author: Shauck, J.

text:
    State of Ohio v. Snook et al.

      Lands acqtdred by state for canals — Become property oj state in fee —Acts of February 4, 1825, and Febimary 27,1826 — State ex rel. v. the P., C., C. & St. L. Ry. Co., followed.

    1. Lands of which the state in any manner acquired possession under the acts of February 4, 1825 (2 Chase, 1472), and February 7, 1826 (24 O. L., 58), and used in the construction of its canals, became the property of the state in fee. (State ex rel. v. The P., C„ C. & St. L. Ry. Co., 34 W. L. B., 15.
    2. It does not prevent the application of this rule that in a deed conveying to the state, upon a valuable consideration, lands which were in part so used, there was a recitation that the conveyance was in aid of the canal fund.
    3. The act of February 7, 1826, did not authorize the canal commissioners to sell, nor the governor to grant, any portion of the lands used for the construction of the canals, including “feeders, dikes, locks, dams and sn'ch other works and devices ” as they had employed in their construction.
    (Decided December 17, 1895.)
    Error to the Circuit Court of Summit county.
    Frances Snook, the general assembly having authorized the joining of the state as a party defendant, brought suit against the state and Jackson; as its lessee, to recover possession of real estate described, in her petition,-it being a portion of lots 233 and 234 on the plat of Akron, lying- between the navigable portion of the canal and a portion of said lots which, as the parties agree, she owns and occupies. The portion of said lots in controversy is occupied in part by a basin of the canal, in part by a dike whereby the waters of Wolf Run are prevented from entering the basin at that point, as they naturally would, and in part by a substituted channel of said run through which its waters are carried alongside said basin to the second lock below where they are used to feed the waters of the canal for locking boats to and from the next lower level, the surplus being used for hydraulic purposes. The petition and answer joined issue on the title in fee.
    On the trial the plaintiff introduced a survey and plat of Akron, showing that these lots, among others, ‘ ‘as marked on the map, have not yet been surve3Ted or staked out on the ground, the survey of which is to be deferred until the canal is made, and may be enlarged or diminished in size as may be found convenient when the ground is prepared for their actual location.” This plat was made in November, 1825. She also introduced a deed from Williams and wife (under which both parties claim 'title) to the state, dated May 13,1826, whereby the whole of lots 233 and 234 weré conveyed to the state in fee “in aid of the canal funds of said state,” and two deeds from Governor Lucas, one dated January 10, 1834, and the other February 2, 1835, the former conveying lot 234 to Thomas May in fee, and the latter conveying lot 233 to George Kirkum in fee. Both deeds recite that they are executed in pursuance of an act of the general assembly entitled “An act to provide for the increase of the canal fund by the purchase and sale of real estate for and on behalf of said state,” passed February 7, 1826.” It is admitted that by the mesne conveyances put in evidence, Mrs. Snook established her claim to the title conveyed by said deeds to May and Kirkum.
    The canal, including the basin, the embankment and the substituted channel of Wolf Run, was constructed after the execution of the deed of Williams to the state, and before the execution of the • deeds from the state to May and Kirkum. Other facts material to the points decided are stated in the opinion.
    The court gave, among others, the following instructions to the jury:
    “Now, as to this Williams deed, I say to you that its effect was to convey to the state, lots 233 and 234, not for the purpose of constituting its canal, but in aid of the canal funds of said state; which implied that the lots might be converted into money by sale; and unless you shall find from the evidence that subsequent to accepting this deed the state altered the boundaries of the lots with respect to the basin front, I will limit it to the basin front now; they are to be considered by you as extending to the water of the basin as it existed, for lot 233 at the date of the Kirkum deed, and as to lot 234 at the date of the T. P. May deed, as you shall find it to have been from the evidence, so as to give said purchasers, their heirs and assigns, the privilege of building wharves and warehouses thereon- convenient for commerce, by extending the lines of said lots straight forward to the water where the same then was of sufficient depth for the purpose aforesaid. But, it being conceded by the plaintiff that this land does not extend beyond the piling, you need not go further west for the westerly line of said lots.
    “Whether _ the state appropriated any of the lands in contention, and if any, how much, by eminent domain, is a fact for you to find from the evidence; and this you must find, if you so find the fact to be, from other evidence than the simple fact of the occupancy of the lands for the purpose of constructing and maintaining the lower basin, or the ditch for passing the waters of Wolf Run. * * * * * * *
    “Whatever lands you find were embraced in lots 233 and 234, as conveyed by the state to T„ P. May and Kirkum, you may presume to have been sucia lands as the state had a right to sell for the purpose of increasing the canal fund, and not such lands as the state appropriated by eminent domain, from the fact that the state conveyed the same, and from the recitals in the Williams deed, and the two deeds to May and Kirkum, notwithstanding the fact that the raceway was then, or since has become the substitute or bed of Wolf Rain, and the use of the basin for canal purposes. We hold that it was then competent for the state to determine whether it owned the lands embraced in those lots for' canal purposes alone, or not, and that its determination in that respect cannot at this late day be questioned by the defendant Jackson, or the state.”
    The following instruction requested by the state was refused.
    “Seventh Request — If you find that prior to the construction Of the Ohio canal, Paul Williams deeded to the state of Ohio, lots 233 and 234 of the town plat of South Akroia, and that after receiving-said deed, the state constructed upon a portion of said lots a canal basin, embankment and race as a • permanent part of the said canal, and that after constructing- the same and filling the said basin with water in such a manner that the actual occupancy of the state with said canal basin, embankment and race was apparent and plainly visible, the state deeded the said lots to Kirkum and May, respectively, then in that case, Kirkum and May would not, by said deeds, obtain title to so much of said land as had been actually taken by the state for canal construction.”
    In the common pleas there was a verdict in favor of the plaintiff against both defendants for the possession of the premises and against Jackson for rents and profits. Their motions for a new trial was overruled, and judgment rendered on the verdict. Both defendants filed petitions in error in the circuit court, where the judgment of the common pleas was affirmed, and that affirmance they assign as error here.

      J. K. Richards, Attorney General, and R. W. Sadler, for plaintiff in error.
    We contend for the state:

      First — That the plaintiff below does not own, and the state does own, the land in dispute.

      Second- — 'That, even if this were otherwise, the state has such interest and rights therein as should defeat this action of ejectment.
    The plaintiff below claims the premises in question as the owner of lots 233 and 234, and to apply certain portions of the charge of the court below, to which exception is taken, it becomes necessary to examine her chain of title. .

      On May 13, 1826, Paul Williams and wife (he having succeeded to the rights of Simon Perkins), deeded to the state of Ohio numerous lots including said lots 233 and 234. The consideration named in the deed is, ‘ ‘ the benefits which will result to the community in g’eneral and to myself in particular, from the construction of the Ohio canal, and from the foundation of a convenient basin in the village of Akron, in said township and county, which works are now in a state of progression.”
    The deed contains also the following language, upon which plaintiff below relies : “The water lots, or those laid out next to the contemplated basin, are in all cases to be considered as extending to the water in said basin, so as to give owners thereof the privilege of building’ wharves or warehouses thereon convenient for commerce, by extending the lines of said lots straight forward to the water where the same is of sufficient depth for the purposes aforesaid, whether the water in the basin be raised to the level of the summit pond or be only raised to the level of the canal below the first lock.”
    Having received the said deed, the state constructed the canal, basin, embankment and race, as above stated, and thereafter, on January 10, 1834, the governor of the state deeded lot 234 to Thomas P. May, and on February 2, 1835, the governor of the state deeded lot 233 to George Kirkum.
    But if the deeds were valid as to their execution, what passed by them ?

      First — Our construction of the language quoted from the deed by Williams to the state is that the lots only extendéd to the water in the basin, i. e., to the water’s edge, with a recital that the reason for their extending to the water’s edge was that thereby the owners of the lots might in the usual way, the canal authorities consenting, build wharves out beyond the lot line and over the shallow water, for the loading and unloading of boats.

      Second — It will be noticed that the deeds from the state by the governor omit the very language found in the deed from Williams to the state, upon which the plaintiff below predicated all her rights. The mission is significant. Between the time of the conveyance by Williams to the state and the conveyances from the state, the canal and basin, embankment and probably the race, had been constructed. It has been adjudicated by this court that all the land appropriated by the state for the canal and its appurtenances became the property of the state in fee simple. - Here we have a conveyance to the state in fee simple. Malone v. Toledo, 34 Ohio St., 541.
    Let it be conceded that the deed from Williams was a grant for the benefit of the canal fund. Still it can hardly be denied that the state was as much entitled to construct the canal upon lands so conveyed to it as upon the lands which it took by appropriation. It will be remembered that the appropriation made by the state in those early times was not an appropriation by legal proceedings, but simply an actual taking of the land. Does it not follow that, when the state constructed this basin, embankment and race, it owned the fee of all the land covered by the basin, embankment and race, not simply as a part of its canal fund, but as a part of the canal itself ? If so, the governor, was wholly without authority to convey away any portion of the basin, the embankment and the race, though included in these lots. The authority of the governor to convey was only that which he received by virtue of section 2 of the act . of February 7, 1826. 24 Ohio Laws, 58,

      Charles Baird, B. L. Marvin and Tibbals <& Frank, for defendants in error.
    Courts have always been liberal in receiving- evidence with regard to boundaries which would not be strictly competent in the establishment of other facts. Old surveys, perambulation of boundaries, even reputation, are constantly received on a question of boundaries of large tracts of land. The declarations of surveyors made at the time of making- a survey have been admitted. In this country a liberal rule on the subject has been adopted in most of the states. The point was discussed by Mr. Justice Lamar in delivering the opinion of the court in Clement v. Packer, 125 U. S., 209; Ayers v. Watson, 137 U. S., 584; Coate v. Speer, 3 McCord, 227; Kennedy, v. Lubold, 88 Pa. St., 246; McCausland v. Flemming, 63 Pa. St., 38; Greenleaf on Evidence, sections 131 and 145 and notes; Child v. Rangsbury, 46 Vt., 47; Lemmon v. Hartsook, 80 Mo., 13; Deery v. Gray, 5 Wall., 795; Boardman v. Reed, 6 Peters, 328; George v. Thomas, 67 Am. Dec., 612; Davis v. Fuller, 36 Am. Dec., 334; Martin v. Alkinson, 50 Am. Dec., 403.
    From the necessity of the case we were required to rely upon the testimony of declarations of persons who were living at the time the canal was constructed. There was no person living at the time of the trial who had anything to do with the construction of the canal or the location of the basin or the western boundary of lots 233 and 234, and for this reason we were compelled,, as in the case cited in the 88 Pa. St., to depend upon first principles and not try to attain perfection.
    The state in all its contracts and dealings with individuals is governed by the same rules applicable in determining the rights of private citizens in contracting and dealing with each other. Chapman v. State, 104 Cal., 690; Carr v. State, 127 Ind., 204; People v. Stephens, 71 N. Y., 549.
    When a grant is made by a staté the general rule is that the doctrine of estoppel applies to the same extent as if the conveyance had been made by a private individual. „ 2 Devlin on Deeds, section 948.
    Where the grant is for a valuable consideration the rule of construction between the government and the subject is the same as between private grantors and grantees, i. e., the construction, if doubtful, is always in favor of the-grantee. 3 Washburn on Real Property, 190.
    The rule may be stated as a general one in respect to legislative grants in this country, that such grants should be construed liberally in favor of the grantees and in such manner as to give them a full and liberal operation so as to carry out the legislative intent, where that can be ascertained. 3 Washburn on Real Property, 190; Hyman v. Reed, 13 Cal., 444; Charles River Bridge v. Warren Bridge, 11 Peters, 389; Commonwealth v. Roxbury, 9 Gray, 492; Martin v. Waddell, 16 Peters, 411. Where description is uncertain, reference may be made to prior deeds conveying the same land. 2 Devlin on Deeds, section 1013; Bowmans. Wettig, 39 Ill., 416; 2 Herman on Estoppel, sections 676 to 679, inclusive.
    If Wolf Run was diverted by the state and a new channel was substituted for its natural channel,.the new channel is to be treated the same as if it were the natural' bed of the stream in all respects, and the owner of the land over which the stream flowed, in its substituted channel would have no property in the flowing water but would be obliged' to permit the same to flow in the substituted channel without material diminution or alteration, and could not prevent the flow of water over his land. Gould on Waters, section 204; Ford v. Whitlock 27 Vt., 265; Woodbury v. Short, 17 Vt., 387; Cooper v. Williams, 4. Ohio, 286; Buckingham v. Smith, 10 Ohio, 297; R. E. Co. v. Tucker, 48 Ohio St., 57.
    In this last cause the rule is said to be fundamental that , a riparian owner is entitled, as an incident to his estate, to the. natural flow of the water of the stream, in its accustomed channel, in-diminished in quantity and unimpaired in qualitju
   Shauck, J.

It appears, not only from the portions, of the charge contained in the foregoing statement, but. from the entire charge, that the trial .judge was of the opinion. that the terms of the deed from Williams to the state conclusively fixed, the charr acter of the land conveyed, as lands .to be used, not for the purpose of the construction of the canal, but in aid of the canal fund. In the view thus presented, the state could acquire lands for the purpose of such construction only by appropriation. This view of the law must have controlled the jury, and it led to the instruction given as to the effect of the deeds from the state to May and Kirkum. These instructions, considered together, resulted in the conclusion that by the later deeds the state was necessarily divested of all the title' in the lots named which it had acquired by the deeds from Williams, notwithstanding that in the meantime it had constructed the canal, and the substituted channel for Wolf Run.

This view is quite at variance with the provisions of the acts of February 4, 1825 (2 Chase, 1472), and February 7, 1826 ( 24 O. L.,-58). These acts coritemplated that “lands," waters and streams” - would be acquired by the state' for the actual construction of its canals, including-“feeders, dikes, locks, dams- and such other works and devices as they (the canal commissioners) may .think proper for making said improvement's,” and lots and' lands not needed for the construction and operation of the canals, but .acquired by donation or otherwise, to be sold or leased and the proceeds used in aid of such construction. The effect of the legislation looking to the establishment- Of the canal system of the state was that it acquired an unrestricted title in fee to all the lands of which it in any manner took possession for the purposes of such construction. Malone v. Toledo, 34 Ohio St., 541; Ohio ex rel. v. The P., C., C. & St. L. Ry. Co., ante, 189. It follows that if the state actually devoted the lands in' question to any of the numerous purposes of construction ■ above quoted, they thereby became, in contemplation of the statute, a part of the canal system. The circumstances under which the Williams deed was executed would indicate that it was then contemplated that the lots would be used as they in fact were used; that is, partly for canal construction, and partly in aid of the canal fund. It was not a deed of gift, and it contained no such restrictions as would be effective to prevent its use by the state for either or both of the purposes'indicated. When interpreted in connection with the provisions of the statute under which it was executed, it is entirely clear that it did not limit the power of the state to use the lands as indicated in the instructions given and in refusals to instruct as requested.

The view that the deed from Williams to the state gave to the lots the unchangeable character of lands devoted to the aid of the canal fund, and incapable of being devoted to the purpose 'of canal construction, led to the effect given by the court to the subsequent deeds from the state to Ketchum and May, since it in effect determined that those deeds divested the state of all the title it had acquired from Williams unless there had been a distinct appropriation of a portion of the lots for the purpose of construction, and that appropriation was elsewhere defined to be the exercise by the state of its power of eminent domain. It is not thought by counsel for the defendant in error that the act of February, 7, 1826, authorized the canal commissioners to sell and the governor to convey any portion of the canals, and the statute would not admit of that view. The only purpose then prompting the general assembly was the establishment and maintenance of the system of canals. The lands in controversy are in and contiguous to the basin next below the portage summit level. Within the two miles of this basin and north of it are more than twenty locks, and the waters stored in the basin and those conducted through the substituted channel of Wolf Run are used in locking boats to and from the level of the Cuyahoga valley. If it were now an open question it would not seem difficult to demonstrate that the basin and the channel are necessary to the operation of the canal. But that they are, was conclusively determined by the commisioners when they constructed them as a part of the canal.

It is agreed by counsel that the waters of Wolf Run, at a level below that of the basin in dispute, are used for locking boats and the surplus for hydraulic purposes. The authority of the canal commissioners to sell was conferred and restricted by the second section of the act of February 7, 1826: ‘•That the canal commissioners are hereby authorized and empowered to sell all such lands and town lots as heretofore have been, or may hereafter be given, granted or ceded to the state for the benefit of the canal fund, other than those which ■ are situated at points or places on or adjoining the line of the Ohio canals where the surplus water produced by said canals can be advantageously used for hydraulic purposes. ’ ’ The authority of the governor to grant did not exceed that of the commission to sell.

It affirmatively appears from the plat of the former proprietors that the disputed boundary of these lots was not located when the plat was made. The plaintiff, not being in possession, was not entitled to recover until she had established her own title. It was incumbent upon her to show a subsequent location of such boundary inconsistent with the present claim of the state. Whether the voluminous bill of exceptions contains any evidence to establish such location is a question whose determination would serve no useful purpose in view of the conclusions already stated. The same observation may be made of the other questions presented by the record and argued by counsel.

The judgments of the cwcuit court and the court of common pleas will be reversed.


source: Caselaw Access Project

author: Bradbury, J.

license: Public Domain

text:
    Peter v. The Farrel Foundry & Machine Co.

      Insolvent Corporation — Procedure to distribute assets — Petition in ■ civil action — Answer and cross-petition' by stockholder — De■rmirrér — Enforcement of stockholder's, statutory liability by creditor.,
    1. Where the petition in a civil action purports to seek a distribution of the assets of an insolvent corporation among its creditors, the assets of the corporation are the subject of the action; and an answer, in the nature of a, cross-petition, which discloses assets of'the concern,.in addition to those ' disclosed by the petition, or shows a title in the party filing such answer to share ‘in the distribution of' such assets, sets forth matters- connected with the subje'ct of the aetion. In ., ■ such case the answer, or'cross-petitio.n; is not subject to a demurrer, although it fails to disclose a cause,of action “in favor of the defendant and against a plaintiff between whom a several judgment might be had in an action.”
    2. In such an.action, a-defendant may .join in his cross-petition, a cause .of. action for money payable to. the insolvent corporation by a stockholder thereof on account of stock issued to ' him, with a cause of action against all the -stockholders of the concern upon their statutory liability as such stockholders.
    3. If the corporation is insolvent and its assets in the hands of a receiver, a creditor'may, by a cross-petition, seek the en- . forcement of the statutory liability óf: the' stockholders, although his claim has not been reduced .to judgment.
    (Decided December 17, 1895.)
    Error to the Circuit Court of Lu«as county.
    On the. 23d day of January, A. D. 1890, the plaintiff, in error, William Peter, together with Sarah E. -Peter, Horace S. Walbridge, S.' Cornell Walbridge, Michael J. Cooney and Charles R. Faben, Jr-., filed -in the court of common pleas of Lucas county, a petition ■ in the words and figures following.:- ■ ■
    “William Peter, Sarah E. Peter, Horace-S..Walbridge, So Cornell .Walbridge, Michael J. Cooney and Charles R. Faben, Jr., plaintiffs, v. The Union Manufacturing Company, defendant. — Petition.

      ‘ ‘Plaintiffs say that the defendant is a corporation duly organized and existing'under the laws of the state of - Ohio; that said corporation was organized for manufacturing and is carrying on the business of manufacturing and selling sewing machines, washing boards of various kinds, churns and flour mill machinery, and that its principal place of business is in the city of Toledo, Lucas county, Ohio; that these plaintiffs are all stockholders of said- defendant corporation; that the amount of the paid up capital stock of; said corporation is seven hundred and twenty-four thousand and five hundred ($724,500.00) dollars and is divided into seven thousand two' hundred and forty-fivé (7245) shares of one hundred ($100.00) dollars each; that plaintiffs are the owners of three hundred and forty-five thousand ($345,000.00) dollars of said paid up capital stock, and' are the owners of three- thousand four hundred and fifty (3,450) shares thereof.
    “Plaintiffs further say that fo'r no one of the three iast preceding- years have the net earnings, of the said defendant corporation been sufficient tó pay, in good faith, an annual dividend of six per centum upon the paid up capital stock of the said corporation, over and above the salaries and expenses authorized by the by-laws and regulations of the said corporation.
    “Plaintiffs further say that the bonded debt of said defendant1 corporation is one hundred thousand ($100,000.00) dollars; that said defendant corporation has, in addition, an unsecured indebtedness of about one hundred and sixty thousand ($160,000.00) dollars;' that the said1 corporation is indebted to these plaintiffs in the sum of not less than fifty thousand ($50,000.00) dollars in the aggregate; that a large part of said unsecured indebtedness, to-wit: thesum of not less than five thousand ($5,000.00) dollars is now due and unpaid and the entire balance of said unsecured indebtedness will become due within a period of four months from this date and at least two-thirds thereof will become due within a period of sixty (60) days from this date.
    “Plaintiffs further say that the said defendant corporation is wholly unable to pay the portion of said indebtedness now past düe and that it will not be able to pay the balance of said indebtedness as the same matures and that said corporation is insolvent ; that said corporation has a large plant situated in Toledo, Ohio, consisting of an interest in real estate factories, machinery, tools and implements ; that it has been and now is engaged in its said business of manufacturing’ sewing machines, Washboards of various kinds, churns and flour mill machinery and .selling the same in said city of Toledo and elsewhere; that it has branch offices in different states and a large force of workmen engaged in said business in various capacities, that it has a large number of unfinished machines, machinery, washboards and churns on hand and also a large number of finished machines, machinery, washboards and churns on hand; that it has a considerable amount of material on hand to be used in the manufacture of such machines, machinery, washboards and churns, and in finishing said articles now unfinished, and said corporation is unable to meet its liabilities and current obligations.
    “Plaintiffs further say that by reason of the insolvent condition of said corporation, and by further reason of the liability of suits, the defendant corporation’s property is in imminent danger of being sacrificed and its business brought to a standstill at a great and irreparable loss to these plaintiffs and all other creditors and stockholders of the defendant corporation.
    “Plaintiffs further say that if said business should be suddenly suspended it would unavoidably result in a very great loss to all the creditors and stockholders of the said defendant; the finished machines, machinery, washboards and churns could not be disposed of except at great sacrifice; the unfinished machines, machinery, washboards and churns would be an almost total loss, and there would also result great loss from inability to carry out subsisting contracts for material prepared expressly for the business of said defendant and which would have practically no value if thrown upon the general market.
    “Plaintiffs further say that a very large part of the assets of said defendant corporation, to wit: about sixty thousand ($60,000.00) dollars consist of amounts due or to become due for machines sold on the installment plan, that is to say, machines sold to be paid for, in small weekly or monthly installments, the corporation retaining title to said machines until the purchase price is fully paid; that said accounts could not be sold unless at a vefy small per centum of the face value thereof, and all the outstanding accounts due or to become due to said corporation are of such a character that if the business of said corporation should be at once suspended, there would be a very great loss on said accounts result to said corporation and all if its creditors and stockholders, growing out of the inability to collect said accounts, or the great and disproportionate expense it would be necessary to ineur in collecting the same or any part thereof.

      “Plaintiffs further say. that 'the said defendant corporation has and is possessed of a good will in its said business which is of a very great value to the said defendant, its stockholders and creditors, unless the same shall be destroyed in consequence of said defendant being "compelled to cease business, but that if said defendant should be compelled to cease business, the said good-will would be a total loss to said defendant corporation, its stockholders and creditors.
    “Plaintiffs further say that the said defendant corporation owns and- holds valuable rights, titles' and interest in various letters patent of the United States especially necessary and valuable in the manufacture of 'said sewing machines.
    “Plaintiffs further say that unless receiver be forthwith appointed for the defendant corporation its property will be sacrificed, its factory will have to be immediately closed and its business, immediately closed and its business be immediately suspended, to the great and irreparable injury of ’ these plaintiffs- and all other creditors and stockholders of the said defendant corporation.
    “Wherefore plaintiff s ask that a receiver for the said defendant corporation may be appointed to take charge of its real and personal property of all kinds and descriptions, and wheresoever situated, including choses in action, with authority to continue the business of said corporation for the time being, under the • direction and subject to the of: ders of this' court, pending the final winding up and settlement of the affairs of said corporation; that he may be authorized by order of this court from timé to time to borrow such sums of money for the purpose aforesaid, as to this court may seem necessary and proper, and issue his obligations therefor, that he- may ascertain the indebtedness of said corporation and report the same to this court, that the said defendant corporation may be ordered to convey or transfer all its. property,. both real and personal, including ch'oses in action and letters patent, wheresoever the same may be situated, whether within this state or any other state or country, to the said receiver to be appointed in this action, that the business and affairs of said defendant corporation may be- ultimately wound up, all its property of all kinds and descriptions sold, and the proceeds thereof equitably distributed under and in accordance with the orders of this court, and - plaintiffs pray for all such other ■ and further relief as they may be entitled to, whether at law or in equity.”,
    ■ The court of common pleas,- pursuant to the prayer of the petition, forthwith appointed a receiver who at once went into the possession of the property and assets -of the defendant corporation', the- Union Manufacturing Company, and entered upon the management of its business -under the direction of the court; continued such possession and management until November 13,1890, when on leave of the court the defendant in error, The Farrell -Foundry and Machine Company, filed its answer and cross-petition in the action, and- for aught disclosed by the record such possession and management still continues.
    The answer and cross-petition of the Farrell Foundry and Machine Company was in the following terms :
    ■ “1. For ' first cause of action it says that it is a corporation organized under the laws of the state of Connecticut for the manufacture and sale of chilled rolls and other machinery, located and having its principal place of business at the town of Ansonia, in said state. Defendant, The Union Manufacturing Company, is a corporation organized under the laws of the state of Ohio for the manufacture and sale of iron and wooden ware; and was until the date of the commencement of this action engaged in carrying on the business for which it was incorporated, as set forth in plaintiff’s petition.
    “ During the months of October, November and December, 1889, this cross-petitioner, at the request of said defendant, shipped from Ansonia to Toledo, and delivered to defendant, fifty-six chilled rolls, grooved. In consideration of such sale and delivery, said defendant at said dates promised to pay this cross-petitioner sixteen dollars for each of said rolls, in the aggregate eight hundred and ninety-six dollars, forthwith thereafter. Said defendant has not paid any part of said moneys, although requested by this cross-petitioner so to do.
    “Defendant is entitled to a credit of two 23-100 dollars for an overcharge of freight upon a shipment of eight of said rolls made on the 28th of October, 1889, and by said defendant paid to the carrier on the 9th day of November, 1889. It is entitled to no other credit nor offset.
    “The respective dates at which said rolls were so sold, shipped and delivered were as follows;
    1889. 6x18 Chilled rolls,
    Oct. 1— 8 grooved, $16..........$128 00
    “ 28— 8 u 16........... 128 00
    Nov. 2— 8 a 16........... 128 00
    “ .14 — 14 a 16.......... 192 00
    “ 27— 4 a 16........... 64 00
    “ 30— 4 u 16........... 64 00

      Dec. 4— 8 grooved, 16........... 128 00
    “ 14— 4 “ 16........... 64 00
    $896 00

      Or. *'

    Nov. 9— By excess of freight paid.................... 2 23
    • Balance due..................................................................$893 77
    “Said rolls were purchased by said defendant, to be by it used for the manufacture of the articles in which it dealt, and were by it applied to such purpose. ■
    “Wherefore said defendant is indebted to this cross-petitioner in the sum of eight hundred and ninety-three 77-100 dollars, with interest thereon from the fourteenth day of December, 1889.
    “This cross-petitioner has never owned any of the stock of said defendant.
    “ When said goods were by this cross-petitioner sold and delivered as aforesaid, said defendant was by cross-petitioner believed to be in good credit and perfectly solvent. But in fact said defendant then was, and long theretofore had been and still is insolvent. It then owed, and still owes, more money than all of its assets were or are of value sufficient to pay. Nearly the entire indebtedness foresaid was by defendant then owed, and is still owed to its stockholders. The amount by it owed to this cross-petitioner and other persons not stockholders was and is, in the aggregate, small. .Said amount was and is much less than the value of the tangible assets then owned by said defendant corporation, now in the possession of Alvin Peter as its receiver in this action.

      “On the 22d day of January, 1890, the board of directors of said defendant was composed of seven of its stockholders, to wit: Plaintiffs William Peter, Horace S. Walbridge, S. Cornell Walbridge and Michael J. Cooney, together with Alphonso E. Rood, Salmon H. Keeler and Isaac N. Poe. No change has since been made in the composition of said board.
    “Said defendant corporation was organized in 1872, with an authorized capital stock of fifty thousand dollars. " Said ■ authorized capital stock has been by the stockholders of defendant successively increased: April 12, 1873, to one hundred thousand dollars; September 19, > 1881, to three hundred thousand dollars; and July 30, 1886, to one million dollars, all of said stock being divided into shares of one hundred each. Of said stock at least seven hundred and twenty-four thousand five hundred dollars have been by said corporation issued- to its stockholders. A very small portion thereof is fully paid up stock. On the contrary, nearly the entire amount of said stock has been by • defendant issued to its shareholders in exchange for moneys by said respective stockholders paid to defendant therefor, ranging respectively from twenty to seventy-five cents for each dollar of the nominal amount of said respective shares so issued, and for moneys by said respective stockholders paid to said defendant corporation much less in amount than the amount of the respective shares issued to them in consideration therefor.
    “Plaintiffs own jointly no stock of said defendant corporation. Plaintiffs individually own stock of the aggregate amount in their petition stated. It is not true that they individually own any large amount of paid up stock. Nearly the entire amount of stock by said individual plaintiffs held was by defendant issued to them respectively paid to defendant therefor, much less in amount than the amount of the respective shares so issued.
    “Plaintiff, Sarah E. Peter, is a relative of plaintiff, William Peter, and holds a certain amount of the last aforesaid described stock by said defendant corporation, issued to said William Peter, which stock was by him thereafter transferred to her without consideration, and is by her held, in trust for his benefit.
    “Said defendant corporation, in the respective months of April and August, 1883, executed two trust deeds in the pature of mortgages to plaintiff, Horace S. Walbridge, as trustee, conveying to him the real estate upon which the factories of said de-. fendant are located, to wit: the westerly- twenty feet of lot numbered fourteen and the whole of lots numbered fifteen to fifty, inclusive, all in Texas addition to the city of. Toledo in this county, together with all the machinery and' appliances used in and necessary for. the carrying -on the business of said defendant, in .trust for securing the payment of, one hundred thousand dollars of the bonds of said defendant corporation issued or to be issued, each bond being for the sum of one thousand dollars, payable to the holder thereof on the first day of April, 1893, with interest thereon payable semi-annually, on the respective first days of October and April in each year after their execution.
    “Said bonds were for the most part .issued to stockholders and directors .of said defendant corporation for seventy-five cents by them paid to said defendant for each dollar by said bonds promised to be paid, and for sums much less than the respective amounts by said bonds purporting to be due. Interest has been paid by said defendant to the first day of October, 1889, upon the full amount to that date purporting to be due upon the principal indebtedness described in said bonds, and in excess of the interest legally payable upon the moneys paid by the parties to whom said bonds were respectively issued, and by said defendant received therefor. Said bonds are still in great measure held and owned by the parties to whom they were originally issued. Said trust deeds were duly recorded, and the indebtedness evidenced by said bonds is the bonded debt of said defendant mentioned in plaintiff’s petition.
    “The unsecured debt owed by said defendant as aforesaid is at least one hundred and sixty thousand dollars. Of this amount James Secor, of Toledo, aforesaid, holds two thousand dollars, with interest from July 3, 1889, at eight per cent, per annum, evidenced by the promissory note of said corporation for that amount payable to his order.
    “Said defendant corporation has been at no.time indebted to plaintiffs in any amount jointly. It was at the date of the commencement of this action, and is still, indebted to plaintiffs, William Peter and Horace S. Walbridge, respectively, in amounts which aggregate at least fifty thousand dollars.
    “ This cross-petitioner has no knowledge of the property, stockholders or liabilities of said defendant which will enable cross-petitioner to make its statements relative thereto more specific than is herein set forth. But plaintiffs, comprising the majority of the board of directors of said defendant, and owning more than one-third of the stock by said corporation issued, were at the date of the commencement of this action, and have at all times since,- been able to inform this court of the specific property, real and personal, both legal and equitable, of said defendant, and of all the books, vouchers and securities relating thereto, as well as to give a full, .just and true account of the capital stock of defendant, the names and residences of the stockholders, the number of shares belonging to each, the amount paid in upon such shares respectively, and the amount still due thereon, and plaintiffs were and have been able to give to this court a specific statement of the aforesaid incumbrance upon the property of said defendant, and-of each of its existing liabilities, specifying the name and residence of each creditor, and nature to each debt, and the true consideration received by defendant therefor. Plaintiffs were at the date of the commencement of this action,, and at all- times since have been able to perform their obligations to apply to this court for a dissolution of said defendant corporation and to make all the ' parties and prosecute every measure required for the winding up of the affairs of said defendant, and the disposal and distribution of its assets by chapter-five of division seven of the first title of the Revised Statutes of Ohio. Plaintiffs have failed to request such dissolution, and furnish the court said information, and make any creditor or stockholder of defendant party to this proceeding’ other than plaintiffs themselves, and have procured the order of this court that said defendant convey its entire property, including choses in action, to Alvin Peter as its receiver, and have in behalf of said corporation placed Alvin Peter as such receiver in possession and control of the entire assets of said corporation, and have in every respect instituted and prosecuted this action with intent thereby to delay and hinder and defraud this cross-petitioner and every other creditor of said defendant other than plaintiffs, in the collection of their respective indebtedness'due from said defendant by appropriate process of law, and with intent, in view of the insolvency of the defendant, to prefer plaintiffs as creditors of said defendant in the disposal and distribution of the assets of said defendant, and the proceeds thereof by them proposed to be made in this action.
    “ Said Alvin Peter, receiver, is the son of plaintiff, William Peter, who is the largest individual creditor and stockholder of said defendant, and since the date of the commencement of this action, said Alvin Peter has been in the possession of the entire property of said defendant, and has claimed the right to control its entire choses in action, asserting such possession and claim as being rightfully made as receiver by virtue of the order of the court in this action. And since the date of the commencement of this action said defendant has transacted no business, and has had no property not in the possession and control of the said Alvin Peter as receiver, and has neither money, credit nor materials with which to transact any business, in the future.
    “The facts relative to the expediency of selling the entire assets and property of said defendant, other than the unpaid amounts due from its stockholders upon their capital stock, but including in said sale the good will of its business, as an establishment in active operation, are as in plaintiff’s petition set forth. But said sale should be made forthwith. The value of the good-will aforesaid has deteriorated, and must continue to deteriorate, if the business formerly carried on by said defendant corporation shall long continue to be prosecuted by this court through the intervention of any receiver or trustee.
    “2. For second cause of action this cross-petitioner repeats the statements of its first cause of action, as though the same were here again set. forth, and says further that the entire indebtedness of said defendant corporation to this cross-petitioner and all its other creditors exceeds the value of its entire assets, including therein the amount of the unpaid moneys due from its stock-. holders upon their stock aforesaid from said stockholders collectible.

      “3. For third cause of action this cross- , petitioner repeats the statements of its first and second causes of action, as though the same were here again set forth, and says further, that in order to fully pay the indebtedness due to this cross-petitioner and all other creditors of said defendant corporation, it will be necessary that each of its stockholders contribute a further amount in proportion to the amount of the stock by him or her owned or held, but not exceeding the amount of said stock.
    “Wherefore this cross-petitioner, in behalf of itself and all other creditors of said corporation, prays that the court ascertain the entire indebtedness of said defendant corporation, the respective parties to whom the same is due, the respective amounts thereof due to each party respectively, and the respective consideration received by said defendant corporation therefor ; and that each said respective creditor by appropriate service of process or publication of notice, be made party to this action, and proceeding; that the court ascertain the names and residence of the past and present stockholders of said defendant, the number of shares issued or belonging to each, the amount paid to said defendant corporation for each said share, respectively, and the amount still due thereon; and that each said stockholder by appropriate service of process or publication of notice be made party to this action and proceeding; that the court ascertain the total amount of the assets and dioses in action of said defendant now in the possession and control of Alvin Peter as receiver; and order all the same other than said moneys unpaid by said stockholders upon their capital stock to be sold as an entirety, including the good-will of defendant’s former business ; or in such other manner as shall ensure the best price for said assets and good-will; that the court order that each stockholder liable for said unpaid amounts due upon his capital stock pay the amount so due to such receiver or officer as the court shall direct; and in default thereof that execution shall issue therefor; that the court .ascertain the further amount due from each stockholder of defendant necessary for the payment to this cross-petitioner and every other creditor of defendant of the full amount of the indebtedness from defendant due, including the costs and expenses of this action and proceeding, with the reasonable counsel fees of the attorneys of this cross-petitioner and 'of such other creditors of defendant as shall in good faith endeavor to procure an equitable distribution of its assets and the moneys due from its stockholders for the benefit of all of its creditors; but not exceeding the amount of the stock by each respective stockholder owned or held ; that each said stockholder be ordered to pay the further amount due from him or her hs aforesaid to such receiver or other officer as the court shall appoint; and in default thereof that execution issue therefor; that if, in consequence of non-residence or insolvency the amount due from any particular stockholder cannot be collected, then that each solvent stockholder within the jurisdiction of the court be ordered to pay as aforesaid all unpaid moneys due upon his stock and such further moneys, not exceeding the amount of his stock, as shall be necessary to pay the costs, expenses and counsel fees aforesaid and all creditors of defendant, with right thereafter to enforce contribution from any other stockholder in case as between said stockholders the party making such payment has paid more than his appropriate share; that all the moneys realized and collected as aforesaid be distributed first to the payment of the costs, expenses and counsel fees aforesaid-; and next to the payment of the entire indebtedness of said defendant corporation ; giving the preference, if necessary, to such creditors of defendant as shall in good faith co-operate with this cross-petitioner in its efforts to secure an equitable distribution of the moneys due from said defendant- and its stockholders among all the creditors of defendant; and shall with this cross-petitioner become responsible for the costs, expenses and counsel fees aforesaid.
    “This cross-petition in behalf of itself and all other creditors of said defendant, prays that this-court grant to it and them all such other and further relief as it and they may legally and equitably claim.

      “But should this court refuse to permit this cross-petitioner to intervene in behalf of any other creditor of said defendant than itself, and should refuse to this cross-petitioner the relief herein before prayed, then in such event this cross-petitioner prays that the court render judgment in its favor, that it recover from defendant, [The Union Manufacturing Company, eight hundred and ninety-three 77-100 dollars, with interest thereon from the fourteenth day of December, 1889; that execution issue therefor ; that the order directing said defendant to convey its property to Alvin Peter, receiver, be rescinded and held for naught, and that this cross-petitioner have leave to cause said execution to be levied upon all property of said defendant now in the possession of Alvin Peter as such receiver.”
    To this cross-petition a demurrer was interposed and sustained by the court of common pleas, and the cross-petition dismissed on the ground that it did not set forth a counterclaim “in favor of the defendant and against a plaintiff between whom a several judgment might be had in an action. ’ ’ The cross-petitioner carried the case to the circuit court on error where the holding of the court of common pleas was reversed. Thereupon the plaintiff in error, one of the plaintiffs in the court of common pleas, brought the cause to this court to obtain the reversal of the judgment of the circuit court.

      Kumey db Neioton, for plaintiffs in error.

      Bissell db Gorrill,' for defendant in error.
   Bradbury, J.

The petition contains averments tending to show a purpose on a part of the plaintiff below to proceed under chapter 5, title. 1, division 7 of the Revised Statutes, providing for the dissolution of corporations.. The subsequent proceeding, however, did not accord with those prescribed by the statute so that the inference to be drawn from the whole record is that those plaintiffs sought to invoke not the provision of that statute, but the powers of a court of equity as prescribed and regulated by the general principles of equity jurisprudence. What their ultimate purpose was is not entirely clear; but'the petition itself, together with the relations that the plaintiffs below bore to the. corporation and the proceedings had subsequently, strongly suggest that instead of intending to procure a dissolution of the corporation and the distribution of its assets to those entitled to receive them, the real purpose of the plaintiffs was to continue the business of the concern indefinitely, freed from annoyance by creditors, in the hope of retrieving its broken fortune. And by the appointment of a receiver they did in fact succeed in withdrawing the entire assets of the corporation from seizure at the hands of its creditors.

While the appointment of a receiver for an insolvent private corporation, may be and, doubtless, often is a beneficent remedy for all interested parties, where a tona fide winding up of affairs, and distribution of its assets to those who show a right to them, is the object sought and steadily kept in view, yet, on the other hand, to employ that extraordinary remedy as a means by which to indefinitely prolong by aid of a friendly receiver, the substantial control of the managing body of an insolvent private corporation over its assets and business, can be justified, in the absence of statutory authority, by circumstances, only, if there can be any, that most unequivocally demand such action, or by- the consent of all parties in interest.

In the case under consideration the business and assets of the corporation were given' over to a receiver, chosen by its board of directors, on the 23rd day of January, 1890, and the business continued under his ostensible management, subject to the direction of the court, until the 14th day of the following October. Whether this policy should be continued indefinitely, or whether the affairs of the concern should be brought to a termination within a reasonable time, and its assets distributed, was a question affecting each of its creditors and stockholders. A system of jurisprudence which would deny a hearing- to a party so'interested might justly be branded as arbitrary if not oppressive. The defendant in error is a creditor of the corporation and waited nearly nine months after the assets of the concern ' and the management of its business had passed into the hands of the receiver, when becoming- dissatisfied with the methods pursued in ostensibly closing up its affairs it applied to the court in which the proceedings were pending for leave to be made a party thereto and to file an answer therein, which leave being granted it did on the 13th day of November, 1890, file the answer, or cross-petition herein before -set forth in full.. A demurrer was interposed to this cross-petition, one ground of which was that, it did not set forth a counterclaim of the character specified in section 5Ó72, Revised Statutes.

That section (5072) provides that “a counterclaim” must be one existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had in the action, and arising1 out of the contract or transaction set forth in the petition as the foundation of the plaintiffs’ claim, or connected with'the .subject of the action.”

The first count of the answer sets forth facts which show among other things that the insolvent corporation is indebted to the cross petitioner. That some of the plaintiffs below, who held stock and bonds of the concern, were liable to it for considerable sums of money on account of the methods by which such stock and bonds had been sold or issued to them, and that the real purpose of the plaintiffs below was to delay and hinder the creditors of the .corporation in the collection of their ■ debts. The second count shows that the liabilities of the corporation exceed its assets; while the third count specifically asserts the necessity of resorting to the statutory liability of the stockholders for the payment of the corporate debts.

That the matter thus set forth, in the first count of the cross petition is connected with “the subject of the action,- is we think indisputable. That subject, is the corporate property. The whole of it, .not merely such parts thereof as had been pointed out by the petition, nor is it material in this respect whether the mode by which plaintiffs below sought to procure its application to the corporate liabilities, was one which a court of equity should adopt or not. It was enough if the petition gave the court jurisdiction over the property; if it accomplished thite end then the court should administer it according to the rights of those who might show title to share in its distribution. The pleading in controversy, after showing the party who filed it to be a creditor of the corporation disclosed assets of that concern, not mentioned in the petition.

Now, the subject matter of the action being the entire assets of the insolvent corporation, it follows that a pleading which brings into the cause any part of those assets, of necessity is connected with such subject. It is true that the cross-petition does not disclose a cause of action upon which it could recover a several judgment against all or any one of the plaintiffs below. Section 5072, Revised Statutes, in defining a counterclaim seems to make the right of the defendant to recover a several judgment against the plaintiff, an essential characteristic thereof. Upon the peculiar languageemployed by that section to define a “counterclaim, ’ ’ an argument is founded in support of the contention of the plaintiff in error, which would narrow the equity powers of the courts of common pleas of the state to a degree seriously embarrassing their efficiency. If the position taken by plaintiff in error is well founded, the courts of the state would be precluded from listening to any claim asserted by a defendant, unless its character was such that the claimant would be entitled to a ‘£ several judgment ’ ’ against the plaintiff.

Section 5070, Revised Statutes, declares that an answer shall contain * * * “2 a statement of any new matter constituting a defense, counterclaim, or set off. ’ ’ * * * Section 5072 Revised Statutes, declares that a counterclaim must be one * * * “in favor of a defendant and against a plaintiff between whom a several judgment might be had in an action. ” * * * Prom the language of these two sections, alone, the contention of plaintiff in error is fairly plausible. But even if these two* sections stood alone, it is doubtful if such contention should prevail. It would defeat one well understood purpose of the code of civil'procedure, which was to prevent multiplicity of actions, and would absolutely abrogate the former jurisdiction in equity by which those courts administered complete justice between all the parties to an action, defendants as well as plaintiffs, respecting the subject matter thereof. These two sections, however, do not stand alone. Section 5071, Revised Statutes, provides that “The defendant may set forth in his answer as many grounds of defense, counterclaims and set offs as he has, whether they are such as have been heretofore denominated legal or equitable, or both.” But it does not stop here; instead, it proceeds “he may claim therein, relief touching the matters in question in the petition against the plaintiff or any other defendants in the same action.” * * * “May claim therein relief.” * * * What is meant by “therein?” Manifestly his answer. Section 5311, Revised Statutes, provides that “judgment may be given for or against one or more of several plaintiffs, and for or against one or -more of several defendants; and by the judgment the court may determine the ultimate rights of the parties on either side as between themselves, and grant to the defendant any affirmative relief to which he is entitled.” These two sections, 5071 and 5311, Revised Statutes, are sufficient to show the broad principles upon which the code of civil procedure administers remedial justice; but there are many other provisions of this code scarcely less important in this connection. When all the provisions of the code of civil procedure are brought into view they clearly demonstrate a purpose to broaden the practice pertaining to the administration of justice as it existed before the code was adopted. Anterior to the adoption of the code of civil procedure, the practice in equity was to set-tie and adjust the claims and rights of all parties before it, respecting the subject matter of an action. The practice in equity before code was adopted being more rational than that at law, may not have required the reforming hand of the codifiers to the extent that the latter did, and therefore may not have been so greatly affected by its provisions; but those provisions disclose no purpose to narrow the practice in the one class of proceedings, while it enlarged the practice respecting the other. And if some single provision of the code seems to produce that result it should yield to the other provisions that are found in accord with its manifest spirit- and purpose. We find nothing in the' code of civil procedure when considered as an entirety, that narrows the former power of a court of equity to fully adjudicate every question legitimately arising between the parties before it, respecting the subject matter of the action. The answer of the Farrell Foundry and Machine Company, in so far as it brought to the attention of the court, assets of the . corporation not before brought in was dealing with a matter clearly connected with the subject of the action. ■ Further still, if the cross-petition disclosed no additional assets, but simply asserted a right in the cross-petitioner to participate in the distribution of assets already in court, it showed a connection with the subject of the action. Whenever a party shows even a contingent right to property or a fund, which is the subject of an equitable action, he should be accorded a hearing for its protection. An unyielding principle of natural justice accords him this right.

The third cause of action in the cross petition invokes the action of the court respecting the statutory liability of stockholders of the corporation. While this statutory liability is not an asset of the corporation, it, nevertheless, is a fund provided by law for the payment of its debts. The court already has, or if not, may bring’ before it, the parties necessary to a complete adjustment of all rig’hts and liabilities g’rowing’ out of the transactions of the insolvent concern. It would be a g’rave reproach to the jurisprudence of the ag’e if under such circumstances, a court after exhausting’ the assets of the corporation, would decline to proceed further, and turn the parties out of court, only to gather them in again in a new action to determine questions so closely related to those it had already adjusted. The question, however, we think was settled in the case of Warner v. Callender, 20 Ohio St., 190, where this court held that, “A judgment creditor of an insolvent railroad corporation may join, in the same action, a claim to compel payment of unpaid subscriptions for stock, and a claim to enforce the individual liability of stockholders, for the satisfaction of his judgment.” If the plaintiff in an action may join these two causes of action in his petition, why may not a defendant do likewise in a cross-petition ? Where the substantial rights of parties are alike, their remedial rights should be equal without regard to their repective positions as plaintiff or defendant in the action. Nor was it necessary for the cross-petitioner to first recover a judgment against the corporation, for it had become insolvent and its assets seized by virtue of legal proceedings and in the custody of the court where they could be administered according to the respective rights of all parties in interest. Younglove v. Lime Co., 49 Ohio St., 663.

Judgment affirmed.


author: Spear, J.

text:
    Webster et al. v. Dwelling House Insurance Company.

      Fire insurance policy — Interest of husband in wife's house used as homestead — Rule of court of equity — Available in suit of law, when — Construction of provisions for forfeiture — Effect of representation of title of property on validity of policy — Examination of property by insuring agent — Sec. S64S, Rev. Stat.—

      ■ — Mortgage of property without consent of insurer.

    1. The interest of a husband in the dwelling house of his wife, used as a homestead by the family, is sufficient to support a recovery by the two jointly on a policy of fire insurance issued to both.
    2. Rules followed in courts of equity respecting forfeitures may be available in a.suit at law where the facts make their application necessary to the ends of justice.
    3. Provisions for forfeitures are to receive, where the intent is doubtful, a strict construction against those for whose benefit they are introduced.
    4. If it be left in doubt, in view of the terms of the instrument and the relation of the contracting parties, whether given words were used in an enlarged or a restricted sense, other things being equal, that construction will be adopted which is most beneficial to the promisee.
    5. Where a farm dwellin g and farm implements are insured by a fire policy issued to a wife and husband, and the dwelling is used and occupied as a family homestead, and the implements are used on the. farm where the dwelling is situate, a representation and warranty in the application that the property is owned by them jointly, should, unless the contrary intent is manifest, be construed in the popular, and not in a technical legal sense, and when so construed will not be held to be untrue simply because the title to the dwelling is wholly in the wife and the title to the personalty wholly in the husband.
    6. The examination required to be made by the agent of an insurance company by section 3643, Revised Statutes, relates to the physical condition of the .property such as an inspection would disclose, and does not relate to the matter of incumbrances. The “change” mentioned in the statute refers to some physical change in the insured property, its use, or its surroundings, and does not relate to a change respecting incumbrances.

      7. Where a policy of insurance stipulates that if any part of the property shall be incumbered by mortgage without the consent of the company, the policy shall be void, such stipulation is not within the provisions of section 3643. And if, after the issuing of the policy and before the loss such incumbrance is created by the insured, without the consent of the company, the policy is thereby invalidated.
    (Decided December 17, 1895.)
    Error to the Circuit Court of Ashtabula county.
    Action on policy of fire insurance issued to Julia L. Webster and'James E. Webster, wife and husband, for $2,000 on dwelling house and $250 on farm implements. Defense of forfeiture: First —That representation and warranty made by insured was that property was owned jointly by them while in fact the house was owned wholly by the wife, and personal property wholly by the husband. Second — That after issue of policy and before loss, insured placed a mortgage lien on the real estate, without notice to or consent of the company, in violation of the terms of the policy. Recovery for amount of insurance on house, no proof being offered of loss or value of personalty. Reversed by circuit court on the ground of error in the charge to the jury.

      Eckoard II. Fitch and A. J. Trunkey, for plaintiffs in error..
    We maintain that the holding of, and construction given to sections 3643 and 3644 of the Revised Statutes by the court of common pleas, is right, and in line with, and sustained by, the decision of this court in. Queen Insurance Company v. Leslie, 47 Ohio St., 409; and that of People's Fire Insurance Company v. Bowersox, 5 C. C. Rep., 444; and United Firemen's Insurance Company v. Mary

      Kukral et al., 7 C. C. Rep., 356. Both of these cases have since been affirmed by thi s court.
    The construction we contend for, and claim has been given to it by this court, has been given by the supreme court of Maine, in construing a statute of that state, in Cannel v. Phoenix Insurance Company, 59 Me., 582.
    The statute makes the effect of the breach of conditions by the party insured to depend upon the actual fact of a material increase of risk, and not only any assumption of the parties with regard to it.
    Such assumption may have some force as an argument in support of the position that the risk was materially increased, but we do not see any good reason for holding that it precludes the plaintiff from raising the question which the statutes makes the decisive test.
    The defendants claimed that they did not take this risk. We find by the policy that they did as•sume it, and then undertook, by means of a condition, to provide for a forfeiture by the insured.
    They insist upon this forfeiture because ‘1 !tis so nominated in the bond ” — in the policy.
    But there is virtue in the laws of other states, besides Venice. The forfeiture which they claim is prohibited by our statute, unless the risk was materially increased by the breach of the condition.

      Squire, Sanders <& Dempsey, for defendant in error.
    There is not, we submit, an intimation to be found in any language used in section 3643, Revised Statutes, that the word “change” refers in any way to the interest of the assured, or to his title, or to incumbrances. It does not include in its reference any defect of title, or misrepresentation as to title, or of the placing of liens upon the property thereafter. To confine the provisions of this statute as to “changes” and “intentional fraud” to the subject matter, in regard to which the legislation is had, and to what precedes in the very sentence in which the words occur,, is but to construe the section grammatically and according to one of the fundamental' rules of construction of- statutes, namely: “All words of a general nature not express and precise, are to be restrained unto the fitness of the subject matter or the person.” Bridgwell v. Starbuck, 34 Ohio St., 280.
    The word “all ” in an act is to be construed in a general or universal sense, according to the demands of sound reason. Stone v. Elliott, 2 Ohio St., 252.
    All words, whether they be in deeds or statutes, otherwise, if they be general and not express and precise, shall be restrained unto the fitness of the matter or person. Steamboat “Messenger” v. Pressler, 13 Ohio St., 225; Tracy v. Card, 2 Ohio St., 231; Aultman v. Seiberling, 31 Ohio St., 201; Schultz v. Cambridge, 48 Ohio St., 659; Lane v. State, 39 Ohio St., 312; Myer v. Seeberger, 45 Ohio St., 234; Howland v. Carson, 28 Ohio St., 628; Elliott v. Shaw, 32 Ohio St., 431.
    The rule of construction sustained by the cases above referred to being applied to the statute under discussion, it is, we submit, perfectly clear that the changes referred to therein, and which may occur after the issuing of a policy, are changes in respect to the building, its physical condition, its surroundings, its insurable value in respect to those things, and those things only, in connection with the building, which were open to the sight and observation of the agent making the examination, or which the agent, in the exercise of proper diligence in the matter, would have discovered. Certainly, had it been the intention of this section to require an examination as to those matters, it would have been so provided.
   Spear, J.

The action of the trial court which was the ground of reversal may be more briefly treated by considering defendant’s requests to charge which were refused than by a review at large of the charge as given.

1. As applicable to its defense of forfeiture by reason of alleged false representation and warranty regarding ownership of property, the defendant requested the court to charge that “No recovery can be had in this action for the loss of any property described in the policy if the jury are satisfied from the evidence that Mrs. Webster had no interest or ownership in the personal property mentioned in the policy, and that Mr. Webster had no ownership or interest in the dwelling-house described in the policy. ”

The claim of the company on this branch of the case was and is, that in the face of the representation and warranty of the insured that they jointly owned the property, there could be no recovery on a policy issued to them jointly so long as the proof disclosed that the wife was sole owner of the dwelling and the husband sole owner of the personalty ; in effect that the agreement was violated the moment it was made, and although the parties had paid the company $45 as premium, which the company retained, yet that there never was any valid contract, and the insured, although acting in entire good faith, never had a dollar of insurance on their property.

Perhaps, technically speaking, the claim is not one of forfeiture, for forfeiture is a deprivation or destruction of aright in consequence of the non-performance of some obligation or condition, and we are not accustomed to associate the idea of-forfeiture with a contract which has not existed ; but manifestly the law as to forfeiture will furnish a guide to the proper disposition of the question. Relief against forfeitures is matter of equitable cognizance, but rules applicable to the subject are resorted to in courts of law, and there seems no good reason why the principles which g’overn courts of equity should not be available in a suit at law where the facts make such cognizance necessary to the ends of justice.

A primal rule is that forfeitures are not favored either in equity or at law; indeed, it is declared as a universal rule that courts of equity will not lend their aid to enforce a forfeiture. Following as a corollary from this, provisions for forfeitures are to receive, when the intent is doubtful, a strict construction against those for whose benefit they are introduced. West v. Ins. Co., 27 Ohio St., 1; Manhattan Ins. Co. v. Smith, 44 Ohio St., 156; Blackwell v. Ins. Co., 48 Ohio St., 533; Livingston v. Sickles, 7 Hill, 255; Catlin v. Springfield Ins. Co., 1 Sumn., 434; Breasted v. Farmers' Loan and Trust Co., 4 Seld.,305. As said by Sherman, J., in Bond v. Swearinger, 1 Ohio, 403, respecting a statutory forfeiture: “Whatever may be the nature or kind of forfeiture, it is never carried by construction beyond the clear expression of the statute creating it.” And by Porter. J., in Hoffman v. Ǣtna Ins. Co., 32 N. Y., 413: “It is a rule of law, as well as' of ethics, that when the language of a promisor may be undérstood in more senses than one, it is to be interpreted in the sense in which he had reason to suppose it was understood by the promisee. Potter v. Ins. Co., 5 Hill, 149 Barlow v. Scott, 24 N. Y., 40, It is also a familiar rule of law, that if it be left in doubt, in view of the general tenor of the instrument and the relation of the contracting parties, whether given words were used in an enlarg-ed or a restricted sense, other things being equal, that construction should be adopted which is most beneficial to the ¡aromisee. Coke’s Litt., 183; Bacon’s Law Maxims, Reg., 3; Doe v. Dixon, 9 East, 16; Marvin v. Stone, 2 Cowen, 806. This rule has been very uniformly applied to conditions and provisions in jjolieies of insurance, on the ground that though they are inserted for the benefit of the underwriters, their office is to limit the force of the principal obligation. Yeaton v. Fry, 5 Cranch, 341; Palmer v. Ins. Co., 1 Storey’s R., 364-5; Petty v. Ins. Co., 1 Burrows, 349.” See also Pipe Line v. Ins. Co., 145 Pa. St., 346 ; Chandler v. Ins. Co., 21 Minn., 85; Anderson v. Fitzgerald, 4 H. of L. Cas., 484; Riddlesbarger v. Ins. Co., 7 Wall, 386; Baley v. Ins. Co., 80 N. Y., 21; Burleigh v. Ins. Co., 90 N. Y., 221; Griffey v. Ins. Co., 100 N. Y., 417.

Applying'the foregoing rules, how stands the case?

This defense is based entirely on the language of the representation. In giving construction to this representation, what meaning should be placed on the words used? Manifestly such as was intended by the applicants, and which the company knew, or ought to have known, they intended. Should the word “jointly” receive construction in accordance with strict legal ideas ? If so, does it mean that the plaintiffs were joint tenants as defined by Blackstone, giving right of survivorship ? An Ohio lawyer, even, would hardly have that in mind, for joint tenancy does not exist in Ohio. Should the word be held to imply tenancy in common, where two or more hold by an undivided possession but several freeholds, neither - being entitled to an exclusive part, but each entitled to occupy the whole in common with the others, and at the death of one his interest to pass to his heirs and not to the survivors? Plaintiffs claim that they did in fact state to the agent who filled up the application the exact condition of the title, and it was not their fault if he did not so write it. But, be this as it may, and even though the word would suggest tenancy in common to the legal mind, these plaintiffs were not lawyers; the property was in the country, and they were, without doubt, plain country folk. Who would suspect them of intending to be understood that their ownership was that of joint tenants, or of tenants in common, within legal definitions ? Rather is it natural to presume that they used the word in the popular sense, implying that they owned the property together, and that no other person was interested in it. And they did. They were in the joint possession of the real estate, and were enjoying- the use of the personalty together, and no third person was the owner, in any sense, of any part of it. While the title to the real estate was in the wife, and while the husband had no estate in it, yet he had, by force of recent statutes, an inchoate dower right in it, liable to become vested in ease she should die seized of it leaving him her widower, a substantial property right, capable of valuation in a proper proceeding, and, under section 3L11, Revised Statutes, he could not, even during- her life, their marital relations remaining, be excluded from her dwelling.

Nor was the alleged failure to state the exact ownership prejudicial to the company. The purpose of statement of ownership is to prevent the making of wagering contracts, or such as would afford a temptation to the insured to purposely or negligently permit the property to burn; and this purpose would seem to be fully accomplished when it appears that the wife and husband own all the property covered by the policy, and are in possession and use of it in common, although there be a small portion of which the wife has not leg’al ownership, for usually there is no more vigilant guardian of the husband’s interests than is the wife. The property is used by both, for their common comfort and welfare, and that of the family. In the husband’s absence the wife has, ordinarily, the entire charge of it, and her'interest in its preservation is scarcely second to his.

If the company may .stand on a strict technical construction of the words used, and hold the plaintiffs to them though they did not fully apprehend their legal effect, and ought not reasonably to have done so, it is placed in the position of tempting patrons into the payment of premiums, and into resting on a mistaken belief that they have indemnity, only to find, when the trial comes, that their reliance had been upon a broken reed. A court cannot sustain such a contention.. If technical forfeitures are to be maintained on such grounds, confidence in commercial faith will be weakened and important property rights impaired. It would .be, as it seems to us, carrying technicality to 'a most unreasonable length, to hold that the representation as to ownership shall forfeit the policy.

Whether a joint action could have been maintained for the personal property we need not determine for no proof of loss of personal property, or its value having been offered, that claim, dropped out. It was held in Dwelling House Ins. Co. v. Leedy et al., decided at January term, 1894, though not reported, that the interest of the husband in the wife’s dwelling house used as a homestead by the family, is sufficient to support a recovery by the two jointly on a policy issued to both, and we but follow that case in holding that the action was properly brought in. the name of both in this case.

The instruction was properly refused,

2. Defendant also requested the court to charge that “If the'plaintiff, after the issuing of the policy sued upon and before the loss, placed a mortgage lien upon the real estate upon which the house burned was situated, without notice to the company, or its consent to such incumbrance, such action on the part of the plaintiff was in violation of the terms of the policy and rendered the policy void, and the plaintiffs, if the jury find the facts as above stated, cannot recover in this action.”

This the court refused to give, and charged in substance that the creating of a mortgage incumbrance after the issuing of the policy and before the fire, without notice or consent by the company, would not of itself constitute a defense, but that it would constitute a defense if the jury should find that the giving of such mortgage materially increased the risk. This holding rests upon the proposition that the facts bring the case within the operation of section 3643, Revised Statutes, and' that it is governed by that part which reads as follows:

“Any person, company or association hereafter insuring any building or structure against loss or damage by fire or lightning-, by a renewal of a policy heretofore issued, or otherwise, shall cause such building or structure to be examined by an agent of the insurer, and a full description thereof to be made, and the insurable value thereof to be fixed by such agent; in the absence of any change increasing- the risk without the consent of the insurers, and also of intentional fraud on the part of the insured, in case of total loss the whole amount mentioned in the policy or renewal upon which the insurers receive a premium, shall be paid; and in case of a partial loss, the full amount of the partial loss shall be paid.” * * *

No question is made as to the import of the language of the policy in respect to the creating of mortgage liens. It is so clear that its meaning’ could not have been misapprehended,' and is to be enforced as written unless the statute controls the case.

We are not able to agree with the construction of this statute given by the learned trial judge. As we construe the statute, the examination required of, the agent before taking the risk, relates to the physical condition of the property such as an inspection would disclose, and does not relate to the matter of incumbrances, and hence thechange referred to in the statute relates to some physical change in the insured building, its use, or its surroundings, which would by reason of changed condition, naturally increase the hazard incurred by the company, and does not relate to a change respecting incumbrances. And that where a policy of insurance, as in this case, stipulates that if any part of the property shall be incumbered by mortgage without the consent of the company the policy shall be void, such stipulation is not within the provision of section 3643, and the right of the company to make such condition, and of the insured to accept it, remains notwithstanding the statute. So that, if, after the issuing of the policy and before the loss, such incumbrance is created by the insured, without the consent of the company, the policy is thereby invalidated.

The question involved is not different in principle from one of the questions disposed of in Sun Fire Office v. Olark, decided October 29, 1895, 34 L. B. 281, and the reasoning of the opinion in that case is so satisfactory, and so well supports the conclusion here reached, that further discussion is deemed unnecessary. It is further supported by the able opinion of the learned judge of the circuit court in Dwelling House Ins. Co. v. Webster et al., 7 O. C. C., 511, to which special reference is here made. Our conclusion is also in harmony with the decision in Iris. Co. v. Leslie, 47 Ohio St., 409, and not inconsistent with the judgment of this court affirming Ins. Co. v. Bowersox, reported in 5 O. C. C., 444, and the judgment affirming- Ins. Co. v. Krukal, reported.in 7 O. C. C., 356, when the records in those cases are understood.

It follows that in refusing this instruction, and in the charge as given, the common pleas erred.

Judgment affirmed.