author: Dickman, J.

text:
    McMonigal v. Brown.

      Promissory notes — Demand and notice — Waiver.
    On the 16th of-January, 1877, G-. executed to B., or order, his promissory note payable one day after date, with interest. On the 9th of March, 1877, B. indorsed and delivered the note to M. At the time of indorsement, it was mutually agreed between the indorser, indorsee, and maker, that Jhe maker should have an extension of time in which to pay the note, “ to about the first of April, 1877.” Held: That the indorser waived demand, and notice of the non-payment of the note.
    (Decided January 10, 1888.)
    Error to the District Court of Fairfield County.

      John S. JBrasee, for plaintiff in error.
    The law of demand and notice is for the sole benefit of the indorser. It is settled that the indorser can waive this benefit as well by acts and circumstances from which a waiver can be inferred, as by an express written or verbal contract.
    It is clear, from the facts pleaded, that the indorser understood, at the time of the delivery of the note, that the maker could not then pay it, and he consented that the same might be considered as not then payable. The fact that by the understanding of all the parties the note was not expected to be paid until about April first, is conclusive of the other material fact that it was not then, March ninth, to be considered payable.
    The plaintiff, therefore, insists that the usual demand and notice to follow the delivery were not necessary in this case, or were waived.
    It may be claimed, however, that although demand and notice were not required to immediately follow March 9th, the day of the indorsement, yet they were necessary “about April 1st,” when it was expected the note would be paid.
    The parties did not make a valid contract for the extension of the time of the payment of the note. There was no definite time fixed, no consideration appears, nor is there anything to indicate that the maker and payee contemplated that a right of action on the note was suspended till “about April 1st,” or any other time. McMonigal might have instantly, upon the indorsement, sued the maker, and had he answered the facts here pleaded, they would not have constituted a defense.
    These views are supported and enforced by the holdings in Hudson v. Wolcott, 39 Ohio St. 618.

      G. W. McCleery and Tall Slough, for defendant in error.
    The averment, considered and construed fairly andJ justly, means, in law, that by the reciprocal agreement of the maker, indorser and indorsee, there was an extension to the maker of time to April 1,1877, to pay the note; that this mutual agreement was supported by a valuable consideration in which all three of the parties were beneficiaries, viz: the maker to have the use of the money until April 1, 1877, for interest at the rate named in the note; the indorsee to receive (under at least the implied agreement of the maker to pay such interest) from the maker such interest for such longer use of the money ; and the indorser to be relieved, for the period of such extension, from liability to be called on by the indorsee for payment, or with notice of demand and non-payment. From March 9, 1877, until “about the first of April, 1877,” meant, to the minds of all the parties to the “mutual agreement,” from March 9,1877, until April 1, 1877.
    If we are right, in the interpretation of this averment of “ mutual agreement,” then the plaintiff's right of action was suspended until April 1, 1877, by that agreement; and if his right of action was thereby so suspended, then it is clear that demand and notice, within a reasonable time after April 1,1877, at least, were necessary.
    I. Every indorsement of a bill of exchange is a new contract, and each indorser becomes- to the subsequent holder a new drawer. Swan's Treatise, 11th ed. 719; Field v. Nickerson, 13 Mass. 131 to 138; Story on Bills of Exchange, p. 122, sec. 108; Van Staphorst v. Pearce, 4 Mass. 262; Ballingalls v. Gloster, 3 East, 482-3; Edwards on Bills, 288; Case v. Heffner, 10 Ohio, 180, 185; 2 Daniel Neg. Inst., sec. 669, and p. 538.

      II. Indorsee may sue indorser only after due diligence to collect of drawee and notice to indorser. Edwards on Bills, 258, 261; Story on Bills of Exchange, secs. 109, 112; Kelsey v. Ross, 6 Blackf. 536; Bishop v. Yeazle, 6 Blackf. 127; James v. Nicholson, 6 Blackf. 288; Treadway v. Drybread, 4 Blackf. 20; Spears v. Clark, 7 Blackf. 283; Herald v. Scott, 2 Ind. 55-6; Marshall v. Pyeatt, 13 Ind. 257; Litterer v. Page, 22 Ind. 337; Bernitz v. Stratford, 22 Ind. 320-1; Miller v. Deaver, 30 Ind. 371; Rice v. Wessom, 11 Met. 400; Werk v. Bank, 8 Ohio St. 302; Davis v. Herrick, 6 Ohio, 55; Bashford v. Shaw, 4 Ohio St. 263; Rev. Stats., sec. 3176; Swan’s Treatise, 11th ed., 719; Field v. Nickerson, 13 Mass. 131, 138; Robinson v. Ames, 20 John. 146; 1 Parson’s Con. 256; Murray v. Judah, 6 Cow. 484.
    III. What is due diligence is a question of law. Townsend v. Lorain Bank, 2 Ohio St. 349-354; Davis v. Herrick, 6 Ohio, 55, 66; Walker v. Stetson, 14 Ohio St. 89, 96; Wheeler v. Field, 6 Met. 290-5; Pollard v. Bowen, 57 Ind. 235-6; Lawson v. Farmers’ Bank, .1 Ohio St. 213; Whitewell v. Johnson, 17 Mass. 453; Byles on Bills, 325; 2 Parsons on Cont. (5th ed.) 28-29; Prescott Bank v. Caverly, 7 Gray, 221; Rev. Stats., sec. 3176.
    IV. An instrument indorsed after due is equivalent to a new bill drawn by the indorser on the maker, payable at sight and demand, must be made in reasonable time, and notice given to indorser, else he is not liable. Swan’s Treatise; Field v. Nickerson, 13 Mass. 134-8; Colt v. Barnard, 18 Pick. 261; Byles on Bills, 326-7; Berry v. Robinson, 9 John. 121: Gilbert v. Dennis, 3 Metc. 496; 1 Daniel on Neg. Inst., p. 579; Wilby v. Bassenhorst, 13 Week. L. Bull. 13.
    V. In such case (i. e., indorsement after maturity) immediate .notice must be given. Whitewell v. Johnson, 17 Mass. 449-53; Eagle Bank v. Chapin, 3 Pick. 183; Talbot v. Clark, 8 Pick. 51, 53; Lawson v. Farmers’ Bank, 1 Ohio St. 206; Gilbert v. Dennis, 3 Met. 496.,
    VI. The same rule applies to checks, bills of exchange, and promissory notes in regard to diligence in making demand, etc. Pollard v. Bowen, 57 Ind. 232; Rev. Stats., sec. 3176.
    VII. If petition in action by indorsee against indorser fails to aver demand and notice, it is insufficient on demurrer. Pollard v. Bowen, 57 Ind. 232, 235; Griffin v. Kemp, 46 Ind. 172, 176-7.
    VIII. A note past due is negotiable. 1 Daniel Neg. Inst. 579; Baxter v. Little, 6 Met. 7.
    This case is clearly and palpably distinguishable from Hudson v. Wolcott, 39 Ohio St. 618, cited by counsel for plaintiff in error.
   Dickman, J.

The plaintiff in error, William H. McMonigal, commenced his original action in the court of common pleas of Fairfield county, against the defendant in error, John W. Brown. In his petition he alleged, “ that on the 16th of January, 1877, one George T. Gould, by the name of G. T. Gould, made and delivered to said John W. Brown his certain promissory note for the sum of $593.52, with interest at eight per cent.; that said note was due and payable one day after its said date; that afterwards, to-wit, on the 9th day of March, A. D. 1877, said John W. Brown, as the payee of said note, and for a valuable consideration then received by him from the plaintiff, indorsed, transferred, assigned and delivered said note to the plaintiff, and it was then and there mutually agreed between the defendant, and said Gould and the plaintiff, that said Gould should have an extension of time in which to pay said note, which indulgence was to no certain date, but to about the first of April, 1877, and defendant thereby 'waived formal demand and notice of the non-payment of said note by said Gould.”

The court of common pleas rendered final judgment for the defendant on a demurrer to the petition, and the judgment was affirmed by the district court.

It is contended in behalf of the defendant in error that no cause of action was stated in the original petition, because it contained no averment of demand of payment from the maker, and notice of non-payment to the indorser; while it is claimed by tbe plaintiff in error that, if demand and notice were ever necessary, they were waived under and by the facts set forth in the pleading.

A waiver of demand and notice may be either verbal or in writing. It may be expressed totidem verbis, or implied from the words or acts of the party. It may be shown from ciz’cumstances, or may result from an understanding between the parties, which is'of a character to satisfy the mind that a waiver is intended. Azzy agreement between the parties to negotiable paper, or language of the indorser calculated to put a holder of reasonable prudence off his guard, and induce him not to make demand or give notice of dishonor, will obviate the necessity of taking those steps. Fuller v. McDonald, 8 Me. 213; Boyd v. Bank of Toledo, 32 Ohio St. 526; see also Moyer’s Appeal, 87 Penn. St. 129.

It has accordingly been held by high authority that whez’e the indoz’ser by agreement with the holder before the maturity of the note, agrees to extend the time of payznent, there is a waiver of all demand and notice. Amoskeag Bank v. Moore, 37 N. H. 539; Ridgway v. Day, 13 Penn. St. 208. And we see no good reason why the same rule should not, for the znost part, apply where an extension of time or forbearance is granted by an agreement between the indorser, holder, and maker, after the maturity of the note. See Hudson v. Wolcott, 39 Ohio St. 618. It is said by Parsons (1 N. & B. 594): “ The expression ‘waiver of demand and notice after maturity’ though often used, is somewhat inaccurate. Properly speaking, demand and notice can only be waived before maturity; but the party may, by words or acts subsequent to that time, relieve the plaintiff from the necessity of proving demand and notice, or render the fact that no demand was znade or notice given entirely immaterial.”

To charge an indorser on a note negotiated after it is overdue, demand mzzst be made upon the maker, and notice given to the indorser, within a reasonable time after the indorsement, unless such demand and notice are waived by the indorser. Bassenhorst v. Wilby, 45 Ohio St. 333; Sanborn v. Southard, 25 Maine, 409; Tyler v. Young, 30 Penn. St. 143; Beebe v. Brooks, 12 Cal. 308. What is a reasonable time in which to demand payment, when a note is negotiated after it is due, must be determined by the circumstances of each case; but, it has been laid down by a number of the authorities, that if the parties reside in the same place, the instrument should be presented for payment the next day after it is received, at furthest; and that where the maker of the note resides in a different place from the indorsee, it would be deemed an unreasonable delay for the indorsee to neglect to forward the instrument for demand the next day after receiving it. Byles on Bills (7 Am. Ed. by Sharswood), 212-13; Piner v. Clary, 17 B. Mon. 645; Thomson on Bills, 297; Chitty on Bills (N. Y. Ed. 1830), 271; Dan. Neg. Inst. § 605.

The note, upon which the original action was founded, was past due when indorsed, but the facts stated in the original petition plainly indicate that the indorser did not intend to avail himself of any advantage he might derive, from want of demand or notice at the maturity of the note. After the maturity of the note, and at the time of his indorsement, he was well aware that the maker was then unable to pay it, and that a presentment of the note for payment then would be useless. And it is evident from the indulgence given for the payment of the note, that the indorser, if he ever contemplated demand and notice, certainly waived them until the expiration of many days after his indorsement. It is not to be presumed that he relied upon a presentment for payment within the time during which he and the holder had virtually dispensed with payment, namely, between the date of the indorsement and “ about the first of April.” Hudson v. Wolcott, 39 Ohio St. 618. While, therefore, it is manifest that the indorser treated the failure to present the note at maturity for payment, and to give notice of dishonor, as unnecessary and immaterial, he also clearly waived the necessity of taking the same steps until a considerable period should elapse after the maturity and indorsement of the note.

It is contended, however, that a new time of payment was fixed, by the extension to “about the first of April, 1877;” and that demand and notice within a reasonable time after the first of April were necessary, in order to make the indorser liable. The extension lo “about the first of April, 1877,” in our view, designated a time so indefinite as to be calculated to mislead the indorsee, and put him in doubt and off his guard, in protecting his rights as. against the indorser. It was beyond the power of the indorsee to determine definitely, when the note was payable by the terms of the extension. To charge a drawer or indorser, demand should be made on the day of the maturity of the note or bill. If made before the note or bill falls due, it is unavailing; and if made after, it is generally insufficient for the purpose of charging the drawer or indorser. The defendant in error, having contributed towards rendering the holder of the note incapable of definitely determining the day of payment, and of strictly complying with the rules of commercial law, in respect to demand and notice, he is to be held as intending to waive such compliance. We have not been able to reach the conclusion that the indorser, after having received a valuable consideration, designed to place his indorsee in a situation of doubt and uncertainty, and afterwards to hold him rigidly to the requirement of demand and notice, in order that ho might evade an indorser’s liability.

We are of opinion, therefore, that the district court erred in affirming the judgment of the court of common pleas, and that the judgments of those courts should be reversed, and the cause remanded for further proceedings.

Judgment accordingly.


source: Caselaw Access Project

author: Minshall, J.

license: Public Domain

text:
    Lemmon v. Beeman.

      Infant — Disaffirmance of contract

    An infant may, Before or on arriving at age, disaffirm a purchase of personalty, other than necessaries, made hy him during his minority, and recover hack the consideration paid without restoring the property sold and delivered him, where it has heen taken from him, whether rightfully or not, upon an execution against a third person. In .such case he is not required, as a condition of his right to recover, to take any steps to recover the property taken from him. It is sufficient, in such case, that the property ceases to be in his possession or subject to his control.
    (Decided January 10, 1888.)
    Error to the District Court of Sandusky County.
    The plaintiff below sued the defendant for money paid by him upon the purchase of a certain stock of drugs of the decedent, the plaintiff being a minor at the time of the purchase, and having elected on becoming of age to rescind the contract. On the trial of the case in the common pleas the defendant excepted to a part of the charge of the court, and took a bill of exceptions setting forth the evidence and the charge to which exception was taken. The judgment was for the plaintiff and was affirmed in the district court. The part of the charge, to which exception was taken, is to the effect, that upon the facts of the case, the plaintiff could recover without returning the property.
    The facts are stated in the opinion.

      John M. Lemmon, for plaintiff in error.
    Notwithstanding Beeman was a minor, he was of years of discretion and entirely capable of receiving title to the property.
    An executed sale of personal property, without fraud, to an infant who has reached years of discretion, cannot be avoided by him at his mere will. He is not at liberty, after having bought property of an innocent vendor, to stand by and allow a trespasser, a mere wrong-doer, to take it away from him and then fall back upon the vendor for.the purchase-money.
    An infant can only avoid his contracts so far as they remain unexecuted. Swan’s Treat. (10th ed.) 602.
    An infant’s executory contracts may be void if the vendor can be put in statu quo. Robinson v. Weeks, 8 Am. L. Reg. (N. S.) 554; Weeks v. Leighton, 5 N. H. 343; Harney v. Owen, 4 Blackf. 337.
    If an infant sell goods and get his pay “ he cannot claim his goods without restoring the consideration received.” Hamb

      lett v. Hamblett, 6 N. H. 339; Badger v. Phinney, 15 Mass. 359; Roof v. Stafford, 7 Cow. 182; Boody v. McKenney, 23 Me. 525; Hillyer v. Bennett, 3 Edw. Ch. 222; Bozeman v. Browning, 31 Ark. 364, 376; Bailey v. Barnberger, 11 B. Mon. 113-115; Smith v. Evans, 5 Humph. (Tenn.) 70; Stuart v. Baker, 17 Tex. 417; Riley v. Mallory, 33 Conn. 201-207; Farr v. Summer, 12 Vt. 28; Breed v. Judd, 1 Gray, 455; Kerr v. Bell, 44 Mo. 120; Kitchen v. Lee, 11 Paige Ch. 107; Ottman v. Moak, 3 Sand. Ch. 431; Bartholomew v. Finnemore, 17 Barb. 428.
    If the parties can be placed in statu quo, the infant may return what he received and take back what he parted with. Bish. Con., secs. 264, 267; Benj. Sales, sec. 27; Pollock Prin. Con. 42; Hall v. Butterfield, 29 Alb. L. Jour. 210; 2 Kent Com. 236-240; Starr v. Wright, 20 Ohio St. 97; Curtiss v. McDougal, 26 Ohio St. 66; Harner v. Dipple, 31 Ohio St. 72; Hubbard v. Cummings, 1 Me. 13; Bartlett v. Cowles, 15 Gray, 445; Carr v. Clough, 6 Foster, 280; Taft v. Pike, 14 Vt. 405; Hill v. Anderson, 5 S. & M. 216; Parker v. Elder, 11 Humph. 546; Ex parte Taylor, 8 De G. M. & G. 254, 258; 1 Chit. Con. (11 Am. ed.) 219; O’Neil v. Railway Co., 33 Minn. 489; Hoyt v. Wilkinson, 57 Vt. 404; 47 Am. Rep. 209.

      J. H. Rhodes, for defendant in error.
    May the infant, having arrived at age, disaffirm the contract and recover back the consideration money without returning the property or its equivalent ?
    The goods purchased were not necessaries. House v. Alexander, 105 Ind. 109; s. c. 55 Am. Rep. 189; Miller v. Smith, 26 Minn. 243; s. c. 37 Am. Rep. 408; Whitcomb v. Joslyn, 51 Vt. 79; s. c. 31 Am. Rep. 679.
    When goods not necessaries are sold to an infant who loses or squanders them during infancy except by his own tortious or criminal act, he may, on coming of age, disaffirm the contract and recover back the consideration without returning the goods so lost. 1 Par. Con. 321; Green v. Green, 69 N. Y. 553; s. c. 25 Am. Rep. 233; Miller v. Smith, supra; Whitcomb v. Joslyn, supra; Shurtleff v. Millard, 12 R. I. 272; s. c. 34 Am. Rep. 640-643; Eureka Company v. Edwards, 71 Ala. 248; s. c. 46 Am. Rep. 314; Tyler on Infancy and Cov. 80; Cresinger v. Welch, 15 Ohio 156; 7 Wait Ac. and Def. Tit. Infancy, 142; Pollock Prin. Con. 42; Briggs v. McCabe, 27 Ind. 327, 330; Carpenter v. Carpenter, 45 Ind. 142; Breckenridge v. McAfee, 54 Ind. 142; House v. Alexander, 4 N. E. Rep. 891; Bingham v. Barley, 55 Tex. 88; s. c. 40 Am. Rep. 802.
    Upon disaffirmance by the infant he becomes divested of the title to the property, and it immediately revests in the vendor, but if the property be lost or squandered during infancy, the seller is remediless. Tyler Inf. and Cov. 79.
    There is no distinction in the law as to the rights of an infant, either on principle or authority between cases which arise upon real and personal property. Miller v. Smith, supra; Whitcomb v. Joslyn, supra; Eureka Company v. Edwards, supra.

   Minshall, J.

In 1881, Beeman,'then a minor, purchased of James Lemmon, then in life but since deceased, a certain stock of drugs, for which he paid at the time $500, the price as agreed on between them. The stock was in a store in the state of Illinois; and the sale was made by Lemmon through his agent, Dr. Everett, who sometime before had sold the stock to Lemmon, and, as his agent, had continued in possession of the property and conducted the business for him. In a short time after the sale had been made to Beeman, the goods were taken from him under an execution issued upon a judgment against Everett, upon the claim of the creditor of the latter, that they belonged to him and not to Lemmon. Bee-man made no effort to recover the property; and, in a short time after he became of age (which was in 1882) disaffirmed the contract, presented a claim to the administrator of Lemmon’s estate for the money he had paid on the purchase, and demanded its return, which was refused and the claim rejected.

No point is made as to the ownership of the goods; it is averred in the petition, and must be taken as the fact, that they belonged to the deceased at the time of the sale to Bee-man. Again there is no room for a claim, nor is it made, that the property purchased was in the nature of necessaries, and the contract, for such reason, incapable of being dis-affirmed ; nor is it claimed that the decedent or his agent was in any way deceived as to the age of Beeman at the time the sale was made : The only question presented upon the record is, whether upon the facts as stated, the minor had the right, on becoming of age, to rescind the contract and recover the consideration he had paid, without returning the property that had beeu sold and delivered to him.

The true doctrine now seems to be that the contract of an infant is in no case absolutely void. 1 Par. Cont. 295, 328; Pol. Cont. 36; Harner v. Dipple, 31 Ohio St. 72; Williams v. Moor, 11 M. & W. 256. An irifant may, as a general rule, disaffirm any contract into which he has entered, but, until he does so, the contract may bo said to subsist, capable of being made absolute by affirmance, or void by disaffirmance, on his arriving at age ; in other words, infancy confers a privilege rather than imposes a disability. Hence, the disaffirmance of a contract by an infant is the exercise of a right similar to that of rescission in the case of an adult — the ground being minority, independent of questions of fraud or mistake. But, in all else, the general doctrine of rescission is departed from no farther than is necessary to preserve the grounds upon which the privilege is allowed; and is governed by the maxim that infancy is a shield and not a sword. He is not in all cases, as is an adult, required to restore the opposite party to his former condition; for if he has lost or squandered the property received by him in the transaction that he rescinds, and so unable to restore it, he may still disaffirm the contract, and recover back the consideration paid by him without making restitution ; for, if it were otherwise, his privilege would be of little avail as a shield against the inexperience and improvidence of youth. But when the property received by him from the adult is in his possession, or under his control, to permit him to rescind without returning it, or offei’ingto do so, would be to permit him to use his privilege as a sword rather than as a shield.

This view is supported not only by reason, but by the greater weight of authority. It was recognized and applied by this court in Cresinger v. Welch, 15 Ohio, 156, decided in 1846. The following is the language used by Mr. Tyler on the subject: “ If the contract has been executed by the adult, and the infant has the property or consideration received, at the time he attains full age, and he then repudiates the transaction, he must return such property or consideration, or its equivalent, to the adult party. If, however, the infant has wasted or squandered the property or consideration received during infancy, and on .coming of age repudiates the transaction, the adult party is remediless.” He then adds that, “There are expressions of judges and text-writers against this latter proposition, but,” he says, “ the weight of authority is in harmony with it, and is decidedly in accord with the general principles of law for the protection of infants.” Tyler Inf., 2d ed., 80, and cases cited by the author. See, also, the case of Price v. Furman, 27 Vt. 268, aud the notes thereto of Mr. Ewell in his Leading Cases on Infancy and Coverture, 119. After an exhaustive review of the cases, this author says, “ The true doctrine, and the one supported by the weight of authority (at least in the United States), would seem to be that, where an infant disaffirms his executed contract after arriving at age, and seeks a recovery of the consideration moving from him, and where the specific consideration received by him remains in his hands in specie at the time of the disaffirmance, and is capable of return, it must be returned by him; but if he has during infancy wasted, sold or otherwise disposed of, or ceased to possess the consideration, aud has none of it in his hands in kind on arriving at majority, he is not liable therefor, and may disaffirm without tendering or 'accounting for such consideration.”

This statement of the law, supported as it is, not only by the greater weight of authority but also of reason, meets with our full approval. There is, however, much conflict in the decisions of the different states, greater, perhaps, than upon any other question connected with the law of infancy (Met. Cont. 76); but we deem it unnecessary to attempt to review or discuss them, for the very good reason, that it has been • done with thoroughness and ability by the authors just referred to.

See, also, the notes of Mr. Ewell to the recent case of Adams v. Beall, decided by the Maryland Court of Appeals, 26 Am. L. Reg. 760.

We have been cited by counsel for the defendant below to a number of the previous decisions of this court, supposed to affect the right of the plaintiff to recover; but a careful examination will disclose that such is not the case. In Starr v. Wright, 20 Ohio St. 97, a conveyance had been made by a father to his minor son, it being without any consideration, and intended to defraud creditors; and, during minority, the son had reconveyed to the father to enable him to raise money and pay his creditors, who for a full consideration then conveyed to the defendant. The court denied the right of the son on arriving at age to disaffirm his deed of reconveyance. Being the voluntary grantee of his father, the son had done no more than was his moral duty to do, and what he might have been compelled to do in favor of creditors and purchasers. The court applied the maxim that infancy is a shield and not a sword. The case is quite analogous in principle to the leading one of Zouch v. Parsons, 3 Burr. 1794, decided by Lord Mansfield in 1765. It was there held that where an infant does what he might have been compelled by a court of equity to do, he can not afterwards disaffirm his act. In Harner v. Dipple, 31 Ohio St. 72, the question was .whether an undertaking executed by an infant for stay of execution was void, or only voidable. The court held that it was voidable only, and might therefore be, as it had been, affirmed by the infant on arriving at age. In Curtiss v. McDougall, 26 Ohio St. 67, it appears an infant had purchased a team of mules, and at the same time had executed a mortgage on them to secure the purchase-money. He afterwards sold the property to his father, who brought an action in replevin against an assignee of the mortgage to recover possession. The claim was based on the theory that, by the subsequent sale of the mortgaged property, the infant had disaffirmed the mortgage, as he would have had a right to do. It is difficult to see how the sale of the property purchased could be treated as a disaffirmance of the contract by which he had acquired it; it' was rather an affirmance than a disaffirmance of that contract, and entirely consistent with the existence of the mortgage that he had given to secure the payment of the purchase-money. Again, there was no positive disaffirmance by the infant, the claim being made by a third person, his grantee, although the rule is well settled that the privilege is personal to the infant, and is not available to third persons. (1 Par. Cont. 329.) But the court placed its decision upon the broader ground, that it was not within the privilege of, the infant to disaffirm the security he had given for the purchase-money, without also avoiding the purchase, saying that, “ in such case if the infant would rescind a part he must rescind the whole contract, and thereby restore to the vendor the title acquired by the purchase; again applying the principle that infancy may be used as a shield but not as a sword. So that the claim of the plaintiff in replevin defeated his right to recover, as a disaffirmance of the mortgage would necessarily have divested the title by which he claimed the property.

It is apparent that none of these cases, when rightly considered, affect the right of the plaintiff to disaffirm the purchase made of the decedent, and to recover the consideration paid. Neither he, nor any one claiming under him, makes any claim to the property purchased. By his disaffirmance the title has been restored to the estate of the vendor, and the property, or its value, may be recovered by the administrator, if it was wrongfully taken by the sheriff under the execution against Everett.

Judgment affirmed.


author: Owen, C. J.

text:
    Caldwell v. Caldwell.

      Executors and administrators — Sale of lands — Purchase by administrator frompwchaser at sale — Validity—Action to set aside — Estoppel.
    1. Where an administrator with the will annexed, whose duty it becomes to convert lands of the testator into money, procures an order of sale from a probate court, makes sale of the lands in accordance therewith, procures a confirmation of such sale, executes a deed to the purchaser to be delivered upon his complying with the terms of the sale, and, before any part of the purchase-money is paid, obtains a deed to himself from the purchaser of the lands in fee-simple upon consideration of the assumption of the latter’s obligation to pay for the lands the sum bid, and release him from such payment, such transaction is void, and the lands are still unadministered, and subject to the trusts created by the will, whether or not he acted in good faith or profited by the transaction.
    2. A beneficiary of the estate, interested in a proper distribution of the proceeds of the lands, who is present in the probate court during a settlement of the administrator’s account, in which he charges himself with the purchase-price of the lands, is not thereby estopped to demand that the deeds to and from the purchaser be set aside in order to obtain a re-sale of the lands — the administrator refusing to make such sale and claiming the lands as his own.
    3. The sale having been made in August, 1878, and such settlement — by partial account — in December, 1881, the beneficiary is not estopped by lapse of time or acquiescence to compel re-sale. The court of common pleas is the proper tribunal to which to apply for an order setting aside the deeds to and from the purchaser for the purpose of obtaining a re-sale of the lands.
    (Decided January 10, 1888.)
    Error to tbe Circuit Court of Crawford County.
    The jdaintiff brought his action in the court of common pleas of Crawford county to compel Alexander J. Caldwell, administrator with the will annexed, of the estate of Samuel S. Caldwell, deceased, to sell at administrator’s sale certain lands of the testator. The defendant had been ordered to sell them by the probate court of the county; had made a sale to John Scott, who soon thereafter deeded them to the administrator individually. The plaintiff’s case assumed that the sale from Scott to the administrator was void, and that the lands were still subject to administration in the hands of the latter.
    The case was taken by appeal to the circuit court, which, on request of the plaintiff, made the following finding of facts from the evidence, and gave judgment for the defendants :
    “1. On or about November 30, 1877, Samuel S. Caldwell, father of the plaintiff and of the defendants, Alexander J. Caldwell and Florence Me. L. "Welsh, died siezed in fee of the real estate described in the amended petition, and leaving a last will and testament which was duly proved and admitted to record in the probate court of Crawford county, Ohio, on December 6, 1877, and Alexander J. Caldwell appointed by said court administrator of the estate of deceased with the will annexed.

      “2. By the will, the testator directs his executor, as soon as practicable, to invest five thousand dollars of his estate, and annually pay to the testator’s wife, Margaret E. Caldwell, during her natural life, the income of said fund remaining after payment of the charges upon it. That if the moneys so payable to her shortld be insufficient for her comfortable' support, the executor is directed to pay her, from time to time, such portions of the principal of said fund, as with the interest receivable by her, should afford her such support.
    “3. The will also devises to Margaret E. Caldwell all such parts of testator’s household and kitchen furniture as she might choose to take, and declares the provisions to be in lieu of her dower and all other claims on his estate. She elected to take under the will.
    “4. Whatever remains of said five thousand dollars after the decease of the testator’s wife, is given and devised to Alexander J. Caldwell and Samuel S. Caldwell, each two-fifths parts, and to Florence Me. L. Welsh one-fifth part.
    “5. The will devises to Florence Me. L. Welsch the sum of twenty-five hundred dollars. Fifteen hundred dollars thereof to be paid her as soon after the investment of said five thousand-dollar fund as the same can be conveniently done out of the sale of the land directed to be sold, and one thous- and dollars thereof to be paid her out of other moneys realized from the sale of said land.
    “6. The testator devises to his granddaughters, Effie Welch and Allie Caldwell, and his grandson, Smith Caldwell, each one hundred dollars, to Smith Caldwell his silver watch, to Alexander J. Caldwell, his family bible, to Samuel S. Caldwell, jr., his pocket biblo, to Florence Me. L. Welsh, twenty-six acres of land where she then resided, during her life, the remainder to her children in fee; and all the residue of his property of every description to Alexander J. Caldwell and Samuel S. Caldwell, jr., to each an equal share; and for the purpose of carrying out the provisions of his will, authorizes and empowers his executor to sell, either at public or private sale, the real estate described in the amended petition at such time or times as he may consider advisable.
    “7. The available personal property of the estate, not including the mortgage debt of the plaintiff, was about $2,659.37. The debts of the estate, besides legacies, was about $1,804.05.
    “8. On April 20, 1878, the administrator filed in the probate court his petition, asking for an order to sell the real estate for the payment of debts and legacies, making Samuel S. Caldwell plaintiff in this action, and others, parties defendants.
    “9. On May 18, 1878, the probate court ordered an appraisement and sale, according to law, at public auction for not less than two-thirds of the appraisement, payable one-third cash in hand, one-third in nine months, and .one-third in eighteen months from the day of sale, the deferred payments to be secured by mortgage on the premises sold, and bearing interest from the day of sale.
    “10. On June 25, 1878, after due notice, the administrator offered the premises for sale at public vendue, and sold the same to John Scott (a banker at Bucyrus, with whom the administrator kept, and then had, an account) for six thousand dollars, two-thirds of the appraisement.
    “11. No money passed hands at the sale. The administrator trusted Scott to giving him credit for the hand-money in his bank account. Had the money been paid to the administrator he would have deposited it with Scott to his bank account at the time. The plaintiff had notice of the sale to Scott a week after the sale.
    “12. The sale was confirmed by the pobate court, July 19, 1878, and a deed ordered to the purchaser. No proceedings have been commenced in the probate court to vacate or modify these orders.
    “13. The deed was executed by the administrator and , left with his counsel, Mr. Adams, for the purchaser, on his giving notes and a mortgage for the deferred payments. The purchaser executed notes and a mortgage on the premises to the administrator for the deferred payments and left them with Mr. Adams for the administrator. The mortgage was not recorded.
    “14. August 13, 1878, Scott, the purchaser, jointly with his wife, conveyed the premises by quit-claim deed to Alexander J. Caldwell (the administrator). The consideration named in the deed is six thousand five hundred dollars. The only consideration given by Caldwell was his assumption of the obligation of Scott as purchaser, and his verbal agreement to discharge Scott from liability as purchaser.
    “15. In three months after the sale to Scott the plaintiff was informed of the purchase by Alexander J. Caldwell; that prior to, and at the sale to Scott, there was not, and had not been, any understanding, agreement or conversation between him and Scott in relation to Scott becoming purchaser, or at any other time at the sale; that there was no understanding or agreement between Caldwell and Scott as to the sale of the premises by Scott to Caldwell until after the confirmation of the admininistrator’s sale and the execution and delivery of the administrator’s deed, to-wit, on the date of the deed from Scott to Caldwell. Scott never took possession of the premises purchased, and no change of possession was had until after the purchase from Scott by Caldwell.
    “16. On Jammy 1, 1879, the administrator settled with Florence Me. L. Welsh for her legacy of twenty-five hundred dollars, directed by the will to be paid out of the proceeds of the sale of the premises, and took her receipt in discharge of the estate of the testator for the same. He made the payment by giving his individual obligations for the amount secured by his mortgage on the part of the premises. On the 22d of August, 1879, the administrator filed in said probate court his first settlement account, in which he charges himself with the proceeds of the sale of this land. The account was heard, examined and approved by said court, the 22d of September, 1879. On September 29, 1880, the administrator filed in the probate court his second settlement account, embracing the same charges. This account was also heard and approved November 15, 1880.

      “17. On December 2, 1881, the administrator filed in tbe probate court his third settlement account, embracing a revision of his first and second settlement accounts, charging himself with all the known assets of the estate of the testator, including the proceeds of the sale of said premises, and crediting himself with the payments made by him on the debts and liabilities of the estate, showing that, after setting apart the five thousand-dollar fund, proceeds of the sale of said premises provided by the will for the maintenance of the testator’s widow, the administrator had paid out $1*563.79 more than his cash receipts, and that $2,931.15, available assets (inventory valuation), remained uncollected, of which the plaintiff owed the estate $2,813.21, upon which a large amount of interest had accumulated. That the hearing of said account was fixed by the probate court on December 26, 1881, of which due notice was given and was received by the plaintiff, and that the plaintiff and his counsel were present on the day of hearing when said account was heard and examined and approved by said probate court and ordered to be recorded.”
    To reverse the judgment of the circuit court the present proceeding is prosecuted.

      Taylor & Taylor and Finley & Harris, for plaintiff in error.

      F. Adams and J. Seroggs, for defendant in error.
   Owen, C. J.

The question for our consideration is whether the facts found by the circuit court, considered with such facts as stand admitted by the pleadings, justified that court in finding for the defendants.

Upon the general principles governing the question involved, there is no controversy between counsel. The counsel for defendant say, in argument:

“ With the general proposition, that a trustee cannot become a purchaser at his own sale, directly or indirectly, we have no controversy; and counsel for plaintiff might have saved the labor of citing the numerous authorities on that point. This is an elementary principle. We claim that the case at bar is not one for the application of that principle.”

The principle is fundamental that trustees are to be held rigidly within their powers in the execution of the trusts confided to them, and that they shall not become personally interested in the subject of the trust.

In the case before us, the order of sale, the sale thereunder, the return thereof, and the order of confirmation, were unassailable, so far as the form of proceedings presented for the consideration of the probate court was concerned.

For this reason no significance attaches to the finding of the court (12) that: “ No proceedings have been commenced in the probate court to vacate or modify these orders.”

Certain facts appear, however, by the admissions of the pleadings and the findings of the court below, which challenge the grave consideration of this court.

(1.) It became necessary for the administrator to make sale of the lands in question.

(2.) He procured from the probate court an order to sell them at public auction, and made such sale to John Scott.

(3.) On the 6th day of August, 1878, he executed a deed for the premises to Scott, and left it with his counsel for the purchaser, upon the latter giving notes and mortgage for the deferred payments, which were made and left with the counsel for the administrator.

(4.) No money was ever paid by Scott to the administrator. The court found (11) that no money passed hands at the sale. The administrator trusted Scott to giving him credit for the hand money in his bank account.” It does not appear that this was done. It does not appear that there was any agreement to do so. The administrator simply trusted Scott to do it. It does appear, however, from the 14th finding that it never was done : The only consideration given by Caldwell was his assumption of the obligation of Scott as purchaser, and his verbal agreement to discharge him from liability as purchaser.” Thereby the individual became debtor to himself as administrator, and the administrator became creditor of himself as an individual; — a complicated and embarrassing relation for a trustee to assume towards the trust estate in his hands for administration.

If the hand money had passed to the credit of the administrator on his bank account, then part, at least, of the consideration of the sale to him by Scott would have been the restoring in some form of this money to Scott or his bank. The finding of the court (11) that: “Had the money been paid to the administrator he would have deposited it with Scott to his bank account at the time,” is in no legal sense a finding of any substantive fact. At best it is but an ex post facto prophesy, based upon mere conjecture, of what might have, but never has, happened.

(5.) The deed was never, in fact, delivered to Scott; the mortgage left by the administrator with his counsel was never recorded. The trust he undertook was never performed.

(6.) On the 13th day of August, 1878, just one week after the deed was left with the counsel, we find the administrator in possession of a deed to himself individually from Scott, purporting to convey the same lands to him in fee, and claiming, as he ever since has, to be the absolute owner thereof in fee-simple.

(7.) The consideration named in the deed from Scott to the administrator is $6,500. Even if the transaction were otherwise in good faith this recital is a suspicious fact. It is not true. In the most favorable view we can take of it, it is just $500 from the truth. Whatever the purpose of this false recital may have been, it is misleading; its only effect is to deceive ; and it is wholly unexplained. Having acquired, during the course of his administration, a large proportion of the trust estate, it behooved the administrator to explain every circumstance to which suspicion could justly attach.

Much reliance seems to be placed upon the finding (15), that prior to and at the sale to Scott, there was not, and had not been, any understanding, agreement, or conversation between him and Scott in relation to the purchase, etc.

While this finding exonerates Scott from suspicion of collusion, the question of the good faith of the defendant in attempting to acquire for himself the title to the property it was his duty to administer, is left without a finding.

Giving this finding its due weight, the fact still remains, that without executing the order of sale which the probate court had made, either in its letter or spirit, we find the administrator in possession, and claiming to be the absolute owner of the lands which it was his duty to convert into money to be administered under the law according to the will of the testator. It is not to be supposed that in taking the place of the purchaser at the sale, and assuming the latter’s obligation to pay, he contemplated a losing bargain for himself. The lands were appraised at $9,000. The petition alleges this sum to be their value. This is not denied in a form to raise a substantial issue. This is the form of denial: “This defendant denies that at the time of said sale the said premises were of the value of nine thousand dollars, or that said premises could then be sold for more than six thousand dollars.”

As to the second clause of this denial, it is enough to say that there is no such allegation in the petition, as that which the denial assumes. This supposed issue is a mere phantom; but if it was substantial it ignores the question of the actual value of the lands. The first denial quoted above aptly illustrates what is known in pleading as a negative pregnant. It admits the value of the lands to be any sum less than $9,000. 2 Bates Pl. 800. It is not necessary to, and wc do not hold, that if, upon issue taken in this form, trial had proceeded without objection, by motion or otherwise, to the form of the denial, and a finding had been made upon it, that the lands were worth but $6,000, such finding should be disturbed or ignored by us now. But as the issue of profit or advantage was not passed upon by the trial court, it is not unfair to hold the defendant to the issue as joined by him. While, by an established principle, it is immaterial that the trustee gained no advantage from his dealings with the trust estate, and acquiring it in his own name, if it affirmatively appear that material gain or advantage has resulted to the trustee from such transaction, this is fatal to its validity. As the issues stand upon the pleadings, they leave the defendant subject to the just imputation that if the transaction by which he claims to have acquired title to the lands in question is to abide, it will be so to his substantial advantage and profit. The theory of the plaintiff’s case, is that to the extent of these lands, the trust confided to the defendant has never been executed, and that he now holds them, subject to administration, and in trust for the beneficiaries, of the will of the testator; that he refuses to proceed with the execution of such trust, claiming to be the absolute owner in fee, in his individual right, of these lands, wherefore the plaintiff seeks to compel the execution of such trust. Upon this theory, if properly assumed, he sought the proper tribunal — the court of common pleas. The probate court affords no remedy to a party seeking to set aside such conveyance, so as to compel an administrator, executor, or testamentary trustee, to perform a trust which he refuses to execute. This is peculiarly within the province of a court of general equity jurisdiction. Nor is it an answer to the plaintiff’s demand for relief, that an adequate remedy was afforded him by exceptions to the account of the administrator in the probate court. He was not required to assume an attitude which had the appearance of waiving the full execution of the trust or ratifying a radical departure from it.

There is no middle ground — no compromise ground — between the assumption and full execution of his trust upon which such a trustee can stand and say he has discharged the duties which his relation imposed upon him.

Barrington v. Alexander, 6 Ohio St. 189, was a case in which an administrator had obtained a deed to himself from the purchaser of lands (sold by the former in his fiduciary capacity), who had paid no part of the purchase-money. A bill was filed by the widow and heirs to set aside the sale, and for a re-sale. The relief was granted. The court did not find that the administrator employed any artifice or collusion to secure the property to himself. Speaking for the court, Bowen, J., said:

But whether there was, on the part of the administrator, any actual collusion or artifice employed to secure the property to himself, need not essentially affect the determination of this case. He held a fiduciary relation to the estate of his inestate. * * * If the purchaser, to whom the land is struck off, fail to comply with the terms of his purchase, the property shall again be offered for sale. To permit the administrator to substitute himself for a delinquent purchaser, would enable him to defeat all genuine competition by receiving the bid of an irresponsible man, and afterward turn it to his own account by voluntarily assuming the place of such bidder, and thus acquire any advantage which the ownership of the property may offer. This would be too dangerous a rule to govern administrators or any other class of trustees in the execution of powers over the trust property committed to their care. The fiduciary character of the administrator toward the land of the estate does not terminate as soon as he makes a sale of it. He must obtain and hold securities for the payment of the purchase-money.” The writer of the above cites with approval the following language of Chancellor Kent in Davone v. Fanning, 2 Johns. Ch. 252, used in a discussion of this general subject: However innocent the purchase may be in a given case, it is poisonous in its consequences. The cestui que trust is not bound to prove, nor is'the court bound to judge, that the trustee has made a bargain advantageous to himself. The fact may be so, and yet the party not have it in his power, distinctly and clearly, to show it. There may be fraud, and the party not able to prove it. It is to guard against this uncertainty and hazard of abuse, and to remove the trustee from temptation, that the rule does and will permit the cestui que trust to come, at his own option, and without showing actual injury, and insist upon having" the experiment of another sale. This is a remedy which goes deep, and touches the very root of the evil.”

The reasoning of these two cases applies with peculiar force to the case at bar. The remedy which the plaintiff selected is the one pre-eminently suited to the object of cutting off all opportunity and all temptation for the administrator to divert the trust property from the true and legitimate course of administration to the uses of his own personal and private gain.

The mere presence in the probate court at the time of the third settlement of the administrator, wherein he charged himself with the purchase-price of the lands, is not sufficient to estop the plaintiff to call in question the defendant’s claim of ownership of the land in his own right. On that same day the proceeding below was commenced. Nor does the lapse of time carry with it such evidence of acquiescence, as should work such estoppel. The plaintiff was largely indebted to the estate during all that time, withholding payment and possibly thereby delaying the settlement of the estate. No facts are shown which can be construed to work an estoppel or show acquiescence in the method of administration • as against the plaintiff. There are considerations of public policy requiring the utmost fidelity and a rigid compliance with all his fiduciary obligations which forbid this court prosecuting a diligent search for grounds of estoppel, acquiescence, waiver or excuse, for the purpose of relieving such a trustee from the uncompromising discharge of his trust.

This court has frequently declared with emphasis its disapproval of all schemes and devices by which trustees may seek, even with honest motives, to acquire in their own right, the trust property committed to their hands for administration in the interests of beneficiaries whose rights should be guarded with scrupulous fidelity. Any relaxation of this salutary principle would be full of peril and uncertainty. Armstrong v. Huston, 8 Ohio, 552; Welsh v. Perkins, 8 Ohio St. 52; Piatt v. Longworth, 27 Ohio St. 196; Glass v. Greathouse, 20 Ohio, 517; Riddle v. Roll, 24 Ohio St. 572;. Mitchell v. Dunlap, 10 Ohio, 117.

The act of the administrator in giving his own individual obligations to Florence Me. L. Welsh, and a mortgage on the lands of the testator, to secure them, as a means of satisfying her legacy of $2,500, which the testator directed to be paid out of the proceeds of such lands, was such a radical departure from the plain and legal course of administration, as to constrain us to record our emphatic disapproval of it. Her approval did not remove the objection which the law interposes to such proceedings.

The judgment of the circuit court is reversed. Proceeding to render such judgment as that court should have rendered, the deed to Scott, and his deed to defendant arc declared void and set aside, and the lands declared to be subject to administration under the trusts created by the will, but without prejudice to the rights of Florence Me. L. Welsh, and her successors in interest, who are to be treated as innocent incumbrancers of the lands to the extent of the amount still unpaid upon her legacy, and to be protected by the first proceeds of the lands. Without considering the power of this court to order a sale and distribution, we have concluded that ample relief can be more speedily administered by permitting the re-appraisement and re-sale of the premises to proceed from the probate court. The accounting between the administrator and the estate may as well be taken upon a settlement in that court. This should embrace all receipts and disbursements by the administrator in the course of his administration, including all costs paid by him rents, issues and profits derived by him from the lands in question, or properly chargeable against him, down to the time of the re-sale to be made from the probate court, deducting the value of permanent improvements made by him upon the lands prior to the commencement of the plaintiff’s action below. Improvements made since that time, pending this litigation, are not proper allowances in his favor in such accounting .-

Judgment reversed.


author: By the Count.

text:
    State ex rel. C. H. Grosvenor et al. v. Emil Kiesewetter, Auditor of State.

      Constitutional Law — Appropriation of money — Act of March 21, 1887.
    Mandamus.

      O. U. Qrosvenor, for relators.'

      J. A. Kohler, attorney-general, for defendant.
   By the Count.

The purchase of a printing press by the trustees of the soldiers’ and sailors’ orphans’ home, where the art of printing is taught, may be paid for from the appropriation “for heating and furnishing new industrial building,” made March 21,1887 (84 Ohio L. 200).

Peremptory writ awarded.


text:
    Eckert v. Myers.

      Bond — Executors and administrators — Joint and several liability.

    1. Where two administrators give a joint bond, with surety, for the faithful administration of the estate that may come to their possession, and thereafter all the property of the deceased comes into their joint possession, if waste is committed by one of the administrators, after the death of the other, it will be the right of the surety, that the estates of both the administrators shall be exhausted before the surety shall be subjected for the surviving administrator’s default.
    2. Such administrators, as between themselves and the surety, are principals, and the surviving administrator and the representatives of the deceased administrator, will be jointly liable to indemnify the surety, if he has been subjected for the waste committed by one of the principals after the death of his associate.
    (Decided February 21, 1888.)
    Error to tbe District Court of Stark County.

      The original action 'was commenced on an administrators’ bond in the court of common pleas of'Stark county, by Harmon W. Landrock, one of the defendants in error, against his co-defendants in error, Henry Engle, William G. Myers, administrator of Samuel Engle, deceased, and the plaintiff in error, Francis Eckert, to recover the amount of a claim for work and labor, done and performed by Harmon W. Land-rock, for Daniel Engle, deceased, as a partner in the firm of Engle & Brother. Henry Engle and Samuel Engle, on the decease of Daniel Engle, were duly appointed and qualified as administrators of his estate. The administrators’ bond contained, among other conditions, the following, to-wit:
    “ Know all men by these presents, That we, Samuel Engle and Henry Engle as principals, and Francis Eckert as surety, are held and firmly bound to pay the state of Ohio the full sum of six thousand dollars if default be made in the condition following: The condition hereof is such that, whereas, letters of administration on the estate of Daniel.Engle, deceased, were granted the said Samuel Engle and Henry Engle, by the probate court of Stark county, state of Ohio, on the 22nd day of January, A. D. 1867. Now, if the said Samuel Engle and Henry Engle, as administrators of the said Daniel Engle, deceased, shall administer according to law, all the moneys, goods, chattels, rights and credits of the said deceased, and the proceeds of all his real estate that may be sold for the payment of his debts, which shall at any time come to the possession of the said administrators, or to the possession of any other person for them; shall pay any balance remaining in their hands, upon the settlement of their accounts, to such persons as said court or the law shall direct; then, but not otherwise, shall this obligation be null and void.”
    A jury having been waived by all the parties, the cause was submitted to the court, and the court, upon the request of the defendant, William G, Myers, administrator of Samuel Engle, deceased, that its conclusions of fact be separately stated from its conclusions of law, finds, as its conclusions of fact, as follows, viz.:

      “1st. That Daniel Engle died January sixth, A. D. 1876; that on the 22nd day of January, 1876, the defendant, Henry Engle and Samuel Engle, were duly appointed and qualified as administrators of the estate of said Daniel Engle, deceased, by the probate court of Stark county, Ohio, and executed their joint and several bond, with Francis Eckert, their surety, and filed the same in said probate court, which bond was on the same day approved by the judge of said court, and recorded.
    “ 2nd. That the property and estate of the said Daniel Engle, deceased, consisted of his undivided one-half of a planing-mill at Canal Fulton, and certain live stock and other chattels upon the farm of said Samuel Engle, which were his undivided property at the time of his death. Said planing-mill was owned by said Daniel and Henry Engle, partners, doing business in the firm name of Daniel Engle & Bro.; that said live stock and other chattels had been upon said farm for some time prior to the death of Daniel; that all of said property remained as it was before Daniel’s death up to the time of appraisement March 1, 1876, and was in the joint possession of said Henry and Samuel Engle; that on the morning of the appraisement, to-wit, March 1, 1876, Samuel Engle was rendered unconscious from a stroke of paralysis, and took no part in said appraisement; remained unconscious and died in about two days thereafter, and said property was inventoried and appraised by said Henry, and return thereof made by him, in his own name, to the probate court. Said Samuel Engle had joined said Henry Engle in giving notice of the appraisal of said estate of Daniel Engle & Bro. Henry Engle, surviving administrator, after the death of said Samuel, proceeded to, and did, administer and settle said estate in his own name as sole administrator.
    “ 4th. That no waste or default of the assets of said estate occurred during the lifetime of Samuel Engle, and that all of said assets were taken in possession by said Henry Engle as such surviving administrator.
    “ 5th. That the claim of the said plaintiff was duly presented to said Henry Engle as such administrator after the death of Samuel, aud allowed by him as a valid claim against said estate, and that there is now due and unpaid thereon the sum of four hundred and eighty-seven dollars and twenty-nine cents ($487.29), and interest from October 15, 1883, and that prior to the beginning of this action said plaintiff demanded payment of his said claim of William G. Myers, administrator of the estate of Samuel Engle, deceased, which was by said Myers refused.

      “ 6th. That the said Henry Engle is insolvent, and has failed to pay over according to law, and in pursuance of an order of the probate court, heretofore made, the sum of $943.41, then found in his hands, in a hearing upon exceptions to his final account as such administrator in said court, which order and finding were made in said court August 23, 1879; that there are no other unpaid claims due creditors of said Daniel Engle, deceased; that said plaintiff, after the order of said probate court, and in pursuance thereof, was entitled to the payment of his said claim against said estate of Daniel Engle, deceased, out of said fund so found in the hands of said Henry Engle, as administrator aforesaid. That more than thirty days after said order, to-wit, September 23, 1879, the said plaintiff demanded payment of his said claim of Henry Engle as administrator aforesaid, which was refused.”
    And as conclusions of law “ the court finds that said plaintiff is entitled to recover a judgment against said Henry Engle, and the administrator of Samuel Engle, deceased, for said sum of $487.29, as principal debtors, and against said Francis Eckert as surety for said sum, together with costs, to which finding of law from the facts above stated, said administrator of Samuel Engle, deceased, excepts and files his motion for a new trial, which the court overrules, and said defendant excepts. It is therefore considered by the court that said plaintiff recover of said Henry Engle and William G. Myers, as administrator of Samuel Engle, deceased, as principal debtors, and said Francis Eckert as surety only, the sum of four hundred and eighty-seven dollars and twenty-nine cents ($487.29), with interest from October 15, 1883 (the first day of this term), and costs of suit, taxed at $-; said judgment against said Myers as administrator aforesaid, to be levied of the goods, chattels and estate in the hands of said administrator to be administered. To which said defendant, Myers, administrator aforesaid, excepts.”
    Myers, administrator, filed his petition in error in the district court, which court reversed so much of the judgment of the court of common pleas as was against him, and adjudged that, as administrator of Samuel Engle, deceased, he was not liable on the bond in suit, to the action of Harmon W. Land-rock, the devastavit complained of having taken place after the-death of Samuel Engle, as appears in the special finding of fact ; but that Landrock recover of Henry Engle, as principal, and Francis Eckert as surety.
    Francis Eckert now seeks to reverse the judgment of the district court.

      R. W. McGaughey and J. J. Parker, for plaintiff in error.
    The weight of the authorities is to the effect that co-administrators who give a joint and several bond, are both liable for waste of either to a surety who has paid money upon breach of such conditions of a bond. Babcock v. Hubbard, 2 Conn. 536; Boyd v. Boyd, 1 Watts (Pa.), 369; Dobyns v. McGovern, 15 Mo. 662; Brandt Sur. & Guar. sec. 408; Seymour v. Stole, 4 West. L. M. 323.

      W. G. Myers, in person, and Albaugh & Welty, for defendants in error.
    None of the assets of the estate came into the hands of either of the administrators prior to the death of Samuel, and no waste or default of the assets occurred during the life time of Samuel. All the assets were taken possession of by Henry, as surviving administrator. The acts of Henry could in no way be considered the acts of both. Suppose that Samuel had re1 signed, or been removed by order of probate court, before assets came into their hands, and that Henry had proceeded to settle the estate as sole- administrator, as he might do, could it be successfully claimed that he would be liable after such resignation or removal, for the acts of the other in which he in no way participated or had power to prevent?
    The following cases support the claim of the defendants in error: Brazier v. Clark, 5 Pick. 96; Towne v. Ammidown, 20 Pick. 535; Ames v. Armstrong, 106 Mass. 15; Marsh v. People, 15 Ill. 284; Stephens’ App., 56 Pa. St. 409; Foster v. Wilber, 1 Paige, 537; Potter v. Webb, 6 Me. 14; Com. v. Smith, 4 Phila. 270; State v. Rottaken, 34 Ark. 144.
   Dickman, J.

The plaintiff in error does not deny his liability as surety on the administration bond, but contends that the administrators are also liable as principal debtors. If the co-administrators, as between themselves and' the surety, are bound as principals, it is the statutory right of the surety, that the property, both personal and real, of the principal debtors, within the jurisdiction of the court, shall be exhausted before any of his property shall be taken in execution.

As appears by the special finding of facts, no waste of assets occurred during the life time of the administrator Samuel Engle ; and it is therefore claimed that his estate cannot be held liable upon the bond in suit jointly with Henry Engle, for a devastavit by Henry Engle after his, Samuel Engle’s, death. It is understood that at the common law, one executor is not chargeable for a devastavit of his co-executor, and is chargeable only for the assets which have come to his own hands; and the better opinion would seem also to be, that administrators stand on the same ground in these respects, as to their powers and responsibilities. And yet, even according to the common law, where there has been a joint possession or custody of any part of the estate, and one executor having power and opportunity to make it secure, has yielded the control to the other, they will thereby be rendered jointly responsible.

But by uniting in a joint statutory bond, one administrator may incur a liability for mismanagement and waste by his co-administrator, to which, at the common law, he would not be subjected. Henry Engle and Samuel Engle executed the joint and several administration bond, with Francis Eckert their surety, of which one of the conditions is, that the administrator shall administer according to law, all the moneys, goods, chattels, rights and credits, and proceeds of real estate, which shall at any time come'to the possession of the administrators, or to the possession of another person for them. At and before the death of Samuel Engle, all the property and estate of Daniel Engle, deceased, had come into the joint possession of his two administrators, and being under their joint control, the duty was incumbent upon each and both of them, to see that all assets in their hands were properly administered for the benefit of creditors and distributees. That duty, so far as Samuel Engle was concerned, having devolved upon him as a joint obligor, it was not released or discharged by reason of his death; and his death was no bar to an action against his personal representative jointly with the surviving administrator. Revised Statutes, section 6102; Burgoyne v. Ohio Life Ins. & Trust Co., 5 Ohio St. 586.

While these views are not entirely in accord with the decisions in Massachusetts, the court in Ames v. Armstrong, 106 Mass. 18, where the executors had given a joint bond, say : They gave a bond according to the requirements of the statute, and we find it impossible to avoid considering that bond as binding equally on both, and making each of them liable for its entire fulfillment, at least as to all assets included in their inventory and which have come, into their joint possession. * * * * Having united in a joint bond, its effect is to make them both liable to the judge of probate as the trustee for creditors and others interested in the estate, to the extent of the assets which have come to their joint possession.”

In Jamison v. Lillard, 12 Lea (Tenn.), 690, the bond was joint, and legal assets came to the hands of Lillard as co-executor, who became insolvent without having accounted for a considerable portion of them ; and although none of the assets ever came actually into the hands of Blackman, who died some two or three months after his qualification as executor, yet it not being shown when they actually came into the hands of Lillard, the active executor, the presumption was, that they did come to the hands of Lillard before Blackman’s death. It was accordingly held, that having given a joint bond, they were mutually liable on the bond, to creditors and distributees, for each other’s acts as executors, prior to the liability of the sureties. Section 5999 of the Revised Statutes provides, that when two or more persons are appointed administrators, the court may take a separate bond, with sureties, from each of them, or a joint bond, with sureties, from all of them. A wise precaution might dictate a separate bond, where one of the administrators is unwilling to become bound as a principal for the acts of the other. But the fact that Samuel Engle entered into the joint obligation would indicate, that it was his intention to charge himself as principal according to the terms of such a bond.

The plaintiff in error, by his written contract — the administration bond — expressly bound himself as surety for Henry Engle and Samuel Engle, as principals. As held by the supreme court of the United States, in Miller v. Stewart, 9 Wheat. 702, the liability of a surety is not to be extended by implication beyond the terms of his contract; his undertaking is to receive a strict interpretation, and not to extend beyond the fair scope of its terms; and the whole series of authorities proceeds on this ground. The obligation assumed by the plaintiff in error was that of a surety for two persons, and a different and increased obligation is not to be imposed upon him, contrary to the plain words of the bond, by reducing the number of principals whose property should be first applied before having recourse to his property, or from whom he might seek indemnity, when subjected to loss on account of the misconduct of cither of them.

Henry Engle and Samuel Engle having given a joint bond as principals, for the faithful performance of their trust, the survivor and the representative of Samuel Engle would be jointly liable to indemnify the surety, if he had been subjected for the default of Henry Engle; and if so, the property of the principals should bo first exhausted in payment of the claim of the creditor Landrock, before resorting to that of the surety. In an early and leading case, Babcock v. Hubbard, 2 Conn. 536, it was held, that executors, who had given bond with surety to the judge of probate, for the faithful performance of their trust, were jointly liable as principals to indemnify the surety who had been subjected for the default of one of them; that they were co-obligors, and that the plaintiff was surety for them all and not co-surety, and had an action against them jointly for indemnity. This case was followed and approved in Dobyns v. McGovern, 15 Mo. 662, where the principle was extended, and it was decided that the representatives of a deceased administrator are responsible to the securities in the administration bond, for anything they may have had to pay on account of the defalcations of a co-administrator, after he became the surviving administrator, and after he received, by order of the court, from the executor of the deceased administrator all the effects the latter had received. In the same line of decision is, Boyd v. Boyd, 1 Watts. 365, in which Bobcock v. Hubbard, supra, is cited, and its doctrine commented upon approvingly. And in Stephens v. Taylor, 62 Ala. 269, it was held that two or more executors or administrators, entering into ajoint bond for the faithful j>erformance of their duties, are hable for the acts and defaults of each other, unless the bond itself shows that they did not intend to become so bound; and they, and each of them, come under the obligation to hold their sureties harmless against any loss by default on the part of either of the principals; and though one or more of the executors dies, the bond remains a security for the performance of duty by the other, unless proper steps are taken to have the. bond made inoperative for future defaults. These,” says Manning, J., are the duties towards one another, that spring out of the relations created by the bond. The instrument does not become void and inoperative by the death of any one of the parties. Should one of the executors die, of course he becomes unable to perform any acts of administration. But the bond remains in force as a security for the proper performance, by the other, of his duties in respect to the estate.”

When administrators enter into a joint bond, for the faithful administration of assets that may come into their possession, creditors and distributees, in an action against the surety for a breach of the conditions of the bond, will not be required to establish an actual breach by both principals before they can recover. Under the joint obligation, the default of one is the default of both. If property has come into the joint possession of two administrators, who have entered into a joint bond, with surety, they may make an arrangement between themselves, by which one of them shall be the acting administrator, and the next day, upon the death of the. other, the survivor may squander all the property in his hands. In such case, the surety may be compelled to make up the loss to the creditors, but upon doing so, it could not be justly claimed, that he would not be entitled to indemnity from the surviving principal and the representative of the deceased principal.

It has been suggested that Henry Engle and Samuel Engle, by executing the joint bond, became merely sureties for each other, as to their respective transactions. But Samuel Engle did not become a co-surety with Francis Eckert, and thereby bound only to contribute a portion of the amount which Eckert, as surety, might be compelled to pay, instead of being liable as principal to re-imburse the whole. As between themselves and Eckert, the two co-administrators were joint principals. It would seem, however, that as between themselves, the co-administrators might each be a principal for the performance of the condition of the joint bond, so far as relates to himself, and a surety for his co-obligor that he would duly perform the conditions to be by him performed; and that, to the extent of his suretyship for his associate, one co-administrator might recover indemnity from the other, as any other surety might from his principal.

In accordance with the aforegoing considerations, our conclusion is, that the judgment of the district court should be reversed, and that of the court of common pleas affirmed.

Judgment accordingly.


text:
    The State v. Kusnick.

      Criminal Law — Embezzlement by cashier and owner of stock in unincorporated banking association.

    An agent and cashier of an unincorporated banking association, whose capital is divided into shares evidenced by certificates thereof, having, by virtue of his employment by a board of directors pursuant to articles of association, the exclusive custody of its assets, who fraudulently converts its property to his own use, is guilty of embezzlement; although he is one of its shareholders.
    (Decided February 21, 1888).
    Exceptions of the prosecuting attorney of Darke county, to the ruling of the court of common pleas, on the trial of the defendant upon an indictment for embezzlement.

      James G. Elliott, prosecuting attorney, and Meeker, Bowman & Meeker, .for the state.
    1. Kusnick was an employe within the meaning of the statute. ' Subject to the supervision of the board of directors, he had entire control of the affairs of the bank, and was required to and did account to them, and not to the stockholders. Hence he was clearly within the terms and meanings of section 6842 of the Ecvised Statutes ; Campbell v. State, 35 Ohio St. 75; 2 Whart. Crim. Law (8 ed.) sec. 1015, n.

    That Kusnick was the employe and agent of the board of directors is further apparent from the rule that the board would be responsible to the bank for the fraudulent and willful mismanagement of its affairs by him. Allen v. Curtis, 26 Conn. 455; Delano v. Gardner, 18 Week. L. Bull. 35.
    It was confidence reposed in Kusnick by the board of directors that secured to him his’ position. His employment gave him the right to the possession of the property embezzled. His embezzlement was a betrayal and violation of the trust reposed.
    2. The property embezzled by the defendant and converted to his own use, came into his possession and control by virtue of his employment, and not by any right, power, or privilege, that arose by reason of the fact that he was de facto or nominally a partner, a member of, or interested in the bank. The fact that he held a certificate of stock gave him no authority to act in the affairs of the bank or to the possession of its property or assets.
    3. Kusnick was the employe and agent of a “ person ” within the meaning of sction 6842, as the word “ pei’son,” when used to designate the owner of property the subject of any offense, includes not only natural persons, but every other owner of property. Section 6794, Revised Statutes.
    4. But it is claimed that inasmuch as. Kusnick had a certificate of stock, he was a partner, and that in embezzling and converting the property to his own use, he simply took and enjoyed that which was his own.

      a. The rule contended for does not apply to those business! organizations wherein no member thereof has any right to exercise control and authority except by virtue of an employment ; but only that class of partnerships wherein' each mem- - ber of the firm exercises a control and management of the affairs of the partnership by virtue of his being a partner and independent of any employment to act in the affairs of the business. 2 Whar. Crim. Law, sec. 1015.

      b. The claim that inasmuch as Kusnick, in addition to his salary, was entitled to a dividend out of the profits on his share of stock, that therefore he was a joint owner of the property he embezzled, and not an employe or agent, finds no authority in law. Campbell v. State, 35 Ohio St. 70, 75.
    c. Before Kusnick could be absolved from criminal liability, it must appear that he was in possession of the property embezzled as a partner, and not by virtue of any employment. Alfele v. Wright, 17 Ohio St. 238, 242.

      d. The "Versailles Exchange Bank was neither a partnership, nor a corporation. It was a joint stock company, and though not so designated, the facts were all set forth in the indictment. Lindley Part. 542, 1085; Parsons Part. 561, 564.
    In Ohio any officer, agent, clerk or servant of any joint stock company may be convicted of embezzlemeut. 66 Ohio L. 29. The revision of that statute must receive the same construction. Allen v. Russell, 39 Ohio St. 336, 337.

      John G. Clark, contra.

    To constitute embezzlement the property embezzled must be the property of another. 1 Whar. Crim. Law, secs. 862, 922, 1009, 1015, 1028, 1033; Campbell v. State, 35 Ohio St. 74, 75; 2 Bish. Crim. Law, secs. 180, 187; State v. Kent, 22 Minn. 41; Kribs v. People, 82 Ill. 425, 426; Commonwealth v. Foster, 107 Mass. 221, 222; Commonwealth v. Stearns, 2 Met. 343, 344; Commonwealth v. Bennett, 118 Mass. 453.
    Kusnick was a partner in the bank. A partner cannot be punished for converting the funds of the firm to which he belongs.
   Owen, C. J.

The indictment charged, among other things, that a co-partnership was formed at the town of Versailles, in Darke county, Ohio, styled The Versailles Exchange Bank,” the object of which was to carry on a general banking, deposit, loan and discount business, which it prosecuted for over two years. That it employed Francis Kusnick as its agent and cashier. That it had a paid up capital of $23,000. .That by virtue of his employment as such agent and cashier, there came into the possession of the defendant, Francis Kusnick, $28,000 in money, notes, checks, drafts and bills of exchange, the assets of such co-partnership, which he fraudulently and feloniously embezzled and converted to his own use. The evidence tended to sustain the charges of the indictment and to show that the alleged partnership was a private, unincorporated banking association, formed by a number of persons entering into articles of association, by which the capital stock of the association was fixed at $25,000, divided into 250 shares of $100 each. Each member was to have one vote for each share held by him. The certificates of shares of stock were to be issued and transferred like those of an incorporated stock company. The officers were to consist of seven directors, a president, vice-president and cashier. The cashier was to be chosen by the board of directors and to hold his office during its pleasure. The death of a shareholder did not work a dissolution of the association, but his interest passed to his legal representatives. The defendant, Kusnick, subscribed for, and became the holder of, ten shares of the stock. He paid $200 in cash upon them and gave his note for the balance, $800, which was never paid. To him was confided by the association the entire and exclusive control and custody of its assets and management of its business, subject to such direction as the board of directors by its joint action should from time to time give him. Upon his election as cashier his salary was fixed, and he was required to, and did give a bond with sureties conditioned that as such cashier he would faithfully discharge the duties imposed upon him by reason of the trust in him reposed by the board of directors, and more particularly keep an accurate and j ust account of monies, books and records of the bank, and turn the same, as well as all other property belonging to the bank over, when requested of him by the board, to his successor in office or any other person designated and authorized by the board, and to answer for all losses occasioned through his neglect, etc.

The evidence also tended to show that it was by virtue solely of his employment as cashier, and not by reason of his right as a shareholder, that he came into possession of the assets which he was charged with embezzling. The indictment was framed under section 6842 of the Revised Statutes, which provides that: “An officer, agent, clerk, or employe of any person * * * who embezzles or converts to his own use * * * anything of value which shall come into his possession by virtue of his employment ” shall be punished as for the larceny of the thing embezzled. Section 6794 provides that the word person,” when used to designate the owner of any property the subject of any offense, includes not only natural persons, but every other owner of property.

The court directed the jury to return the defendant not guilty. The theory upon which this action was taken is that the banking association was a partnership, and that the defendant, being a holder of shares of the capital of the association, was a partner, and being interested in, and a part owner of, the assets of the association, could not be convicted of their embezzlement, as to constitute that crime the property converted must be wholly the “ property of another.”

The court said to the jury, among other things:

People may associate together and constitute a firm, they may name and designate the style of the business or firm, by what name they may see fit to call it, and they would have a right to use the name in bringing suits if they did business under such style. They might sue and be sued under such name; and in partnerships, under the law, the possession of one partner is considered the possession of all, and of each and every partner interested in such firm, association or partnership. Therefore, if half a dozen men or more associate themselves together in a partnership, if one of the partners has possession, it is considered in law that of each and all the others, although they have not actual possession, but that the possession of one is the possession of all of them. Following this fact of partnership, it will be seen at once that although this money may be appropriated, the partnership funds may be in the hands of A., in law it is also in the hands of B., C. and I). Possession of one is the possession of all. It follows that the property being in the possession, and right to the possession of one partner he has just as much right over the property of the partnership as the other, unless by agreement between the parties. And it follows that if such is the possession as heretofore stated, a party who has possession of property as partner, that he could not commit larceny as against that property. He could not and would not be liable under the laws regulating the crime or offense of larceny for taking any such goods or property, because to constitute that crime, the property taken must be the property of another, or the same as in this statute in regard to embezzlement of property or money taken or converted to his own use, must be the property of another person. That is he must have no interest in the property so taken.”

To this action of the court the state excepted, and upon the bill of exceptions taken by the prosecuting attorney, the question of law involved is here for determination.

It is not necessary to a solution of the question before us that we define or discuss the relation which this association or its members sustained to creditors, or whether that relation was that of partners. No rights of creditors intervene here to complicate the question. The only proposition calling for a solution is whether Kusniek’s relation to the assets of this association was such that they were subject to embezzlement at his hands.

It is true that at the common law, to constitute larceny, the thing alleged to have been stolen must be the “ property of another ” person than the offender. It is also true that the statutes of nearly all the states which undertake to define embezzlement, require that the subject of the offense shall be shown to be the “property of another;” and this has almost universally been construed to mean that it must be ^whoRy the property of another. It has resulted that, as a *riile, a member of an ordinary partnership could not be convicted of embezzlement of partnership property. The same rule has been applied in this respect as in the case of larceny. An act passed March 15, 1867 (66 Ohio L. 29), seems to have been framed upon this theory. It provided that if any clerk, agent, or servant of any private person, or of any corporation or co-partnership, shall embezzle or convert to his own use, any money, goods, rights in action, or valuable security or effects belonging to any other person or persons, etc., which shall come to his possession or care by virtue of such employment, etc., shall be punished as for larceny, etc. This peculiar element of this offense, seems, however, to have been eliminated from our law by the enactment under which the present indictment was framed. It simply provides that an agent, etc., who embezzles or converts to his own use “ anything of value which shall come into his possession by virtue of his employment,” shall be punished as for larceny of the thing embezzled. The words, “ property of another,” are omitted. The element of exclusive ownership by-another person is wholly eliminated, and the test of the crime is that the property converted shall come to the hands of the offender by virtue of his employment as agent. If we are to have regard to the plain provision of this statute, the fact that an agent who converts the assets of a corporation to his own use may be interested in them, is not by that fact to be permitted to say that he is the owner of them and cannot be held to answer for converting the “ property of another.” The general ownership was undoubtedly in the association. It was clearly established in the trial below, that by the articles of association to which the defendant became a party, and under which he was chosen its agent and cashier, he had no right, by reason of his relation as a shareholder, to the possession of a dollar of its assets. If it had been within the intent of the members of the general assembly to declare that the very act with which the defendant was charged should constitute the crime of embezzlement, they could not easily have chosen more appropriate language. If this language be accepted at its palpable import, it may, without violence, or any strained construction be held as intended to prevent a mere shareholder in a private business association, who is made its sole manager and the sole custodian of its property, converting to his own use its entire capital and assets, by declaring such conversion to be a crime. The law of embezzlement is statutory. The offense was unknown to the common law. The statutes on this subject differ in the different states. It has been well observed by Bishop in his work on Criminal Law, (2 vol., § 325):

“Seeing that the statutes are numerous and in some respects diverse in their provisions, the practitioner should be cautious about coming to conclusions upon a question under the law of embezzlement, unless, when he examines a decision relied upon, he first sees whether the statute on which it was rendered is, in its terms, the same with the one of his own state.” Griffin v. State, 4 Tex. App. 390, 409.

The cases cited in support of the action of the court below when subjected to this test, fail to meet the question involved. The case of State v. Kent, 22 Minn. 41, upon which most reliance is placed, arose upon a statute declaring the conversion by an agent of “ any money or property of another ” which has come to his possession by virtue of his employment, to be a crime. The case turns upon the words above quoted.

The facts which the indictment charges and which the evidence below tended to establish, considered in the light of the statute under which the prosecution was had, leave no place for the application of the familiar fiction that the interest of a partner in, and his dominion over, the firm property is such that he cannot be guilty of larceny or embezzlement by converting it to his own use. Counsel resisting the allowance of the exceptions cite 1 Wharton Crim. Law, § 1015 where it is said:

A prosecution cannot be maintained against members of societies or against partners for embezzlements of this class j because (1) the possession of the particular member or partner is the possession of the whole society or firm; and (2) such members or partners cannot be servants under the act to the firms or societies to which they belong.” The same author says, however, in the same section: “ It is otherwise in eases where the government of a society is vested in trustees, to whom the defendant, as treasurer, is distinctively subject.”

So, in Reg. v. Proud, Leigh & Cave C. C. 97, the prisoner, a member of a friendly society, was employed to receive the weekly payments made by the members. He gave correct receipts to the members, but omitted to enter in contribution and cash books a large number of the sums so received. On being called upon for an explanation, he admitted that he had received the sums so omitted; it was held, that he was guilty of embezzlement.

In Rex v. Hall, 1 Moody C. C. 474, it was held that it is embezzlement in a member and secretary of a society, fraudulently to withhold money received from a member to be paid over to the trustees. In these eases, the defendants had an interest in the property converted, but this interest did not entitle them to its custody or possession.

The action of the trial court proceeded upon the assumption that Kusnick, by reason of his being a shareholder of the association, was a partner in the same, and that he could possess himself of its entire assets, and that conversion of them to his own use, however reprehensible in morals, would not constitute a crime. If this were so, any adventurer, with design upon the money and other assets of the bank, would have only to purchase a share of its capital, and thus armed he could, with impunity, pillage its vaults of their contents and defiantly flaunt his certificate in the face of the law with the declaration that he was a partner and part owner of the property taken, and that he was not, for that reason, amenable to the law; that no man can steal or embezzle property in which he has an interest. This theory, in its application to the case at bar, loses sight of two controlling considerations: (1) The mere ownership of a share did not invest the owner with the right of possession and control of the assets of the association; (2) it was the employment of the defendant as agent and cashier that gave him control of the property converted, and made him the rightful and exclusive custodian of it, and which brought him within both the spirit and letter of the law under which the prosecution was conducted.

Exceptions sustained.