author: Spear, J.

text:
    Harpold et al. v. Stobart.

      Stockholders — Statutory liability of — Transfer of stock — Must be made upon the' stock book — ■ When liability attaches.

    1. Where, in a suit brought by creditors of an insolvent corporation to enforce statutory liability against stockholders, a defendant pleads that, prior to the insolvency of the corporation, he sold in good faith his shares of stock to another party, who is solvent, and prays that whatever sum may he found to be due as respects the shares so sold may be adjuged against such party, and issue is joined by reply, and a judgment is rendered in the court of common pleas, from which an appeal is taken by the vendor to the circuit court, such appeal carries up the case as to said vendee, whether he appeals, in his own right, or not.
    2. Where, in such case, the vendor causes an entry of transfer to be made by the secretary of the company, in a book then present at the company’s office other than the stock book, with the expectation that it will be entered in another book then at the residence of the secretary, but no transfer is made in the stock book of the company, and, at the time of the accruing of the debts of the corporation, and at the time of the trial, such vendor appears, by the stock book, to be the owner of the shares, such entry of transfer is not sufficient to relieve the vendor of liability to the creditors of the corporation, notwithstanding the fact that the sale was made in good faith and for value, and that the vendor believed he had done all that was necessary to effect a transfer of the stock, and the further fact that the company thereafter treated the purchaser as the owner of the stock so sold.
    3. A gtockholder who, in good faith, sells and transfers his stock to one whoafterwards becomes insolvent, is.liable to creditors of the corporation, for such portion only of the debts existing while he held the stock, and remaining due, (not in excess of the amount of stock assigned) as will be equal to the proportion which the capital stock assigned by him bears to the entire capital stock held by solvent stockholders within the jurisdiction, liable in respect of the same debts, to be-ascertained at the time judgment is rendered.
    (Decided April 23, 1889.)
    Error to the Circuit Court of Meigs County.
    This proceeding in error is brought by Peter Harpold, W. A. Roberts, Daniel Bibbee, the executors of Moses E. Sayre, and John A. Williamson, to reverse judgments rendered against them in the Circuit Court of Meigs County.
    The action below was brought by creditors of the Riverside Salt Company, a corporation organized under the laws of Ohio, which had become insolvent, and a large number of persons, including plaintiffs in error, as stockholders, for the purpose of enforcing the statutory liability against them in favor of the creditors. Several of the defendants were not stockholders when the corporation became insolvent, but had been such at dates anterior thereto, and were charged as liable because' they had assigned to persons who were insolvent. W. A. Roberts was a creditor of the company, and, for a time, a. stockholder. He sold and transferred his stock, May 29, 1875, to R. R. Hudson. The case was tried in the common pleas and appealed to the circuit court, by the plaintiffs in error, save Roberts, who did not appeal. In that court, judgments were rendered against the plaintiffs in error, a reversal of which is sought by this proceeding. Upon the judgment rendered against Roberts in the common pleas, he paid the sum of four hundred dollars. Further facts necessary to an understanding of the points decided, appear in the opinion.
    W. A. Roberts’ special claim is that the judgment of the circuit court is erroneous, because the case, as to him, was not appealed to that court.
    Peter Harpold’s special claim is that he had sold and transferred his stock to plaintiff in error, Roberts, and that the circuit court erred in holding him as a stockholder.
    The further claim of these parties, and the claim of the remaining plaintiffs in error is, that, as to each, the judgment rendered is excessive.

      Russell & Russell, for plaintiffs in error.

      W. II. Lasley and J. U. Myers, for defendant in error.
   Spear, J.

Was W. A. Roberts a party in the circuit court?

Issue was made by the answer of Harpold, and the reply, as to his-alleged transfer to Roberts, and as to his right to have all assessments against the shares of stock by him sold to Roberts, made against that party. Hence Roberts was a party necessary to the working out of the equities of Harpold, and that fact gave Harpold the right to appeal.the whole case in so far as it affected him, and that appeal carried Roberts into the circuit court, whether his presence in the case as a creditor had a like effect or not. There was no error in overruling Roberts’ motion to dismiss the appeal. But the appeal vacated the judgment rendered against Roberts in the common pleas, and his payment of four hundred dollars, made on that judgment, should have been credited to him in the circuit court, and the refusal to so credit it, we think was error.

Did the circuit court err iu its judgment against Peter Harpold ?

The controversy arises as to thirty shares of stock, -which, on May 12th, 1873, he sold in good faith and for value, to W. A. Roberts, and he claims that, as to these, he should be held only as a guarantor for Roberts, and that such liability should be confined to a proportional liability for debts existing at the time of the sale. The sale was admitted, but it was claimed by the creditors that there was no transfer of the stock on the books of the company, and hence that Harpold continued liable to creditors as though he had owned the stock at the commencement of the action. The findings of the circuit court show that the transfer stock book of the company was Journal A; that no transfer of this stock was made on that book, though a .transfer was, at the time of the sale, entered by the secretary in a-small book present in the office of the company, and it was then understood that the secretary would make the transfer in another book then at his house. The president and directors of the company were present and knew of the transaction. Harpold was a director at the time, and he did all that he supposed necessary to effect the transfer, and the corporation thereafter treated Roberts as the owner of the stock. Two years later, there was an entry on Journal A, of the transfer of eighty shares from Roberts to one R. R. Hudson, which included the thirty shares purchased by Roberts from Harpold. At the time of the trial Harpold still appeared by Ledger A and Journal A, to be the owner of thirty shares of stock.

The creditors have the right to resort to and rely upon the proper book of the company as showing who the stockholders are, and the amount of stock held by each, and they are presumed to have relied upon the record so found in this case. While it is not necessary that a book of any special kind be adopted for that purpose, yet when one is selected and used, that becomes the stock book, and transfers, to be valid, must be made upon that. The object to be accomplished by the keeping of such a book requires reasonable certainty as to its identity. Where the book so selected and used by the company shows that the party is the owner of shares of stock, he is estopped, as. between himself and creditors, to contradict the record, provided the entry was placed in the stock book originally by his consent. And where the name of an actual stockholder appears upon that book as owning a given number of shares, the entry is presumed to have been made with his consent; at least this is so where it was correct when made, and, as between him and creditors of the corporation, he is •estopped to contradict the record, or deny ownership of the shares. Revised Statutes, sec. 3259; Lowell on Transfer of Stock, sees. 82, 107, 191, 203; Thompson’s Liability of Stockholders, sec. 217; Ex parte Brown, 19 Bevan, 97; Stanley v. Stanley, 26 Me. 191.

The circuit court treated Harpold as the owner of these shares, as between him and creditors, and this, we think, was correct. But, as between Harpold and Roberts, the former was entitled to a judgment against the latter.

The finding as to Daniel Bibbee presents the facts upon which may be determined the further question in the case. He was the owner of twenty shares of stock, the par value of which was $2,000. On the 31st day of May, 1875, he sold this stock, in good faith and for value, to one R. R. Hudson, and the same was on that day transferred to the latter on the books of the company. The company continued to do business until the year 1878, when it failed, many new debts having accrued in the meantime. Hudson became insolvent, and was so at the time the cause was tried. At that time the liabilities of the corporation reached $43,791.05, a sum in excess of the face value of all the stock held by solvent stockholders, as well those who had assigned their stock as those who were holders at the commencement of the suit. During the life of the corporation frequent changes occurred in the ownership of portions of the stock, and debts against the corporation accrued at various times during that period.

In its decree the court divided the indebtedness into series, and made assessments upon stockholders to meet each class of debts, with a finding as to what stockholders were solvent, and the amount of stock held by each at the date fixed for each assessment, rendering judgments accordingly. Those who-owned stock at the commencement of the action, and were solvent, were assessed the full amount of their statutory liability, and that liability was thus exhausted. By this finding it appears that between July 11, 1873, and January 1st, 1875, there existed debts still unpaid to the amount of $4,152i50, upon which assessment was made against Bibbee of $519.25. Between June 15, 1870, aud July 11, 1873, there existed debts still unpaid to the amount of $13,148.00, upon which he was assessed $1,391.00, and prior to June 15, 1870, there existed debts to the amount of $926.90, upon which¡ he assessed $80.00, the whole amounting to a sum practically equal to the amount of his stock. In making these assessments the court commenced with the class of stockholders who held stock at the date of the failure of the company, and assessed each solvent stockholder to the full amount of his liability in respect of all the debts then due from the corporation. The amount so procured not proving sufficient to pay the obligations, the court then, proceeding to the class last in order of assignment of stock, assessed the solvent assignors of the present insolvent stockholders, in the amount of their liability in respect of the debts contracted prior to the transfer of their stock to their insolvent assignees, and so proceeded until all-liability on stock was exhausted.

The effect of this rule, as to each solvent assignor of stock to-an insolvent assignee, was, to make him liable, not simply to a proportionate amount of the indebtedness which existed while-lie was a stockholder equal to the ratio which his proportion of the capital stock bore to the entire stock held by solvent stockholders, but to an amount equal to the full amount of his-stock.

It is claimed for Bibbee that he should have been assessed but $956.64, in all, and that the court erred in omitting to include in the class of stockholders who were liable with him those who were holders of stock when the suit was commenced, but who, by the decree, were left out because their liability had already been exhausted. This claim presents the question to be determined, which is : Is this party to be assessed in a class which includes only those who were stockholders at the time he was such and are solvent, or should such class include also those who continued to be stockholders, and so became liable in respect of after accruing debts ?

We first inquire what liability was created? What right of contribution, if any, attended it? Is the liability which may be enforced to be measured by the extent of liability as of the time it attached, or may it be enlarged by reason of a change in the condition of the corporation brought about by after accruing debts ? And is the right of contribution to be impaired by reason .of like causes ?

We are not materially aided in making answer, either by text books, or by decisions of courts outside of our own.

The constitutional provision is : “ Dues from corporations shall be secured, by such individual liability of the stockholders, and other means, as may be prescribed by law; but in all cases, each stockholder shall be liable, over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum, at least equal in amount to such stock.” And the statute is: All stockholders * * * shall be deemed and held liable, to an amount equal to their stock subscribed, in addition to said stock, for the purpose of securing the creditors of such company.”- It will be noted that neither provision gives a rule for determining who are stockholders, nor for ascertaining whether or not all may be treated as stockholders for some purposes, and no£ for others. But such questions are left for determination by the courts in giving construction to the statute, as cases may arise. In construing these provisions, the holdings in this state are to the effect that the individual liability of stockholders attaches in favor of creditors at the time the debt is contracted, or the liability incurre'd by the corporation, and that such liability is not discharged by the subsequent assignment or transfer of the stock, but the successive assignees impliedly undertake to indemnify or discharge the assignor from the liability which attached to him while he held the stock. This right against the stockholders is intended for the common and equal benefit of all the creditors. As between the stockholders and the creditors, each stockholder is liable severally to all the creditors; but, as between stockholders, there is a proportional liability by all stockholders and right of contribution which grows out of the organic relation existing between them, and, as between them, each stockholder is bound to pay in proportion to his stock. The liability is not a primary fund or resource for the payment of the debts of the company, but is collateral to the principal obligation which rests on the corporation, and is to be resorted to only in case of the insolvency of the corporation, or where payment cannot be enforced by ordinary process. Wright v. McCormack, 17 Ohio St. 86; Umstead v. Buskirk, Id. 113; Brown v. Hitchcock, 36 Ohio St. 667; Wheeler v. Faurot, 37 Ohio St. 26 ; Bullock v. Kilgour, 39 Ohio St. 543; Mason v. Alexander, 44 Ohio St. 318.

Of the foregoing there should be emphasized three important conclusions bearing upon the question under consideration, viz :

(1). The liability of the stockholder is collateral to that of the principal debtor, the corporation. (2). This liability attaches at the time the-debt against the corporation is created or liability incurred. And (3), each stockholder sought to be so made liable, has, in order that his liability may be confined to his just proportion, the right to insist that all stockholders within the jurisdiction and solvent, who stand in the same relation to the debts with himself, shall be brought in, and be held to their proportional liability in common with’him.

When it has been determined that the liability of the stockholder is collateral, and not original, his right to ask for a marshalling of other like securities arises. So, too, when it has been determined that the liability as to debts arises at the time they are incurred, it clearly follows that such liability is confined to debts which exist during the time 'the fetoclc is owned. It follows, with equal certainty, that no mode of assessment should be adopted which enlarges the liability of the stockholder in the case we are considering, so as to make him liable, directly or indirectly, for debts contracted by the corporation after he has ceased to be a stockholder. And when it has been ascertained that he has the right of contribution as between himself and his fellow stockholders who stand in the same relation with himself to the debts he is sought to be held for, it follows, with like certainty, that no rule of assessment which curtails that right is equitable or just. ’ This liability has already attached, and it is in respect of debts existing at the time he assigns, and for nothing else. His right of contribution against his fellow stockholders, to require them to respond to their proportional share of the same burden, is enforceable in the same action, and this right is not inferior to that of the creditor to enforce his claim. They go together. It is equally plain, thát if any of the stockholders who are alike liable with him, are assessed so that their liability is exhausted in the payment, in whole or in part, of debts, created after he has assigned his stock, then he is indirectly made to respond to debts of that character, and his right to insist upon proportionate contribution is, in like manner, impaired. As we have already found, he is, in a sense, a surety for the corporation. That is, his liability is secondary, and not primary. Resort must first be had to the corporation before he can be held. In Michigan, under a statute not dissimilar to ours as construed in Wright v. McCormack, supra, the Supreme Court (Hanson v. Donkersley, 37 Mich. 184), held a stockholder to be a surety, and that his liability is discharged by the extension of time by the creditor, and there are other authorities to the same effect. Whether or not the law, in' Ohio, goes to that length, we need not inquire. It is enough to know that his obligation is collateral and secondary, and that he has the right to call upon his co-stockholders to bear their proportion of the common liability. Is it equitable to impair that right? True, the liability created by statute is for the benefit of creditors, but it does not follow that the creditor’s interest is the only one the court should guard. All laws for the collection of debts are in the interest of creditors, but the duty of giving to the creditor the full benefit of such statutes does not warrant forgetfulness of the rights of the debtor. And in this case no reason exists for enforcing the right. of the creditor given by the statute, and at the same time, ignoring the limitation placed upon that right by the construction of this court given to the statute.

After the stockholder ceases to be such, he has no voice in the management of’the corporation, and no share in the profits that may thereafter be made. The creditor continues, or may continue, to deal with the corporation, and, in doing so, may delay indefinitely the collection of his debt, even if he may not, by a new contract, extend its payment, without consent or knowledge on the part of the stockholder who has assigned, and thus continue a contingent liability against the latter which he is powerless to terminate. Under such circumstances, it does not seem inequitable to place upon the creditor, rather than upon the former stockholder, the risks incident to such delays as affected by the incurring of new debts.

We are of opinion that a stockholder who has, in good faith, sold and assigned his stock to one who becomes insolvent, is liable to creditors of the corporation, for such portion only of the debts existing while he held the stock, and remaining due, (not in excess of the amount of stock assigned) as will be equal to the proportion which the capital stock assigned by him bears to the entire capital stock held by solvent stockholders, liable in respect of the same debts, who are within the jurisdiction, to be ascertained at the time judgment is rendered.

In this view, the mode of assessment adopted by the circuit court was not an equitable one, and the judgments against the plaintiffs in error Roberts, Williamson, Ex’r of Moses E. Sayre, and Daniel Bibbee, should be modified in conformity with the conclusions herein stated.

The costs in this court may be taxed one-half to plaintiffs in error, and one-half to defendants in error.

Bradbury, J., did not sit in the case.


source: Caselaw Access Project

author: Bradbury, J.

license: Public Domain

text:
    Mandel v. McClave et al.

      Dower — Contingent right of — Mortgages—Foreclosure.
    1. The contingent right of a wife, during her husband’s life, to be endowed of his real estate at his death, is property having a substantial value that may be ascertained with reasonable certainty from established tables of mortality, aided by evidence respecting the state of health and constitutional vigor of the husband and wife respectively.

      % Where the wife has joined in a mortgage of the husband’s lands to secure his debt, upon a judicial sale of the premises, she may have the value of her contingent right of dower in the entire proceeds ascertained and the husband’s entire interest therein shall be exhausted to pay the debt before resorting to the interest of the wife therein.
    3. The release, in such mortgage, of her contingent right of dower does not inure to the benefit of the husband’s subsequent judgment creditors, and, as against them, the ascertained value of her contingent right of dower in the entire proceeds of the sale will be paid to her out of the balance left when the mortgage debt is paid, before any part thereof will be distributed to them on their judgment.
    (Decided April 23, 1889.)
    Error to the Circuit Court of Jefferson County.
    On the trial of this cause in the Court of Common Pleas of Jefferson County, the court stated its conclusions of fact and law separately; and the plaintiff in error, excepting, in one particular, to the conclusions of law drawn by the court, carried the cause to the circuit court on error, and that court affirming the judgment of the common' pleas, she thereupon instituted this proceeding to reverse both judgments.
    From the pleadings, aided by the facts found by the court of common pleas, it appears : ’ that the plaintiff in error, Mrs. Mandel, joined with her husband in two separate mortgages made by him on his real estate to secure his debts; that after-wards the husband became indebted to the defendants, John McClave and "William H. Lowe, separately, each of whom reduced his debt to judgment; that thereupon McClave brought suit to enforce his judgment, making parties thereto, the other judgment creditor, Lowe, the two mortgagees, and the husband and his wife, the plaintiff in error: that a decree was taken in the action giving to each lienholder a judgment for the sale of the premises; that the sale was made on an order of sale caused to be issued by the judgment creditor, McClave; that after paying costs, taxes and the mortgage debts, there remained of the proceeds of the sale about $3,900.00 for distribution ; that the value of the wife’s contingent right of dower was $1,203.06, if she was entitled to be endowed of the whole estate, but only $278.95 if she was only endowable of the equity of redemption; that the claim of the judgment creditor, Lowe, was $1,774.70, and that of McClave $1,730.39. The court then held, as matter of law, that the wife was only entitled to be endowed of the equity of redemption, and ordered $278.95 to be distributed to her.
    The other facts necessary to a decision of the case will be found in the opinion.

      John M. Gook, for plaintiff in error.
    Our claim is, that the property having sold for sufficient to pay the costs, taxes and the mortgage liens of the Union Deposit Bank and Joshua Manley, and at the same time allow plaintiff in error inchoate, right .of dower in the entire premises, that in joining with her husband in the execution of the mortgages for his debts, she only released her right of dower to the mortgagees, and that McClave or Lowe has no right to claim or obtain any advantage by her joining with her husband in those mortgages. Kling v. Ballentine, 40 Ohio St. 391; Black v. Kuhlman, 30 Ohio St. 196; Kitzmiller et al. v. Van Renselaer, 10 Ohio St. 63; Unger v. Leiter, 32 Ohio St. 210; McArthur v. Franklin, 16 Ohio St. 205-206; Ketchum v. Shaw, 28 Ohio St. 503; Baker v. Fetters et al., 16 Ohio St. 596; Jones on Mortgages, secs. 46 and 666.
    It may be claimed that the doctrine laid down in State Bank v. Hinton, 21 Ohio St. 509, is in conflict with this claim, and so it seems to be. The circumstances of that case, however, differ materially from the facts of this case. Bank v. Hinton cannot be harmonized with Black v. Kuhlman, if the rule laid down in the former case is of the general application claimed for it. The law of Ohio is becoming more liberal as to the rights of married women, and the claim of plaintiff in error does equal justice to all parties.

      Mg Clave & Lewis, for defendants in error, filed no brief.
   Bradbury, J.

The husband of plaintiff in error is still living, and, therefore, when his lands were sold by the sheriff and the proceeds thereof distributed by the order of the court of common pleas, she had only a contingent right of dower therein. This right, the court found, was sold and passed to the purchaser at the sheriff’s sale. To this finding she took no exception, being apparently satisfied to have her rights determined by the order of distribution.

The proceeds of the sale were $17,600, of which $13,663.37 were consumed in paying the taxes, costs and mortgage liens, about which no contention arose ; there then remained a balance of $3,930.63 to be distributed to the wife and the two judgment creditors. Of this sum she claimed $500.00, in lieu of a homestead; on this claim the court found in her favor, and the amount was paid to her. The defendant, Mc-Clave, excepted to this finding and order of the court, but did not, so far as the record discloses, bring the question to the attention of the circuit court, nor has he presented the matter to this court for review. He will, therefore, be regarded as acquiescing in the action of the court below respecting it, and the question will not be further noticed here.

The only ruling of the courts below that we are asked to review, is that which limited the right of the wife to dowel in the proceeds of the equity of redemption. As the fund is large enough to pay in full Lowe’s claim, notwithstanding the wife’s claim may be allowed to its full extent, it follows that he is not interested in the question,.; but as the claim of the wife, to the extent it may be allowed, will be paid out of funds that would, otherwise, be distributed to McClave, the contention is confined to them.

McClave concedes that the wife is entitled to be endowed of the proceeds of the equity of redemption, while she claims the right to be endowed of the entire proceeds of the land, to be paid, however, out of the proceeds of the equity of redemption. He contends that her release of dower to the mortgagees inures to his benefit; that it was an absolute release of that right in the premises to the extent of the mortgage debt, and that in satisfying the mortgage debts out of the proceeds, her interest in so much of the fund as was required for that' purpose, should be applied equally with that of her husband.

Her contention, upon the other hand, is, that her contingent interest in the whole premises was pledged, together with the whole interest of the husband therein for the payment of his debt; that the debt being his, it was primarily chargeable upon his interest, and that his entire interest in the thing pledged should be applied to pay the debt before resorting to her interest therein.

This precise question is new in this state, and we are to solve it by applying to the facts, such settled legal and equitable principles as in their nature are applicable and pertinent thereto.

If the contingent right of a wife to dower in her husband’s real estate is recognized by the laws of the state as property, and if her release of it by joining with her husband in a mortgage to secure his debt, is not a technical bar, but, instead, only inures to the benefit of the mortgagee and his privies, we perceive no principle of law or public policy that should pre7 vent a court of equity from applying, in favor of the wife, the equitable rule, that the property of the debtor shall be first applied to the satisfaction of his debt before resorting to that of the surety. And the creditors of the husband have no standing in a court of equity, to prevent the application of this equitable rule; they have no claim that property, which as between husband and wife belongs to the wife, shall be taken, without her consent, and applied to pay their debts against the husband. The first question, therefore, to be determined, is whether, in this state, the contingent right of a wife to dower in her husband’s real estate, is property, having a substantial and ascertainable value.

To reconcile all the cases, even in Ohio, on the subject of the nature of the wife’s contingent right of dower, or respecting the effect of her release of it by joining with her husband in a conveyance of the real estate to which it attaches, would be impossible. In the cases upon the subject in this, or in other states, or in England, almost every shade of opinion can be found. Nowhere is this wide divergence of judicial opinion more clearly set forth than in the dissenting opinion of Judge Johnson, in Black v. Kuhlman, 30 Ohio St. 196, where that able judge reviews the cases in support of the older and more technical rules on the subject. The court, however, took the more liberal, and, as we think, the more reasonable view of the question. And there seems to be clearly discernible in the Ohio cases, a growing tendency to disregard the older and more technical rules of the earlier cases ; and this is especially true of the later cases in this state.

It is an incontestable fact that, in the estimation of the business world, the contingent right of the wife, during the husband’s life, to dower in his real estate, at his death, has a positive and substantial value, and no acuteness of artificial reasoning, founded on technical rules of law, can persuade a prospective purchaser to the contrary.

This practical view of the matter has been adopted by the later Ohio eases. Ketchum v. Shaw, 28 Ohio St. 503 ; Black v. Kuhlman, 30 Ohio St. 196; Unger v. Leiter, 32 Ohio St. 210; Kling v. Ballentine, 40 Ohio St. 391.

In Black v. Kuhlman, supra, the court held, not only that her contingent right of dower was valuable, but that, during her husband’s life, its value could be ascertained with reasonable certainty under tables of mortality, based on wide and long observations.” And furthermore, that its value should be thus ascertained, as against mortgagees in whose mortgages she had not joined, and paid to a subsequent mortgagee to whom, by joining with her husband, she had subsequently re-: leased it.

In Unger v. Leiter, supra, the court found the contingent right of the wife to dower to be valuable, and that value capable of ascertainment by reference to tables of recognized authority ■on that subject, in connection with the state of health and constitutional vigor of the wife and her husband.” In addition to these cases we have statutory recognition of the property of the wife in her contingent right of dower in the real estate of her husband during his life. Ohio Laws, vol. 82, page 14. This statute directs the probate court to ascertain the value of the wife’s contingent dower in the real estate of an insolvent debtor, and directs the same to be paid to her. Thus, we have- the legislature as well as the courts of the state, recognizing this right as tangible property, capable of being ascertained, and in a proper case given to her or to her releasee.

What, then, is the effect of her release of this right by joining with her husband in a mortgage to secure his debt ? Loos it inure to the benefit of other persons who are strangers to the deed, or is its operation restricted to the grantee and his privies? This latter view we think the more reasonable; it accords more nearly with the probable intention of the parties to the instrument; there is no ground to asser’t that the mortgagee was contracting for the benefit of any one but himself ; there is nothing in the nature of the transaction from which it can be inferred that a wife, by joining with her husband in a mortgage of his lands to secure his debt, intends more than to pledge her. contingent right of dower for that particular debt; nor is there, in the terms of the instrument itself, any language importing such intent. If, therefore, the instrument has any such effect, it is the result of some technical rule of law giving to the deed of the parties in this respect an operation never, so far as can be gathered from the words of the parties, within their contemplation. Whatever the state of the law may be elsewhere, we think no such technical rule now prevails in Ohio; some of the earlier cases seem lo give it support, but the tendency of the later cases is to limit the operation of the release to the mortgagee and his privies.

In Ketchum v. Shaw, 28 Ohio St. 503, a case involving the right of a wife to dower, we find this language used by Judge Wright (506) : “ She joined in the conveyance of the land, releasing her dower, not absolutely, but only so far forth as it was necessary to pay the mortgage debt. That done, everything else remains to her.”

In Kitzmiller v. Van Renselaer, 10 Ohio St. 63, it appeared, that after the recovery of a judgment against the husband, he sold his real estate to a third person, the wife joining in the deed by a release of dower. Afterwards the land was sold under an execution issued on the judgment, whereupon the purchaser ejected the grantee under the deed of the husband and wife. The husband then died, and the wife brought suit for dower against the purchaser at the judicial sale. He sought to defeat her claim for dower by setting up her release to the grantee of the husband; but the court held that the release did not inure to his benefit. On page 64, this language is found : He can not make the release available to him as a grant, for he was not a party to the grant; nor is he in privity with the grantees. The release can .not operate in behalf of the defendant below, by way of estoppel; for, “a stranger can not be bound by, nor take advantage of, an estoppel.” Here the wife had released her right of dower to the grantee of her husband, absolutely; no right of redemption reserved as in a mortgage, yet the court hold that the release is wholly inoperative except in favor of the grantee. Cases can bo found in Ohio, that conflict with this view; but this irreconcilable conflict leaves us to adopt that view which accords most nearly with that presumed intention of the parties, which arises from the nature of the transaction, and a rational construction of the language they have used.

It being established that the contingent right of the wife to dower in her husband’s real estate is property, the value of which can be ascertained by the aid of fixed principles, and that her release of it .by joining with her husband in a mortgage, to secure his debt, does not, by reason of any technical rule of law, inure to the benefit of a stranger to the instrument, either by way of grant or estoppel, it remains for the court to determine to what extent equity will protect this right, after the real estate has been converted into money and the fund is before the court for distribution. The undoubted rule is, that, so long as the real estate remains in the husband or his grantee, equity will not interfere in her favor during the life of the husband, but that she must await her husband’s death, when her inchoate right will become consummate. When, however, the estate has been sold .at a judicial sale, free from her contingent right of dower, whatever right she may have, is in the proceeds of the sale, and must be enforced, if at all, by a distribution of the fund.

If the plaintiff in error had been seized of a separate estate, and it'had been pledged, together with the husband’s property, for the payment of his debt, there can be no doubt that his property would be primarily liable for its payment. As between each other he would be the principal and she his surety. We think the same principle should be applied to her contingent right of dower. It is property; its value can be ascertained. More than this, it is a favorite of the law. (See authorities collected in American & English Encyclopedia of Law, Vol. 5, page 885, note.) It is a provision for her support, and when she pledges it for her husband’s debt, by joining in a mortgage with him, the most obvious principles of natural justice l’equire that this benevolent provision of the law should not be touched until the husband’s interest has been first exhausted. She is a purchaser. The inception of her right was earlier than that of the creditors; it began with the marriage and seizin of the husband; theirs began when the debt was contracted, but only became a lien from the recovery of the judgment against the husband. This favorite of the law is entitled to protection equal to that accorded to her other property.

We are aware that this question has been decided differently in many of the states, but by courts holding views of the nature of contingent dower, and of the effect of the wife’s release thereof, widely different from those adopted in this state in relation thereto, and the decisions are, therefore, of little or no weight here. ‘ One Ohio case, Bank v. Hinton et al., 12 Ohio St. 509, is not in harmony with our view, but the able judge who wrote the opinion in that case, rested the decision respecting this point upon the authority of two New York cases: Hawley v. Bradford, 9 Paige, 200, and Bell v. New York, 10 Paige 49, and entered upon no discussion of the principles necessarily involved therein.

The conclusions reached by the court in these two cases in Paige, were legitimately drawn from the doctrine which obtains in New York respecting the nature of the contingent right of the wife to dower, and the effect of a release of it by her, by joining with her husband in deed or mortgage; but they by-no means follow from the rules laid down in’ Ohio cases on the same subject, and therefore those cases cannot be regarded as of sufficient authority to prevent our deducing from the Ohio cases such results as legitimately follow from them.

Whether Bank v. Hinton, supra, resting as it does upon those cases in Paige, has become a rule of property in this state; which we would deem ourselves bound to follow in cases coming within its exact terms, we need not stop now to enquire.

The more recent case of Kling v. Ballentine, supra, is in accord with our decision here. In that case the contest was between the widow and certain devisees, who were daughters of the husband. The widow had, during her husband’s life, joined with him in a mortgage of his land to secure his debt, and the court held that, as against the husband’s devisees, who were his daughters, the widow was entitled to dower in the whole of the lands, to be paid out of the surplus after the mortgage debt had been paid, thus exhausting the husband’s interest before resorting to the wife’s dower. In that case the devisees were entitled to all the interest of the husband, their devisor, as in the case at bar the judgment creditors were entitled to all the interest of their debtor in the fund; and the principles that underlie and justify the holding of the court in that case, are the same which we apply to the case before us; they are, that the contingent interest of the wife to dower in her husband’s real estate is valuable, and that her release of it by joining with him in a mortgage to secure his debt, is not a technical bar, and inures only to the mortgagee and those claiming under him.

It follows, therefore, that the judgment of the circuit court and that of the court of common pleas should he modified so as to give the plaintiff in error the value of her contingent right of dower in the entire fund.


author: By the Court.

text:
    Williams v. Lockoman et al.

      Oownty ditch — Evidence on appeal.

    ■On an appeal to the probate court from the order and finding of a joint board of county commissioners, determining that a proposed ditch is necessary, and will be conducive to the public health, convenience and welfare, the jury, in examining and determining the matter appealed from, may, under section 4467 of the Revised Statutes, consider in., evidence, facts ptade known to them personally from an actual view of the premises.
    (Decided April 23, 1889.)
    Error to the Circuit Court of Henry County.

      Stephenson & Knupp, W. W. Tourelle and H. H. Ham, for plaintiff in error.

      R. W. Cahill, Haag & Ragan, for defendants in error.
   By the Court.

Frederick W. Lockoman, William Lockoman and Philip Yarnell, defendants in error, filed their petition in the office of the auditors of Henry and Fulton counties, addressed to the joint board of county commissioners of those counties, praying for the location and construction of a joint county ditch on a route and terminus described, andrepresenting that they were the owners of lands and lots which would be affected by the improvement asked for; that the improvement was necessary to drain and reclaim the lots or lands along the line thereof and adjacent thereto, and that such improvement would be conducive to the public health, convenience and welfare.

On appeal to the probate court by John H. Williams, the plaintiff in error, from the order and finding of the joint board of commissioners determining that the proposed ditcb was necessary, and would be conducive to the public health, convenience and welfare, the probate court charged the jury as follows:

“You were ordered to view the premises along the whole route. This was for the purpose of enabling you better to determine the questions in this case, and to apply your own judgment in regard to them, as well as to better understand the evidence given, and in making up your verdict you will consider both the facts appearing to you from the view of the premises and the evidence adduced.”

The court of common pleas reversed the judgment of the probate court. The circuit court reversed the judgment of the common pleas, and affirmed the proceedings and judgment of the probate court, and found as the law of the case, that the jury in the probate court upon the trial of the issues of the case therein, might and should take its view of the premises as evidence, in determining the question as to whether the proposed ditch would be conducive to the public health, convenience or welfare.

The county commissioners are required by section 4452 of the Revised Statutes, to take to their assistance a competent surveyor or engineer, if, in their opinion, his services are necessary, and at once proceed to view the line of the proposed improvement, and determine by actual view of the premises along and adjacent thereto, whether the improvement is necessary, or will be conducive to the public health, convenience or welfare.

By section 4463 of the Revised Statutes, an appeal may be taken from a final order or judgment of the commissioners, determining whether the ditch will be conducive to the public health, convenience or welfare.

And on appeal to the probate court, it is provided by section 4467 of the Revised Statutes that “ The probate judge shall administer to the jurors an oath, faithfully, impartially, and to the best of their ability, and from actual view of the premises along the whole route of the improvement, to examine and determine the particular matters appealed from, and to render a true verdict according to the facts appearing to them from actual view of the premises, and the evidence, under the charge of the court.”

The provisions of section 4467 manifestly contemplate, that by an actual view of the premises, the jury shall be enabled not only the better to apply the testimony disclosed at the trial, but shall also be aided by their personal knowledge of the facts as derived from an actual view of the premises, in examining and determining the particular matters appealed from, which, in the present case, embrace the order and finding of the joint board of commissioner’s, that the proposed ditch was necessary, and conducive to the public health, convenience and welfare.

Judgment affirmed.


text:
    Scheifers et al. v. Insurance Company.

      ■Life insurance — Lapse of -premiums — •Massachusetts’ Statute — “Net single-premium of temporary insurance.”

    Where in a suit upon a policy of life, insurance the plaintiff relies upon the provisions of a statute of the state of the company that .issued it, to avoid the effect of a forfeiture for non-payment of premiums, the facts bringing the case within such provision must be averred.
    (Decided May 14, 1889.)
    Error to the Superior Court of Cincinnati.
    The suit below was upon a policy of life insurance ; and the errors assigned arise upon the sustaining of a demurrer to the amended petition of the plaintiffs. The pleading as amended reads as follows:

      “ And now come the said plaintiffs, and by leave of the court first had and obtained, file this their amended petition; and for a cause of action against the said defendant, say : That the plaintiff, Elizabeth M. Scheifers, is the widow, and the other above named plaintiffs are the children and heirs at law, of Rudolph F. Scheifers, deceased, and Elizabeth M. Scheifers; that said plaintiffs, Rudolph F. Scheifers and Clara Scheifers, are minors, aged respectively fourteen and seven years, and bring this action by their next friend, said William R. Scheifers.
    “ That the defendant, the said Massachusetts Mutual Life Insurance Company of Springfield, Massachusetts, is a duly incorporated life insurance company, under and by the laws of the State of Massachusetts, and is located in said state, at Springfield, Massachusetts.

      “ That on the second day of September, 1863, at the city of Cincinnati, in this the State of Ohio, then and there, by and through its agent, located at said Cincinnati, receiving the premium from the insured, and delivering to him the policy hereinafter mentioned, in consideration of the payment of forty dollars and sixty-seven cents, annually, during the life .of the said Rudolph F. Scheifers, deceased, the said defendant, then and there, did duly execute its policy of insurance in writing to said Rudolph F. Scheifers, since deceased, on his life, in the sum of two thousand dollars, said sum so insured being expressed in said policy for the express benefit of the said Elizabeth M. Scheifers, wife of the said insured, and their children, who are these plaintiffs, a copy of which policy is annexed to and filed with the petition herein; that at the time of effecting said insurance, and at no time thereafter, had the said insured any notice or knowledge (and he was a resident of the State of Ohio) of the statute of the State of Massachusetts hereinafter mentioned; nor had any of the plaintiffs such knowledge, but were wholly ignorant of the same, until the time and in the manner hereinafter stated, while they aver that the defendant, before, at the time of, and ever since making said contract of insurance, had full knowledge of said statute, and of all its terms and provisions, and had then obtained the privilege to do business in this state as a foreign life insurance company; that the premiums under said policy were duly paid to the defendant by said insured for the period of thirteen years to September 2, 1876; that on said last named day there was an additional premium due, which additional premium was unpaid by said said assured, and no premium was thereafter paid by him, or any one for him, before his decease, which occurred on July 13,1881, but all the other terms and conditions of said policy were duly kept and performed by said assured until his death, as aforesaid.

      “ That the defendant, knowing, as aforesaid, said statute, and said insured being wholly ignorant of the same, incorporated the following terms and provisions in said policy, to which the said assured, in ignorance of such statute, assented, to-wit:

      “ Massachusetts Mutual Ufe Insurance Company, Springfield, Mass., Incorporated by the Legislature of Massachusetts, 1851.”

      “ This policy witnesseth, that the Massachusetts Mutual Life Insurance Company, in consideration of the premium of forty dollars and sixty cents, to them paid as per margin by Rudolph F. Scheifers, of Cincinnati, in the county of Hamilton, and in the State of Ohio, being the assured in this policy, and a like sum to be paid to them by the said assured, on or before the second day of September in every year during the continuance of this policy, do insure the life of Rudolph F. Scheifers in the amount of two thousand dollars, for the term of the continuance of life, from the date hereof at noon. And the said company do hereby promise and agree to and with the said assured, his executors, administrators, or assigns, well and truly to pay the said sum insured to the said assured, his •executors, administrators, or assigns, ninety days after due notice and proof of the death of the said Rudolph F. Scheifers during the continuance and before the termination of this policy, the balance of the year’s premium, if any, being first deducted therefrom; said sum insured being for the express benefit of Elizabeth M. Scheifers, wife of the said assured, and their ■children.
    “ Provided always, and it is hereby declared to be the true intent and meaning of this policy, and the same is accepted by the assured, upon these express conditions:
    “4. * * * And in case the premiums shall not be paid to said company on or before the time herein mentioned for the payment of the same, then, and in every such case, the said company shall not be liable for the payment of the supi insured or any part thereof,'and this policy shall cease and determine.”
    And said policy contained the further condition, in relation to any creditor notes given by the assured to said defendant for any premium, etc., that1* on non-payment of any premium, or such note or security, or any part thereof, when due, this policy shall be forfeited to said company, and become void.”
    “ 6. In case of this policy becoming null and void, the holder of the same will not be entitled to a return of any part of the premium paid thereon.”
    That the plaintiffs claim the defendant thereby represented to said assured that it had the corporate power and authority to make the contract of insurance aforesaid, which the assured understood and believed.
    That these plaintiffs being wholly ignorant of the statute of Massachusetts hereinafter mentioned, and never having been residents of the State of Massachusetts, but of the .State of Ohio, believed from the said statements made by said defendant in said policy, that it had, with all the premiums paid upon the same, become void and forfeited to the defendant on and from the said seeond day of September, 1876; that none of them were administrator or executor of said assured, or had the custody of said policy and papers relating to said insurance, until long after the expiration of ninety days from the death of said assured; that had they known of said above mentioned statute of Massachusetts, they would, within ninety days after the decease of said assured, have given the defendant notice of the claim, and submitted to it proof of the death of said assured, in all respects as required by said statute; that as soon as they learned of the existence of said statute they notified the defendant of the death of said Rudolph F. Scheifers, and requested the defendant to furnish them with the necessary forms or papers, that they might make proof of loss of said death, and demand of payment, within ninety days after such said discovery of said statute of Massachusetts (which proof in due form they were ready and willing to make, and furnish said defendant, and offered so to do), but the defendant refused to furnish them with such forms and papers, as it was bound to do, or make payment for said loss, but denied its liability to the plaintiffs upon said policy for any sum whatever ; that said statute of Massachusetts is in the words and figures following, to-wit:

      £ Chapter 186.

      ‘An Act to Regulate the Forfeiture of Policies of Life Insurance, Approved April 10, 1861.
    £Be it enacted, etc., as follows :
    ‘ Section 1. No policy of insurance on life, hereafter issued by any company chartered by the authority of this Commonwealth, shall be forfeited or become void by the non-payment of premium thereon, any further than regards the right of the party insured therein to have it continued in force beyond a certain period, to be determined as follows, to-wit:

      ‘ The net value of the policy, when the premium becomes due and is not paid, shall be ascertained, according to the “combined experience,” or “actuaries” rate of mortality, with interest at four per centum per annum. After deducting from such net value any indebtedness to the company, or notes held by the company against the insured — which notes, if given for premium, shall then be cancelled — four-fifths of what remains shall be considered as a net single premium of temporary insurance, and the term for which it will insure shall be determined according to the age of the party at the time of the lapse of the premium, and the assumptions of mortality and interest aforesaid/

      ‘ Section 2. If the death of the party occur within the term of temporary insurance covered by the value of the policy, as determined in the previous section, and if no condition of the insurance other than the non-payment of the premium shall have been violated by the insured, the company shall be bound to pay the amount of the policy the same as if there had been no lapse or premium, anything in the policy to the contrary notwithstanding: Provided however, that notice of the claim and proof of death shall be submitted to the company within ninety days after the decease; and provided, also, that the company shall have the right to deduct from the amount insured ip. the policy the amount of six per cent, per annum of the premiums that have been forborne at the time of death/
    “ And that said defendant never at any time insisted upon, or made any claim under, said first section of said statute, or notified the said assured thereof in any way, and of which he was wholly ignorant, as were these plaintiffs, none of whom were ever so notified by the defendant.
    “Wherefore the plaintiffs ask judgment against the defendant for the sum of two thousand dollars, wdth interest'from July 13th, 1881.”
    Judgment having been rendered in favor of the defendant on the demurrer at special term, was afterwards affirmed on error in general term; and this proceeding is prosecuted to reverse the judgments of both terms.

      Alfred Yaple and A. S. Langley, for plaintiffs in error.

      Thompson, King, Richards & Thompson, for defendant in error.
   By the Court.

The effect of the Massachusetts statute was to save the policy from a forfeiture by a lapse of the premiums from September 2,1876, to the death of the life insured, provided the death occurred “within the term of temporary insurance covered by the value of the policy” as provided in the first section. The provision is as follows :

“The net value of the policy, when the premium becomes due and is not paid, shall be ascertained, according to the 'combined experience/ or 'actuaries’ rate of mortality, with interest at four per centum per annum. After deducting from such net value any indebtedness to the company, or notes held by the company against the insured — which notes, if given for premium, shall then be cancelled — four-fifths of Avhat remains shall be considered as a net single premium of temporary insurance, and the term for which it will insure shall be determined according to the age of the party at the time of the lapse of the premium, and the assumptions of mortality and interest aforesaid.”

The petition does not show that the death of the party occurred within the term of temporary insurance to which he w'ould have been entitled under the provisions of this statute at the time the lapse in the payment of the premiums occurred. No data are given from which the “net single premium of temporary insurance ” to which he would have been entitled, can be ascertained. The age of the party at the lapse of the premiums is not given, nor is it shown whether he was indebted to the company in any way, nor, is given the “'combined experience” or actuaries” rate of mortality applicable to the case. Hence the petition failed to state a cause of action.

Judgment affirmed.


author: Minshall, C. J.

text:
    Miller, Treas. v. The First National Bank. Miller, Treas. v. The Merchants’ Nat’l Bank. Miller, Treas. v. The Third National Bank.

      National bank stock — How listed for taxation — Sections 2765 and 2769, Rev.'Slats.. construed.

    1. There is no authority in the statutes of the state, nor of the United States, for listing and valuing the shares in a national bank in the aggregate, and placing such aggregate on the tax-list in the name of the bank. Such shares, when listed and valued for taxation, are required to be placed on the proper tax-list in the names of the respective owners.
    2. The listing of the shares for taxation is provided for and secured by § 2765, R. S.; and the correction of returns made by the cashier of the bank to the county auditor, is provided for by § 2769 and not by § 2782, R. 8.
    (Decided May 21, 1889.)
    Error to the District Dourt of Hamilton County.
    The action below was by the Treasurer of Hamilton County against the First National Bank of Cincinnati. The questions arise upon a demurrer to the petition on the grounds, (1), that there is a want of proper parties, and (2), that the petition does not state facts sufficient to constitute a cause of action. The petition is as follows:

      “ Plaintiff says that he is the duly elected and qualified Treasurer of Hamilton County, Ohio, now holding and exercising said office, and that the defendant is a National Bank, incorporated under the laws of the United States, having now and during all the time hereinafter referred to, its place of, and transacting its business in Cincinnati, Hamilton County, Ohio.

      “ Plaintiff says that in each of the years 1877, 1878, 1879, 1880 and 1881, the said defendant, by its cashier, for the purposes of taxation, made a return to the Auditor of Hamilton County, Ohio, purporting to be a true return of the resources and liabilities of said bank at the close of business on the Wednesday next preceding the second Monday of May of each of said years, but did not return any statement of the names and residences of the stockholders therein, with the number of shares held by each, but, instead thereof, a written statement that said bank would pay the taxes for and on behalf of the stockholders; and said bank did pay the taxes levied in accordance with said returns so made out; but plaintiff says that the Auditor of said County of Hamilton in the year 1881, discovered that said returns were false. Thereupon said auditor proceeded to correct said returns, and having fully inquired, in accordance with the requirements of the statute in such cases made and provided, into the amount of the personal property, money, credits and investments that said bank should have returned for each of said years, and having first notified the cashier of said bank and permitted full opportunity for the same to be heard by its counsel and officers to show that its said returns were correct, he, the said auditor thereupon found that each of said returns were false, and that there had been omitted from the same, personal property which should have been included therein and listed for taxation of the value, for the year 1877 of $82,837; for the year 1878 of $475,522; for the year 1879 of $349,246; for the year 1880 of $481,159, and for the year 1881 of $377,827, which said sums the said auditor, on April 8, 1882, placed on the tax list against the defendant, as, and for the years 1877,1878, ■1879, 1880 and 1881, respectively, when the same should have been returned, and opposite to the same the taxes on said sums for the said years, amounting for the year 1877 to' to the sum of $2,410.56 ; for the year 1878 to the sum of $13,-571.40 ; for the year 1879 to the sum of $10,121.14; for the year 1880 to the sum of $14,915.50, and for the year 1881 to the sum of $8,837.76, which taxes now stand charged on the duplicate of said Hamilton county ; that the same are due and unpaid, and the stockholders of said bank are indebted to the plaintiff, as treasurer of said county, in the said sum of $2,-410.56, with interest thereon from December 20, 1877, and in the sum of $13,571.40, with interest thereon from December 20, 1878, and in the sum of $10,121.14, with interest thereon from December 20, 1879, and in the sum of $14,915.-50, with interest thereon from December 20, 1880, and in the sum of $8,837.76, with interest thereon from December 20, 1881, which, though payment has often been demanded, the defendant has failed and refused and still fails and refuses to pa7

      “ Plaintiff further says that the defendant at all times during the years above mentioned, had in its possession, and now has, money and property belonging to its stockholders more than sufficient to pay all the sums of taxes so as aforesaid due from the said stockholders, but instead of applying the same or any part thereof, to the payment of said taxes, has paid over large portions of the same as dividends to the said stockholders, although the defendant has been repeatedly notified by the treasurer of said county, of the non-payment of said taxes; and notwithstanding the premises, the defendant lias during all said years been transferring and permitting to be transferred from one person to another the stock thereof, as the stockholders therein have from time to time requested; and said defendant will, unless restrained by the order of this court, continue to refuse to pay said taxes, and will at the same time continue to pay dividends to stockholders of said bank and to transfer the stock thereof, to the great and irreparable damage of plaintiff.
    “ Wherefore plaintiff prays that defendant, its officers and agents be enjoined from paying to its stockholders, or any of them, any dividends, and from transferring on its book or otherwise any shares or share of its capital stock, until said taxes and interest shall have been paid in full, and that the court cause an account to be taken of the moneys and property in defendant’s possession belonging to the several stockholders, and cause the taxes and interest as aforesaid due from them and each of them to be paid in full out of said money and property in defendant’s possession, and for such other .and further relief as may be just.
    Chas. Evans,
    (Duly verified.) County Solicitor.

    The demurrer was sustained, and judgment rendered therein for the defendant, which, on error, was affirmed by the district court; and this proceeding is prosecuted to reverse both judgments on the ground that the court of common pleas erred in sustaining the demurrer to the petition.
    The cases of Miller, Treasurer v. The Merchants’ National Bank, of Cincinnati, and The same v. The Third National Bank, numbered respectively 895 and 896, were argued and submitted with the case here reported.

      Foraker & Black, Little, Goss & Cohen, and Rufus B. Smith, for plaintiff in error.

      John W. Herron, for The First National Bank; King, Thompson & Maxwell, for- The Merchants’ National Bank, and Lincoln, Stephens & Lincoln, for The Third National Bank, defendants in error.
   Minshall, C. J.

It is evident that the relief prayed for against the stockholders in this case, can not be granted as they are not parties to the action; and, unless the plaintiff is entitled to some relief upon the facts stated against the bank, the demun-er to the petition was properly sustained.

And, as regards the bank, there is but one question in the case that needs to be determined, for the determination of it will dispose of all the others that have been raised; and that is, whether the shares of stock in a national bank are to be listed for taxation in the names of the shareholders or in the name of the bank ? The power of the state to impose any tax upon such shares is conferred by the statutes of the United States, § 5219 Rev. Stats. This is not controverted. It is ¡also true that the property of a national bank, other than its realty, can not be subjected to taxation by a state or any of its-subdivisions. The power conferred by the section just referred to, is to include the “ shares” in the valuation of the personal property of the “owner” or “holder” of such shares. A. bank does not own the shares of its capital; it owns the capital, and the shares are owned by its stockholders. The capital is corporate property; the shares in it are the individual property of its shareholders. It is the latter that may be taxed, and not the former. No authority .is conferred to assess them for taxation against the bank itself; and to so assess them would be but another form of taxing the capital of the bank itself, which no one contends could be done without the authority of congress. A share in a bank is but a fractional part of its capital, owned by one who contributed an equivalent part of the capital, or his transferee; and the aggregate of all the-shares held by individuals in a bank is equal to the aggregate-of its capital. So that if all the shares in a bank were assessed for taxation in its- name and payment of the tax required of it, the effect would be precisely the same as a tax upon the aggregate capital of the bank. . Again, as the shares-are to be assessed for taxation according to their true value im money, a tax so levied would extend to and include all the-property of the bank — its personalty, in the valuation placed on the shares in its capital stock, and its realty, under the exception contained in § 5219 U. S. Rev. Stats. It seems, then, to follow, as a necessary result, that shares in a national bank must be assessed for taxation in the names of the owners of them, and not in the name of the bank itself. The language-of the statute under which the power is conferred on a state-to tax such shares, is such, and the power conferred must be confined to the language, or the exemption of the bank itself from taxation may be reduced to an empty expression.

Nor do the statutes of the state on the subject of taxation,, contemplate- or intend that such stock should be listed in the-name of the bank. They contain special provisions for the-listing of the shares of the stockholders in incorporated banks.. They are required to be listed at their true value in money,, and taxed in the city, ward or village where located, and not. «elsewhere. The shares are not required to be listed by the ■shareholders themselves j this is done by the auditor of the county ; and provision is then made for their equalization, and the hearing of complaints. To facilitate the enlistment of the stock and its valuation for taxation, the bank is required to keep in the office where its business is transacted a full and complete list of the names and residences of its stockholders and the number of shares held by each, open at all times during business hours to the inspection of all officers authorized to list or assess the value of such shares for taxation. § 2764 Rev. Stats. And then annually, at the proper time in the month of May, the cashier is required to make out and return to the auditor a duplicate report of the resources and liabilities” of the bank, “ together with a full statement of the names and residences of the stockholders therein, with the number of shares held by each and the par value of each share.” § 2765 Rev. Stats. This constitutes the listing of the stock for taxation, and is necessarily intended tó be done in the names of the owners of it. No other reason can be perceived for the requirement that the names of the owners .and the number of shares held by each, shall be returned to the auditor. Having been thus listed, the auditor is required to fix the total value of the shares according to their true value in money, and deduct therefrom the value of the real ■estate included in the statement. of resources, as the same stands upon the duplicate. This is evidently required for the purpose of arriving at the true value of the shares themselves, and constitutes their valuation by the auditor for taxation.

Provision is then made for their equalization by the annual county board, and finally by the state board of equalization. And it is to be .noticed, that a copy of the statement furnished by the cashier of the names of the stockholders and the number of shares held by each, as well as of the resources and liabilities of the bank, is, in each case, to be furnished by the county auditor, first to the county board, and then to the state board. And finally, on completion of the equalization by the .state board, the Auditor of State is required, forthwith, to iC certify to the auditors of the proper counties the valuation, as equalized, of the shares of banks situated in such counties, which valuations shall be put on the proper tax-lists.” § 28101 Rev. Stats. .It is the “ shares ” that are required to be put upon the proper tax-lists. And as shares belong to their respective owners and not to the bank, it would seem a very reasonable construction to say that they are to be placed on the list in the names of their owners, and not in that of the bank, particularly in view of the fact, that they have been required to be listed, valued and equalized in the names of the owners.

Again, unless the shares are assessed for taxation in the names of the shareholders, there would be no opportunity given a shareholder to have a deduction in his favor for any bona fide indebtedness on his part; and to which he would be entitled under the decisions in Whitbeck, Treasurer v. Mercantile National Bank, 127 U. S., 193, 199; Hills v. Exchange Bank, 105 U. S., 319; Supervisors v. Stanley, Id., 305.

But if any doubt remained upon this point, it is certainly removed by the provisions contained in § 2839 Rev. Stats., making the tax a lien on the shares, and providing a remedy in case of its non-payment. The section is as follows:

Any taxes assessed on any shares of stock or the value thereof, of any bank or banking association, shall be and remain a lien on such shares from the first Monday of May in each year until such taxes are paid; and in case of the nonpayment of such taxes at the time required by law by any shareholder, and after notice received of the county treasurer of the non-payment of such taxes, it shall be unlawful for the cashier or other officer of such bank or banking association to transfer or permit to be transferred the whole or any portion of said stock, until the delinquent taxes thereon, together with costs and penalties, shall be paid in full; and no dividend shall be paid on any stock so delinquent, so long as such taxes, penalties, and costs, or any part thereof, remain due and unpaid.”

Each and every provision of this section contemplates an assessment upon shares in the name of the shareholder, and are inconsistent with any other practice. The lien is fastened on the shares, and in ease of the non-payment of the tax “ by any shareholder,” the consequence is visited upon him, and no one else. It is made unlawful for the cashier or any officer of the bank, on notice, to transfer or permit the transfer of his stock, or the payment of any dividends to him so long as the tax remains due and unpaid.

This Ariew does not interfere Avith any arrangement by which a bank may, under the provisions of § 2840, Rev. Stats., as a matter of convenience to its shareholders and the public, agree to ¡jay the taxes levied upon the stock of its shareholders, and deduct the same from dividends or other-funds in its hands belonging to them. In such an arrangement the individual rights of shareholders are preserved, each being liable only for such taxes as may be assessed against stock held by himself. An agreement by the bank in such case to pay the taxes assessed against its shareholders might be enforced as any similar agreement. The assumption would be supported by its possession of funds, belonging to the party whose liability is assumed, and against Avhich it would have the right to credit itself for the payment so made on behalf of the shareholder. Such an arrangement in no way infringes the exemption of the bank from state taxation, nor impairs its efficiency as one of the fiscal agents of the general government j and finds full support in the principles announced by the Supreme Court of the United States in the decision of National Bank v. Commonwealth, 9 Wall. 353 ; Avhere a statute of the State of Kentucky, requiring the bank to pay a tax levied on the shares of its shareholders, was sustained, the tax being paid from funds of the shareholder in its hands, and not from the assets or capital of the bank.

What then rvas the nature of the suit brought by the treasurer against the bank ? It was not for taxes that had been assessed against all or any of its shareholders, and which they or any of them had neglected to pay, and Avhich it might have paid under the provisions of § 2840, Rev. Stats., making it lawful for the bank to pay the taxes, assessed upon its shares * ' * * in the hands of its shareholders respectively,” deducting the same from any dividends that might be due or become due upon the same. The substance of the petition is, that the cashier of the defendant, for the years named, made a return to the auditor, purporting to be a true return, of the resources and liabilities of the bank, but did not return any statement of the names of its stockholders with the amount of stock held by each, and, instead thereof, returned a written statement that it would pay the taxes for and on behalf of the stockholders; and that it paid the taxes in accordance with ■said return. That the auditor ascertained that the return was false, and, proceeding to correct the same, ascertained the •amounts omitted for each year, placed the .same on the tax-list against the bank, and, opposite thereto, the taxes on the .amounts omitted for the several years included. For this we fail to find any authority. § 2782, Rev. Stats., applies to the case where an individual has made a false return of his property subject to taxation, and authorizes its correction by ■charging “such persons on the duplicate with the proper amount ■of taxes.” The bank is not subject to taxation, and could therefore have been charged with nothing under this section. But an adequate remedy was provided for the case under •'§ 2769, and constitutes the only remedy where a cashier makes :a false return to the auditor. Under this section, the auditor may examine the books of the bank, and any officer or agent of it under oath, together with such other persons as he may deem proper, “and make out the statement; ” and any officer of the bank may be fined not. exceeding $100, for failing to make the statement, or for willfully making a false one. This would seem to be as efficient as it is rigid for the purpose of securing true returns of bank shares for taxation.

A further claim is made that the bank being charged on the duplicate with the amount of these taxes, the duplicate is, under § 2859 Rev. Stats., prima facie evidence that the tax ■is due, and that the burthen is on the defendant to show that it is not. But that section applies only to the case where taxes stand charged against any person” and are not paid as pre.scribed bylaw. As a-national bank cannot bet-axed by the state, the fact that it may stand charged with a tax upon the duplicate of a county, furnishes no ground for an action of any kind against it. If they stand charged against its stockholders, or any of them, then an adequate remedy for their collection is provided in § 2840 above referred to.

The argument based on the averment that the cashier stated in the return, that the bank would pay the taxes for and on account of its shareholders, cannot avail here. For conceding that this statement amounted to an agreement oii the part of the bank to pay them, and that the agreement was a valid one, still it is averred that it did pay the taxes levied in accordance with the return, and the agreement had that extent, and no more. But it is apparent that the averment was made as setting forth part of the grounds on which the auditor acted in assuming to correct the returns that- had been made by the cashier of the bank, and to charge it with taxes upon omissions for the years designated in the petition, and not as a ground for the recovery of a judgment against the bank for the breach of its agreement. No such judgment is prayed for, and whilst the prayer is no part of the cause of action, still it may be looked at for the purpose of construing the averments of the petition.

Judgments affirmed.


author: Dickman, J.

text:
    Spence v. Emerine.

      Cognovit.

    1. A warrant of attorney to confess judgment should be strictly construed.
    2. A warrant of attorney attached to a sealed note payable to the payee or bearer, authorized “ any attorney at law, at any time after the above sum becomes due, with or without process, to appear for us in any court .of record in the state of Ohio, and confess judgment against us, for the amount then due thereon, with interest and costs, and to release all errors and the right of appeal,” Held:

      (a) Such warrant of attorney conferred no authority to confess judgment against the maker of the note, in favor of the holder to whom the payee had transferred the note by delivery.

      (b) In an action on the note, it was error to render judgment against the maker thereof in favor of such holder, by virtue of such warrant of attorney, without summons or other notice to the maker of the bringing of the action.
    (Decided May 21, 1889.)

      Error to the Court of Common Pleas of Sandusky County.
    The defendant in error, Andrew Emerine., to whom a sealed note, payable to E. S. Clark, or bearer, had been transferred by delivery, took a judgment thereon against the maker, John Spence, plaintiff in error, by confession, under a warrant of attorney attached thereto, at the September Term, 1887, of the Court of Common Pleas of Sandusky County.
    The following is a copy of the note and warrant of attorney.
    “$250.00. Springfield, O., Dec. 17, 1885.
    “On the 1st day of Oct. 1887, I promise to pay to E. S. Clark, or bearer, two hundred and fifty dollars, for value received, with 6 per cent, interest from and after Sept. 1st, 1886, until due, and 8 per cent, after due; interest to be paid annually after maturity.
    “And we jointly and severally hereby authorize any attorney-at-law, at any time after the above sum becomes due, with or without process, to appear for us in any court of record in the state of Ohio, and confess judgment against us, for the amount then due hereon, with interest and costs, and to release all errors and the right of appeal.
    “ Witness our hands and seals.
    “ John Spence, [Seal.]
    “ Post-office, North Hampton.”
    By leave of this court, for the reasons set forth in the application of the plaintiff in .error to file a petition in error, he filed such petition in error to reverse said judgment, and made the following assignment of error :
    “Said court of common pleas erred in rendering judgment in favor of the defendant in error against the plaintiff in error, without summons or other notice of the bringing of said action, by virtue of a warrant of attorney attached to the note sued on in said case below, because said warrant did not authorize the confession of a judgment in favor of said defendant in error, and said common pleas court, therefore, had no jurisdiction over the person of the plaintiff in error.”

      Harrison, Olds & Marsh, Bowman & Bowman, for plaintiff in error.
    I. To authorize the confession of judgment in favor of the equitable transferee of a sealed promissory note, payable to the payee or bearer, by virtue of a warrant of attorney; the warrant must expressly authorize the confession of a judgment in favor of the transferee. That is to say, unless a warrant of attorney expressly authorizes the confession of judgment in favor of the payee of the note, or in favor of any holder thereof, the warrant is void for its uncertainty, or else it merely authorizes the confession of judgment in favor of the payée. Osborn v. Hawley, 19 Ohio, 130; Marsden et al. v. Soper, 11 Ohio St. 503; Watson v. Payne, 25 Ohio St. 340; Cushman v. Welsh, 19 Ohio St. 536 ; Clements, v. Hull, 35 Ohio St. 141; Reams v. Bank of Lima, 2 Ohio C. C. Rep’ts, 43.
    II. A warrant of attorney to confess j udgment, which does not state in whose favor the judgment may be confessed, is void for its uncertainty. It is fatally defective for want of an essential term. This essential term cannot be supplied by intendnvmt or presumption. The rule of strict construction of such warrants, has been repeatedly laid down and applied with a firm hand by the courts, including this court. Cushman et al. v. Welsh, and other cases before cited; 5 Hill, 497; 15 East. 592; 7 Taunt. 452; 61 Ill. 236; Short v. Coglin, 1 Anstruther, 225 ; Henshall, Ex’r v. Mathews, 1 Dowling’s Pr. Rep. 217; Foster v. Clagget, 6 Dowling’s Pr. Cases, 524; Cowie, Ex’r v. Allaway, 8 Dunf. & E. 257; Lewis et al. v. Moon, 1 Ohio C. C. R. 211; Carlin v. Taylor, 7 Lea (Tenn.) 666 McDoal v. Yeoman, 8 Watts. (Pa.) 361; Lamaurieux v. Hewitt, 5 Wend. 308.
    III. But if the courts could aid, by intendment or presumption, the words of the power, they would not do so by liberal and extensive construction; but, on the other hand, they would only aid any omission or defect in its terms, by necessary implication, guided by the rule of strict construction.
    Yet, even under the liberal rule of construction, there are as strong, if not stronger reasons for presuming the obligor intended the power to■ be exercised in favor of the obligee only. The obligee was the only other party the obligor had in mind at the time he entered into the obligation. The obligee was the person, and the only person, with whom the obligor dealt or contracted. A transfer of the note “by endorsement theron,” if made before the maturity of the note, would preclude any defense which the obligor might have at maturity. Can it be presumed that the obligor desired also to confer the further right upon any transferee to get judgment without process? It seems plain to us that the maker of such a note would much more likely intend that only the payee should have the right to take judgment without process; and that if the intention had been to confer such extraordinary right upon any transferee, the warrant would have so provided.
    In this class of instruments, which may be, and in point of fact often are used to carry out schemes of fraud or oppression, and upon which judgments may be taken without notice, the courts do not apply a liberal rule, nor feel at'liberty to give them such scope as the maker may be supposed to have intended ; but, on the contrary, the courts go only so far as they are compelled by the express terms of the power, or by necessary implication. In many instances, these instruments are snares prepared to entrap the unwary. In the state of Illinois warrants of attorney or cognovit notes, have been abrogated by statute. The good citizens of the state got tired of this instrumentality of fraud and oppression, and the general assembly came to their relief.

      McCauley & Weller, for defendant in error.
    I. It was held in Osborn v. Hawley, 19 Ohio, 130, that a power of attorney to confess judgment, attached to a negotiable promissory note, when the note is transferred becomes inoperative and void.
    The correctness of this holding was questioned in Marsden v. Soper, 11 Ohio St. 503.
    The same question was made in Watson v. Paine, 25 Ohio St. 340. The court in this case did not seem to be fully agreed on the point, but Mcllvaine, C. J., in the opinion p. 346, states some very obvious reasons why no such rule should be held.
    In the later case of Clements v. Hull, 35 Ohio St. 141, it was held that a power of attorney, attached to a sealed note payable to bearer authorizing the waiving of process and the confession of judgment in favor of the holder of the note, may be executed in favor of an equitable owner and holder, to whom the note may be transferred by - delivery, but without indorsement thereon.
    The rule is therefore settled that the transfer of the note does not render the power void. That result would probably follow in the single case of the transfer of a note with a power attached to confess judgment for the payee only.
    In the case before the court the note was a plain promissory note, payable to bearer, and while it was in fact under seal, the fact was of no consequence. The statute of April 14, 1884, Ohio L. 81, p. 198, abolished private seals, so that the note was negotiable by delivery.
    If therefore, as held in Clements v. Hull above, it was competent to confess a judgment in favo;' of an equitable holder of a note, there could be no possible objection to confessing a judgment in favor of a person holding a note as this one was held, unless the power of attorney in this case is bad for uncertainty.
    II. It is a,well settled rule that formal instruments, such as powers of attorneys, are subject to a strict construction; that is, where powers are expressly limited to a specified person, or to be exercised in a designated court, county or state, or in favor of a certain person, or at a specified term of court, or in any other of the many ways in which they may be so limited, the courts restrain the exercise of the power within the limits clearly expressed.
    Many instances of this kind may be found. • The plaintiff in his brief has referred to quite a number of them. The only fair inference from these cases is, that the power conferred on a particular person must be exercised by him only. An examination of the cases in which a strict construction has been enforced will show, that where a power is expressly limited, the court will not extend it beyond the limits expressed.
    The power in this case authorized any attorney-at-law, with or without process, to appear for us in any court of record in the State of Ohio and confess judgment against us for the amount due hereon, etc.
    There was a distinct authority here to confess a judgment against the maker. The authority was not limited to be exercised for any person, or class of persons. The exercise of this clear grant of authority necessarily implied that the judgment should be in favor of some person, or class of persons; some holder, either the payee or, as stated in the note, “ the bearer some party in interest who might properly bring an action on the note.
    The rule on this subject is clearly stated in Ewells Evans on Agency, 145, (marginal).
    Authority is clearly given in terms to confess a judgment against the maker of the note. That authority is-not ambiguous or uncertain, either in terms or meaning. It is not easy to see how this authority,could be exercised without confessing a judgment in favor of some holder of the note.' A judgment must have been so confessed, as a necessary means of executing the authority so clearly given, with effect.
    It does not follow that because the power necessarily includes the payee, it necessarily includes no one else.
    If it includes the payee while he owns the note, it includes the transferee in the same sense when he becomes the owner of it. This results from the negotiable quality of the note, and the fact that the power follows it upon its transfer. The transferee therefore shows a necessary implication including him when he alleges ownership of the note with such a power attached to it.
   Dickman, J.

Although at common law a note under seal is not negotiable, either by delivery or indorsement, so as to enable the holder to maintain an action upon it in his own name, the sealed note now under consideration became negotiable hy statute, unless its negotiability was destroyed by the warrant of attorney attached to it. It is provided by section 3171 of the Revised Statutes, that all bonds and promissory notes, for a sum certain, and payable to any person or order, shall be negotiable by indorsement thereon; “ and all such instruments payable to a person or bearer shall be negotiable by delivery.” . In this state, it is held that if the note is in itself certain and perfect, without conditions, it may remain negotiable, although the power of attorney to confess judgment attached to and forming a part of the note, may not, by its terms, operate in favor of an indorsee or transferee of the note. Osborn v. Hawley, 19 Ohio, 130.

Whether the warrant of attorney can be executed for the benefit of a holder of the note other than the payee, must depend upon the language of the warrant itself. But it is an established principle, that an authority given by warrant of attorney to confess a judgment against the maker of the note, must be clear and explicit, and strictly pursued, and we cannot supply any supposed omissions of the parties. Cushman v. Welsh, 19 Ohio St., 536 ; Cowie v. Allaway, 8 T. R., 257 ; Henshall v. Matthew, 1 Dowling’s Pr. Cas., 217 ; Foster v. Claggett, 6 Dowling’s Pr. Cas., 524; The Manufacturers’ and Mechanics’ Bank of Philadelphia v. St. John, 5 Hill, 497. In all cases of special agency, an agent constituted for a particular purpose, and under a limited power, cannot bind his principal if he exceeds that power. The special authority must be strictly pursued. 2 Kent’s Com., 621. And the same principle may be traced back to the Roman law, by which, when the authority was express or special, the agent was bound to act within it.

The'plaintiff in error, in executing the note, might be presumed to have authorized an attorney to enter up a judgment against him in favor of the payee, when he would-not be presumed to have consented to stand in the relation of judgment debtor to a stranger or adverse holder, to whom the payee might.indorse or deliver the note. The maker might well insist upon a strict construction of the power granted, when the payee, by transferring the note before maturity, might preclude a defense which he might hav« at maturity. The power of attorney attached to the note in controversy, does not, in express language, authorize a confession of judgment in favor of any one, not even of the payee; but if such authority might be implied as to the payee, we cannot, under the rule of a strict interpretation, extend that implication in favor of the defendant in error to whom the note was transferred by delivery.

In Osborn v. Hawley, supra, as appears from a certified copy of the journal entry in the court of common pleas, upon which error was assigned, the warrant of attorney did not indicate in whose favor a judgment might be confessed, and it was held, that when the legal title to the note was transferred, such power of attorney became invalid and inoperative, and no authority whatever could be exercised under it for the benefit of the indorsee.

In Marsden v. Soper, 11 Ohio St. 503, the warrant of attorney under which judgment was confessed, purported to authorize such confession “in favor of any holders of this obligation,” at any time after the same became due; but the court questioned, whether such a warrant of attorney would be legally operative, to authorize the confession of a judgment in favor of an indorsee of such note.

In Cushman v. Welsh, supra, the power was conferred by the terms of the instrument, to confess judgment only “in favor of the legal holder of the note,” and it was decided that a warrant of attorney for the confession of such a judgment,' did not authorize a confession of judgment on such note in favor of the owner and holder thereof, without'an indorsement thereon by the payee, as provided by the statute, transferring the legal title to such owner and holder of the note.

In Watson v. Paine, 25 Ohio St. 340, the warrant of attorney attached to the note gave authority to appear in any court of record in the United States, and confess a judgment against the makers, “ in favor of the holder of the note.” The point was made in the case, that the warrant of attorney did not authorize the waiving of process, or an appearance for the makers, in an’action brought by an indorsee of the note; in other words, that the power of attorney was not negotiable. The court did not find it necessary to decide the point, but it was said by Mcllvaine, J., in delivering the opinion of the court, I am unable to find a reason why a power to confess judgment in favor of any holder of the note, may not as well be used in favor of an indorsee as in favor of the payee.”

In Clements v. Hull, 35 Ohio St. 141, the scope of the power was not limited as in Cushman y. Welsh, supra, in favor of the legal holder only, but the authority given by the warrant of attorney was, “ to confess judgment in favor of the holder of said note.” It was by virtue of such language in the warrant, that the court was of opinion, that the power authorizing waiver of process and confession of judgment-might be executed in favor of an equitable owner and holder, to whom the sealed note — payable to a designated payee or bearer — had been transferred by delivery, without indorsement thereon as required by the statute.

It will thus be seen, that where it has been adjudged by the court that a power of attorney to confess a judgment may be executed in favor of a party other than the payee, it has been in cases w'here authority was expressly conferred to confess a judgment in favor of a legal holder or holder of the note. The decisions have all been based upon a strict interpretation of the power granted, without aiding any omission or defect in its terms by liberal intendment or construction.

In accordance with the views which we have expressed,’ our conclusion is, that the warrant of attorney attached to the note sued on, did not authorize a confession of judgment in favor of defendant in error, and there having been no summons or other notice to the plaintiff in error oF the bringing of the original action, the court of common ' pleas acquired no jurisdiction over t-he person of the plaintiff in error, and erred in rendering a judgment against him.

We are therefore of opinion, that the judgment of the court of common pleas should be reversed, and the petition in that court dismissed without prejudice.

Judgment accordingly.