author: Dickman, J. Speab, J.

text:
    Citizens’ National Bank v. Brown.

      Banking — Negotiable instruments — Lost certificate of deposit — Liability—■ Indemnity.

      1. A certificate of deposit issued by a national bank for SI,145, payable to tlie order of the depositor-, on the return of the certificate, in current funds is, in effect, a negotiable promissory note.
    2. Where such a certificate is lost by the payee, and the same has never been indorsed by him, he may maintain an action at law thereon against the maker, without tendering an indemnity against future liability.
    (Decided March 22, 1887.)
    Error to the District Court of Hamilton County.
    Eugene E. Brown, the defendant in error, brought suit in the superior court of Cincinnati, against the Citizens’ National Bank of Cincinnati, the plaintiff in error, alleging in substance, in his petition, that on the 9th day of August, 1882, he deposited in that bank the sum of eleven hundred and forty-five dollars, and received from the bank a certificate of deposit, of which the following is a true copy :
    “762. Citizens’ National Bank, Cincinnati, August 9th, 1882. Eugene E. Brown has deposited in this bank, eleven hundred and forty-five dollars, payable to the order of himself on return of this certificate, in current funds,”— which certificate was signed by the proper officer of the bank. That on the 16th day of September, 1882, at Cincinnati, Ohio, he lost the- certificate of deposit, and his pocket-book. containing the same, and had not since that time seed or heard of either, and did not know where the certificate of deposit was. That he immediately notified the bank of the loss, and not to pay the certificate, and that the same had not been indorsed by him. That he had not, in fact, at any time indorsed the certificate of deposit; that it was in the same condition when lost as when received by him; that he had not in any manner sold or transferred the same to any person; and that the certificate had not been presented for payment to the bank by any one. That he immediately demanded payment from the bank of the amount of the deposit, which was by the bank refused, although he offered to receipt in full for the amount of money, and against the certificate of deposit.
    The bank, in its answer, admitted the deposit of the sum of eleven hundred and forty-five dollars by the plaintiff, and that he received from the bank a certificate of deposit therefor as by him alleged; that he demanded payment of that sum at the time stated in the petition, but failed to present or produce the certificate of deposit, and informed the bank that he had lost the same. The bank averred that at the time the plaintiff demanded the sum of money by him deposited, it was ready and willing, and then offered to pay the same, if he would produce and indorse the certificate of deposit; and in case the certificate was lost, that it was ready and willing to pay the same on the plaintiffs executing and delivering his bond with good and sufficient sureties, to indemnify the bank against any loss that it might sustain, by reason of the certificate being held or owned by some person other than himself, and' the collection thereof enforced against the bank. The bank further averred that it was then ready and willing, and would continue in readiness to pay the certificate to the plaintiff, upon the execution and delivery of such bond; but that plaintiff had and still refused to execute and deliver such bond and the bank had and still refused to pay the amount of the certificate, unless and until such bond was executed and delivered for its protection.
    The cause having been heard upon the pleadings, testimony and exhibits, the court found that the plaintiff on the 9th day of August, 1882, deposited with the bank the sum of eleven hundred and forty-five dollars, and received from the bank the certificate of deposit described in the petition, duly executed by the officers of the bank; that on the 16th day of September, 1882, plaintiff lost the certificate of deposit, and had not since found or recovered the same; that the certificate was not indorsed by the plaintiff when lost, and that on the 18th day of September, 1882, he demanded payment thereof from the bank, and although the certificate was then overdue and payable, the bank refused to pay the same, unless the plaintiff should first indemnify the bank against bhe possibility of loss, by reason of the fact that the certificate had been lost by the plaintiff.
    The court found that there was due to the plaintiff from the bank the sum of $1,145, with interest thereon from September 18, 1882, and judgment was rendered for the plaintiff accordingly.
    A motion was made by the bank for a new trial and overruled, to which the bank excepted. A bill of exceptions embodying all the evidence given or offered on the trial was allowed, and made a part of the record. The district court, on petition in error, affirmed the judgment of the court below, and this proceeding is instituted to reverse the judgment of the district court.

      Paxton & Warrington, for plaintiff in error.

      T. Q. Hildebrand, for defendant in error.
   Dickman, J.

The record discloses as facts established to the satisfaction of the courts below, and which we are not disposed to call in question, that the defendant in error, on the 9th day of August, 1882, deposited with the Citizens’ National Bank of Cincinnati, the sum of eleven hundred and forty-five dollar’s, and received from the bank a certificate of deposit for that amount, signed by the proper officer of the bank, bearing date as of that day, and made payable to the order of the depositor in current funds, on the return of the certificate. On the 16th day of September, 1882, the defendant in error lost the certificate of deposit, and has not since found or recovered it. When lost, the certificate was not indorsed by the defendant in error; and on the 18th day of September, 1882, he demanded payment thereof from the bank, but the bank refused to pay the same unless he would first indemnify it by bond, with good and sufficient sureties against any loss which it might suffer by reason of the certificate being held or owned by some person other than himself, who would seek to enforce against the bank the collection thereof.

The certificate was in effect a promissory note. It possessed all the requisites of a negotiable promissory note, and as such was governed by the rules and principles apj)licable to that class of paper. In Howe v. Hartness, 11 Ohio St. 449, it was held that a certificate of deposit substantially the same as that under consideration, was a negotiable promissory note. And in Miller v. Austen, 13 How. (U. S.) 218, where the amount deposited with the bank was payable only to the order of the depositor, at a future day certain, upon the return of the certificate of deposit, it was recognized as the established doctrine, that a promise to deliver or to be accountable for so much money is á good bill or note; that the sum named in the certificate issued being certain and the promise direct, every reason existed why the indorser of the paper should be held responsible to his indorsee, that could prevail in cases where the paper indorsed is in the ordinary form of a promissory note; and that as such note, the state courts generally had treated certificates of deposit payable to order: The fact that the money deposited with the plaintiff in error was made payable on return of the certificate, was not such a contingency as affected the negotiable character of the instrument. Hunt v. Divine, 37 Ill. 137; Smilie v. Stevens, 39 Vt. 315; Bellows Falls Bank v. Rutland County Bank, 40 Vt. 377.

In the view which we take of the case before us, it becomes unnecessary to inquire whether the certificate was overdue and payable at the time of its loss, or whether a demand before the loss of the certificate was an essential pre-requisite to the maturity of the instrument, in order to determine whether one who should come into possession of it, would be subject to the equities that might exist between the bank and the depositor, whereby the bank would be secure in paying the amount of the certificate to the depositor, without exacting from him an indemnity. The certificate though negotiable was not negotiated when lost by the payee. It was never indorsed by him, and it becomes a subject of inquiry whether, in such, case, a bond of indemnity to the bank was á condition precedent to his right of recovery at law on the lost instrument.

It was said by Lord Ellenborough in Pierson v. Hutchinson, 2 Campb. 211, whether an indemnity be sufficient or insufficient, is a question of which a court of law cannot judge ”; and by Lord Elden, in Ex parte Greenway, 6 Ves. Jr. 812, I never could understand by what authority courts of law compelled parties to take the indemnity.” But the difficulty which courts of law have found in adjusting indemnities is obviated in this state under our code of civil procedure, which settles in the same action the legal and equitable rights of the parties, — altering .rather the form of administering justice than impairing in any manner the rights of the parties, whether before denominated legal or equitable. Lamson v. Pfaff, 1 Handy, 449.

If a negotiable note payable to bearer, or to order, and indorsed in blank, is lost before maturity, it is right that the maker, upon paying its contents, should be made secure against being compelled to pay the same a second time. But when the lost instrument is not payable to bearer, or is payable to order and is unindorsed by the.payee, as no legal title in such a case could pass, so as to invest any one with the privileges of a bona fide holder in the usual course of trade, no indemnity would be necessary. If one should find a note negotiable by indorsement, and forge the indorsement, the holder by this title could make no valid claim against any one, because the written transfer would confer no title upon him. And if the finder should not forge the endorsement, his action or demand of payment must needs be in the payee’s name, and the maker might then plead any judgment already rendered against him on the note in favor of the payee, or any payment thereon made by him to the payee.

Among the exceptions as to indemnity, it is said by an approved text-writer, that there are some cases in which the defendant can run no risk, and in which the plaintiff may, therefore, proceed in a court of equity or law without giving a bond of indemnity; that is, where the note is not negotiable; and where, though negotiable, it is payable to order and unindorsed, or has been specially indorsed. Daniel on Negotiable Instruments, § 1481.

The reason which permits notes never negotiable to be sued under the expeditious forms of the common law, in preference to the more tedious and expensive ones of chancery, applies, says Parsons, in his treatise on Notes and Bills, equally well to all notes which, being negotiable, have not been negotiated. The rule as laid down by Greenleaf (Evid., vol. 2, § 156) is, that if the bill or other negotiable security be lost, there can be no remedy upon it by law, unless it was in such a state when lost, that no person but the plaintiff could have acquired a right to sue thereon. But, if there is no danger that the defendant will ever again be liable on the bill or note, as, if the indorsement were specially restricted to the plaintiff only, or if the instrument was not indorsed, the plaintiff has been permitted to recover upon the usual secondary evidence. And Judge Story, in considering the remedy afforded in equity, and approving the rule allowing a recovery on a lost note at law where it is not negotiable, states that the same rule will apply if the note were originally negotiable,where it has not been indorsed by the payee. Promissory Notes, § 451.

In accord with the rule holding the maker liable without indemnity, where the payee has lost a negotiable note before indorsing it, is the decision in Thayer v. King, 15 Ohio, 242. That decision was rendered in the year 1846, and it has stood approved in this state from the day of its announcement. "We find no adequate ground for now disturbing it. The court held, in that case, that an action might be maintained at law on a note payable to order, and indorsed in blank, and lost after it became due. The reason for so holding will apply with equal force to the case under consideration. In the one case, it was deemed unnecessary to invoke the chancery powers of the court for an indemnity, as the maker wuuld be protected against a double payment of the overdue lost notes, by reason of their being charged with all equities existing between himself and the owner of the paper. . And in the case at bar, no bond of idemnity was neccessary, — the bank being protected against a second payment of the certificate of deposit by reason of its not having been indorsed before it was lost, whereby no bona fide holder could invalidate the equities between Brown and the bank. In referring to the contingency of a double recovery against a maker who has been compelled to pay lost negotiable paper, which had fallen into the hands of an innocent holder, who had received it before due, Read, J., in Thayer v. King, supra, says: “ If former payment or recovery would be a complete bar to any subsequent payment or recovery, the reason of the rule ceases, and the objection to a recovery by the owner no longer exists. Hence, if the circumstances of the case are such that the negotiable paper can never be produced for payment a second time, or if produced would permit no right of recovery in the hands of the holder, no indemnity in such case being required to guard against a second payment, recovery may be had in a court of law. Thus, if the instrument be totally destroyed, or if it pass into the hands of the holder, charged with all the equities which exist against the original holder, the action may be at law.”

Our attention has been called to leading authorities in different states, in confirmation of the aforegoing views — all going to establish the doctrine that an action at law may be sustained — without tendering an indemnity — on the lost note though it be negotiable, if it'appear not to have been negotiated, upon giving the usual proof necessaiy to let in parol evidence of a written contract.

In New York, before the enactment of provisions securing the action at law upon lost negotiable paper, upon tendering a bond of indemnity, it was said in Pintard v. Tackington, 10 Johns. 104, that the cases which have not permitted a recovery at law, upon negotiable paper which was merely lost, were those in which the paper had been indorsed before it was lost. And where a plaintiff declared on a promissory note payable on demand, and stated that the note had been lost, and the existence and contents of the note were proved, and it not appearing that the note was negotiable, or if negotiable, that it had in fact been negotiated, it was held that he was entitled to recover on the note. See also Rowley v. Ball, 3 Cowen, 303; McNair v. Gilbert, 3 Wend. 344.

In Rogers v. Miller, 4 Scam. 333, the court say that where the note has not been indorsed at all, or has been specially indorsed, there, as no danger can arise of its falling into the hands of a bona fide holder, and thus fastening upon the maker a second liability, the party may recover by showing the loss of the note merely, and its contents.

In Depew v. Wheelan, 6 Blackf. 485, it was held that the payee of a lost promissory note, transferable by indorsement under the statute, not having indorsed it, may maintain an action at law on it against the maker. Dewey, J., in delivering the opinion of the court, observes: “ The note is averred in the declaration to be lost, but there is no averment, or proof, that it was ever indorsed by the plaintiffs. There was testimony that if it be lost, it was lost from the possession of the agent of the plaintiffs. This, we think, raises a fair presumption that they never transferred it; and of course no other holder can show title to it. The makers are in no danger of a second liability.”

In Lazell v. Lazell, 12 Vt. 443, the court pronounces the law as well settled that when a note not negotiable, or if negotiable by being payable to order, not negotiated, is lost, an action at law may be maintained on the note, on proof of its loss, to recover its contents.

Aborn v. Bosworth, 1 R. I. 401, was the case of a lost bill of exchange drawn upon II. and payable to A., the plaintiff, or order, on presentment. In its transmission to the agent of the plaintiff, the bill was lost on board a steamer. In an action against the drawer of the bill, in which there was a verdict for the plaintiff, Green, C. J., charged the jury: “If you find that the bill was not destroyed, you will then determine -whether the bill was unindorsed, or so indorsed that no third party could recover upon it. If the bill had no indorsement, or if it was specially indorsed to the party to whom it was sent, then no third person can interpose a claim.”

In Moore v. Fall, 42 Maine, 450, the case of Pintard v. Tackington, supra, is approvingly cited in support of the doctrine, that a recovery may be had at law without furnishing an indemnity on a lost note which is not negotiable, or which, being negotiable, has not been negotiated.

By statutory provision in Alabama, an action is maintainable at law on a lost negotiable note, which had not been negotiated at the time of the loss. . But in Branch Bank at Mobile v. Tillman, 12 Ala. 214, the remedy by statute was declared to be cumulative, and not designed to repeal or annul all others which were previously recognized at law. The preamble of the enactment indicates its true meaning to provide a certain remedy at law for parties who might lose the written evidence of any debt or duty, — the necessity for which is affirmed to be the uncertainty in the decisions of the courts of the state upon the subject.

It is manifest that the principle underlying the authorities to which we have heretofore referred is, that the payee or owner in an action at law against the maker on a lost negotiable instrument, need not tender to him an indemnity, if the paper when lost was in such a state that the maker would not be compelled to pay the contents again to a bona fide holder. The rule which, we think, should govern in the case at bar, is in keeping with the decision in Rolt v. Watson, 4 Bing. 273,— a case overruled in England, but not in America, and which, in our judgment, commends itself as an authoritative exposition of the law on the subject-matter adjudicated. “The question for us,” says Best, C. J., “ is, whether the bill which the defendant in this cause has accepted, be an instrument which can ever rise in judgment against him? Now the jury have found expressly that the bill was unindorsed, and though payable three months after date, it has not been heard of from 1825 to 1827. There is no decision in which the party has been held to be responsible in respect of an outstanding bill unindorsed. In all the cases in which a defendant has been holden to be discharged, in respect of a supposed liability on a bill, the bill has been in such a state as to be likely to be used against him.” See Long v. Bailie, 2 Campb. 214 n.

It is contended that the words, “ payable on return of this certificate,” gave the bank the right to hold the depositor to the letter of the contract, and to refuse payment until the certificate was surrendered, or until a sufficient indemnity had been offered. "We do not understand that those words import a stipulation for an indemnity in case of a failure to return the certificate, or to settle the terms upon which the payee would be entitled to his’money, in the event of a loss of the instrument. Under some circumstances, an indemnity might be properly required for the maker’s protection, as, where the instrument is payable to bearer, or to order, and indorsed at the time of its loss, while under other circumstances, such an indemnity might be wholly unnecessary. The words, payable on return of this certificate,” cannot be construed to have an effect beyond what might be sufficient for the safety of the bank, upon its paying the certificate. At the most, the bank should not demand indemnity, when not necessary to protect itself against a second liability. A note payable to bearer requires a physical presentation of the instrument before payment, as much as a certificate of deposit “payable on its return.” By the literal terms of the note, there must be a bearer of it before payment can be exacted. And yet in the light of Thayer v. King, supra, it will not be claimed, that a note payable to bearer and lost after it becomes due, cannot be collected without first producing the note or tendering an indemnity. In every promissory note there is an implied undertaking by the payee, or holder to return it to the maker on payment of the money; and an express undertaking to return it could have no greater force, nor change or modify the legal effect of the instrument. As expressed by Peck, J., in Smilie v. Stevens, supra, “ The return of the certificate is an act to be done with the instrument itself, contemporaneous with the payment, and is no more than would be the implied duty of the holder of a negotiable note or bill, in the absence of such, stipulation; as it is the duty of the holder to deliver up a negotiable promissory note, or bill, on the payment of it by the maker, as a voucher for his security, or show a sufficient excuse for not doing so.” An inability to return the certificate, by reason of its loss, cannot operate as a payment or satisfaction. The maker is not thereby discharged; but the question arises as to what, if any, conditions should be imposed upon the loser, before he can recover of the maker. Having failed to return the certificate, though required to tender an indemnity in cases where the maker would not be safe in paying without such return, he should not be required to go further, and indemnify when the certificate was not negotiated at the time of its loss, and its non-delivery to the maker would not subject him to a second payment.

It is assigned as error that the court below allowed interest on the certificate of deposit from the 18th day of September, 1882. On that day Brown requested payment, and the bank refused. It was incumbent upon him to produce and surrender the certificate, or give an adequate reason for his inability to do so. Such a reason was furnished in the loss of the certificate. As the bank, notwithstanding, deemed it advisable to withhold payment, the certificate should bear interest from the day the bank declined to pay.

Judgment affirmed.

Speab, J.

(dissenting). This case was first tried in the superior court upon a demurrer to the petition. The demurrer was sustained, and a judgment entered for defendant. Error was prosecuted to the district court, in which court the judgment below was reversed, and the cause remanded for trial. The ground of reversal (opinion in 9 Law Bulletin, 361) seems to have been that the certificate was, in legal effect, a demand note, and overdue at the time of the alleged loss. Upon trial, the superior court, yielding its judgment to the authority of the district court, found the facts and rendered the judgment as given in the statement which precedes the majority opinion.

I think .the superior court was right in its holding upon the demurrer. The petition showed that the condition of payment contained in the certificate had not been complied with by the holder. This disclosed a state of facts which precluded a recovery at law. And there being no equivalent to a return of the certificate offered, i. e., no tender of indemnity, the petition failed to make a case in equity, and hence th’e demurrer was properly sustained. The fact that under our practice the distinctions between equitable and legal forms are abolished, and that equitable and legal rights may be enforced in the same forum, in no way aids the petition, or affects the question. If the plaintiff’s action was a legal one, it invoked the powers of the court as a court of law, and was triable by a jury; if an equitable one, it invoked the equity powers, and was triable by the court. If the facts disclosed by the petition showed that no case was made for relief at law, then, unless the infirmities of the plaintiff’s cause could be cured in equity, he had no case for the court to act upon. Cases involving the ordering of indemnity have never been, in this state, cognizable at law, or triable on the law side of the court. A court of law renders judgments for the unconditional payment of money, but does not impose conditions.

The assumption of the district court, as to the certificate, embodied in the subsequent finding of the trial court, was, it seems to me, unfounded. That instrument was not past-due paper at the time of its alleged loss, and the demand by Brown, without the paper, could not cause it to mature, especially if the condition “ on return of this certificate” is to be given its legitimate effect. Neither could mere efflux of time have that effect. About forty days had intervened from the date of issue at the time of the attempted demand. The certificates represented moneys left for safe-keeping, to be retained until actual demand, and, according to its terms, .the certificate would not be dishonored until presented.' Certificates of this general nature have been held to be, in legal effect, promissory notes. Such was the character given the certificate in dispute in Howe v. Hartness, 11 Ohio St. 449. That certificate bore interest, and payment was not subject to the condition, “on return of this certificate.” It hardly advances the inquiry to call such a paper a negotiable promissory note. Cases are to be found which decide the point opposite ways. Needless attempts at classification, and the vague use of terms, often tend to confuse rather than to enlighten, and may, with safety, be avoided. In Massachusetts, by statute, it is provided that in an action on a note, payable on demand, brought by the indorser against the maker, any matter shall be a defense which would be had suit been brought by the payee, except matter arising after notice of the transfer. In Shute v. Pacific National Bank, 137 Mass. 487, it was held that certificates of deposit, similar in form to the one in the case at bar, were not promissory notes within the meaning of that statute, and that such certificate “ is not due until demand is made and the certificate returned or tendered.” Such certificates, “though having in most respects the incidents of promissory notes, and classed as such, differ from common promissory notes in important particulars. Such a certificate is not merely a promise to pay a certain sum, but it declares that a certain fund has been deposited, which is payable to the depositor, or his order, on the return of the certificate, properly indorsed.” Probably, it is sufficient to say that the current of authorities treats such certificates as negotiable paper.

But whatever this certificate is called, in determining the rights of the parties, their relation to one another, and to the contract, and their intention in making it, as gathered from the character of the agreement and the language used, must be considered. Their relation is rather that of depositor and bailee, than of lender and borrower; the transaction more resembles a deposit than a loan. At all events, the paper cannot be what the district court (and what, judging by the conclusion reached, the majority of this court) seemed to think it, “ in legal effect a promissory note payable on demand.” . If the transaction had been a simple loan, no time for payment having been fixed, the paper might have been treated as a demand note; the debt would have been due at once, and action could have been brought, which itself would have been a sufficient demand, but being a deposit, rules, applicable to bailments, rather than those applicable to loans, apply especially in determining as to the maturing of the obligation. The contract between the depositor and the bank is not one of strict bailment, because the deposit is not necessarily to be returned in specie, and yet, in all other respects, the contract is similar to that of bailment. The deposit here was for the benefit of the depositor. The depositary was to safely keep, but without compensation. The distinction between an ordinary loan of money, and a deposit of money which the depositary has the right to use, is an important one, and should not be lost sight of. Ordinarily, a loan is made at the request, and for the benefit of, the borrower, while the deposit is usually for the benefit and accommodation of the depositor. In the former case, as already stated, where no time of-payment is fixed, the obligation becomes instantly due, and the beginning of an action is a sufficient demand to warrant a recovery; in the latter case a demand is absolutely necessary to perfect the liability of the depositary. Bronson, J., in Downes v. Phoenix Bank, 6 Hill, 297, gives as a reason why a special demand should be made in such a case, that no one could desire to receive money on deposit for an indefinite period, with a right in the depositor to sue the next moment, and without any prior intimation that he wished to recall the loan.” This reason seems conclusive. In Munger v. Albany City National Bank, 85 N. Y. 580, the court holds that “ there is no right of action upon a certificate of deposit in ordinary form, issued by a bank, until demand of payment.” In the opinion, Folger, J., remarks that u as the certificate of deposit was a negotiable instrument, and was by its terms payable only on the return of it to the bank that had issued it, it never accrued due and payable, never matured until a return of it, and demand of payment made of it.” For full discussion of this phase of the question see opinion of Mullin, J., in Payne v. Gardner, 29 N. Y. 167,

In Bellows Falls Bank v. Rutland County Bank, 40 Vt. 377, suit was brought on a certificate, in most respects similar to the one in the present case, though not so definite in its terms, without alleging a previous demand. The declaration was held bad on demurrer. Wilson, J., in the opinion uses this language: The only remaining question necessary to consider is, whether a special demand is necessary before bringing suit, and this question depends entirely upon the construction to be given to the instrument. It is claimed by the plaintiffs that the transaction between Clark and the defendants is to be deemed a mere loan of money, where payment becomes presently due, and that an action may be brought without previous demand of payment. * * * But it seems clear to us that the transaction in question is not a loan, but a deposit, and the rights and liabilities of the parties are to be ascertained and governed by rules of law applicable to this sort of bailment. A deposit is defined to be a naked bailment of goods to be kept without recompense, and to be returned when the bailor shall require it. Story on Bailment. In the construction of this contract, as of all others, the intention of the parties must control, especially where their intention is apparent upon the face of the instrument. The defendants, in and by the instrument, say that ‘ O. B. Clark has deposited in their bank $1,100, payable to the order of himself on presentation of this certificate properly indorsed.’ The instrument, construed according to its legal effect, constitutes a deposit; but it is clear that it leaves the period of time the bailment shall continue indefinite. The provisions of the instrument constitute an agreement-to pay the money when Clark, or his indorsee, presents the certificate to the bank for payment, properly indorsed. The time when the instrument is due, by its terms, is ascertainable only by an actual presentation of it to the defendant’s bank, properly indorsed, and call for the money. There is nothing in the transaction to distinguish it from a naked bailment, for the exclusive benefit of the depositor, and in such cases a demand is generally necessary to perfect a right of action against the depositary. In this case it is clear, upon principle, that no action should be allowed against the defendants without a previous demand, and, we think, this view of the subject will give operation to the instrument according to its legal effect, and the obvious intention of the parties.- * * * Cases are cited by the plaintiffs’ counsel to the effect that in an action on a promissory note, payable 031 demand at a partículas: place, no special demand is necessaiy before bringing suit, and none need be averred. These cases arc applicable where the note or other instrument creates a debt, which, according to the legal effect of the instrument, is presently due, but they can have no application to the instrument on which the plaintiffs in this case seek to recover.” See, also, Fells Point Sav. Ins. of Baltimore v. Weedon, adm’r, 18 Md. 320; Sanbourn v. Smith, 44 Iowa, 152; Herrick v. Wolverton, 41 N. Y. 581, and Watson v. Phoenix Bank, 8 Met. 217.

The bank, in such ease, is not bound to hunt up the payee and make payment. On the contrary, the payee is bound to present the paper at the bank and make demand of payment there, and until this is done no right of action at law would accrue upon the paper, nor would the statute of limitations begin to run. Howell v. Adams, 68 N. Y. 314; Boughton v. Flint, 74 N. Y. 476; Nat’l Bank of Fort Edward v. Wash. Co. Nat’l Bank, 5 Hun. 605. In Girard Bank v. Bank of Penn Tp., 39 Pa. St. 92, Sti;ong, J., observes: “ It (the bank) is a mere custodian and is not in default or liable to respond in da3nages until demand has been made and payment refused. Such are the tenns of the contract implied in the transaction of receiving money on deposit, terms necessary alike to the depositor and the banker. And it is only because such is the contract, that the bank is not under the obligation of a common debtor to go after its customer and return the deposit wherever he may be found. Hence, it follows that no right of action exists, and the statute of limitations does not begin to run until the demand stipulated for in the contract has been duly made.” The certificate of deposit ivas, therefore, not duo at the time of the alleged loss, and if any effect at all is to be given to the stipulatiosi payable to the order of himself on return of this certificate,” it was not due on the 18th of September, 1882, when plaintiff asked the bank to pay him the mo3iey without complying with that stipulation, or attempthig to furnish any equivalent, nor was it in law due at the time of the commencement of the action.

I maintain that the term, payable to the order of himself on return of this certificate,” cannot be rightfully disregarded. Though it be held that the clause does not destroy the negotiability of the paper, still it by no means follows that it is to be treated as of no effect, and the instrument construed as though it were absent. It is easy to say that it is the duty of every holder of a promissory note on payment to deliver it up to the maker, and that the clause referred to is no more than would be implied as to every note. This implication is put in the following language by Peck, J., in Smilie v. Stevens, 39 Vt. 315: “ It is the duty of the holder to deliver up a negotiable promissory note or bill on the payment of it by the maker, as a voucher for his security, or show a sufficient excuse for not doing so.” If satisfied with the implication referred to with its qualification, “ or show a sufficient excuse for not doing so,” why put in the express stipulation ? Its presence here indicates that the parties relied upon it as important. Why should we infer that they intended to do a mere vain, frivolous thing ? It may have been that this qualification, and the holding of some courts upon certificates not containing such return clause, caused the parties in this case to make the express provision in this certificate. Clearly they had the right to do so; is it as clear that this court has the right to say that such careful forethought shall be of no avail ? Of course it can arbitrarily decree this. But should it be done ? The parties undertook to provide in the paper the protection the bank should have upon returning the money. The effect of the judgment in the case is that such protection shall not be afforded, and no other protection shall be given in its place. This manifest intent, therefore, of the parties is overslaughed. In the case of Patterson v. Poindexter, 6 Watts & Sergeant, 227, Chief Justice Gibson, in construing'the meaning of the word “ payable ” in a certificate of deposit, treats the subject in this manner: Where the parties have used it in its natural sense, by what authority shall we, who profess to be guided by the intention as the polar star of interpretation, say that they have used it in a different one?” And here we ask, in the same spirit,, why should this court, which ought to be governed by the same polar star ” in arriving at the proper construction of contracts, arbitrarily say that these words mean nothing, or that their meaning is different from the natural import, and thus fritter away this important provision by construction ?

Tiic court is not called upon to strain the law in order to assist the plaintiff out of a possible hardship, nor is it to be at all influenced by the consideration that one party may have more ability to stand a loss than the other. Parties themselves make the circumstances. Courts are in no way responsible for them, and when a like case arises again it may show a reversal of the condition of the pari.lea.,

Piad the court seen fit to hold that the return clause in this certificate deprived the paper of the attribute of negotiability, it is probable that the bank would have been fully, protected in payment to Brown without a return of the instrument, and Brown at the same time relieved of the effects of his claimed misfortune. There is authority for such holding. The supreme court, sitting in Hamilton county, in Austin v. Miller, 4 Western Law Journal, 527, held, “ that a certificate of deposit of money in bank, payable to the order of the depositor, with interest, at a future day, on return of this certificate, was not negotiable so as to charge the indorser.” In Patterson v. Poindexter, 6 Watts & Sergeant, supra, the court held a certificate having a like clause to bo a certificate of deposit on special terms,” negotiable for purposes of transfer only,” but not to hold an indorser. This court was, therefore, at liberty to hold the certificate in the case at bar, non-negotiable, though it is conceded that the weight of authority out of this state is the other way. Indeed, it may be conceded that precedents can be found in the books for almost any possible claim as to many of the questions mooted here. There is great contrariety of view, not to say irreconcilable conflict, in ihe decided cases.

Nor can the case of the defendant in error be'maintained upon the claim and finding that the certificate was unindorsed at time of alleged loss. The record in this case binds none but the parties to it. It is possible, we need not say probable, that the certificate may have been indorsed for value by the payee before loss. If so, the holder could recover, and payment to Brown would not furnish a shadow of a defense. But even if not indorsed by his genuine signature heretofore, it is possible to be put on hereafter, and even upon a forged indorsement the bank could be put to the trouble and expense of defending an action with the possibility and risk of an erroneous finding of the fact against it.

Perhaps no case is likely to arise where the danger of adjudging unconditional payment would be more apparent than, the one we are considering. By the testimony of the plaintiff (a bar-tender) it appeal’s that at the time of the alleged loss of the certificate he was intoxicated. He got on a street car in Cincinnati, corner of Fifth and Walnut streets, about 11 o’clock Saturday night, went to sleep and rode away past his home, to the end of the route. There he was awakened by the conductor, had a little trouble about paying fare, and rode back. He was unconscious nearly all the time he was on the car. Whore he went after getting off, does not appear, though he appears to have been at home the next morning, when he discovered the loss of the pocket-book containing the paper. He left the place of his employment about 7 o’clock in the evening, and was at many other saloons and was drinking freely. Some young country friends were in town and he was out with them, and talked with many other people. An uncle (a manufacturer and peddler of a patent medicine called “Allen’s Lightning Cure ”) accompanied him. At one saloon they stayed some time, and there the uncle was shown the certificate. He took it in his hands and handed it right back. He did not look to see whether it was indorsed or not, but saw no indorsement. From this saloon he went with the plaintiff to the corner of Fifth and Walnut, where the latter took the car, and the uncle saw no more of him that night. The plaintiff was positive that he did not indorse the certificate, but what he did, or where he was, after parting with the uncle, is unexplained, except as before stated, and his admitted condition would seem to make his assertion as to any definite recollection of what was done with the certificate doubtful, if not entirely untrustworthy. Of course the bank could adduce no testimony to contradict this, and upon it the finding was had that the certificate had been lost, and that it was not indorsed at the time; and upon such finding, based upon such testimony, unconditional judgment is rendered. Not only is the bank not to have any indemnity, but it is to pay interest from the date Brown asked for the money, and all costs. The poor privilege of holding Brown’s own bond of indemnity, • even, is denied; so that, in case it shall turn out that some person in the future may present this certificate with the payee’s genuine indorsement upon it, and compel the bank to pay to him, there would be no probability of recourse on Brown, for the present judgment settles that, as between the parties, the certificate was lost and was not then indorsed. A person holding this certificate rightfully has the right to hold it indefinitely, subject possibly to the duty of presentation within a reasonable time. What the limit is, if that rule applies, is a matter almost wholly of conjecture, and all risks, as to whether a plea of unreasonable delay in presentation would be held a bar, are on the bank.

In Nat’l Bank of Fort Ed. v. Wash. Co. Nat’l Bank, supra, the action was upon a certificate of deposit issued April 4, 1863. A payment was made by the bank to the payee on the 20th of September, 1864, but not indorsed. October 20th, 1870, the certificate was transferred for value to the plaintiff, without notice of the payment. The defendant set up that the certificate was dishonored, an unreasonable time (seven years) having elapsed before transfer, and asked to have the payment deducted. But the claim found no favor with the court. It said: The depositor puts his money in the bank for better security, instead of keeping it himself. And when he actually demands it'the bank is to pay; not before. The bank may, also, give a certificate of deposit. When they do this, and when; as in this case, they make the certificate payable on its return, properly indorsed, they have then added to their original undertaking as a depositary, an agreement that they will pay the deposit to the holder of that certificate, properly endorsed. They are, therefore, under a liability as depositary, to be ready to redeliver the money whenever demanded; and further, to deliver it to any holder of that certificate, properly indorsed. It follows, therefore, that they are liable to a bona fide holder of the certificate, notwithstanding a payment to the original depositor. It was urged by the defendant that the certificate was payable forthwith; that after the lapse of an unreasonable time (in this case seven years) it was presumed to be dishonored, and, therefore, that the assignee took it, subject to all equities. We think not. The very nature of the instrument, and the ordinary mode of business, show that a certificate of deposit, like a deposit credited in a pass-book, is intended to represent moneys actually left with the bank for safe keeping, which are to be retained until the depositor actually demands them. Such a certificate is not dishonored until jwesented. Our statutes recognize depositors as a distinct class from other creditors, and sometimes give them special privileges; and this is because, although in fact the bank is a debtor, yet it is supposed to be more, and to be a depositary, liable to redeliver, at any time, on demand.55 In Girard Bank v. Bank of Penn Tp., supra, action was upon a certified check, dated October 7, 1852, presented September 19, 1859. Money had been paid to original depositor, bond being taken. The court held that checks on a bank marked f good5 are to be regarded as evidences of deposit to the credit of the holder, and laches in making a demand for payment is no more imputable to him than to any other depositor. * , * * Upon the whole, we find nothing in the adjudicated cases which requires us to hold that a depositor is barred of his action against his banker by delaying to call for his deposit more than six years from the time he placed the money in bank, and we think such a doctrine would be alike impolitic and unjust.55 See, also, Pardee v. Fish, 60 N. Y. 265. In Ohio, the statute of limitations does not run against paper of this character until the lapse of fifteen years after maturity.

It seems manifest that the only safe, reasonable and just course regarding actions upon instruments like the one in this case, lost Before maturity, is to treat them as equitable claims, and make payment depend upon indemnity, at least such, as the party -may be able to give. Judge Gholson was of opinion that this rule should apply to notes and bills generally, where lost. In Lamson v. Pfaff, 1 Handy, 449 (which was upon a lost bill of exchange), he suggests, that in every case upon a lost bill or note, whether lost before or after maturity, it is but fair to require the plaintiff to indemnify the maker, as well against charges and expenses of possible litigation, as against a liability to pay a second time; that the liability to pay where the paper is not produced should be placed on equitable instead of legal ground, and that the indemnity required “ might be suited to and measured by the exigencies of the particular case,” the party being required to add sureties to the undertaking or not, as the circumstances indicated to be proper, in the exercise of a just discretion. Judge Story, in his work on Equity Jurisprudence, secs. 85 and 86, lays down the same principle as the true rule. The case here does not require.so extreme a rule, but if it be a proper rule as to all lost instruments, a fortiori is it a proper one in a case like the present. In England recovery cannot be had at law on a note lost before maturity, whatever the proof may be as to indorsement. Ramuz v. Crowe, 1 Exch. 167. In California, in Massachusetts, and in New York (by statute), security is required. Welton v. Adams, 4 Cal. 37, is in point. The action was like the one at bar, except that in one particular it was stronger for the plaintiff. Instead of a lost certificate, it was proven to have been destroyed. The judge, in the opinion, says: “It is undeniable that, upon payment of a note or bill, the maker or acceptor has a right to its possession, as a voucher of its payment. Can this right be taken away without an equivalent? It is said that proof of its destruction is a sufficient assurance that it can never afterwards appear. But, when we reflect upon the uncertainty and fallibility of all human testimony, it looks unjust to force the risk of its reappearance upon a party totally innocent of fault, and who has not bargained with a view to any mischance which may, in the future, result to his injury. I think there never can be, to him, that assurance óf the loss or destruction of the paper, as should force him, against his will, to take the peril, either of defending an action thereafter, or of repaying the amount. The negligence or misfortune of the holder ought not to- give him the right of casting such a burthen upon the maker.” This doctrine was approved in Price v. Dunlap, 5 Cal. 483, and in Randolph v. Harris, 28 Cal. 561.

It is insisted that the question is disposed of in favor of defendant in error by Thayer v. King, 15 Ohio, 242. With due respect, I think this is not so, but that, on the contrary, this court is at liberty to apply to the case at bar a reasonable rule, and in doing so would not conflict with that decision. The authoritative law of that case is the judgment rendered upon the facts. The action was upon notes due the day of their date, indorsed from one to four years afterward, and soon thereafter lost. Manifestly, the court was dealing with a case essentially different from the one at bar. And yet the rule we contend for is fully recognized. The syllabus is: “An action will lie, at the suit of the owner of negotiable paper, which has been lost after it fell due, at law; but if lost before due, the remedy is in chancery, where the owner can be required to indemnify the maker.” Suggesting that it is the judgment on the facts, which controls, rather than the language of the judge who delivers the opinion, yet I direct attention to the following, taken from the opinion of Judge Eead, which seems to have been omitted from the majority opinion in this case:' “ Now, it is a well recognized principle, that negotiable paper received after it is due, is charged with all the equities existing between the original parties. So, if payment be made to the original holdei’, and a l’ecovery be had by him, it would constitute a complete bar to another action brought by any person who should receive it after due. But, if it be lost before due, and the original holder commence suit, there is a possibility that the paper may be outstanding in the hands of an innocent holder — upon which recovery could be had; and hence, the law will not permit, in such case, a .recovery to be had until complete indemnity is furnished against such possibility. Now, a court of law has not the power to compel this indemnity; and, hence, is forbidden to give judgment or to entertain jurisdiction of the case. A court of law proceeds upon fixed principles, and if the party is entitled to judgment, lie is entitled to execution without limit or restraint. But, a court of equity, being called upon to give its aid, will guard the rights of all parties, and will not permit a recovery until the party seeking it will guard the opposite party from a danger which exists by the misfortune of the very person seeking its aid.”

It will be noted that the learned judge gives controlling importance to the consideration that there is a possibility that the paper may be outstanding in the hands of an innocent holder.” So, I contend here, that there is a possibility that this certificate may be in the hands of an innocent holder, and the court should not permit a recovery by the plaintiff until he shall guard the defendant from a danger which exists by the misfortune of the plaintiff himself.

The instance of a note payable to bearer and lost after due, is adduced, and it is suggested that such a note requires a physical presentation as much as a certificate of deposit u payable on its return.” The suggestion hardly aids the argument. The case put does not diifer, in principle, from Thayer v. King. We are dealing in this case with an instrument lost before due, and one which required presentation and demand to cause it to become due.

In conclusion, I must express regret that the court did not embrace the present opportunity to adopt a just and equitable rule as applicable to this class of cases. A rule of law which, in a case like the one at bar, relieves a party guilty of culpable negligence of all risk of the paper reappearing and serving as the basis of a claim against the maker in such form as to require him to defend an action and possibly repay the amount, and results in a record which screens such negligent party from liability in case such repayment is enforced, and 'places all that risk upon a party totally innocent of fault, and who not only has not agreed to assume it, but has distinctly and in terms bargained against it, is, I submit, unjust and inequitable.

Minshall, J., concurs in the dissenting opinion.


source: Caselaw Access Project

author: Spear, J.

license: Public Domain

text:
    Marmet v. The State. Hill v. City of Cincinnati. Hayman v. City of Cincinnati. Fernberg v. City of Cincinnati. Hammerly v. City of Cincinnati.

      Constitutional law — License of occupations — Municipal corporations.

    1. The general assembly has power (except as limited by section 18 of the schedule to the constitution) to regulate occupations by license, and to compel, by imposition of a fine, payment of a reasonable fee, where a special benefit is conferred by the public upon those who follow an occupation, or where the occupation imposes special burdens on the public, or where it is injurious to or dangerous to the public.
    2. The provisions of sections 1, 2, 22, 26 and 35 of the act of April 16, 1883 (80 Ohio L. 129), and section 29 as amended March 25, 1884 (81 Ohio L. 78), which require that in cities of the first grade of the first class each proprietor or lessee of a theater, etc., and all keepers or owners of livery, sale or boarding stables, every dealer in second-hand articles and keepers of junk shops, and the owners of all vehicles used upon the streets of the city, shall pay license as therein provided; that no person shall engage in any such business until a license therefor shall have been obtained, and that any person who shall violate any of the provisions of the act shall be punished by fine, are not in conflict with the constitution. Cincinnati v. Buckingham, 10 Ohio, 257; Cincinnati v. Bryson, 15 Ohio, 625; and Baker v. Cincinnati, 11 Ohio St. 534, approved and followed.
    (Decided March 22,1887.)
    Error to tbe District Court of Hamilton County.
    The plaintiff in error, Marmet, was convicted and fined in the police court of the city of Cincinnati, upon a charge founded on provisions of the act of April 16, 1883 (80 Ohio L. 129), amended March 25, 1884 (81 Ohio L. 78), entitled “ an act to provide a license on trades, business and professions carried on in cities of the first grade of the first class, and providing for the enforcement and collection of fines and penalties for carrying on business without license, and for other purposes,” the charge being that he had used vehicles upon the streets of the city of Cincinnati without first obtaining a license therefor. A petition in error was filed in the court of common pleas of Hamilton county to reverse the judgment of conviction. The last named court affirmed the judgment below, and petition is filed here to reverse both judgments.
    Each of the other plaintiffs in error brought suit to collect money claimed to have been illegally exacted by the officers of the city in compelling the taking out of license. The trial court below sustained demurrers to the several petitions, and dismissed the actions, and the district court affirmed those judgments.
    Hill is owner of a large number of drays and sprinkling carts used upon the streets of the city of Cincinnati.
    Iiayman is keeper of a livery stable, and runs vehicles.
    Fernberg is a dealer in second-hand articles.
    Hammerly is the proprietor of a concert hall.

      Balter & Goodhue, E. G. Hewitt and L. H Swormstedt, for plaintiffs in error.

      Goppoek, Cox & Gallagher, city solicitors, and Wulsin & Perkins, for defendants in error.
   Spear, J.

The ground urged for reversal of the judgments is that the law referred to is invalid because in violation of the constitution. If the law, as to the provisions involved in this iuquiry, is shown to be dearly, palpably in conflict with the constitution, so that there is no doubt or hesitancy in the mind of the court, it should be so held. But if there be any doubt upon the subject, that should be solved in favor of the law, and the court should decline to interfere; for if a law has-been enacted which is simply unwise and does not infringe upon any constitutional limitation, the only remedy is by resort to the law-making power to procure its repeal.

' The first section of the act provides, that in cities of the first grade of the first class, no person shall be engaged in any trade, business or profession hereinafter mentioned, until he or she shall have obtained a license therefor, as hereinafter provided.” The second section provides that “ any person who shall violate any of the provisions of this act, shall be deemed guilty of a misdemeanor, and upon conviction thereof, shall be punished by fine,” etc. The section relating to vehicles, which is section 29, as amended March 25, 1884 (81 Ohio L. 78), provides that “the owners of all vehicles used upon the streets of the city, shall pay annual license fees as follows: * * for each one-horse cart, three dollars; for each one-horse dray or truck, five dollars; * * for each two-horse wagon used for hauling boilers, engines, safes, stone, brick, lumber, logs or merchandise, fifteen dollars; * * for each wagon not before mentioned, drawn by one horse, three dollars ; drawn by two horses, ten dollars; drawn by three horses, fifteen dollars; drawn by four horses, twenty dollars,” etc. The requirement is not to apply to vehicles used by farmers marketing the products of their farms, or for hauling produce into such city; nor to gardeners, fruit growers or florists; nor to any person living without such ■ city engaged in farming, gardening, or huckstering, hauling goods or merchandise to or from such city; nor to any person living without such city who may go in or out in any buggy, sulky or carriage; but dairymen living without are to pay license upon their vehicles used upon the streets, three dollars for a one-horse wagon, five for a two-horse wagon, and ten for a three or four-horse wagon. Section 22 requires every proprietor of a theater, concert hall, etc., to pay license according to seating capacity, varying from five dollars per day to two hundred dollars per year where the capacity is less than 975 persons; and over that number, from same amount per day to three hundred dollars per year. Section 26 requires keepers of livery, sale and boarding stables to pay license graded according to gross receipts; those whose annual receipts are $15,000 and over, twenty-five dollars, and those whose receipts are less than that sum, fifteen dollars. Section 35 requires every dealer in second-hand articles and keepers of junk shops to pay a license of fifty dollars.

It is objected that this act is of a general nature, and that it is void under section 26 of article 2 of the constitution, because it is limited in its operation to cities of the first grade of the first class, and for that reason does not have a uniform operation throughout the state; that it is, therefore, a special act, and, inasmuch as it attempts to confer corporate powers, is in conflict with section 1 of article 13 of the constitution, which prohibits the general assembly from passing any special act conferring corporate powers, and with section 6 of the same article, which enjoins upon that body the duty of providing for the organization of cities and villages, and of restraining their powers of taxation, by general laws.

The law is not a special act. It is local and special as to the ends to be accomplished, but general in its terms and operation, applying to all cities of the first grade of the first class. It is not limited to such city as may have been in that class and grade at the date of its enactment. At that time Cincinnati was the only city in the state answering to the description; but there is a possibility, not to say certainty, that other cities in the state will increase in population, so that they will pass into this grade, and when that happens they will come within the provisions of this law. In this respect, the law differs essentially from that in review in the case of The State v. Mitchell, 31 Ohio St. 592. That law was made applicable only to cities of the second class, having a population of thirty-one thousand at the last federal census; and, inasmuch as Columbus was the only city in the state having that population, and as the act could apply alone to that city, and never to any other, and as it undertook to confer corporate powers, this court held it to be in conflict with section 1, of article 13, and therefore void. A like objection was found to exist against the act under consideration, in the case of The State v. Pugh, 43 Ohio St. 98; and the distinction above indicated is made apparent with great clearness and force in the opinion rendered by the present chief j ustice. The classification provided for by sections 1546 and 1547 of the Revised Statutes, has been sustained by repeated adjudications of this court, in cases involving questions as to the conferring of corporate powers, as to assessment, and as to governmental regulation, and it is too late now to question the validity of those sections. The city of Cincinnati comes within a class so constituted, and the law applies equally to all of the class intended to be affected by it, and hence, within the spirit of the decisions referred to, has a uniform operation throughout the state. We need not stop to inquire whether the act does or docs not confer corporate powers. It is not open to the objection urged under this head.

Another objection, in substance like the one just considered, is, that the law undertakes to make criminal in one locality, an act which, elsewhere, would be innocent. Falk, Exp., 42 Ohio St. 638, is cited in support of this point. The act in review in that case sought to punish any person found in any city of the first grade of the first class, or within four - miles thereof, having burglar’s tools in' his possession. In the opinion of Okey, J., the power of the general assembly to pass penal statutes which are local and even special in character, is fully recognized. But, inasmuch as there could be no conviction under the law unless it were shown that the defendant had such possession to aid in the commission of an unlawful act when favorable opportunity presented, thus showing an act not merely immoral, but plainly vicious, and of a serious and dangerous character, a crime malum in se, a wrong to society in every part of the state, and one which might properly be made punishable by statute throughout the state, as a criminal offense, the legislation could not be maintained. The court regarded classification by population not proper classification with reference to the subject-matter of the act. Had the law dealt with acts merely mala prohibita, and had the provision been in the nature of police regulations, enacted for the purpose of enforcing legitimate local requirements, it is clear that a different question would have been presented. The offense which we are here considering is wholly different in its nature from that of which Falk was convicted. It is wrong only because prohibited, and the prohibition is of use only where the needs of dense population require it. In the rural districts, and in many of the smaller municipalities, no necessity for it exists.

It is further urged that the sections quoted are in conflict with section 2, of article 12, of the constitution, which provides that “ laws shall be passed taxing by a uniform rule all moneys,” etc., according to its true value,” and is an attempt, under form of license, to raise money for general revenue. Section: 20, if regarded as imposing a tax, does not purport to tax property; neither does it. An owner may use, upon his own premises, and he may manufacture, and may sell any number of vehicles without coming within the provisions of this section. Only when he desires to use such vehicles upon the streets must he pay the annual license fee. And as to sections 22, 26 and 35, the same distinction may be made. As to theaters, wore this a tax on the property, every theater would have to pay, whether in operation or not, but the license is required only of those in operation. The burden is placed upon the occupation, and not upon the property used in the occupation. The power to tax or regulate by license arises from the general legislative power given by section 1, of article 2, of the constitution, and is not derived from section 2, of article 12. The latter section is but a limitation upon the taxing power, and it has been often held that the requirement of this section is simply that 'taxes upon property, as such, shall be by a uniform rule, but that this does not impair the power of the general assembly to use its discretion when the burden is not placed upon property. The last named section by no means exhausts the taxing power. The provision in section 38, that all moneys received from licenses upon vehicles; shall be placed to the credit of the street-repairing fund, wrould seem to refute the claim that the money from this source is, raised for general revenue, although it would not, necessarily, follow, even if it were required to-be placed to the credit of the general fund, that the purpose, of the law was exclusively the raising of general revenue, because no impediment exists to placing in one fund moneys intended for different purposes. So other moneys arising from licenses, though required to be placed to- the credit of the general fund, do not, by reason of that fact,, become general revenue. If revenue is necessarily beneficial to all the people within the jurisdiction in which it is raised, it may then be classed as general revenue; otherwise, it is special. In a general, popular sense, it may be said that improvement or repair in one portion of a city, tends to the benefit of all portions, and that, in like sense, police supervision and protection as to things which may, if not supervised, become harmful, tends to the benefit of all citizens. But this cannot be affirmed to be true in a legal sense. It is not so necessarily. That the receipts from these licenses are devoted to the general revenue in the legal sense, is not made apparent.

It is urged, too, that the last clause of section 29 makes discriminations in favor of farmers marketing the products of their own farms, which are unjust, and that this invalidates the law. Such products ordinarily embrace the necessaries of life, without which the people, and, to some extent, domestic animals could not subsist, and it is not unfair to assume that this consideration had weight with the legislature in making the discriminations referred to. Other reasons may have been within the knowledge of that body which are not here disclosed, and do not occur to us. However, it is enough to say, that it is not shown that such discriminations are not within the legislative discretion. It may be added that absolute equality as to burdens, whether applied to taxes or other subjects of legislation, is not to be expected in our laws. The wisdom of man has not yet devised a system of equalizing burdens so perfect in its application and so thorough in its enforcement as to leave no room for adverse comment or criticism.

Section 11 of the law is objected to as inquisitorial, and in violation of the constitutional right by which the citizen is secure against unreasonable searches and seizures. The section provides that when the rates of license depend upon the receipts or profits of the business, or upon the amount of business done, etc., the applicant for license may be examined upon such matters and may be required to subscribe to an affidavit that he has, to the best of his knowledge and belief, truly answered all questions touching the amount of license. Any false statement is made a misdemeanor, punishable as provided in section 2. If this section is ascertained to be wholly void, then a like infirmity attaches to many sections of other laws now'in force. The first four chapters of the title upon the subject of taxation (Revised Statutes, vol. 1, p. 524) and the practice which has grown up under them, furnish many examples of prying into the private business of the citizen, attended with inconveniences quite as marked as the requirements of section 11 of this law. A like objection is urged against other sections — those relating to the effect to be given certain testimony that may be received upon a proceeding to enforce the penalty, to the examination of places of business by city officers, in order to see that licenses are taken out and no business transacted but such as the license permits, etc., etc. As to these, it is enough to say that the questions sought to be raised are not in the cases before us. Though all of those sections were eliminated, the law would remain. They are not so interwoven with the sections under review as to invalidate them, even if held themselves to be invalid.

Whether the authority to enact laws of the character of the one in question shall be regarded as based upon the police power ot the government, or upon the taxing power, is, perhaps, not of the greatest importance, provided the power is found to exist. We have the best of authority for the oft-repeated aphorism that there is no magic in names.” The enactment provides for the regulation of relative rights, privileges and duties as between individuals, for the conservation of order, and the discouragement of pernicious employments, or of such as may become so, thus keeping its object apparently within the attributes of police power (Cooley on Taxation, 586); but we need not concern ourselves with nice and finely-drawn distinctions. Both the police and the taxing power, including power of assessment, are included within the general legislative power vested by our constitution in the general assembly. Of the police power, Redfield, C. J., in Thorpe v. Rutland and Burlington R. Co., 27 Vt. 140, observes: “ This police power of the state extends to the protection of the lives, limbs, health, comfort and quiet of all persons, and the protection of all property within the state. According to the maxim, sic utere tuo ut alienum non Icedas, which is of universal application, it must, of course, be within the range of legislative action to define the mode and manner in which every one may so use his OAvn as not to inj ure others.” Again, he speaks of it as the poAver “by Avkich persons and property are subjected to all kinds of restraints and burdens in order to secure the general comfort, health and prosperity of the state, of the perfect right in the legislature to do which no question ever was, or, upon acknowledged general principles, ever can be made, so far as natural persons are concerned.” Tiedeman, in his work on Limitations of Police Power, at page 194, has the folloAving: “ It will probably not be disputed that every one has a right to pursue in a lawful manner any lawful calling which he may select. The state can neither compel him to pursue any particular calling, nor prohibit him from engaging in any lawful business, provided he does so in a lawful manner. It is equally recognized as beyond dispute that the state, in the exercise of its police power, is, as a general proposition, authorized to subject all occupations to a reasonable regulation, where such regulation is required for the protection of public interests, or for the public Avelfarc.”

Questions germane to those brought in revieAV here, have been considered by this court in several cases, to which attention may briefly be called, in some of which the exactions are treated as direct taxes for revenue on occupations, in others as assessments on account of benefits, and in others as police regulations merely. The State v. Hibbard, 3 Ohio, 63, Avas an action of debt to recover the tax assessed upon the defendant as a practicing attorney. The same plaintiff v. Proudfit, same volume and page, Avas a like action to recover a tax against defendant as a physician. Judgment for plaintiff was rendered in each case. The State v. Gazley, 5 Ohio, 15, was likeAvise an action to recover a tax against the defendant, which had been assessed upon him as a practicing attorney. The tax Avas imposed by the court of common pleas by virtue of a laAV Avkich authorized such imposition. The court held that the tax w.as not a poll, but a faculty tax, and that it might be legally assessed by the legal tribunals. It is not shoAvn to what purpose the revenue so arising was devoted; but inasmuch as the courts could avail themselves of the poAver or not, it is a fair interference that the purposes were local. The State v. The Judges, 21 Ohio St. 1, was brought to test the right of the judges of the court of common pleas of Hamilton county to exercise the powers conferred upon them by an act, the effect of which was to constitute the receipts derived from the offices of clerk, probate judge, sheriff, treasurer, recorder, and auditor of Hamilton county public moneys belonging to the county, and to provide that after paying the compensation of deputies, etc., as fixed by the judges of the court of common pleas, the salary of commissioner of costs and fees appointed by the judges, and stated sums to each of the officers named, the residue to be transferred to the general fund for the use of the county. The act was held to be of a local nature, the object not being taxation for the purpose of general revenue, but to limit and provide for the payment of the compensation of the officers named, and to reduce the expenses of official service to the public, and that the provision that the surplus shall be transferred to the general county fund did not render the act invalid. In the opinion, White, J., uses this language: The plain design of the act is not to tax those requiring official services for the purpose of general revenue, but to require payment of a reasonable compensation for the facilities afforded', and the services performed.” The law upheld in this case is clearly an • instance of the exercise of legislative power to levy taxes other than on property, and is so treated in the subsequent case of West. Union Telegraph Co. v. Mayer, 28 Ohio St. 521. See, also, Cincinnati Gas Light & Coke Co. v. The State, 18 Ohio St. 237, where an assessment on gas companies, according to the appraised value of their capital, was regarded as “ not a tax on property, but rather a charge upon individual corporations — artificial persons — and the business in -which they are engaged; ” and it by no means follows,” adds Brinkerhoff, J., “ that because the state is compelled to tax all property by a uniform rule, that it is, therefore, cut off from all power to lay assessments and charges for exceptional and special purposes coming clearly within the general legislative power conferred by the constitution upon the general assembly.”

The power of a city to regulate, by a license ordinance, places of amusement, was directly involved in the case of Baker v. Cincinnati, 11 Ohio St. 534. The ordinance provided, among other things, that “ any person or persons who shall exhibit, or participate in exhibiting, for pay, in said city, any theatrical performance,” etc., without a license shall, for every offense, upon conviction, pay a fine of not less than five nor more than one hundred dollars and costs. The license fee placed upon theaters was from $100 to $500. The action was to recover back money claimed to have been illegally exacted by the mayor as a condition to granting a license. The court held that “ the money was not illegally exacted, and that the exaction was not in violation of any provision of the constitution of the state restricting the power of taxation vested in the general assembly.” In the opinion, Gholson, J., uses this language: We think that the power to prohibit certain things to be done, unless a license be obtained, and to charge for such license, in many instances of its exercise, stands on the same principle as an assessment. An assessment stands on a principle of benefit to property; a charge for a license may be made in view of the special inconvenience and expense to the government, for the benefit of the individual who asks for the license.” * * The power to authorize licenses is, in terms, untouched in the constitution, except in a particular instance, and how far, and to what extent, this power may' be used as a means of raising revenue, it is not necessary, nor proper that wc should inquire.”

The authority of a city to regulate market spaces, and to require payment of license fees, was involved in the case of Cincinnati v. Buckingham, 10 Ohio, 257. An ordinance of the city provided that no person should be licensed or permitted to occupy a place in any of the market places of the city, or in the streets contiguous, except upon making payment of twenty-five cents for every market day, and any one refusing to pay should forfeit five dollars and costs, to be recovered before the mayor. Buckingham had refused to pay, and had been fined by the mayor. This court held the ordinance lawful, and that it could be enforced by fine. The reasoning of the judge who delivered the opinion (Lane, C. J.) is to the effect that the spaces in and about the market required police supervision; the due regulation ” of the market required the expenditure of money, mostly for the benefit of the sellers; the spaces had to be paved and kept in repair and olean, and as to all these expenses it was but just that those who received the benefit should help defray the cost. To the claim that the city’s demand was a tax upon the sale of the commodities brought to market, he answered that it was rather a price demanded for accommodations provided. The case of Cincinnati v. Bryson, 15 Ohio, 625, is still more to the purpose. The defendant in that case was a drayman, who had been convicted and fined for refusal to take out a license under an ordinance which required owners of vehicles to pay a license fee. Drays drawn by one horse were assessed three dollars. An owner who refused or neglected to obtain a license, was, by the terms of the ordinance, to be subjected, on conviction, to a fine not exceeding ten dollars and costs, to be recovered before the mayor, or other proper officer, for every vehicle, and every day that he continued to run the vehicle without license was a néw offense. This court sustained the conviction. The following from the able opinion of Birchard, J., indicates the view taken by the coui’t: The court in that case (referring to Boston v. Schaffer, 9 Pick. 419) held that it was proper that towns, when put to expense by the exercise of particular employments, should be compensated. So in this case, the employment of drays, hacks, omnibuses, and other heavy vehicles, upon their pavements, cause no inconsiderable amount of expenditure to the city, in the way of repairing the streets and alleys. It is manifest to every one, that, in a large city, vehicles of this description cause great destruction to the public ways; far greater than the usual, ordinary travel of citizens otherwise employed. There is, therefore, no injustice in exacting a reasonable portion of the expenses which such special occupations cause to the community; and those who enjoy the special privilege, can refuse to bear a reasonable portion but with an ill-grace. But aside from all this, it is unquestionable that the power to license and regulate drays, etc., authorized the assessment and collection of a fine from any one running such vehicle without a license.” * * * But it is' again urged that the whole ordinances are void, because they are in restrain! of trade, and levy a tax. If this were the true character of the ordinances, they could not be sustained. We, however, do not view them in any such- light. The employment gives the drayman or hackman special privileges, which he enjoys to the prejudice of the city, in the injury necessarily done to her streets and pavements, to an amount far greater than any benefit to be derived from the price of the license, excluding the necessary burden of supervision.” It will be noted that the expression of the learned judge in respect to restraint upon trade and the levying of a tax, referred to an ordinance, not to an act of the general assemblju The authority of the foregoing decisions, cited from the Ohio reports, cannot be affected by the fact that since they were rendered a new constitution has been adopted and is in force, unless it be made apparent that the po wer to license and regulate, or to tax occupations, has been limited by the later constitution. This it is believed, cannot be shown. Save only as controlled by section 18 of the schedule, which relates to intoxicating liquors, the power to license and to tax occupations is as broad under the present constitution as under that of 1802.

Nor is this exercise of power as to vehicles generally an unreasonable exercise of it. The ownership of the streets is in the city, and the duty is imposed to keep them open, in repair and free from nuisance. This involves, in many ways, the expenditure of large amounts of money. It calls for constant vigilance as to all the streets, and for extensive pavements upon the more important ones. These, ordinarily, are laid at the expense of the owners of the abutting property. If neglected they soon wear out, and then, in most cases, another burden is imposed on the same property for repaving. It matters not that a particular property-owner has not kept a vehicle, and has not had direct agency in the destruction of the street. If enough pressure is brought to procure the city’s order for a new pavement, he must, nolens volens, pay the assessment, and meantime pay the general tax upon his property for the making of repairs to such of the streets as the authorities see fit to repair. Expense of early renewal of the pavement is to be avoided only by careful and constant repairs, made necessary by constant use on the part of those who run vehicles upon the street, and the better the pavement and the more carefully it is kept in repair, the more useful and convient it becomes for those who use it. They thus receive a special, direct benefit by the original outlay and by the repairs from time to time, and by such use impose burdens upon the property-owners and the public at large. A proportion of them, those who own taxable property, contribute in taxes toward the repair fund (and may be among those whose property is subject to assessment for the original improvement) ; but many do not, and thousands of property-owners use no vehicles of any kind. Why should not these favored ones pay a small sum toward making good that which they wear out ? Especially wearing on the streets are the heavy loads transported by those in occupations similar to that of plaintiffs in error Marmet and Hill, and the heavier the load, the greater the number of horses necessary to propel it. Hence the license fee is properly graded according to the number of horses used. The principle involved is not different from that upon which the establishment of toll-roads' and the authority to collect tolls of those travelling upon them, and to grade the amount charged in proportion to damage inflicted or use made by the traveller, is sustained. Then, too, there is force in the point made by counsel that special police regulation is needed upon the streets of large cities to prevent accidents, to protect pedestrians at crossings, to prevent fast and reckless driving, and to prevent blockades.

Dealers in second-hand articles, and keepers of junk shops, may properly be classed with pawn-brokers and keepers of loan offices, who are required to obtain license because of imposing special burdens. As to them it is well known that, in large cities, the supervising power of the police is necessary, inasmuch as thieves and receivers of stolen property often resort to such places to pledge or otherwise dispose of their ill-gotten gains. Launder v. Chicago, 111 Ill. 291. Involving-like need of police supervision in large cities is the business of livery and sale stables, where, when in unscrupulous hands, frauds upon innocent customers and strangers are of so frequent occurrence as to have become matter of common knowledge. And license upon such pursuits are required, not as taxes upon property, but on occupations. Municipality v. Dubois, 10 La. Ann. 56.

As answer to the complaint that the mode of enforcing collection of the license fee by fine is unreasonable and illegal, it is enough to say that the power to so punish is distinctly sustained by this court in Cincinnati v. Buckingham, and in Cincinnati v. Bryson, supra, and we follow those decisions. Whether or not imprisonment ought to be added, does not arise in this record, and need not be discussed. Those cases, as also Baker v. Cincinnati, supra, involve the power of the general assembly to confer authority on the municipal governments to legislate upon the subjects treated of. That the assembly itself would lack power to legislate directly upon those subjects, we presume would not be claimed.

By way of conclusion, without undertaking to lay down any general rule as to the power to license or tax occupations, and confining our holding to the necessities of the cases before us, we think it may safely be affirmed, upon both principle and authority, that power to regulate by license, and to compel payment of a reasonable fee, may be maintained where a special benefit is conferred at the expense of the general public, or the business imposes a special burden on the public, or where the business is injurious to, or involves danger to the public. And Relieving that the exactions required by the sections of the law in question here fairly come within the rule thus stated, we hold them to be valid.

We find no error in the records.

Judgments affirmed.