party in the working out of the enforcement of the collateral inheritance statute.

Nor does the fact that the -executrix, upon resigning, gave a small bond as residuary legatee in any way change the situation. By the resignation she simply left the estate unadministered and her duty unperformed. The requirements of the collateral inheritance statute are not met by the substitution of a bond for the personal presence of a legal representative of the estate.

We are fully satisfied that the probate court properly overruled the motion to remove the administrator de bonis non; that the common pleas erred in sustaining the motion, and that the circuit court properly reversed the latter judgment. Its judgment 'will therefore be

Affirmed.

Price, C. J., Si-iauck, Crew, Summers and Davis, JJ., concur.


author: Summers, J.

text:
    Holdren, Admr., et al. v. Holdren et al.

      Acceleration of remainders — Doctrine applies, when — Devise of one sixth to widozv and remainder to son — Widow elects dower— Doctrine does not apply — Construction of wills.

    1. Under the doctrine of acceleration of remainders a devise to A for life, and at his death to B, is to be read as a limitation of a remainder, to take effect in every event which removes the prior estate out of the way; but this doctrine rests upon the presumed intention of the testator and will be applied only when promotive of his intention.
    2. When a testator devises one-sixth of his real estate to his widow for life, and at her death to a son, and devises the remaining five-sixths of his real estate to others, and the widow elects to take her dower and distributive share, the value of which exceeds the value of her life estate in the one-sixth, the remainder in the one-sixth will not be accelerated, but the widow’s life estate will be sequestered to compensate the disappointed devisees.
    (No. 9366
    Decided June 9, 1908.)
    Error to the Circuit Court of Fayette county.
    [The decision and opinion in this case is the result of a rehearing. The case was originally decided, without report, on June 29, 1906. See Holdren, Admr., et al. v. Holdren et al., 74 Ohio St., 520. — Reporter.]
    John Holdren died testate leaving five sons and six grandchildren, children of a deceased daughter, and a widow, who was his second wife and the mother of one of the sons.
    His will provides: I. For the payment of his debts and funeral expenses. 2. A bequest of $100 for a church. 3. To the trustees of the church $100, to.be kept at interest during the life of his wife and the proceeds applied annually to the payment of the quarterage of his wife, and at her death the principal sum to be paid to his son by the second wife. 4. To his widow he gives all his household goods and furniture and his personal property. 5. He devises to his wife one-sixth part of his real estate, subject to the payment of the legacies, for and during her natural life, and at her death to their son, Stanley Holdren, in fee simple. 6. To each of his other four surviving sons, each one-sixth of his real estate, subject to the payment of said legacies. 7. To his said grandchildren, children of his deceased' daughter, the remaining one-sixth of said real estate, subject to the payment of said legacies.
    The widow elected not to take the provisions of the will made for her, but to take under the law her distributive share of the personal property and dower in the real estate.
    The personal property was insufficient to pay the debts and the administrator filed his petition in the probate court to sell the real estate. The widow filed an answer waiving the assignment of her dower by metes and bounds, and elected to take the value thereof in money. The real estate sold for $14,572.50. The probate court determined the value of the widow’s dower and ordered its payment and also ordered the administrator .to pay the costs and taxes and to distribute the remainder according to law and the will of the testator.
    The administrator being in doubt as to the proper distribution instituted this suit in the court of common pleas, under the provisions of Section 6202, Revised Statutes, asking the direction and judgment of the court, setting up in his petition that the devisees under items six and seven of the will, being the children and grandchildren of the testator by his first wife, contended that the dower of the widow should be paid so far as possible out of the life estate provided for her in the will, and that to her son there should be distributed only the value of the one-sixth devised to him after deducting therefrom the value of the life estate therein devised to her.
    The value of the widow’s dower, as determined by the probate court, was $3154.21. So that the value of the widow’s estate for life in the one-sixth of the real estate devised to her for life, and at her death to her son, was $1577.12. One-sixth of the amount for which the real estate sold is $2428.75. Deducting from this the value of the widow’s life estate leaves the value of the estate in remainder in her son $851.63. The personal property sold for $442.90 and the total amount of debts, legacies, costs, taxes, etc., paid and to be paid by the administrator is $3544.03.
    The court of common pleas found against the contention of the plaintiff in the action and directed the administrator to pay to the widow’s son .the full one-sixth of the proceeds of the sale of the farm remaining after the payment of the debts, costs and legacies. ■■
    Error was prosecuted in the circuit court and that court found that the widow was entitled to part of the proceeds of the personal property and that one-third of the value of the life estate devised to her should be applied to making up the value of her dower and that the remaining two-thirds of said life estate, amounting to $1058.08, shotfld be appropriated to compensate the disappointed devisees for the value of the widow’s dower .taken from their respective interests.
    To the judgment of the circuit court the plaintiffs in the action prosecute error in this court and the guardian of the widow’s son has filed his cross-petition in error in this court.

      Messrs. Post & Reid, for plaintiffs in error.

      Mr. Mills Gardner, for defendants in error.
   Summers, J.

The contention on the part of the minor son, Stanley Holdren, is that by the will he took a vested estate in remainder, and that it was accelerated, and took effect in possession immediately upon the determination of his mother’s life estate, by her election not to take under the will. And the contention on the part of the other devisees is, that the estate devised to the minor son is not an estate in remainder but by executory devise, that it was not accelerated by the election of the widow not to take under the will and that a court of equity will sequester what the widow would have taken under the will to compensate the disappointed devisees.

We do not think it important to consider whether the minor took an estate in remainder or by ex-ecutory devise, for in the view we take of the case the doctrine of acceleration of remainders has no application. That doctrine is based upon the presumed intention of’the testator to devise the property in remainder from and after the determination of the preceding estate, and not from and after the death of the life tenant. It is a rule of interpretation, and is to be applied so as to effect and not to defeat the testator’s intention.

By the fifth item the testator devised the one-sixth part of his real estate to his widow for and during her natural life, and at her death' to his son Stanley in fee simple. In Lessee of Thompson v. Hoop, 6 Ohio St., 487, Bartley, C. J., quotes with approval from 1 Jarman on Wills as follows: “Every devise of a future interest, which is not preceded by an estate of freehold created by the same will, or which, being so preceded, is limited to take effect before or after, and not at the expiration of such prior estate of freehold, is an executory devise.” Counsel contend upon the authority of that case that Stanley’s estate is limited to take effect at the widow’s death, and not at the expiration of her life estate, and that, therefore, his estate is not accelerated by her election not to take under the will. But if the doctrine of acceleration applies, the words, “At her death” must be interpreted to mean from and after the determination of her life estate. In Jull v. Jacobs, L. R. 3 Ch. Div., 711, the devise was to a daughter of the testator “during her life time”, and “after her decease” to be divided equally between “her children on their becoming of age.” The daughter signed the will as a witness, and for that cause, under the English statute, the devise to such daughter was void. The question was as.to the disposition of the property devised, during the period between the death of the testator and the actual death of the daughter. It is there ruled: “That a gift to A for life, and from and after the decease of A, to B, C, D or anybody else, means from and after the determination of the estate; and whether the estate is determined by revocation or by death, or by the incapacity of the devisee to take, or by any other circumstance, the life estate being out of the way, the remainder takes effect, having only been postponed in order that the life estate may be given to A.” In Lainson v. Lainson, 18 Beav., 1, Lord Romily says: “This doctrine rests upon the authorities from the earliest period downwards.” In Blatchford et al. v. Newberry et al., 99 Ill., 11, in the opinion and in the dissenting opinion quite a number of cases are referred to, in which this doctrine is laid down. In 1 Jarman on Wills, 537, it is said: “The doctrine evidently proceeds upon the supposition that, though the ulterior devise is in terms not to take effect in possession until the decease of the prior devisee, if tenant for life, or his decease without issue, if tenant in tail, yet that, in point of fact, it is to be read as a limitation of a remainder, to take effect in every event which removes the prior estate out of the way.”

This doctrine, however, is based upon the presumed intention of the testator, and it can be invoked only to effect that intention, and not to defeat it. If the provision made by the testator for his widow was in addition to her dower, or if the termination of her life estate would not disappoint other beneficiaries under the will, the presumption would be that Stanley’s possession had been postponed merely to let his mother enjoy the one-sixth for her life; but there is no room for the presumption where' the provision is not in addition to dower, and where the presumption can be raised only at the expense of other devisees. The testator cannot be presumed to have intended that his widow, by electing not to take under his will, might not only double what she receives from his estate, but also treble what her son will receive. It is true the testator is presumed to have made his will with knowledge that he could not defeat his wife’s right of dower, but there is also-a presumption that he gave her by his will all that he intended.

In Millikin v. Welliver, 37 Ohio St., 460, it is held that: “If the husband devise his real estate to his wife for life, with remainder to his heirs, and the wife elects to take her dower, or fails to make her election, the remainder vests in fee in the heirs, subject to the dower estate of the wife.” This holding is based upon the doctrine of acceleration, but it must be understood as limited to cases in which that doctrine is applicable, otherwise it is too broad. In that case there was no disappointed legatee, but all of the estate went to the remainder-man.- It is well settled, when a widow elects not to take under a will, but to take under the law, her portion under the will will be sequestered to compensate those beneficiaries under the will whose shares are cut down by her election. Pomeroy’s Equity'Jurisprudence, Section 517. It is so held in Jennings v. Jennings, 21 Ohio St., 56. There the testator devised the undivided one-third part of his real estate to his widow for and during her natural life, and the remaining two-thirds thereof to his brothers and sisters in fee simple; the widow elected not to take under the will and then claimed that the testator died intestate as to the fee of the one-third that he had devised to her for life, and that it descended to her by the statutes of descent; she also claimed dower in the remaining two-thirds of the real estate devised to the brothers and sisters, held: “Where, in such case, the widow elects to be endowed of the lands of her husband, the devisees, who are prejudiced by such election, are equitably entitled to compensation out of the rejected provision made for her in the will.” In the opinion the following is quoted with approval from Adams’ Equity: “The effect of election is not to divest the property out of the donee, but to bind him to deal with it as the court shall direct.” See also Pomeroy’s Equity Jur., Seetion 467. Oúr statute, Section 5963, provides that, “the widow or widower shall not be entitled to both dower and provisions of the will in her or his favor, unless it plainly appears by the will to have been the intention that the widow or widower should have such provision in addition to the dower and such distributive share.” And that, “if any provision be made for a widow or widower in the will of the deceased consort, the probate court shall, forthwith, after the probate of such will, issue a citation to such widow or widower to appear and elect whether to take such provision or to be endowed of the lands of the deceased consort and take the distributive share of the personal estate.” Section 5964, Revised Statutes, provides that, “if the widow or widower shall fail to make such election, the widow or widower shall retain the dower, and such share of the personal estate of the deceased consort as the widow or widower would be entitled to by law in case the deceased consort had died intestate, leaving children,” so that an election to be endowed and to take the distributive share, or a failure so to elect, divests the provision made by the will, and such portion will be sequestered to compensate the disappointed devisees. Whether or not if there should be a surplus after compensating the disappointed legatees, it should be paid to the remainder-man or would descend as intestate property, it is not necessary in the present case to determine. It is directed to be paid to the remainder-man in McReynolds v. Counts, 9 Grattan, 242.

If the widow had elected to take under the will the personal property given her would have been taken to pay debts, and under Section 5973, Revised Statutes, all the other devisees and legatees would have been required to contribute to her their respective proportions of the loss, but as they must contribute in the same ratio to pay the debts, and as the value of the personal property has been so applied, it is not necessary now to take that into account. The value of the widow’s life estate should be applied in payment of her dower. The value of her estate for life in the one-sixth of the real estate devised to Stanley is equal to one-half of the value of her dower, and the other five-sixths of the real estate should be charged with the payment of the other one-half of her dower.

Applying these principals to the facts admitted by the pleadings the result would be reached as follows: The value of the real estate is $14,-572.50. Stanley’s share is one-sixth, $2,428:75. The widow’s life estate in the one-sixth devised to Stanley is equal to one-half of her dower. Deducting the other one-half of her dower, $1,577.12, from the value of five-sixths of the land, leaves $10,566.63; adding to this the value of Stanley’s remainder, $851.63, gives $11,4x8.26, as the amount chargeable with the costs, debts and legacies, which, after deducting $442.90, the value of the personal property, amount to $3,101.15.

Stanley’s share is to the whole of the debt as the value of his remainder is to the amount chargeable with the debt, that is, it is $231.29. Deducting his share of the debts from the value of the remainder in the one-sixth of the real estate devised to him by the will leaves $620.34 as the amount that should be paid to him upon distribution. The remainder of the amount on hand for distribution should be distributed one-fifth to each of the other four sons, and one-fifth to the children of the deceased daughter.

This is only- for the purpose of illustration. There may be costs and charges incurred since the stating of the above amounts, so that the order is that distribution be made as follows: i. The debts, costs of administration and specific legacies. 2. To Stanley an amount equal to one-sixth of the proceeds of the sale of the real estate, diminished by the value of the life estate of the widow therein, and further diminished by the proportionate amount of the debts, costs and specific legacies chargeable on his interest. 3. One-fifth of the remainder of the fund on hand for distribution to each of the other four sons, and one-fifth to the .children of the deceased daughter.

Judgment reversed and judgment in accordance with the opinion.

Price, C. J., Si-iauck, Crew and Spear, jj\, concur.


text:
    Commissioners of Muskingum County v. The State of Ohio.

      Power of county commissioners to issue bonds — Section 2834a, Revised Statutes — Action to enjoin delivery of bonds — Money judgment against recipient of bonds — May be rendered, when.

    1. County commissioners are authorized by Section 28340, Revised Statutes, to issue new bonds and to exchange them for outstanding bonds, 'but they are not authorized to exchange them for the promissory notes or other evidences of the debt of the county.
    2. In a suit by a taxpayer, against the board of county commissioners and the party to whom the bonds of the county have been delivered without authority of law, to enjoin the delivery of the bonds, the court may render a money judgment against such party for money had and received or for a conversion of the bonds, when it appears from the facts disclosed on the hearing, but not known to the plaintiff when he brought his suit, that the bonds had already been issued and delivered and had been transferred to a bona tide holder.
    (No. 10865
    Decided June 9, 1908.)
    Error to the Circuit Court of Muskingum County.
    In November, 1904, a taxpayer of Muskingum county brought suit to enjoin the board of county commissioners from issuing $55,500 of county bonds to P. S. Briggs & Company, of Cincinnati, Ohio. He averred that Briggs & Company contracted with the commissioners to print and purchase bonds to that amount for the purpose of refunding the floating indebtedness of said county and prayed that the commissioners be enjoined from issuing and delivering the bonds, on the ground that they had not been advertised as required by law. He also averred that the prosecuting attorney had refused to bring the suit.
    January 13, 1905, the taxpayer moved the court to dismiss the action and on the same day C. U. Shryock, another taxpayer, asked leave to become a party defendant in the action to prosecute the same and for leave to file an answer and cross-petition as such taxpayer. The court overruled the motion to dismiss and granted leave to Shryock to file an answer and cross-petition.
    January 17, 1905, Shryock filed his answer and cross-petition and obtained leave to make the Cincinnati Trust Company, a corporation, a party defendant, and on the same day the court granted an order restraining the trust company and Briggs & Company from selling -and disposing of the bonds until further order of the court.
    Summons on the cross-petition and the restraining order were served upon Briggs & Company and the trust company on January 18.
    In his answer and cross-petition Shryock averred that since the commencement of the action, to-wit, on or about the first day of December, 1904, the commissioners had attempted to carry out the contract, and had executed and delivered to Briggs & Company the bonds of the county in the sum of $55,5°° for the par value thereof when said board and company well knew that the market value of the bonds was $61,000. He averred that the board of county commissioners never had determined that it was necessary or to the interests of the taxpayers of the county, or to the interests of the county, to issue any of said bonds, and that no advertisement of the sale and issue of said bonds had been made. He prayed that Briggs & Company and the trust company be enjoined from disposing of the bonds and that upon a final hearing they be ordered to return and restore and cancel the bonds, and that upon their failure to so do, that the court enter a judgment against them in favor of the county for $61,000, the value of the bonds.
    Briggs & Company filed an answer admitting that they had entered into the contract, but averring that the contract never had been carried out, and averring that it did not own or have possession or control of the bonds, or any interest in them, or any of them, at the time of the service of the restraining order, or at any time thereafter.
    The trust company answered denying that any contract ever had been entered into by the county commissioners and Briggs & Company for or on its behalf, and admitting that on or about the first day of December, 1904, the trust company was the owner of certain evidences of indebtedness of Muskingum county, which were drawing interest at the rate of six per cent, per annum, and that it agreed with the board of county commissioners to exchange, and that it did exchange said evidences of indebtedness, dollar for dollar, for other evidences of indebtedness, to-wit, bonds of the county, drawing interest at the rate of 4^ per cent, per annum, and it denied that at the time of the service of the restraining order, or at any time since such service, it either owned, controlled or had possession of the bonds referred to, or any interest in them or any of them.
    The court of common pleas found for the defendants and dismissed the petition. Shryock appealed the case to the circuit court. The circuit court at its April term, 1907, found for the plaintiff and ordered the defendants, Briggs & Company and the trust company, to return the bonds to the county auditor within ten days and that upon such return the auditor should return to the defendants the notes that 'had been given in exchange for the bonds, and “that upon failure of said defendants to deliver up said bonds as herein decreed, it is ordered, adjudged and decreed that the plaintiff recover from the said- defendants the sum of $4,400 with interest from December 9, 1904, at six per cent.”
    It appears from the bill of exceptions that on June 24, 1904, the board of county commissioners at its meeting adopted the following resolutions:
    “Whereas, The county bridge fund has been overdrawn by reason of extraordinary expenditures caused by unusual storms destroying bridges and roads; and
    “Whereas, It will be necessary to further draw on the bridge funds to replace bridges destroyed and make repairs.
    “Therefore, be it resolved, That the tax levy made by this board at its June session, 1904, for the restoration of bridges be anticipated, and $25,-500 be borrowed from the Old Citizens National Bank of Zanesville, Ohio, in anticipation of the collection of said tax, and the two notes each in the amount of $12,750, bearing date of June 24, 1904, with interest at six per cent, and payable on demand, be executed by this board in favor of said the Old Citizens National Bank.

      “Ayes: J. B. Tanner, J. H. Crooks, A. S. Leland”
    It further appears that this money was obtained from the bank and the following notes, or evidences of indebtedness delivered to the bank:
    “County of Muskingum, State of Ohio.
    “Zanesville, Ohio, June 24, 1904.
    “On or before the first day of March, 1905, the county of Muskingum will pay to The Old Citizens National Bank, or order, twelve thousand seven hundred and fifty dollars, and interest, six per cent, thereon from date, the interest to be paid semi-annually on the twenty-third day of December and the twenty-third day of June in each year. Value received; payable at the county treasury, Muskingum county, Ohio.
    “This note given for money borrowed in anticipation of the collection of tax levied by the County Commissioners of said county, at their- June session in 1904, for repairing and rebuilding bridges under authority granted by Section 871, Revised Statutes of Ohio.
    “Board of Commissioners of the County of Muskingum, State of Ohio.
    “[Seal.] “J. B. Tanner,
    “J. H. Crooks,
    “A. S. Leland,
    “Countersigned by Auditor: L. E. Brelsfobd.'”
    “Zanesville, Ohio, June 24, 1904.
    “County of Muskingum, State of Ohio.
    “On or before the first day of September, 1905, the county of Muskingum will pay to The Old Citizens National Bank, or order, twelve thousand seven hundred and fifty_ dollars, and interest, six per cent, thereon from date, the interest to be paid semi-annually on the twenty-third day of December and the twenty-third day of June in each year. Value received; payable at the county treasury, Muskingum county, Ohio.
    “This note given for money borrowed in anticipation of the collection of tax levied by the County Commissioners of said county, at their June session in 1904, for repairing and rebuilding bridges under authority granted by Section 871, Revised Statutes of Ohio.
    “Board of Commissioners of the County of Muskingum, State of Ohio.
    “[Seal.] . “J. B. Tanner,
    “J. H. Crooks,
    “A. S. Leland. “Countersigned by Auditor: L. E. Brelsford.”
    September 1, 1904, at a meeting, the board of commissioners adopted the following resolution:
    “Whereas, overdrafts exist in the funds of the county treasury from lawful payments made therefrom, as follows:
    “In general county fund the sum of $18,166.70 and in the court fund the sum of $12,184.97, in all $30,351.67, which indebtedness is an existing, valid and binding obligation of the county of Muskingum, State of Ohio, and said amounts are due . and required to be paid at once, and from limits of taxation the said county is unable to pay the same at maturity and it is necessary to borrow money for the payment of said indebtedness; therefore, for the purpose of funding the said indebtedness and extending the time for payment of the same, it is ordered that the notes or obligations of the county be made and issued according to law, to be signed by the commissioners and auditor according to law, for a sum not exceeding the amount of said indebtedness, to-wit, $30,351.67, such notes to be to such persons or parties and in such sums as is deemed best by the commissioners, and bear interest from their date at the rate of six per cent, per annum, and to run for a period not exceeding four months from date, and said notes shall be made payable at Zanesville, Ohio, and be issued and delivered to the payees named thereon for a sum not less than the face value thereof; and it is further ordered that the sum so realized from the said notes so to be issued be applied to the payment of said existing indebtedness and for no other purposes.
    “Ayes: Tames B. Tanner, Tohn H. Crooks, A. S. Leland
    With respect to this loan the following appears from the journal of the commissioners:
    “Temporary loan of $30,351.67 secured from The Union National Bank and First National Bank. In compliance with the foregoing order, the sum of $20,000 was borrowed from The First National Bank of Zanesville, Ohio, and $10,351.67 from The Union National Bank of Zanesville, Ohio, making in all the sum of $30,351.67, of which sum $18,166.70 is for payment of overdrafts in the general county fund and $12,184.97 is f°r payments of overdrafts in the court fund. In consideration of said loan, the Board of County Commissioners have executed two several notes of the county, in favor of said parties, of which the following are true copies:
    “Zanesville, Ohio, September i, 1904.
    “For value received, the county of Muskingum, State of Ohio, promise to pay to the order of The Union National Bank of Zanesville, Ohio, the sum of ten thousand three hundred and fifty-one dollars and sixty-seven cents four months after date, with interest from date at six per cent, per annum, payable at said bank. This note is made pursuant to the order of the board of county commissioners of said county made this date, for the purpose of funding a valid, existing and binding indebtedness of said county, under Section 2834a, Revised Statutes of Ohio.
    “Witness the hands of the County Commissioners of said county, attested by the Auditor of said county, on the day aforesaid.
    “James B, Tanner,
    “John H. Crooks,
    “Almon S. Leland,
    “County Commissioners of Muskingum County, O.
    “Zanesville, Ohio, September 1, 1904.
    “For value received, the county of Muskingum, in the state of Ohio, promises to pay to the order of The First National Bank of Zanesville, Ohio, the sum of twenty thousand dollars, four months after date, with interest from date at the rate of six per cent, per annum, payable at said bank. This note is made pursuant to the order of the Board of County Commissioners of said county made this date, for the purpose of funding a valid, existing and binding indebtedness of said county, under Section 2834a, Revised Statutes of Ohio.
    “Witness the hands of the County Commissioners of said county, attested by the order of said county, on the day aforesaid.
    “James B. Tanner,
    “John H. Crooks,
    “Almon S. Leland,
    “County Commissioners of Muskingum County, Ohio.”
    November 15, 1904, the following resolution appears upon the minutes of the board of county commissioners:
    “Whereas, The county of Muskingum, Ohio, is indebted to various persons in the aggregate sum of $55,500, all of which indebtedness is now due, and which indebtedness this county, from its limits of taxation is unable to pay; and
    “Whereas, Said indebtedness and each and every item thereof is now determined and declared by this board to be an existing, valid and binding obligation of this county; and
    “Whereas, Said indebtedness bears interest at the rate of six per cent, per annum and can be funded at the- rate of four and one-half per cent, per annum; and
    “Therefore, This board deems it to be for the best interests of the county that said debts should be funded at such lower rate of interest;
    “Therefore, be it resolved by the Board of County Commissioners of Muskingum county, Ohio, that for the purpose of extending the time of payment of said indebtedness and to reduce the rate of interest thereon, and to change but not increase the same, bonds of said county be issued in the sum of $55,500. Said bonds shall be of denomination of $500 each, numbered from 1 to 111 each, inclusive, shall be dated December 1, 1904, shall bear interest at the rate of four and one-half per cent, per annum, payable semi-annually, and shall mature as follows:
    “$15,500 December 1, 1921.
    “$20,000 December 1, 1922.
    “$20,000 December 1, 1923.
    “Said bonds shall be substantially in the following form, to-wit:
    “No.- $500.00
    “United States of America,
    “State of Ohio,'
    “County of Muskingum,
    “4 J2 % Refunding Bonds.
    “Know all men by ti-iese presents, That the county of Muskingum, in the state of Ohio, acknowledges itself to owe, and for value received hereby promises to pay to bearer the sum of five hundred dollars in lawful money of the United States of America, upon the first of December, 19 — , with interest thereon at the rate of four and one-half per cent, per annum, payable semi-annually, on the first days of June and December of each year, until the payment of the principal sum hereof, upon presentation and surrender of the proper coupon therefor hereto attached. Both principal and interest hereof are payable at the county treasurer’s office, in Zanesville, Ohio.
    “This bond is one of a series of 111 bonds of like date, denomination and tenor, except as to maturity, numbered from I to hi each, inclusive, and-is issued under authority of the general statutes of the state of Ohio and by virtue of a resolution duly passed by the Board of County Commissioners of said Muskingum county on the fifteenth day of November, 1904.
    “It is hereby certified and recited that all acts, conditions and things required by law precedent to and in the issuance of this bond, in order to make the same, a legal, valid and binding obligation, have been done, have happened, and been performed in regular and due form; that the indebtedness to fund which this series of bonds was issued was a legal, valid, and binding obligation of said county of Muskingum; that this issue of bonds, together with all other indebtedness of said county of, and with the full faith, credit and revenues and all the real and personal property of said county of Muskingum are hereby irrevocably pledged for the prompt payment of this bond and interest, as the same mature.
    “in witness whereof, the county of Muskingum, Ohio, has caused this bond to be signed by its Board of County Commissioners, duly authorized hereunto, countersigned by the county auditor, and the county seal to be affixed, and the coupons to bear the facsimile signature of its county auditor, at Zanesville, Ohio, this first day of December, 1904.
    “John H. Crooi-cs, “James B. Tanner, “A. S. Leland, “County Commissioners.
    “Countersigned: L. E. Brelsford, County Auditor.

      “Coupon No. - $11-25.
    “On the first day of June, 1905, the county of Muskingum, state of Ohio, will pay to the bearer the sum of $11.25, tb-e county treasurer’s office, Zanesville, Ohio, being six months interest then due on its four and one-half per cent, refunding bond, No. -, dated December 1, 1904.
    “L. E. Brelsford, County Auditor.
    “Said bonds shall be signed by the Board of •County Commissioners, countersigned by the County Auditor, and the seal of the county affixed; provided that the coupons may bear the facsimile signature of the County Auditor.
    “When said bonds have been duly executed, they shall be delivered to the holder of the indebtedness to refund which they are issued, and exchanged for the same, dollar for dollar, and the evidence of the indebtedness shall be immediately cancelled, and to pay such bonded indebtedness, this board obligates itself to levy each year during the period these bonds have to run, a tax, in addition to the amount authorized, sufficient in amount to pay the accruing interest and the bonds as they mature.
    “Mr. Tanner moved the adoption of this resolution, and upon the call, of ayes and noes, the following members of the board voted: Ayes,- James B. Tanner, John H. Crooks, A. S. Leland; no, none. Resolution adopted.
    “Board adjourned sine die.

    “John H. Crooks,
    “Almon S. Leland,
    “James B. Tanner,
    “County Commissioners.”

      The defendants offered no evidence and the uncontradicted testimony is to the effect that the commissioners had acceptéd a proposal from Briggs & Company to exchange these notes for bonds, and that to prevent this the suit was commenced; that about the first of December, 1904, while the suit was pending, the trust company purchased the notes from the banks and exchanged them for the bonds, and that on December 9, 1904, it sold and delivered them to parties in Boston, and that they were at that time worth in the market a premium of eight per cent.

      Mr. Harry L. Gordon; Mr. Louis M. Ireton and Mr. Walter M. Schoenle, for plaintiffs in error.

      Mr. H. E. Buher, for defendant in error.
   Summers, J.

The case involves the construction of Sections 22b, 871 and 2834a, Revised Statutes. Section 2834a is as follows: “The trustees of any township, the board of education of any school district and the commissioners of any county for the purpose of extending the time of payment of any indebtedness, which from its limits of taxation such township, school district or county is unable to pay at maturity, shall have power to borrow money or to issue bonds of such township, school district or county, so as to change but not to increase the indebtedness in such amounts and for such length of time and at such rate of interest, as the trustees, board of education or commissioners may deem proper, not to exceed the rate of six per centum per annum, payable annually or semi-annually.

“Or when it shall appear to the trustees, board of education or commissioners of any township, school district or county to be for the best interests of such township, school district or county to renew, refund or extend the time of payment of any bonded indebtedness which shall not have matured and thereby reduce the rate of interest thereon, such trustees, board of education or commissioners shall have authority to issue for that purpose new bonds, and to exchange the same with the holder or holders of such outstanding bonds if such holder or holders shall consent to make such exchange and to such reduction of interest.

“Provided, however, that no indebtedness of any township, school district or county shall be funded, refunded or extended unless such indebtedness shall first be determined to be an existing, valid and binding obligation of any such township, school district or county by a formal resolution of the trustees, board of education or commissioners of any such township, school district or county, which resolution shall so state the amount of the existing indebtedness to be funded, refunded or extended, the aggregate amount of bonds to be issued therefor, their number and denomination, the date of their maturity, the rate of interest they shall bear and the place of payment of principal and interest.

“And for the payment of the bonds issued under this section the township trustees, board of education or county commissioners shall levy a tax, in addition to the amount otherwise authorized; every year during the period the bonds have to run sufficient in amount to pay the accruing interest and the bonds as they mature.”

The section was first enacted in 1896 (92 Ohio Laws, 6), and comprised only the first paragraph. It was amended the same year (92 Ohio Laws, 33), by the addition of the proviso, being the third paragraph; in 1898 (93 Ohio Laws, 233), by the addition of the fourth paragraph, providing for the levy of the tax, and in 1904 (97 Ohio Laws, 514) by the addition of the second paragraph providing for an exchange of bonds.

The wording of the statute is not accurate, but it clearly appears that authority is given, under the circumstances stated, to borrow money, or to issue bonds, and to issue new bonds and exchange them for outstanding bonds. It is contended that the negotiable promissory notes held by the banks were bonds, and that the commissioners were authorized to issue new bonds and to exchange them for the notes. In its broad sense a bond comprises a negotiable promissory note, under seal, but' a promissory note is not a municipal bond within the meaning of those words as understood in the commercial world. A negotiable promissory note generally is made payable to a person, or order, and is for a comparatively short period of time, while a bond generally is made payable to bearer, has a long time to run and has negotiable interest coupons attached. It is easier to distinguish them than to point- out the distinction.

“By the term ‘municipal bonds’ is meant evidences of indebtedness, issued by cities, incorporated towns, counties, townships, school districts, and other public corporate bodies, negotiable in form, payable at a designated future time, bearing interest payable annually or semi-annually, and usually having coupons attached evidencing the several installments of interest.

“Municipal bonds issued in the usual negotiable form, when authorized by law, have all the attributes of negotiable commercial paper of individuals or private corporations; they are usually made payable to bearer; they pass by delivery, and, like other negotiable instruments, are not subject to equities. between prior holders, in the hands of bona ñde purchaser for value, before due, without notice of such equities. Municipal bonds, when authorized by law, may be issued to raise money for the purpose of constructing or carrying on authorized public improvements or works. They represent a large portion of the wealth of the country, and their commercial value in the market depends very largely upon their negotiable character.” Harris on Municipal Bonds, 8.

Practically the same definition is given by Judge Hainer in his work entitled “The Modern Law of Municipal Securities,” Section 4. Daniel on Negotiable Instruments, Section i486, says they are “A new species of security for money which has sprung at once to the front rank of negotiable instruments.. They constitute a vast portion of the wealth of this country.” In Mercer Co. v. Hacket, 1 Wallace, 83, Mr. Justice Grier says: “This species of bonds is a modern invention intended to pass by manual delivery and to have the qualitiés of negotiable paper; and their value depends mainly upon this character.” .

The power to issue bonds, or other negotiable securities, is not necessarily incident to a power expressly conferred upon a municipal corporation to borrow money, but generally the one power as well as the other must be expressly granted. In Merrill v. Town of Monticello, 138 U. S., 673, Mr, Justice Lamar says: “It is admitted that the power to borrow money, or to incur indebtedness, carries with it the power to issue the usual evidences of indebtedness by the corporation to the lender or other creditor. Such evidences may be in the form of promissory notes, warrants, and, perhaps, most generally, in that of a bond. But there is a marked legal difference between the power to give a note to a lender for the amount of money borrowed, or to a creditor for the amount due, and the power to issue, for sale in open market, a bond, as a commercial security, with immunity, in the hands of a bona ñde holder for value, from equitable defenses.” And again he says: “To borrow money, and to give a bond or obligation therefor, which may circulate in the market as a negotiable security, freed from any equities that may be set up by the'maker of it, are, in their language and legal effect essentially different transactions.” In Brenham v. German American Bank, 144 U. S., 173, where the charter authorized the city to borrow money for general purposes, on the credit of the city, it is held that the city in the exercise of this power, could give to the lender, as a voucher, for the payment of the money, evidence of indebtedness in the shape of non-negotiable paper, but that it did not authorize it to issue negotiable paper or .bonds, unimpeachable in the hands of a bona ñde holder.

Section 2834a does not confer power to borrow and to issue bonds as evidence of the debt, the power given is to borrow, or to issue bonds; and as originally enacted it read power to issue bonds or to borrow money, and this necessarily excludes the implication that the power to borrow includes the power to issue bonds.

Two of the notes recite that they are issued under authority of Section 871. That section authorizes the commissioners to borrow money and to issue the bonds of the county to secure the payment óf principal and interest thereof, but Section 872 provides that the bonds so issued shall be in sums not more than one thousand dollars each. These two notes are in the sum of $12,750.00 each. Moreover, each of the four instruments recites that it is a note. However, it is not necessary to determine whether the statute confers power to give negotiable promissory notes, for if the word “bonds” is used to designate a security different from a negotiable promissory note then the authority to issue new bonds and to exchange them for outstanding bonds does not include power to issue and exchange bonds for negotiable promissory notes or evidences of indebtedness other than bonds. There is a reason why such an exchange should be limited to bonds. Section 22&, Revised Statutes, enacted in 1883, provides that all bonds issued by boards of county commissioners shall be sold to the highest bidder after being advertised, and it may well be that in such case the legislature supposed it would be in the interest of the public to permit new bonds to be issued, bearing a less rate of interest, and to be exchanged for the outstanding bonds. Moreover, if the power to exchange is not limited to such an indebtedness, for which bonds had been advertised and sold, then the last amendment added nothing to the section, for it already conferred power to fund, refund or extend.

The bonds having been issued and delivered, without authority of law, to the trust company in exchange for the notes, and the bonds having passed from the trust company to a bona fide holder for value, the question remains whether the judgment against Briggs & Company and the trust company, as for a conversion of the bonds, is authorized.

The petition does not state a cause of action at law, in which the defendants, Briggs & Company and the trust company, could be joined as defendants with the commissioners and be required to answer in the Muskingum court, but' it does state grounds for an injunction, that was the primary relief sought, and respecting that the defendants were properly joined and summoned and appeared without objection. While the suit was pending the commissioners issued and delivered the bonds to the defendant, the trust company, and it sold and delivered them to purchasers beyond the jurisdiction of the court, so that the primary relief sought could not be granted. It is well settled that, “If a court of equity obtains jurisdiction of a suit for the purpose of granting some distinctively equitable relief, such, for example, as the specific performance of a contract, or the rescission or cancellation of some instrument, and it appears from facts disclosed on the hearing, but not known to the plaintiff when he brought his suit, that the special relief prayed for has become impracticable, and the plaintiff is entitled to the only alternative relief possible of damages, the court then may, and generally will, instead of compelling the plaintiff to incur the double expense and trouble of an action at law, retain the cause, decide all the issues involved, and decree' the payment of mere compensatory damages.” i Pomeroy’s Equity Jurisprudence, Section 237. A case illustrative of this practice is referred to by Judge Burnet in the opinion in Rees v. Smith, 1 Ohio, 124. He says: “We consider it no objection to the decree in this case, that it is for the payment of money only. Such decrees are frequent. The case of Turner v. Dayton and others, decided at the last term, in Champaign, is in point. The bill was filed for a specific performance. The allegations of the bill were sustained, but Dayton having sold the land to his co-defendants, who had purchased for a valuable consideration without notice, a specific performance could not be decreed. The court, however, having become legally possessed of the case, refused to turn the plaintiff round, retained the cause and under the general prayer for relief decreed to the complainant the value of the land, which was admitted to be the sum for which it had been sold, and which was then in the hands of the defendant, Dayton.”

Piad these bonds remained in the hands of the trust company the court by its decree could have required that they be surrendered, but while the suit was pending they passed beyond the reach of the court, and we do not think there can be any doubt that a cause of action exists against the parties who obtained them and placed them beyond the the jurisdiction of the court as for a cpnversion of the bonds, or for money had and received, for the amount which the defendant .realized on their sale. In a somewhat similar case, the Town of Plainview v. Winona & St. Peter R. Co., 36 Minn., 505, it is said: “If it be conceded that these bonds, when once placed on the market, were liable to pass into the hands of purchasers who would be entitled to enforce the same as valid negotiable securities in the United States courts, as the result in this case has proved, it must necessarily follow, we think, that plaintiff has a cause of action for damages.” In Comstock v. Hier, 73 N. Y., 269-275, it is said: “It would be illogical, conceding the invalidity of the note in the hands of the defendants, and the non-liability of the plaintiff to them, to hold the defendants would acquire a title to the proceeds of the note by a transfer of 'the same to a third person. A party can not fortify his title to property by a sale, as the title to proceeds upon sale will be the same as to the property before sale. I am of the opinion that the plaintiff had an election of remedies — trover for the conversion of the note, or an action for money had and received, for the amount which the defendants realized upon the sale of the note. This follows from the conceded rule that the defendants were without title to the note, or authority to dispose' of the same.” In Chitty on Bills, *251, the author says: “Where a note or bill was void in its creation, the party entitled to the instrument may maintain an action of detinue or trover to .recover the same-or its value, or assumpsit for money had and received, if the proceeds of the bill have been received.” And in Lamb, Exr., v. Clark, 5 Pick., 193, 197, the court say: “There are cases where an injured party may have his election of remedies, as where there has been a tortious taking of his property, he may bring trespass or trover, or he may waive both, and bring assumpsit for the proceeds when it has been converted into money.” See also Farnham v. Benedict, 107 N. Y., 159; Webb v. City Council of Alexandria, 33 Gratt., 168.

The doctrine of lis pendens does not apply to negotiable securities .purchased before maturity, and there is no question as to the good faith of the trust company, the prosecuting attorney of the county advised that the statute authorized the commissioners to exchange the bonds for the notes, hut the trust company received the bonds in exchange for the notes and is charged with knowledge that the action of the commissioners was unauthorized. There is, however, no evidence that will support the judgment against Briggs & Company, and the judgment is reversed-as to it and as to the trust company it is affirmed.

Judgment reversed as to Briggs & Company.

Judgment affirmed as to trust company.

Price, C. J., Shaucic, Crew and Spear, JJ., concur.