author: Bradbury, J.

text:
    Culver, Executor, v. Culver, Admr., et al.

      Property held in trust — Executor made trustee by devisees — Triistee one of the devisees — Agreement by heirs as to the distribution of propei'ty — Continuation of trust — Authority of trustee — Rights of estate creditors.

    1. Where, by the provisions of a will, real estate is devised to two sons of the testator, to be held in trust for his four children, including the two trustees, the will providing for a total or partial distribution of the trust property among the children when a majority of them should consent thereto ; and where, after all debts and legacies have been paid, the children enter into a contract by virtue of which the share of one trustee is set off to him in severalty, and the residue set apart to the other children jointly, deeds are not passed, but the contract providing that: “Each of the parties hereto, hereby agrees at any time on demand of the parties interested, to execute all such further receipts, releases, deeds, conveyances or other assurances of title as shall be necessary in order to more fully and completely to carry out the spirit and intent of this agreementThe agreement should be regarded as effecting a complete distribution of the trust property, terminating both the trust, and the powers of the trustees under the will.
    2= If, thereafter, the brothers and a sister of the trustee whose share had been set off to him in severalty, should permit the latter to manage the portion set off to them, make contracts from time to time for the sale of parcels thereof and collect the purchase money, and suffer this course of business to continue for more than twenty years without calling for an accounting in the probate court, his authority, in favor of the sureties on his executor’s bond, should be regarded as derived, not from the will of the testator, but from his brothers and sister, and they can require him to account only in a court of general jurisdiction as their agent, and not in the probate court as executor or trustee under the will.
    (Decided March 22, 1898.)
    Error to the Circuit Court of Hocking county.
    Cynthia B. Culver, as administratrix of her deceased husband, L. H. Culver, defendant in error began these proceedings in the probate court of Hocking county by filing a petition therein to obtain a citation against Lawrence A. Culver, as executor of Reuben Culver, deceased, requiring him to file an account as such executor. He was ordered to and did file an account in the probate, to which exceptions were taken by the defendants in error. Upon hearing of this account and the exceptions taken to it, the piobate court found remaining in the hands of the executor as assets of the estate a large sum of money which the court ordered distributed according to law.
    The plaintiff in error, as executor, appealed the cause to the court of common pleas, where he was again charged as executor with a considerable sum as assets of the estate. He then took the cause on error to the circuit court where the judgment of the court of common pleas was affirmed. Thereupon the plaintiff in error brought the cause to the Supreme Court on error to obtain a reversal of the judgment of the circuit court.
    Such facts as are necessary to an understanding of the question decided will be stated in the opinion.

      R. A. Harrison; John 8. Friesner; 8. H. Bright; and O. H Buerhaus, for plaintiff in error.
    Brief of John 8. Friesner, for plaintiff in error.
    We claim that a proceeding by citation in the probate court, is quasi criminal proceeding, like that for contempt to show cause, etc., and the same rules apply to such a proceeding as to any other that is quasi criminal.
    The probate court has no general or common law jurisdiction, and only such as has been' conferred upon it by statute.

      While an executor is in a sense a trustee, he is not such in the general sense.
    The offices and duties of an executor and trustee are separate and distinct, and entirely distinguishable the one from the other. An executor and a trustee may be both appointed by the same instrument; they may be different individuals, or the two offices may be conferred upon the same individuals.
    Where one is appointed an executor, and also a trustee by the same instrument, and enters upon the execution of both trusts, a citation issued ag’ainst him as an executor, confers no jurisdiction upon the probate court to treat the citation as one issued ag-ainst him as a trustee. See sections 6178-6047-6048 of Revised Statutes.
    We think it is clear, therefore, that when Mr. Culver was cited to account as an executor any question of his duties as a trustee was not before the court, nor the proper subject of investigation. That the only questions properly to be determined, and inquired into under that proceeding, was as to how he had discharged his duties as an executor, had he collected up the assets belonging to the estate had he paid the debts and specific legacies ; or had all these matters become at rest by operation of law from lapse of time. Phillips v. The State ex rel., 5 Ohio St., 122.
    Where parties are appointed trustees by will and also named as executors they may act in both capacities, and their rights and duties under the two offices will be kept separate and distinct. Redfield on Wills, Yol. 3, p. 76. Godolf v. Walker etal., 15 Ohio St., 275.
    After the lapse of 20 years the law presumes that an estate has been fully administered, and that thereafter the executor holds as trustee. Jennings v. Davis, 5 Dana, 127; Perry on Trusts, section 559; Hinds v. Hinds, 35 Ind.,312; Judgeson v. Gibson, 5 Wind., 226; Wheatly v. Badger, 7 Penn., 459; Redfield on Wills, 3rd Vol., 77.
    Nothing could be more fallacious than to suppose that the proceedings in the probate court, can be by any process tortured into a proceeding to settle a trust, or the accounts of a trustee in the execution of his trust; it was a settlement of an executor pure and simple. The proceedings in respect to the trust are in their nature “in rem,” in respect to the trust, jurisdiction is obtained by publication. The matter published there was a settlement of an executor.
    The matter of trust and trustee was never mentioned. The two proceedings are so entirely distinct and different that there is no possibility of mistaking the one for the other. Section 6329. The notice in this case was for an executor.
    The subject we are -now treating of is the settlement of trusts and accounts of trustees created by will. Jurisdiction over the subject is expressly vested in probate courts, being courts of limited jurisdiction, and the appellate jurisdiction is given to the common pleas courts by statute. Sections 6330 and 6331; Home Insurance Go. v. Morse, 20 Wall., 451; Sompton v. Ballard, 133 Miss., 465 ; Black on Judgments, section 217 ; Geo. B. B. Bank Co. v. Harris, 5 Ga., 527.
    Upon the same principle where trustees have the power to sell land, comprised in a will, the cestue que trusts where the property has become vested in them, and they are sui juris may by electing to take the property as it stands, put an entire end to the trust. Cotton’s Trustees and the School Board of London, 19 Chan. D., 624; Floyd <& Seville v. Boff'et al., 2 O. Ct. Ct. Rep., 253; 1 Circ. Dec., 472.
    Down to the present day the current of our authorities have been uniform wherever doubts and disputes have arisen with regard to the right of different members of the same family. Compromises have been sustained by the court albeit resting upon the grounds which would not be deemed satisfactory if the transaction had been among strangers. Westboy v. Westboy, 2 D. Mar., 503.

      A family arrangement may be implied without any express written contract from a long course of dealings between the parties and the court will enforce it, in the same mode as it does ordinary family arrangements. Williams v. Williams, 2 D. R. & Son 378; 2 L. R. Ch. App., 294; W. & L. Leading Cases in Equity, Pt. 2, Vol. 2, p. 1685.
    For a collection of the American cases on the subject of family arrangements see American notes. Stoplton v. Stoplton, in Eq., Vol. 2, Pt. 2d, page 1726, and especially Woolfolkv. Woolf oik, 4 Dev., 535; Hurlbut v. Phelps, 30 Conn., 42; Bailey v. Wilson, 1 Dev., 182.
    Section 6233 provides that every guardian shall be allowed, etc., his reasonable expense incurred in the execution of his trust.
    Also such compensation for his services as the court may deem reasonable. Boyd v. Hawkins, 2 Dev. Equity; Storey Eq., 334; Barney v. Saunders, 31268; 16 Howe, U. S.,542 ; P. Pg ester v. Case, 4 Gault Ch., 514; Wag staff v. low erre, 23 Barb., 221.

      ■ See American authorities collected under the leading case of Robinson v. Pott, W. & L. Leading Cases in Equity, Vol. II, page 550.
    Myer S. Appeal, 12 P. F. Smith, 109; Brennan’s Estate, 15 P. F. Smith, 16; Lowrie Appeal, 1 Crant; 373; Frederick’s Estate, 5 Phill. Rep., 478, MeEthemy’s Appeal, 10 Wright, 348; Foltz Appeal, 5 P. F.- Smith, 428; Pirmes Estate, 1st Tucker, page 119.
    To hold that a notice published of the settlement of an executor of his accounts as such, will suffice to confer upon the court, jurisdiction to settle a trust, would violate every principle upon which the jurisdiction of courts is founded. Rogers v. Wood, 2 B. Ad., 245; Cooper v. Reynolds, 10 Wall., 316; Fithian-v. Monk, 43 Mo., 515; Black on Judgments, section 216.
    If there is any 'thing better settled in the law than any other thing, it is that consent can not confer jurisdiction either over the subject matter, or where the public is to be affected to the res.

    In cases where the common pleas court, has appellate jurisdiction only of probate matters, the parties can not by consent confer original jurisdiction upon them. Home Ins. Co. v. Morse, 20 Wall., 451 ;'J Somton v. Ballard, 133 Miss., 465; Black on Judgments, section 217; Geo. R. R. Bank Co. v. Hcurris, 5 Ga., 527.
    Brief of S. H. Bright, for plaintiff in error.
    The contract of 1866 was a complete settlement of the estate so far as the probate court had jurisdiction of the same.
    All of the property rights and credits constituting the estate belonged in law and equit3r to the four children of Dr. Culver. They were then all of age, sui juris, and clothed in their right minds There were no creditors then and we are not dealing with creditors now.
    We may ask: Was there any power on earth to hinder them from doing with their own whatsoever they pleased.
    By that contract they set off to L. A. Culver his share, and he agreed to execute such further papers as might be necessary to vest the title in them.
    In this connection read sections 274, 285, 401, 850 and 921 of Perry on Trusts; Woerner’s American Law of Administration, section 260, middle paragraph. Revised Statutes, 6190; Pratt v. Long-worth, 27 Ohio St., 159; Giaque’s Manual for Trustees, page 5.
    We have claimed in the last subdivision that by the contract of 1866, L. A. Culver went out of the estate, and was thereby discharged from any execution of the will either as executor or as trustee.
    The probate court never had any jurisdiction over him as trustee because he never became trustee under the will. By the contract of 1866 his duty as executor was at an end. He was nominated in the will as trustee, but he never was appointed as such.
    The will did not provide for the omission of the bond; and hence he could not act as trustee until he had given bond as such. The bond given was a bond as executor ; as the record shows.
    Giaque’s Manual for Trustees, page 5, paragraph 16;, also page 27. Under section 5981, Revised Statutes, the probate court could not “grant permission” to him to act as trustee until a bond was given; and as matter of fact it never did grant such permission. Sections 6266 and 5995.
    There is no such thing as executor de son tort, in Ohio. Benjamin v. Be Baron’s Admr., 15 Ohio, 517.
    The power to proceed against L. A. Culver by attachment and to compel him to settle had been lost. Revised Statutes, 4984 and 6178; Phillips v. State, 5 Ohio St., 122; Ohio Digest, Vol. I, 495; 18 Ohio St., 643; 22 Ohio St., 27; Woerner’s Law of Administration, section 538; Buplerath v. Van Wes, Em., Bulletin of 1894, page 35.
    The joint liability of executors in Ohio arises wholly by the reason of our statutes, See section 5996 for form of bond.
    At common law joint executors were not jointly liable. Ecert v. Myers, 45 Ohio St., 530; Revised Statutes, 5999, 6102, 5984; Woerner’s Adms. Law, 558, 738,. 1179 and 1180.
    But whatever joint liability was created by the joint bond as executors in this case is now barred by the statute and lapse of time. No action can now be maintained on the executor’s bond. Phillips v. State, 5 Ohio St., and other authorities cited above under “Limitations.”
    The bond given was by its terms an executor’s bond, and must be presumed to be nothing more, from its amount. They were bound to settle as executors in eighteen months, and after this lapse of time, such settlement will be presumed. Hence, L. A. Culver cannot now be held liable for funds coming solely into the hands of L. H, Culver soon after the death of their father.. State v. Gilford, 18 Ohio, 500.
    Failure of executor to settle in probate court. Hamden, his co-executor, said it was not necessary ; and Hamden was Ms legal adviser. Manual for Trustees, page 76, paragraph 41; Miller v. Proctor, 20 Ohio St., 442; Redf. on Wills, 565,
    No one called Mm to settlement in court except a hungry probate judge, who appears to have acted solely on his own motion.
    No one had any interest in the settlement of the probate court, for the debts were all paid, and. the estate had in fact been administered, within the real meaning of that term. Woerner’s Law of Adms,, section 201; 27Ohio St., 159, section 5 of' syllabus.
    A settlement and disposition of the estate was made by written consent of all parties in 1866.
    Brief of J. M. McGillivray, for defendants in error.
    Is an accounting barred by lapse of time ?
    The matter being in trust, the statute of limitations does not commence to run until there is a denial of the trust, or a refusal to act under it. Section 497, Revised Statutes; Phillips v. The State, 5 Ohio St., 122; 13 Am., & Eng. Enc. Law, 683-7; 2 Perry on Trusts, 2nd Ed. sections 863-4.
    And here there is neither denial nor renunciation, refusal to act or claim of a bar until April 19, 1890.
    Abandonment of the trust, or conveying to another with authority to execute will not discharge the trustee. 2 Perry on Trusts, 274; Flagg v. Mann, 2 Sumner, 486; Webster v. Vanderenter, 72 Mass., 528; Teazle v. McGugin, 40 Ohio St., 365.
    Brief of L. D. Vickers, for defendants in error.
    The probate court óf Hocking county had jurisdiction in this case and it was the only court in the state of Ohio which had, or could have jurisdiction of this case, and it made no difference whether Culver was executor, administrator or trustee or all combined; its jurisdiction over him was complete in either capacity. Sections 524, 6328 and 6330, Revised Statutes.
    It makes no difference whether the law requiring Culver to settle in the probate court was in force or not at the time of the death of Reuben Culver and the probate of his will, for the legislature had a perfect right under the Constitution to change the place of settling his accounts at any time. It is sufficient to say that at the time he filed his account the probate court had jurisdiction to require him to file his account there. Rairden v. Holden, 15 Ohio St., 207; Templeton v. Kraner, 24 Ohio St., 554; Railroad v. Commissioners, 35 Ohio St., 1; Rouse v. Chappell, 26 Ohio St., 306; Ludlow v. Johnston, 3 Ohio St., 550.
    The probate court having jurisdiction over the trust estate of Reuben Culver, deceased, and over the person who had been appointed by his will to execute the trust and administer the estate, that jurisdiction would remain so long as there was any estate of Reuben Culver to be settled, no matter in what capacity, whether as plain executor, or executor and trustee combined, the person claimed to hold it. If he was executor he must settle in the probate court, and the statute says that in either capacity the jurisdiction is the same and the settlement must be made in the same manner exactly, and the'same in each instance. Neither the powers or the duties of Culver as executor or trustee would cease until the estate was finally settled. Taylor v. Thorn, 29 Ohio St., 569; McAfee v. Phillips, 25 Ohio St., 374; Weyer v. Watt, Ex., 48 Ohio St., 545.
   Bradbury, J.

This court being of the opinion that the history of the transaction as disclosed by the record shows that the plaintiff in error, in respect of the matters contained in the account filed by him in the probate court, was acting in his individual capacity and not as executor or trustee under his father’s will, will consider no other question in this opinion; and in fact go very little beyond reciting those parts of the record which have produced this conclusion.

Dr. R. Culver, of Logan, Hocking county, died in 1861, testate, leaving surviving him a widow and four children, the latter, three sons and one daughter were then all of full age. His will was duly probated on the 16th day of April, 1861, and reads as follows:

“In the name of the Benevolent Father of all, I, Reuben Culver, of Logan, Hocking county, Ohio, being now weak in body, but being of sound mind and disposing memory, do make, ordain and publish this my last will and testament, hereby revoking, setting aside and annulling all other and former wills by me made as fully and completely as if the same had never been made.

1. And first, I do hereby make, constitute and appoint my beloved wife, Hannah D. and my two sons, Lueien H. and Lawrence A., executors of this, my last will and testament.

2. Secondly, I do hereby give, devise and bequeath to my said executors to hold as trustees, all of my real estate and personal property of every kind and description in trust for the purposes hereinafter set out.

3. It being my intention to vest in my said executors all of my property of every kind which I may own, or be entitled to at the time of my death, for the purpose of more fully carrying out the trusts hereinafter declared.

4. I direct my said executors to proceed to collect all claims which may he owing to me, except those hereinafter expressly excepted.

5. It is my wish that my said executors shall pay to Hunter & Stanbery the balance due on the two lots in Logan for which I hold their title bond, and take a deed therefor in their names as said trustees, and to proceed to erect thereon, a good, commodious dwelling house.

6. For the purpose of securing a home for my beloved wife and each of my children, I direct that they shall each have the right to occupy as a residence as they may severally wish, the following property, to-wit:

7. For the use of my wife, the entire premises on which I now reside, being about six acres of land with the appurtenances; for my sons Charles Vernon, Lucien Hamden and Lawrence Augustus, the lots on which they reside, giving to Lucien H. the use of the entire lot of which he now occupies but half; and for the use of my daughter Mary Ellen, the two lots and the house provided for in section five (5).

8. Furthermore, it is my wish that my wife have the use of all my household furniture and library and that no inventory be made of the same.

9. The uses to which my said trustees shall hold the property hereinbefore vested in them, is hereby declared to be as follows:

10. First, to pay over to my beloved wife one-third part of the whole proceeds of the same; but if from any unforseen event one-third should not be sufficient to provide her a comfortable support, then that from the residue my trustees provide for her a comfortable support during her life.

11. As to the residue my trustees shall hold the same for the equal benefit, when distribution shall finally be made of my four children, or their heirs if any of them should be dead; but it is my wish that no distribution be made .except by the consent of a majority of my said children, when an entire or partial distribution may be made.

12. In case of the death of any of my children, I direct my trustees to pay over to the legal representative of such child the proportion due to such child as rapidly as the assets shall be converted into money.

13. I request that my lands not hereinbefore mentioned may be sold by my trustees whenever they may be directed to do so by a majority of my children and the proceeds held under the same trust.

14. It is my wish that my trustees shall from time to time invest the funds belonging to my estate; but no investment shall be made without the consent of a majority of my children.

15. I request my executors to remit the balance due me from my beloved brother Cromwell B. Culver.

16. I also give to my affectionate and well beloved nephew, B. P. Culver, my stock of medicines, galvanic battery, and other instruments, saving the case of pocket instruments.

17. Upon final distribution I desire that my trustees convey to each of my children the lots heretofore designated to each; and that in making final settlement the indebtedness of each as shown by note and book account with interest shall be charged to them respectively.

18. In case of the death of either one of my executors the trust hereby granted to all shall be exercised by the survivor.

In testimony whereof I have hereto set my hand and seal and published this, my last will and testament, this 25th day of March, A. D., 1861.”

The widow and the two sons, Lucien H. and Lawrence A., qualified as executors under the will, but the widow does not seem to have taken any part in administering the estate which was estimated at a valuation of about $30,000.00, one-third of which was personal property, the balance real estate. After their appointment and qualification the two brothers entered upon the active management of the estate, ignoring however the probate court. The personal assets were collected and debts and legacies paid, but nothing further was done looking to a settlement of the accounts and distribution of the estate until October 1, 1866, the widow having died in the meantime, when the following statement of the condition of the estate was made:

October 1, 1866, Statement of R. Culver’s estate with approximate estimate of the value of assets: Apr. 1, ’61, Cash on hand and in bank..... $1812 76

Notes good and collectible .... 4682 53

Accounts good and collectible . . . 456 56

Judgments —Adcock $1354.75, Rathburn $169.00 . . . . 1523 75

Stock of Citizens’ Bank..... 2000 00

Real estate:

Homestead . . . .$5000 00

Lot No. 4, Webster’s addition C. V. C. . 1200 00

Lot No. 11, Hansackus addition L. H. C. . 1400 00

Lot No. 24, Main and Mulberry St. L. A. C. ..... . 2500 00

Lots 97 and 98, Hunter Lots, M. E. W. 400 00

Lots 30 and 31, Brickyard ..... 400 00

Out-lots...... 2300 00

Warehouse at deep-cut ...... 600 00

1340 acres in Barton Co., Mo..... 4000 00

240, Tama Co., la. . 1200 00

80, Henry Co., Ohio . 800 00

Personal property . 200 00 20000 00

$30475 60

Deduct amount expended 475 60

$30000 00

Distributive share to each of four heirs. 7500 00

Due L. A. Culver for his distributive share...... 7500 00

DueL. A. Culver from L. H. Culver. . . 174 60

Due L. A. Culver from C. Y. Culver . . 2704 30 10378 90

He receives homestead at appraisement..... 5000 00

He receives Lot No. 24 appraisement . 2500 00

He owes the estate as per schedule “A” . 2291 40

He receives for balance due 6 shares bank stock . . . 587 50 10378 90

This was the basis of the following family arrangement entered into two days later.

“This .agreement made and entered into, this 3d day of November, A. D., 1866, by and between C. V. Culver, Lucien H. Culver, L. A. Culver and Mary E. Webb, witnesseth:

That, whereas the said parties have for many years had mutual dealings interchangeably, and have this day made full and complete settlement so far as relates to L. A. Culver and find the following results:

C. V. Culver is indebted to L. A. Culver in the sum of $2,704.30 and Lucien H. Culver is indebted to L. A. Culver in the sum of $174.60 as is shown by the schedule of amount hereto annexed:

And whereas the said parties are the children and heirs at law of the late Dr. R. Culver, deceased, and on an estimate made this day, the whole value of the estate left by the said decedent is supposed to be about $30,000, and the distributive share of each heir $7,500:

And whereas it is found that the said L. A. Culver has withdrawn from said estate as a portion of his distributive share the sum of $2,291.40.

Now for the purpose of making a full and final settlement of all claims, or demands owing to the said L. A. Culver by either of the other parties or to either of the said other parties by the said L. A. Culver, and also for the purpose of setting aside to the said L. A. Culver, his full and equal portion of the said estate it is agreed as follows:

1. The said L. A. Culver agrees to convey on demand to Mary E. Culver hereinafter named the house and lot in Reno now occupied by him.

2. The said L. A. Culver also agrees to transfer to Mary E. Webb ten shares of the stock of the First National Bank of Logan which is to be chargeable to her as a payment made by C. V. and L. H. Culver of that amount on her distributive share of said estate; and also at any time to transfer to such party as either C. V. Culver or Lucien H. Culver shall hereafter direct twenty shares of said stock and pay to Mary E. Webb the dividends arising from said twenty shares of stock until such directions shall be given.

3. The said C. V. Culver, Lucien H. Culver and Mary E. Webb agree to release and do hereby release to the said L. A. Culver, his heirs and assigns the following parcels of land, to-wit:

The late homestead of the decedent aforesaid in the town of Logan, county of Hocking, and state of Ohio, containing about six acres more specifically described in a deed made by John B. Zimmerman and wife to the said decedent, dated February 6, 1841, and recorded, in said county, in Book F, page 208, and which was valued at $5,000 in the estimate of said estate, and also lot No. 24, in the town aforesaid, being the same set apart to the said L. A. Culver in the will of said decedent and valued in the foregoing estimate at $2,500.00.

4. The said L. A. Culver hereby releases to the said C. V. Culver, Lucien H. Culver and Mary E. Webb and their heirs and assigns all of the rest and residue of said estate, or any right to participate in any distribution of the same, and agrees to join in the execution of any deeds or conveyance of the same as from time to time may be required.

5. It is agreed and understood that any and all claims or demands owing by any of the aforesaid parties to L. A. Culver, or owing by him to any of .the said parties are hereby canceled and discharged without regard to the manner in which claims and demands arose or how they are evidenced.

6. Each of the parties .hereto, hereby agrees at any time on demand of the parties interested, to execute all such further receipts, releases, deeds, conveyances or other assurances of title as shall be necessary in order to more fully and completely to carry out the spirit and interest of this agreement.

7. MaryE. Culver, wife of the said C. Y. Culver; Cynthia B. Culver, wife of the said Lucien H. Culver; LucyH. Culver, wife of the said L. A. Culver, joining herein with their said husbands, assent to the terms of this agreement.

In testimony whereof the said parties named herein have executed this agreement in four parts, each of which are to be taken as originals.

C. Y. Culver, (seal)

Mary E. Culver, (seal)

Lucien H. Culver, (seal)

Cynthia B. Culver, (seal)

Lawrence A. Culver. (seal)

Lucy H. Culver, (seal)

Mary E. Webb, (seal)

It is hereby understood that the amount herein specified as due to L. A. Culver as follows:

From C. V. Culver .... $2704 30

From L. H. Culver .... 174 60 $2878 90

Are discharged as follows:

By the assumption of L. A. Culver’s indebtedness to the estate........ 2291 40

By stock of First National Bank, Logan...... 587 50 $2878 90

C. V. CULVER.”

We think this instrument effected such a division of the estate of R. Culver as was authorized by item eleven of his will. If instead of setting off to Lucien H. Culver, C. V. Culver and Mary E. Webb, jointly, the three-fourths of the estate to which they were entitled the share of each had been severed, and as was done with the share of L. A. Culver, set off to each separately, there would seem to be little ground to contend that it was not a final division of the estate. The period had arrived when a division could be made; the assets had been collected, debts and legacies satisfied, and the widow was dead. No obstacle intervened to prevent a final and complete distribution of the residue of the estate. The parties entitled to share in the distribution were of full age and competent to act. Whether the share of each should be set off in severalty, or whether the shares of two or more should be set off to them jointly, was a matter that concerned them alone. When this contract was executed the authority of L. A. Culver under the will, whether as executor or as trustee in respect of the real estate assigned to his brothers and sister was subordinate to their proprietary rights. They could have sold the estate thus assigned to them without his consent or even against his prohibition, and he would have been bound by this family compact to execute deeds to the purchaser.

It may be that by their sufferance he might have continued to exercise the powers conferred upon him by the will of the testator, and that conveyances subsequently made by him and his co-trustee under those powers would have conveyed a good title to the grantee. This result, however, would not follow because his power to act under the will continued, notwithstanding the family compact; but because being originally clothed with such power by the-will, an express or implied revocation, or termination of it secretly made by the acts of the beneficiaries under that instrument, would not be permitted to affect tona fide grantees for value.

The parties to this contract of distribution may, or may not have fully comprehended its scope and operation. One or two circumstances, however, that reflects strongly upon this question stands out with prominence in every stage of this peculiar transaction. One is the unlimited confidence reposed in each other by the children of Dr. Culver, the testator, and the strength of their devotion to the interests of the family as it was represented by the plaintiff in error. The other is perhaps but a corollary of the first one, and that is: That after this family contract was executed, November 3, 1866, one brother, Lucien H. Culver, lived until the year 1881, a period of fifteen years; the sister lived until 1885, nineteen years thereafter. The other brother is still living. Yet during all that long period of time, the plaintiff in error did not file any account of his transactions in the probate court nor was he required to file one there. If there was any serious doubt as to the effect to be given to the contract of November 3, 1866, the confidence reposed in the plaintiff in error together with this long delay would be entitled to considerable weight as a practical construction of its meaning and tending to show that his brothers and sisters were dealing with him personally.

' Still further: Even if this contract of November 3,1866, had not effected by its own force a division of the estate, its terms were such that, together with long delay, and the manner in which the brothers and sister dealt with each other in the matter, it would be obviously unjust to permit them to resort to a course of procedure which, would involve the rights of sureties on the bond of the executors. If Lucien H. Culver and the sister, Mary Ellen, were alive and urging this claim, the absence of any equity in their favor, as against the sureties on the bond of their brother. Lawrence A. Culver would clearly appear. They reposed full confidence in him, they permitted him to transact the affairs connected with the real estate that had been assigned to them by the terms of the contract as if he were an agent of their own creation and answerable to them only rather than an executor or trustee whose accounts were to be rendered to the probate court. They were of full age and competent to elect in which capacity he should act. After this long delay and in favor of the sureties they should be held to have elected to deal with him as an agent appointed by themselves, for the settlement of whose accounts they must resort to a court of general jurisdiction. The rights of the personal representatives of this brother and sister are in this respect identical with those that the brother and sister would possess if living and before the court.

Counsel urge with great force that if the plaintiff in error is liable to account for his transactions at all it is immaterial whether it is before the probate court or in the court of common pleas under its general jurisdiction. In so far as the judgment will affect him personally this contention may be true. But as we have seen, others, the sureties of the plaintiff in error who are not before the court, may be affected by the judgment. For, if without collusion a judgment should be rendered against him as executor or trustee under the will, these sureties would be bound by such judgment. If the judgment should be against him as an agent created by the parties these sureties would not be liable, for their undertaking related only to such acts as might be done by him under and by virtue of the will. These considerations apply equally to those who may be sureties on an appeal or supersedeas bond. These sureties undertake to answer for their principal only in the character in which the action against him is prosecuted.

The court of common pleas should have dismissed the proceedings.

Judgment reversed.


source: Caselaw Access Project

author: Spear, C. J.

license: Public Domain

text:
    Albright v. Meredith.

      Chattel mortgage — Conditional sale — Mortgage by vendee — Levy by original vendor subject to vendee's mortgage, when — Sections 791S-7S, Revised Statutes.

    1. In order to support a mortgage it is not necessary that the mortgagor shall be the absolute owner of the property mortgaged.
    2. One in possession of chattel property under a contract of conditional sale, who has paid a part of the purchase money, has acquired an interest in the property which may be mortgaged.
    3. A vendor of chattels by a conditional sale who has put the purchaser in possession and received a portion of the purchase money, may, upon default by the purchaser in subsequent payments, retake the goods by complying with the conditional sales act, section 7913-73, Revised Statutes, (S. & B.) as to tender of amount paid, etc. If, instead of such course, the vendor recovers judgment at law upon the unpaid installments of purchase money, and causes the goods to be seized in execution, such seizure will be regarded as an election to treat the property as belonging to the purchaser. And if, before levy, the purchaser has made a valid mortgage of the property to a third person, 3ueh mortgage will have precedence of the levy, and the mortgagee may maintain replevin for the goods against the officer holding the writ.
    (Decided March 22, 1898.)
    Error to the Circuit Court of Columbiana county.
    The action below was in replevin brought by George W. Meredith, defendant in error, against E. A. Albright, constable, plaintiff in error, before a justice of the peace, to recover possession of a cash register. Judgment was given for Meredith. On appeal, a like judgment was rendered by the court of common pleas, which was affirmed by the circuit court. A further statement of the case will be found in the opinion.

      A. H. Ola/rh, for plaintiff in error.

      ■ The question then is, in the main: Did the Cash Register Company lose its lien under its conditional sale contract by a failure to refile within the time allowed by law as against the chattel mortgage of the defendant in error? We think not. We assume, and claim, that the conditional sale contract, conditional as it was, to the effect that title was to remain in the seller and not to pass to the purchaser, there was as a matter of fact no title vested in Morrow that he could convey to Meredith by chattel mortgage or otherwise, and therefore it was not necessary for the Cash Register Company to refile its contract, and in this view we are sustained by the court of common pleas of Scioto county, a recent decision, in which this same National Cash Register Company was plaintiff and the Farmers National Bank, of Portsmouth, Ohio, was defendant. 31 Weekly Law Bulletin, 114.
    On sale of personal property, where right to receive payment before delivery is waived by vendor, and possession is given the vendee, and yet by express agreement, the title is to remain in the vendor until payment of price, such payment is strictly a condition precedent; and, until performance, the right of property is not vested in the vendee, and where it is agreed that title to chattels paid for in part only, the title shall not pass until full payment. The condition of payment is not waived by taking vendee’s notes for the price. Miller on Law and Conditional Sales, pages 60 and 61, and authorities there cited. 21 Am. and Eng. Encyclopedia, 636, et seq., and authorities cited.
    But it may be claimed that inasmuch as we sued Morrow for the balance due us, we have waived the conditions of our contract. We do not think so.
    • The fact that the seller sold goods, under an agreement that the title of the goods was to remain in him until full payment of the purchase price, sues for the balance unpaid, is not an election that the title shall vest at once in the buyer. 21 Am. and Eng. Encyclopedia, 638, citing 54 Hun. (N. Y.), 116; 55 Vt., 308.
    The National Register Company did not take possession of the cash register until after suit had been brought, judgment obtained and then only on execution being levied. It was rather a foreclosure of the vendor’s lien for the unpaid purchase money, and this was not taking possession of said cash register within the meaning of the act of May 4, 1885, which took effect July 1, 1885. Revised Statutes, 7913-72, 73. Sage v. Slentz, 23 Ohio St., 1; Sanders v. Rater <& Miller, 28 Ohio St., 630; Gall v. Seymour, 40 Ohio St., 670; Case Manufacturing Go. v. Garven, 45 Ohio St., 302, and cases; 46 Ohio St., 450.

      We contend that this was a conditional sale and that title to the property remained in the vendor until it was paid for. That filing of the contract was not only notice to the defendant in error, but the world, and in compliance with the statute, sections 7913-72.
    Por conditional sale, mortgage and notice. Case Mfg. Co. v. Garvin, 46 Ohio St., 289.
    It may be claimed, however, that the agreement between the Register Company and Morrow was in effect a chattel mortgage. This we deny, but suppose it was. We claim, and we think the facts show, that the defendant in error was not a tona fide purchaser; that is, he took his mortgage while the contract was still on file and therefore had notice of its existence. The fact that suit was brought for the balance due on the register would be actual notice to the defendant in error that the claim had not been paid. So that whatever rights he acquired, he acquired them with full knowledge of the prior rights of the National Cash Register Co. We think that the defendant in error did not act in good faith. 14 Ohio St., 488.
    An authority that sustains our contention in this case, is the case of the Huber Manufacturing Co. Y.Sweney et al., 57 Ohio St., 169; 7 Ohio St., 198; Day v. Mionsen, 14 Ohio St., 488.
    As to who may take advantage of an omission to file, etc., see Jones on Chattel Mortgages, sections 292 and 293, and authorities there cited.
    A chattel mortgage is valid without renewal as against a subsequent mortgage with actual notice. American Digest, 1894, pp. 656, par. 105. Reiderer v. Pfaff, (S. C.) 61 F., 872.
    A subsequent mortgagee, who becomes such before the expiration of the year from the filing of the first mortgage, cannot take advantage of the omission of the prior mortgagee to renew. Am. Dig., 1893, pp. 699, par. 100; Farmers & Mechanics-Bank v. Bank of Glen Elder, 26 Pac. Rep., 680 ; 46 Kan., 376; Hoioard v. Bank, 24 Pac. Neb., 983; 44 Kansas, 549; 50 Kansas, 420.
    A mortgage which has not been renewed does not become void if not refiled within the prescribed time as to one who purchased before the expiration, within which it should be refiled. Mix v. Wiswell, (Wis.) 54 N. W., 620.

      Walter B. Hill, for defendant in error.
    J. A. Morrow, Jr., having purchased the cash register on an executory contract and having paid part of the purchase price thereon, and having given. Ms promissory notes for the balance, had a mortgageable interest therein.
    It is not necessary that the mortgagor shall have the absolute and entire title to the property which is the subject-matter of his mortgage. A limited or special interest in property is sufficient to support a mortgage of it. Jones on Chattel Mortgages, section 114; citing’, 105 Mass., 225; 102 Mass., 445, 67 Me., 497.
    If one mortgages chattels to which he has no title, title afterwards acquired by him will inure to the mortgagee. Watkins v. Crenshaw, 1 Mo. App. Rep., 17; The American Lawyer, June, 1895, page 238; American Digest Annual, 1895, page 654, section 26; 59 Mo. App., 183, 1 Mo. App. Rep., 17.
    The National Cash Register Company lost its lien on the cash register as against creditors of Morrow by failing to refile with the township clerk within the thirty days prior to the 18th day of July, 1892, one year from the date of the original filing. 45 Ohio St., 625; Revised Statutes, 4155.
    By having the constable levy under execution upon the cash register with intention of selling, the National Cash Register Company waived and abandoned any and all interest they may otherwise have had a right to claim in the cash register by virtue of their conditional sale contract.
    Where the buyer of goods under a conditional sale gives notes for the price, and is put in possession, the title to pass when the notes are paid, the seller has the option, on default of the payment of the notes, to sue the buyer thereon for the contract price, or to retake the goods, and sue for breach of contract; and by retaking the goods he exercises his option, and the notes and mortgages given to secure them are cancelled. Earle v. Robinson, (Sup.) 33 N. Y. S., 606; Amer. Dig. Annual, 1895, page 4135, section 433; 12 Mise. Rep., 536; Seanor v. McLaughlin, (Pa. Sup.) 30 A. 717; Am. Dig’est Annual, 1895, page 4134; 165 Pa. St., 150; 35 W. N. C., 455.
    Where the plaintiff sold goods on condition that the title should not pass until such goods were paid for, and took notes for the price, its election to enforce payment of said notes was a bar to an action for the recovery of the goods. Parlin to Orendorff Go. v. Harrell, (Tex. Civ. App.) 27 S.W., 1084; Am. Digest, 1895, page 4135, sections 444-445.
    This action is between Albright as constable, and Meredith as mortgagee. The National Cash Register Company is not a party to the proceeding. G. W. Meredith had a valid mortgage upon the cash register.
    The Cash Register Company had not refiled its contract as required by statute, but had abandoned its claim to the cash register under its conditional sale contract. It recognized the cash register as the property of J. A. Morrow, Jr., and elected to recover under execution and levy, as on an ordinary debt.
   Spear, C. J.

The essential facts are as follows:

May 28, 1891, one J. A. Morrow, Jr., purchased a cash register from the National Cash Register Company for a consideration of $175, on a conditional sale contract, to be paid for by installments of $15 each, which were represented by promissory notes. July 18, following, a copy of the contract was duly filed in the office of the clerk of the township where Morrow resided, which contract remained on file.

December 10, 1891, Morrow duly executed and delivered to Meredith a valid chattel mortgage on the register, which was duly filed in the office of the township clerk on December 14, following.

June 11, 1892, the National Cash Register Company commenced an action before a justice of the peace, against Morrow, to recover on such of the notes as then remained unpaid. The contract and notes were attached to the bill of particulars, and made part of it, and on June 16, a judgment in its favor for $108, and costs, was rendered. August 29, following, an execution issued to Albright, constable. He thereupon levied the same upon the cash register, and took it into his possession and held it until it was taken from him by the replevin process broug-ht in the action below.

The chattel mortgage to Meredith was in full force at the time of the bringing of the action against Morrow by the company, and at the time judgment was taken, execution issued and levy made.

No tender was made by the company to Morrow of any part of the installments of the purchase money which he had paid.

The issue is between Albright, the constable, and Meredith, the mortgagee. It is, which was entitled to the possession of the cash register ? The one stands upon his levy of the execution; the other upon his mortgage. No question can now be made as to the validity of the mortgage, for the agreed facts show that it was valid. That is, it was valid provided Morrow had an interest in the register which could be the subject of mortgage. And this is not open to question, for he had paid a portion of the purchase money. This gave him an interest which he might mortgage. It is not necessary that the mortgagor shall have the entire title ; a limited, or special interest in property, is sufficient to support a mortgage of it. And that this interest is acquired by conditional sale does not alter the case. Jones on Chattel Mortgages, 114; Crompton v. Pratt, 105 Mass., 255; Day v. Bassett, 102 Mass., 445. This mortgage, therefore, was good as to all the world save the vendor, and good against it save only when it asserted its right in accordance with law.

Did the company assert its rights as vendor in accordance with law ? We think not. Its rights as vendor were subject to the statute regulating conditional sales. Section 7913-73, Revised Statutes (S. & B.). That act provides: “Section2. Whenever such property is sold * * * it shall be unlawful for the vendor to take possession of said property without tendering or refunding to the purchaser * * * the sum or sums of money so paid after deducting therefrom a reasonable compensation for the use .of such property, which shall in no case exceed fifty per cent, of the amount so paid,” etc., etc. If, therefore, the company desired to avail itself of its right to subject the register to the payment of the balance due from Morrow, a tender in compliance with the terms of the statute, was necessary, or, perhaps it could have resorted to a’ foreclosure in a court of competent jurisdiction. But, disregarding these methods, the company proceeded, by its judgment and execution, against Morrow’s interest in the register, and to seize it and take possession of it in direct violation of the terms of the statute. This proceeding was, in law, an election to treat the register as Morrow’s property, and placed the company in the attitude, as regards that article as well as liis other property, of a general creditor. The rights of such would necessarily be subject to any prior right acquired through the valid acts of Morrow. And, inasmuch as all the interest of Morrow was covered by his mortgage to Meredith, the latter had the right of possession while his mortgage remained unsatisfied. Thomason v. Lewis, 103 Ala., 429; Seanor v. McLaughlin, 165 Pa. State, 150; Bank v. Thomas, 69 Tex., 237.

There is no error in the judgments below, and they will be

Affirmed.


text:
    Follett v. Alexander, et al.
    “ Irregularity in obtaining judgment,” what is — Section 5357, Revised Statutes, construed — Before vacating judgment Court must adjudge a valid defense exists.

    1. The rendition of judgment for plaintiff, as upon default, where a demurrer has been duly filed to the petition and remains undisposed of, is an “ irregularity in obtaining a judgment,” for which the court may, upon motion and a proper showing, vacate the judgment.
    2. A motion setting forth the above facts is not a motion to vacate because the judgment was rendered “ before the action regularly stood for trial, ” within the meaning of section 5357, Revised Statutes, and hence is not required to be made within “ the first three days of the succeeding term.”
    3. Upon the hearing of such motion, it is error for the court to enter a judgment of vacation before it has adjudged that there is a valid defense to the action.
    (Decided March 22, 1898.)
    ERROR to the Circuit Court of Franklin county.
    The plaintiff sued the defendants in the court of common pleas, to recover under that section of the gambling act which gives to the wife a cause of action for money lost by her husband at gaming. Her petition was filed December 23, 1893. January 20, 1894, a demurrer was filed by defendants, on the ground that it appeared on tbe face of the petition that the alleged causes of action were barred by the statute of limitations. A memorandum in support of the demurrer was filed with it.
    At the September term, 1894, to wit: October 10, 1894, the cause was submitted to the court, a jury being waived, and the court, finding that the defendants were each' in default for answer or demurrer, upon consideration, found for the plaintiff and rendered judgment in her favor and against defendants, for $879.05, and costs.
    At the April term, 1895, to-wit: June 29, 1895, defendants filed a motion to set aside the default judgment on the ground that the same was taken without notice to the defendants, or their counsel, irregularly, improperly, and in violation of the rules of court. The motion averred that no entry was submitted to counsel for defendants; a demurrer duly filed with memorandum in support, remained undisposed of, the same never having been pressed for hearing; the cause was never ready for hearing upon the facts ; never noted for trial; never placed upon the bar lists from which assignments are made up, nor ever put upon any of the printed assignments.
    On July 11, 1895, the motion was heard, and the court having found that plaintiff’s attorney had received due notice of the filing of the motion, and that the motion was well taken, sustained it, and adjudged that the “ judgment be and the same is hereby vacated, set aside and held for naught.” This judgment of vacation was affirmed by the circuit court and it is to procure a reversal of the judgment of affirmance, and of the' judgment of

      vacation in the common pleas, and the reinstatement of the original judgment, that this proceeding in error is brought.

      Charles Follett and T. F. Powell, for plaintiff in error,
    cited the following statutes and cases: Sections 5123, 5124, 5125, 5357, 5358, 5360, Revised Statutes; 36 Ohio St., 639; 49 Ohio St., 298; Hittick v. Wilson, 12 Ohio St., 136; Huntington v. Finch & Co., 3 Ohio St., 445; Frazier v. Williams et al., 24 Ohio St., 625; Watson et al. v.' Paine, 25 Ohio St., 340 ; Braden v. Braden, 46 Ohio St., 639.

      T. J. Keating, for defendants in error,
    cited the following statutes and cases : Gilliland v. Sellers, Admr., 2 Ohio St., 223; Kent v. Bierce, 6 Ohio St., 336; Wood Practice Evidence, 624; 12 Ind., 448; 9 Ohio St., 511; Cooper v. Rowley, 29 Ohio St., 547; Carens v. Knight, 17 Ohio St., 69; Bank v. Greene, 40 Ohio St., 431; Elliott on Appellate Procedure, sections 470, 658, 674, 672, 679.
   By the Court :

It is proper to say that no charge of bad faith is made against counsel who obtained the judgment. Other cases of like character were pending between the same parties, and it is probable that the' demurrer and memorandum had been placed with the files in one of the other cases, and were, for that reason, overlooked. Nor was there failure to act promptly on the part of counsel for defendants. They filed the motion immediately upon learning that the default judgment had been taken.

The judgment of vacation is attacked upon two grounds: 1. That the motion came too late; if available at any time it should have been filed not later than the third day of the succeeding (January) term. 2. That the judgment of vacation could not be lawfully entered until the court had first found and adjudged that a valid defense to the action had been shown.

Other questions are argued, but the record eliminates them from consideration.

The case turns, therefore, upon whether or not the motion was filed in time, and whether the common pleas had -power to vacate before finding that a valid defense had been shown.

Section 5357, Revised Statutes, provides : “The proceedings to correct mistakes or omissions of the clerk, or irregularity in obtaining a judgment or order, shall be by motion, upon reasonable notice to the adverse party or his attorney in the action; but the motion to vacate a judgment because of its rendition before the action regularly stood for trial, can be made only in the first three days of the succeeding term.”

It is manifest that the ground of the motion was irregularity in obtaining the default judgment, for the regular course of practice would require that the demurrer be disposed of before judgment on the petition, and this without reference to any local rules of practice, as to pressing the demurrer for hearing, noting the case for trial, or placing it upon a bar list, or what not. And the irregularity would be just as patent whether the court or counsel knew of the filing of the demurrer or not. It seems equally manifest that the ground of the motion, that is, the real gist of it, was not because of the rendition of judgment before the action regularly stood for trial, for the irregularity did not consist in taking up the case for disposition of the issues of law raised by the demurrer out of its order with respect to other cases on the docket or at too early a date. It was quite within the discretion of the court to dispose of the demurrer at any convenient time after it had been filed, and, if overruled, and no further pleading’ was desired, to award judgment. The real objection, therefore, notwithstanding the recitals of fact in the motion, is not that the court undertook to act upon the case too soon, but that the action which it did take was irregular in substance as well as in form. It follows that the motion was not required to be filed within the first three days of the succeeding term, and was within proper time.

But if the action of the common pleas was clearly irregular in the first instance it was not less clearly erroneous in the second. The rule is two well established to need argument or illustration that, after deciding upon the grounds to vacate, the judgment shall not be vacated ‘ ‘ Until it is adjudged that there is a valid defense to the action. ’ ’ Section 5S60, Revised Statutes ; Frazier v. Williams, 24 Ohio St., 625; Watson v. Paine, 25 Ohio St., 340; Bank v. Slemmons, 34 Ohio St., 143. It is suggested that the presence of the demurrer was a sufficient showing of defense. We think not. At all events the court did not attempt even to act upon that.

The judgment of the circuit court affirming that of the common pleas, and the judgment of that court vacating the judgment of October 10, 1894, will be reversed, and the cause remanded to the latter court for further proceedings according to law on the motion.

Reversed.


author: Burket, J.

text:
    First National Bank of Belmont v. First National Bank of Barnesville.

      Bank Check — Drawee held to know signature of drawer — Effect of “ indorsement for collection

    1. The general rule that the drawee of a check, draft, or bill of exchange, is held to know the signature of the drawer, and makes payment at his own peril, has not been modified in this state, except by local custom as held in Ellis and Morton v. Ohio Life Insurance and Trust Company, 4 Ohio St., 628.
    2. An indorsement of a check, draft, or bill of exchange, ‘1 for collection, ” by one other than the payee, does not guarantee that the name of the drawer is genuine.
    3. Such indorsement is a guaranty that the names of the indorsers, then on the paper, are genuine.
    4. An indorsement ‘ ‘ for collection, ’ ’ is notice to the drawee that the indorsee is not the owner of the paper, but only the agent of the owner authorized to receive payment for him.
    5. Presentation for payment of a check by a bank which is the indorsee “for collection,” does not justify the drawee bank in relaxing any of its vigilance in determining whether or not the name of the drawer is genuine.
    6. Where the drawer of a check has no account individually with the bank upon which the check is drawn, but has an account there as administrator, dr in some other trust capacity, it is wrong for the bank to pay the check and charge it to the trust account.
    7. The bank of Belmont purchased a check drawn on the bank of Barnesville, from the payee thereof, who was known to the cashier, and at his request the cashier wrote the payee’s name on the back of the check as a blank indorsement. The cashier then indorsed the check ‘ ‘ for collection, ’ ’ and forwarded it to its correspondent, which also indorsed it “for collection,” and presented it to the drawee bank, which paid it, and charged it to the account of the drawer as administrator, as he had no individual account with the bank. About three months thereafter the check was found to be a forgery, and the drawee bank caused it to be duly protested, and gave notice to the Belmont bank, and demanded repayment of the money. Held: That the drawee bank was bound to know the signature of its depositor, and was negligent in charging the check to his account as administrator, and that it had no right to recover the money.
    (Decided March 29, 1898.)

      Error to the Circuit Court of Belmont county.
    A jury was waived, and the case submitted to the court upon the amended petition and answer thereto in the court of common pleas. Disregarding technicalities, the amended petition and answer concede the facts to be as follows: On the 19th day of June, 1893, during banking hours, Elwood Horner presented to the First National Bank of Belmont a check for one hundred and five dollars purporting to be drawn by J. W. Horner on the First National Bank of Barnesville. At the request of Elwood Horner, the payee, the cashier of the Belmont bank wrote Mr. Horner’s name on the back of the check, and in the usual course of business gave him one hundred and five dollars in cash for the check. The Belmont bank then in the usual course of business indorsed the check for collection, and sent it to the Peoples National Bank of Barnesville, and that bank also in the usual course of business, indorsed it for collection, and presented it to the drawee, The First National Bank of Barnesville, and received payment during banking hours in full on June 21, 1893.
    The following is a copy of the check with all indorsements :
    “No............ Barnesville, June 19, 1893.
    First National Bank, pay to the order of Elwood Horner one hundred and five dollars.
    $105.00 J. W. Horner.”
    Endorsed: ‘ ‘ Elwood Horner. For collection account of First National Bank, Belmont, Ohio, William Kinney, cashier. For collection for account of Peoples National Bank, Barnesville, Ohio, A. E. Dent, cashier.”

      J. W. Horner, individually, had no account with the First National Bank of Barnesville, but had an account there as administrator, and the bank charged the check to his administrator account. Upon settlement and balancing his pass-book on October 6, 1893, J. W. Horner pronounced the cheek a forgery, and refused to allow it in his settlement with the bank. Thereupon the First National Bank of Barnesville caused the check to be duly protested on the 9th day of October, 1893, and caused notice to be served by due course of mail on the Belmont bank that the check was a forgery, and demanded payment of the cheek from that bank.
    About the first of October, 1893, said Elwood Horner died, leaving an estate wholly insolvent, of which facts the Belmont bank had knowledge when it received the notice of protest. None of the banks had any knowledge that the cheek was a forgery, and all believed it to be genuine.
    Upon these facts the common pleas court rendered judgment in favor of the Belmont bank, defendant below. The circuit court reversed the j udgment, and rendered judgment against the Belmont bank, and in favor of the First National Bank of Barnesville for the full amount of the check with interest and costs.
    Thereupon the Belmont bank filed its petition in error in this court, seeking to reverse the judgment of the circuit court, and asking an affirmance of the judgment of the common pleas.

      John Pollock and N. K. Kennan: for plaintiff in error.
    J. W. Horner was the customer of the Barnes-ville bank, the drawee of the check. The Barnes-ville bank was bound to know the signature of its customer, J. W. Horner. Price v. Neal, 3 Burr, 1355; JJ. 8. Bank v. Bank of Georgia, 10 Wheat, 333; National Park Bank v. Ninth National Bank, 46 N. Y., 77; Bank of 8t. Albans v. Fcmners, etc., Bank, 10 Vt., 141; Levy v. U. 8. Bank 4 Dali., 234; Commercial, etc., Bank v. First National Bank, 30 Md., 11; First National Bank v. Yost, 34 N. Y., S. R., 180; Deposit Bank v. Fayette Bank, 90 Ky., 10; First National Bank v. Northioestern National Bank, 111., 26 L. R. A., 289.
    The Belmont bank placed a restrictive indorse ment on the check, namely: ‘ ‘ For collection. ’ ’ Such restrictive indorsement does not guarantee the signature of the drawer as between indorser and drawee so as to relieve the latter of its obligation to know such signature. Northwestern National Bank v. Bank of Commerce, Mo., 15 L. R. A., 102; Germania Bank v. Boutell et al., Minn., 27 L. R. A., 635.

      Petty (& Smith, for defendant in error.
    The answer to the amended petition admits that William Kinney, the cashier of the First National Bank of Belmont, when said check was presented for payment, indorsed the name of Elwood Horner, the payee, on the check, and then said bank of Belmont placed its own indorsement on the check, and put the same in circulation by sending it to the Peoples National Bank of Barnesville, instead of sending it directly to the drawee. The transaction was in the nature of a purchase of the paper by the First National Bank of Belmont, and the proceeds of the check were then, in fact, coming to the bank of Belmont. Fwst National Bank of Crawfordsville v. Indiana National Bank of La

      Fayette, (Ind. App.) 30 N. E. Reporter, page 808; Peoples Bank v. Franklin Bank, 8 Amer. State, 884; 88 Tennessee, 299.
    Where a loss must be borne by one of two parties alike innocent of a forgery can be traced to the neglect or fault of either, it is reasonable that it should be borne by him, even though innocent of any intentional fraud, through whos'e means it has succeeded. Bank of Danvers v. Bank of Salem, 21 Amer. State, 450; 151 Mass., 280 ; Gloucester Bank v. Salem Bank, 17 Mass., 33 ; National Bank of N Amer. v. Bangs, 8 Amer. Report, 349; 106 Mass., 441; Selser v. Brock, 3 Ohio St., 302 ; Fullerton v. Sturgess,4 Ohio St., 530 ; Insurance Company v. Fshelman, 30 Ohio St., 659.
    To entitle the holder to retain money obtained by mistake upon a forged instrument, he must occupy the vantage ground, by putting the drawee alone in the wrong, etc. Filis c& Morton v. Ohio Life Ins. and Trust Co., 4 Ohio St., 662.
    As to notice and demand within a reasonable time after the discovery of the forgery. Note and authorities cited under case of Peoples Bank v. Franklin Bank, 17 Amer. State, page 899.
    The claim of plaintiff in error that notice was unreasonably delayed is not tenable. Third National Bank v. Merchants National Bank, 27 N. Y. S., 1070; 76 Hun., 475; Indiana National Bank v. Mrst National Bank, (Ind. App.) 36 N. E., 382.
   Burket, J.

Since the case of Price v. Neal, 3 Burr., 1354, decided by Lord Mansfield in 1762, the general rule has been and is, that when the drawee of a check or bill pays the same to a bona fide holder, such drawee cannot recover the money back upon discovering such check or bill to be a forgery. The drawee is presumed to know the signature of the drawer, and if when the check or bill is presented to the drawee for payment, he pays the same, and it afterwards turns out to be a forgery, he cannot recover the money back from the person to whom he paid it. When the drawee is a bank, there is a much stronger reason for holding it to know the signature of its depositors and customers, than in the ease of a private individual, because banks keep a book in which are preserved the genuine signatures of their depositors, customers and correspondents.

That the general rule is as above stated, is shown by the following authorities : National Park Bank v. Ninth National Bank, 46 N. Y., 77; 7th Am. R., 310; Smith v. Mercer, 6 Taunt., 76; Wilkinson v. Johnson, 3 B. & C., 428; National Bank of Commerce v. National Mechanics Bank, 55 N. Y., 211; 14 Am. R., 232; Frank v. Chemical National Bank, 84 N. Y., 209; 38 Am. R., 501; Levy v. Bank of U. S., 4 Dall., 234; Morse on Banks and Banking, 3rd Ed., 463; 2 Daniels on Negotiable Instruments, 3d Ed., sections 1359 and 1655; Northwestern National Bank of Chicago v. Bank of Commerce of Kansas City, 107 Mo., 402; 15 L. R. A., 102; Commercial and Farmers National Bank v. First National Bank, 30 Maryland, 11; Deposit Bank of Georgetown v. Fayette National Bank, 90 Kentucky, 10; National Bank of Danvers v. First Nationl Bank of Salem, 151 Mass., 280; 21 Am. St. Rep., 450 ; National Park Bank of New York v. Seaboard Bank, 114 N. Y., 28; 11 Am. St. Rep., 612; 5 Am. and Eng. Enc. of Law, 2 Ed., 1071; Ellis & Morton v. Ohio Life Lnsurance and Trust Co., 4 Ohio St., 628.

„ This last case fully recognizes the general rule, but the majority of the court, two judges dissenting, held that as there was a local custom among banks at Cincinnati to the effect that before purchasing bills or cheeks drawn upon other banks in that city, that the purchasing bank should have the identity of the person offering to dispose of the paper fully shown, and make careful inquiry as to his right to the paper, and as to its being genuine, and that the purchasing bank in that case, having neglected the customary precautions, was guilty of such negligence as to make it liable to pay back the money received on the forged bills. The court was careful to say that it was dealing only with the case then under consideration; and the right to recover back the money in that case is founded upon the local custom and the general rule is not modified further, than to hold that in view of the local custom, known to both banks, the purchasing bank was guilty of such negligence in taking the* bills from an unidentified stranger, as to render it liable to pay back the money when the bills turned out to be forgeries.

It is urged, that as the check was presented for payment to the drawee bank, by another bank in good standing, the drawee bank had a right to presume that the check was all right, and relying upon such presumption, it was thereby thrown off its guard, and was less careful in scrutinizing the signature to the check, than if the same had been presented at its counter for payment by an individual. A holding to this effect has been made in a few cases wherein the indorsements were unrestricted, but when the indorsement is “for collection,” or “for account of,” it is notice to the drawee that the bank presenting the check or bill for payment is not the owner, but only the agent of the owner, and that the money is to be remitted to the owner, back through the same channel through which the check or bill was received by the collecting bank. In such cases the collecting bank acts as the agent, or servant of the owner, and the drawee bank is not justified in relaxing its vigilance.

Some years ago the practice of indorsing checks “for collection,” or “for account of,” had become almost universal, and when it was decided in the above cases of National Park Bank of New York v. Seaboard Bank and Northwestern National Bank of Chicago v. Bank of Commerce of Kansas City, that the drawee bank could not recover back the money, in the one case from the collecting bank, nor in the other from the bank owning the draft, it startled the banks located in large cities, and awakened them to the dangers attending the payment' of such drafts or bills, and the result was that in the year 1896, the clearing house in the city of New York adopted a rule to the effect thai its members should not send through the exchanges any paper having 'any qualified or restrictive indorsements, such as “for collection,” or “for account of,” unless all indorsements were guaranteed by the bank sending such paper. This' action was soon followed by the clearing houses in other cities, and in some of them all indorsements are required to be either in blank, or ‘ ‘pay to-- or order. ” By this action of the clearing houses, indorsements “for collection,” or “for account of,” have fallen into disuse, and the banking business of the country is now done, almost universally, upon unrestricted indorsements. The decisions of the courts as to the rights and liabilities of the parties to paper with ■unrestricted indorsements thereon, vary somewhat in different states, but in this state, the general rule that the drawee bank is bound to know the signature of the drawer, has not been modified, further than as permitted by local custom, as in the Ohio Life Insurance and Trust Co. case, above cited.

It is urged that the Belmont bank having indorsed the check, thereby guaranteed that the signatures of the drawer and indorsers were genuine, and some cases are cited to that effect. Peoples Bank v. Franklin Bank, 88 Tenn., 299; 17 Am. St. Rep., 884; First National Bank of Danvers v. First National Bank of Salem, 151 Mass., 280; 21 Am. St. Rep., 450.

Other cases hold, that an indorser does not guarantee that the name of the drawer is genuine, but that the drawee must determine that for himself, and at his own peril. Germania Bank of Minneapolis v. Boutelle, 60 Minn., 189; 27 L. R. A., 635, and cases there cited.

In the cases in which it has been held that the indorsement is a guaranty, to the effect that the name of the drawer is genuine, the indorsements were unrestricted, and therefore indicated an absolute transfer, and sale of the paper. But when the indorsement is for collection only, as in this case, it indicates on its face, that the indorser remains the owner of the paper, and that his successive indorsees are only his agents for the sole purpose of collecting the paper, and remitting the proceeds to him. Such a restricted indorsement does not authorize a subsequent indorsee to negotiate the paper. His only power is to collect it, and the drawee bank is bound by the notice in the •indorsement. Such an indorsement is not a guaranty that the name of the drawer is genuine, but only that the names of the indorsers then on the paper are genuine. Mechanics Bank v. Valley Packing Company, 70 Mo., 643; 4 Mo. Appeal Reports, 200; Northwestern National Bank of Chicago v. Bank of Commerce of Kansas City, 107 Mo., 402; 15 L. R. A., 102.

In the case now under consideration the drawer’s name was a forgery, but the name of the payee indorsed on the check was genuine, having been written by the cashier at the request of the payee.

It has been urged that if the payee had been required by the cashier to write his name upon the check, that it might have shown that his name in the body of the check had been written by himself, and thus lead to a detection of the forgery. But in the above case of. First National Bank of Danvers v. First National Bank of Salem, the payee indorsed the cheek, and the handwriting was the same in both names, payee and indorser, and yet the forgery was not thereby detected, and the court attaches no importance to the fact in its decision of the case. In that case, and in the above ' case in the 4 Ohio St., 628, and in nearly all the cases in which the money has been recovered back, the bank purchasing the check or bill, took it from an unidentified strang’er, and this has often, though not always, been held to be such negligence as would authorize a recovery of the money. But in the case at bar, the facts do not show Elwood Horner to have been a stranger to the cashier of the Belmont bank, because as soon as he was notified of the forgery, he pointed out that Mr. Horner had died only a few days before, and that his estate was wholly insolvent. He was therefore known, and required no identification, and the cases which turn upon the unidentified stranger, have no application to this case.

Again, it is conceded that J. W. Horner had no individual account with the First National Bank of Barnesville, the drawee, and that the bank charged the check to his account as administrator. This was not only irregular, but wrong. The bank should have refused payment, and allowed the check to go to protest; or if it desired to favor Mr. Horner, it should have notified him that his check was at the bank, and no funds with which to pay the same. Had this been done, the forgery would have been discovered at once, and notice would have been given to the Belmont bank, and that bank would then have had recourse on Elwood Horner, who indorsed and sold the check. Whether he was then solvent or not does not appear, and is of no importance. The bank would have had its recourse against him within three or four days after it parted with its money, and such recourse is regarded in commercial transactions as a valuable right; and of this right the Belmont bank was deprived by the acts of the Barnesville bank in not detecting that the name of its depositor was forged to the check, and in negligently charging it to his account as administrator.

It is therefore clear that the Belmont bank was guilty of no negligence, and that the loss occurred by reason of the acts of The First National Bank of Barnesville, and that it would be unconscionable to permit it to recover the money back from the Belmont bank.

The judgment of the circuit court is therefore reversed, and that of the common pleas affirmed.

Judgment accordingly.

Minshall, J., dissents.


author: Williams, J.

text:
    Polley and Hicks, Admrs., Etc., v. Elizabeth A. Hicks.

      Gift — Delivery to donee of bank deposit book — Is valid gift of the deposits, when.

    A delivery to a donee, of a deposit book issued by a savings bank containing entries of deposits to tbe credit of tbe donor, witb the intention to give tbe donee tbe deposits represented by the book, and accompanied with appropriate words of gift, is a sufficient delivery to constitute a valid gift of such deposits, without assignment or transfer in writing.
    (Decided March 29, 1898.)
    Error to the Circuit Court of Cuyahoga county.
    Suit was brought in the court of common pleas of Cuyahoga county by Elizabeth A. Hicks against George Polley and John A. Hicks as administrators of the estate of Morgan Polley deceased, and individually, to recover $1,816.50, which the plaintiff in her petition alleges became her property by gift from Morgan Polley, and was, after his decease, obtained and converted by the defendants to their own use. The gift, it is alleged, was made by the delivery to the plaintiff of a bank book issued by a Cleveland Savings Bank showing deposits to the credit of the donor in the amount sued for. Issue was joined by George Polley upon the allegations of the gift; and, a trial resulted in a verdict and judgment for the plaintiff which was affirmed by the circuit court. George Polley prosecutes error here. Some questions are made concerning the state of tbe record and a defect of parties, but we do not deem it necessary to report those questions. The facts constituting the alleged gift are stated in the opinion.

      Charles G. Canfield and Henry G. Ranney, for plaintiffs in error.

      Johnson <& Hackney, for defendant in error.
   Williams, J.

The facts which the evidence fairly tends to prove, and which, therefore, in view of the verdict and judgment must be regarded as having been established to the satisfaction of the jury and the courts whose duty it was to pass upon its weight, are substantially as follows : Morgan Polley died intestate in the city of Cleveland, December 2, 1892, and the defendants below were appointed administrators of his estate. A few days before his death, Morgan Polley, having then in his possession a bank book issued to him by a Cleveland Savings Bank showing deposits by him to the amount of eighteen hundred dollars and over, delivered the book to the plaintiff, accompanying the delivery with the declaration that he gave her the book and the money it represented, as her property. This was done with the intention to thereby make an absolute gift of the book and money to the plaintiff. At that time Morgan Polley was ill of the malady of which he afterward died, was conscious of his approaching death, and of sound mind. His apparent motive in making the gift was, that an engagement of marriage existed between him and the plaintiff, and she was constant in her care of him during his illness. She accepted the gift when it was made, received the bank book into her possession, and retained its actual custody until some time after the death of Morgan Polley, when, without her consent, the defendants obtained possession of it, and George Polley, on its presentation to the bank, received the whole amount appearing to be due upon it, and claims the right to hold and administer the money as assets of Morgan Polley’s estate. The deposit book, under the regulations of the bank, was of such character that the amount on deposit, or any part of it, could be drawn upon the presentation of the book at the bank by the holder, without check or order from the depositor, and it could not be drawn without the production of the book; and any payment made upon a book of that kind was entered on it by the bank when made, so that it always showed the actual amount which the bank owed upon it.

If there was a sufficient delivery to effectuate the intended gift, there was present every element of a valid donatio causa mortis, as well as of a gift inter vivos. In support of their contention that the delivery was insufficient, counsel for the plaintiffs in error cite the cases of Hamor v. Moore's Admr., 8 Ohio St,, 239; Starr v. Starr, 9 Ohio St., 75; Simmons v. Savings Society, 31 Ohio St., 457; Gano v. Fisk, 43 Ohio St.. 462; and Flanders v. Blandy, 45 Ohio St., 108. But the question we have here is different from that involved in any of those cases. In the last two of them there was no actual delivery to the donee of the subject of the alleged gift — in one case government bonds, and in the other choses in action due the donor. In Simmons v. Savings Society, the gift was of the drawer’s check payable to the donee, which was never accepted by the drawee, and was revoked before its presentation. It was subject to revocation, and there was no liability of the drawee upon it. In the first two of the cases referred to, the things delivered were the donor’s own promissory notes payable to the donees. They were sought to be made available as a gift of the money which the donors promised to pay; but, the promises being without consideration, they amounted to no more than mere promises to give the money, .and could not be enforced. In the case before us, the deposit book which Morgan Polley gave to the plaintiff was issued to him by the Savings Bank as evidence of its indebtedness to him, and was the only evidence thereof furnished in such cases. And, as no part of the deposit could be withdrawn without presentation of the book, upon which, at the time, the entries of the withdrawals are made by the bank, this book, at the time of its delivery to the plaintiff showed the exact amount which the bank then owed upon it, and was complete evidence of the bank’s obligation to pay that amount to the depositor, or whoever should become its lawful owner, when duly presented at the bank. The question then which this case presents is, whether there can be a valid gift inter vivos, or causa mortis, of a chose in action by its delivery to the donee without assignment in writing by the donor. We .are not aware of any reported decision of this court in which the question has been considered. Elsewhere such gifts are sustained by the great weight of authority, and almost with unanimity. In Thornton on Gifts and Advancements, section 273, that author says, “it may be stated that any written obligation is the subject of gift, without indorsement or assignment.” Not only notes, bonds, mortgages, etc., but “all evidences of indebtedness which may be regarded as representing the debt, whether with or without indorsement, are the subject of a donatio mortis causa, and of course of inter vivos.” And that doctrine is maintained, as the author shows, in a large number of the American States, and by the English courts. In 2 Redfield on Wills, (Ed. 1866) 312, 313, it is laid down as the established rule, that “notes and bills not negotiated so as to pass by delivery, and also promissory notes not negotiable, bonds, mortgages, policies of insurance, and all other evidences of indebtedness which may be regarded as representing the debt, may by a parol gift, and delivery of the paper by which the debt is evidenced, either with, or without written assignment or indorsement, constitute a good gift mortis causa."

There seems never to have been serious doubt of the validity of parol gifts of specialties negotiable by delivery ; nor much controversy that a valid gift could be made by the delivery of instruments payable to bearer ; but it was held in some early English cases that, as delivery without indorsement of notes payable to order, and of nonnegotiable obligations, passed only the equitable title, a valid gift could not be made by such delivery. This holding rested upon the theory that it was necessai’y to resort to equity to compel the donor, or his representative, to transfer the legal title, and that equity would not lend assistance to compel the completion of a mere voluntary gift. This reason ceased to be of force when the donee became entitled to use the name of the donor, or his personal representative, in a suit to enforce collection of the instrument ; and, since all suits at law, as well as in equity, may be brought in the name of the real party in interest, the rule may be regarded as obsolete. As said in Thornton on Gifts, section 270, ‘ ‘The old rule that impeded the holding of such gifts as valid because the donee could not maintain an action thereon, is swept away by the more enlightened rule which compels the personal representative of the donor upon being indemnified for whatever costs he may be compelled to pay, to permit the action to be brought in his name; or by the equitable rule enforced by statutes or codes that the real party in interest may bring an action upon a note he holds, whether it was indorsed to him or not.”

The right to give is as clearly incident to the right of property, as the right to sell; and ehoses in action are as much within the scope of this principle as lands and chattels ; and hence, a delivery by way of gift, of an instrument evidencing a debt, without written indorsement by the donor, as effectually transfers the beneficial interest in the property to the donee, as would such delivery by way of assignment for value. It was said by the Master of the Rolls, in Veal v. Veal, 27 Bevan, 303, that it was a “much more healthy state of the law that the validity of such a gift should not depend on whether the donor had written his name on the back of the bills or not, if it be clear that he intended to give them.” The indorsement of the donor’s name on the instrument is merely evidence of his intention to make a gift, which may be proven aside from such indorsement. In Grover v. Grover, 24 Pick., 261-263, the Supreme Court of Massachusetts in answering an objection that no valid gift of a chose in action could be made without written assignment said, that, “as a good and effectual equitable assignment of a chose in action may be made by parol, and' as courts of law take notice of and give effect to such assignments, there seems to be no good foundation for the objection. It is true that the cases, which are numerous, in which such equitable assignments have been supported, are founded on assignments for a valuable consideration; but there is little, if any, distinction in this respect, between contracts and gifts inter vivos, the latter indeed, when made perfect by delivery of the thing’s given, are executed contracts. 2 Kent’s Com., (3d Ed.) 438. By delivery and acceptance the title passes, the gift becomes perfect and is irrevocable. There is, therefore, no good reason why property thus acquired should not be protected as fully and effectually as property acquired by purchase. And so we think a gift of a chose in action, provided no claims of creditors interfere to affect its validity, ought to stand on the same footing as sales.” And this is the rule which prevails in the Federal courts, and in all of the states in which the question has arisen; and it has been before the court of last resort in many of them. Thornton on Gifts, section 271.

In recent well considered cases the rule has been applied to sustain gifts made by the delivery, without written transfer, of books of deposit issued by savings banks, in cases not distinguish-. able in any important feature from that now under consideration. In Camp’s Appeal, 36Conn., 88, it is held that; “a delivery to a donee, of a Savings Bank book, containing entries of deposits to the credit of the donor, with the intention to give the donee the deposits represented by the book, is a good delivery to constitute a complete gift of such deposits;” that, “a delivery of a chose in action that would be sufficient to vest- an equitable title in a purchaser, is sufficient delivery to constitute a valid gift of such chose in action without a transfer of the legal title;” and that, under statutes which provide “that the assignee of a chose in action may sue upon it in his own name, a delivery of such, chose in action would vest in the donee a legal title.” In a case of the same kind, in New York, Ridden v. Thrall, 125 N. Y., 572, 577, it is said, the gift was consummated by the delivery of the Savings Bank book, “and no other formality to constitute the actual delivery of the bank deposits or vest the possession and title in the donee was needful.” Pierce v. Savings Bank, 129 Mass., 425; Tillinghast v. Wheaton, 8 R. I., 536, and Hill v. Stevenson, 63 Me., 364, are cases of the same kind and in which the courts hold as above stated.

We think, on principle and authority, the gift to the plaintiff was legally consummated, and the judgment in her favor should be affirmed.

Judgment accordingly.