author: Spear, J.

text:
    The Cincinnati Volksblatt Company v. Hoffmeister.

      Injunction the proper remedy to enforce stockholder’s right — To inspect books of corporation ■ — Section 3254 Rev. Stat. —■Motive of demand for inspection not material■ — Inspection may be by agent and includes right to take copies of records.

      1. Injunction is the proper form of remedy to enforce the right of a stockholder in a private corporation, given by section 3234, Revised Statutes, to inspect the books and records of the corporation.
    2. The right to inspect does not depend upon the motive or purpose of the stockholder in demanding such inspection, and a petition which shows that the plaintiff is a stockholder; that he has requested the defendant to allow him to inspect the books and records of the corporation, and fix a reasonable time for the same, which request has been refused, states a cause-of action.
    3. As incident to such right is the right to have such inspection by a proper agent, and to take copies from such books and records.
    (Decided March 6, 1900.)
    Error to the Superior Court of Cincinnati.
    The defendant in error, Albert F. Hoffmeister, commenced liis action against the Cincinnati Volksblatt Company, in the superior court of Cincinnati by tbe filing of a petition in which it is alleged that:
    “The defendant is a corporation organized under the laws of the state of Ohio. The plaintiff is a stockholder in said corporation and is the owner and holder of five (5) shares of its capital stock, of the face value of five hundred ($500) dollars each. The plaintiff has requested the defendant to allow him to inspect the books and records of said corporation, and to fix a reasonable time for said inspection. Defendant has refused such request, and refuses to allow the plaintiff to inspect its books and records at any time.
    “Wherefore the plaintiff prays that the defendant • be enjoined from refusing to allow him to inspect its books and records, and prays the court for such other and further relief, as he may be entitled to at law or in equity.”
    A demurrer to the petition being overruled the defendant company answered, admitting its corporate existence and that plaintiff is the owner of the number of shares of stock alleged in the petition, and denying other allegations. Also averring that the plaintiff’s action was not brought in good faith, but to compel defendant to purchase the stock held by him under a threat to apply for the appointment of a receiver for the company. Also that plaintiff is interested in a rival company, a competitor of defendant, and the application is made in bad faith for the purpose of injuring defendant, and to compel it to purchase the stock. Also that plaintiff is not, under the allegations of the petition, entitled to any relief, and that the court has no jurisdiction of the action.
    A reply took issue with the new matter alleged.
    Upon trial the court found the issues for the plaintiff; that he is entitled to inspect any of the books and records of defendant at any reasonable time, and that he may make such inspection by himself, or by agent, bookkeeper or accountant, and may take copies of any of said books and records, and judgment was entered enjoining defendant from preventing an inspection of any of the books and records of defendant, at any reasonable time, and the taking of copies thereof by the plaintiff himself, or by his agent, bookkeeper or accountant. This judgment was affirmed by the general term of the superior court, and the company brings error.

      Charles W. Baker, for plaintiff in error.
    The plaintiff below has mistaken his remedy. It is not by injunction, mandatory or otherwise. Such injunctions are rarely granted, and courts hesitate to employ them. High on Injunctions, section 2.
    If the plaintiff has any remedy at all, it is by mandamus under sec. 6741, Rev. Stat. It was claimed by counsel below that in Ohio, the writ of mandamus was a high prerogative writ, to be employed only in cases where it was sought to direct public officials. State v. Carpenter, 51 Ohio St., 83; Freon v. Carriage Co., 42 Ohio St., 30; State ex rel. v. Farmer, 7 C. C., 429.
    Counsel below claimed that in Ohio and England the writ of mandamus still preserves its high prerogative features exclusively, and can be used only to redress public grievances. And he cites a number of English cases.
    In the case at bar, plaintiff below has procured an injunction that for all time permits plaintiff to walk into the business house of the Volksblatt Company, examine any books and papers and records he may choose, from the subscription lists to the advertising bills, take copies of them and walk out, and he may repeat that performance under the order in this case, and protected by it every day in the week for the balance of his natural life.
    A perpetual decree of - injunction could not be drawn, mandatory or otherwise, that would not in its practical effect, work just that result. Why, the court might as well turn over the property of the Volksblatt Company and its good-will and its business management to Mr. Hoffmeister for the balance of its days.
    Counsel for plaintiff cited below, as the latest adjudication of this court, claiming it as a decisive authority in his favor, Fraternal Mystic Circle v. Fritter, 61 Ohio St., 628.
    If in this case ^Fritter had sought to be reinstated into membership by mandatory injunction, the remedy invoked in the case at bar, we respectfully submit this court would have denied him the right to such a remedy, precisely for the same reasons this court denied him relief by mandamus. Spelling on Private Corporations, secs. 656, 657; High on Extraordinary Legal Remedies, secs. 5-24; Thompson on Corporations, vol. 4, sec. 4431; Kinkead on Code Pleading, vol. 2, sec. 790.
    Again, this court has held in all three of the Ohio cases before cited, that writs of mandamus — and surely writs of mandatory injunction would have been equally impossible — ; could not be invoked as remedies, because for refusal to transfer stock, and to re-induct to membership, ample redress could be found in actions at law for damages.
    If so, then why is not Mr. Hoffmeister also remitted to his action at law, for damages? The inspection of certain books is no more enjoined by section 3254, than is the keeping of stock books and the transfer of stock, and the issuance of new certificates. If the failure to do these remits the party injured to his action for damages, then why will not the party refused the inspection merely of such books be likewise remitted to his action for damages?
    It is no answer to say that he will not be so remitted because he can show no damages. It would be damnum absque injuria. Stettuer v. N. Y. Co., 42 N. J. Eq., 46; Kinkead on Code Pleading, vol. I., section 682.

      We submit that no stockholder is entitled to any such sweeping and omnibus order as is to be found in this final decree, and certainly not on the plaintiff’s petition. Pratt v. Cutlery Co., 35 Conn., 36; Grant on Corporations, sec. 311; Foster v. White, 86 Ala., 467; American Asylum v. Phoenix Bank, 4 Conn., 172; Lyon v. Screw Co., 16 R. I., 472; People v. Railway, 11 Hun. 1, affirmed, 70 N. Y., 220; Putnam v. Valentine, 5 Ohio, 187; Van Wert v. Webster, 31 Ohio St., 420; Spangler v. Cleveland, 43 Ohio St., 526.
    We submit that section 3254 of the statute should be construed strictly. That this does not mean that the mailing lists, the advertising lists, the subscription list of a newspaper that happens to be conducted by a corporation, shall be liable to be copied by any stockholder whenever he chooses.
    Records, such as stock and transfer books, we agree under the statute a stockholder at reasonable times has the right to inspect. But we deny as an abstract right in a stockholder, the privilege of entering the business premises of a corporation and there make copies of any lists or books or accounts that he sees fit. People v. Mail Co., 34 How. Prac. (N. Y.), 193.

      Alfred B. Benedict and Jerome D. Creed, for defendant in error.
    Mandamus in Ohio has preserved its original high, prerogative character, issuing only to redress public injuries, and never to redress private grievances. State v. Carpenter, 51 Ohio St., S3; Freeon v. Carriage Co., 42 Ohio St., 30, construing sections 6741 and 6744, R. S., which control the matter here. Section 6741 provides when the writ may issue, and section 6744 provides when it shall not issue.
    The highest courts of England have reached the same conclusion. Holland, v. Dickson, L. R. 37, Ch. D., 669; Mutter v. Railway Co., L. R. 38, CL. D. 92; Prender v. Lushington, 6 Ch. D. 70 (1877) ; Huyler v. Cattle Co., 40 N. J. Eq., 392 (1885).
    A similar decision was made by the .same court in Mitchell v. Rubber Co., 24 Atl., Rep. 407 (1892).
    Thompson on Corporations, VoL 4, Sec. 4432, is especially referred to as being particularly clear and strong on this point. Sec. 1412, of Pomeroy’s Eq.
    The second ground of demurrer raised the question whether it was necessary for the petitioner to allege and prove some special reason or purpose for desiring an inspection.
    At common law a stockholder had a right to inspect, but some courts held that he must allege some reason for wanting an inspection, while other courts held that the right was absolute, just as the right of a partner is absolute to have access to the books of his partnership. Cook, Sec. 512, 4th Ed., VoL 2.
    All the authorities cited by my adversary are cases arising at common law and not under any statute.
    Where a statute confers a right to inspect, the right is absolute. All that the stockholder needs to do is to bring himself within the language of the statute.
    It is settled on both sides of the Atlantic that a stockholder, under a statute conferring a right of inspection, not only does not need to allege any reason for wanting to inspect, but that it is immaterial even if the admitted purpose is an evil one.
    It is submitted that the language of Sec. 3254 is plain and unmistakable, and that it must be enforced by the court. We are now considering not the rights of shareholders belonging to them apart from statute, but are considering a statutory right. The cases are uniform to the effect that where a shareholder is enforcing a statutory right it is only necessary for him to allege and prove that he is a shareholder, that he has demanded the right at reasonable times, and that he has been refused inspection.
    All property is rights. Blackstone, Vo). I, p, 138.

      Property, then, is a right; and a shareholder’s property right in a corporation is his bundle of rights, including the right to respect its books. It cannot be successfully denied that the sum total of the shareholder’s rights make up his stock, his property in the corporation.
    Having affirmed that these right's are property rights, the English cases proceed upon the well established rule that one may assert his property rights regardless of motive. Letts v. Kessler, 51 Ohio St., 73; Morris v. Tuthill, 72 N. Y., 575; Davis v. Flagg, 35 N. J. Eq., 491; McDonald v. Smalley, 1 Pet., 620; Thompson on Code, Vol. 4„ Sec. 4412; Cook on Stockholders .and Corporations, Sec. 514, Yol. 1 of the 4th Ed.
    The right is absolute. State v. Railway Co., 29 Mo. App., 301; State v. Club, 29 Mo. App., 326: Mitchell v. Rubber Co., 24 Atl. Rep., 407; Mattin v. Johnston, 25 Abbott’s New Cases, 350; Foster v. White, 6 South. Rep., 88.
    Finally, owing to the evils of secrecy in management, and without discarding the doctrine that a corporation is an ideal person, a principle useful for some purposes, but recognizing that after all a corporation is really only its members viewed collectively. State v. Standard Oil Co., 49 Ohio St., 137; People v. Refining Company, 121 N. Y., 582; Morowitz, Sec. 1, many courts Avent the Avhole length of holding that the books of the corporation should be open to the stockholders at all times, without their assigning any special reason for Avanting an inspection. Cook, Sec. 512.
    For a clear statement of some of the evils of secrecy of management, Avhicli the legislatures are intending to provide against, Note 1, Sec. 511, Cook on Stock and Stockholders, 3rd ed.; Kelsey v. Fermentation Co.. 3rd N. Y. Supp., 723.
    The company next says: “We did not deny Mr. Hoffrneister the right to inspect the books, we only refused to let them be inspected by an agent of Mr. Hoffmeister’s.” And the claim is made that in law the right to inspect is personal to the stockholder.
    It can be observed of this position that it is inconsistent with the other position that the refusal was because Mr. Hoffmeister was acting from a bad motive. In one breath the company say they object to Mr. Hoffmeister examining the books because he is acting in bad faith, and in the next breath, that they do not oebjct to his examining the books himself, but that they do object to his examining them by his agent.
    But the right to an inspection is not personal; it may be exercised by an agent, attorney or accountant. The provision of section 3254, being enacted to remedy the evils growing out of secrecy of management by those who, for the time being, are in power, is a remedial provision to be liberally construed to accomplish the purpose of the legislature. All the authorities are to the effect that the right is not personal merely. Thompson on Corporations, Yol. 4, Sec. 4426; Phoenix Iron Co. v. Commonwealth, 113 Pa. St.. 563; State v. Oil Wks. Co., 28 La. Ann., 204.
   Spear, J.

It is argued, in- support of the petition in error, that the plaintiff has mistaken his remedy; that if he has any it is by mandamus, and not by injunction, and that the superior court is without jurisdiction, that court having no jurisdiction in mandamus. Also that sufficient facts are neither stated in the petition nor proven to entitle the plaintiff to any injunction whatever, and that, under any possible showing, he was not entitled to the sweeping order that the court made.

The proper form of action. As to mandamus our statute, section 6741, Revised Statutes, provides : “Mandamus is a writ issued in the name of the state, to an inferior tribunal, a corporation, board, or person, commanding the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station.” And by section 6744, it “must not be issued in a case where there is a plain and adequate remedy in the ordinary course of the law.” In some jurisdictions the remedy of mandamus is given to right wrongs similar to the one here complained of. We are not, however, concerned with the law of other states, but with that of our own, and it seems hardly necessary to take space to demonstrate that in Ohio mandamus is not, but that injunction is, the proper remedy in a case of this nature. The complaint of plaintiff is that he is unlawfully prevented from the enjoyment of a right which is incident to his ownership of stock, and his remedy is that the corporation be compelled to desist from such deprivation. This does not call for the performance of an act which the law specifically enjoins. It is, on the other hand, an act which may be compelled by injunction in the common and ordinary exercise of that power. There is, therefore, a plain and adequate remedy open to him in the ordinary course of the law, for, within the meaning of this statute, an equity proceeding is a proceeding of that character. There is, in the opinion of the writer, another and perhaps better, reason than the foregoing for the conclusion announced (The Fraternal Mystic Circle v. The State,61 Ohio St., 628), but the one given is deemed sufficient for the purposes of this case. Freon v. Carriage Co., 42 Ohio St., 30; State ex rel. v. Carpenter, 51 Ohio St., 83.

It being determined that the action was properly brought, and that the court had jurisdiction, is the petition sufficient, or must the plaintiff, before he can have standing in court, set out what his reasons for desiring the inspection asked are, and show that he is actuated by proper motives and in the pursuit of justifiable ends? Such is the contention of plaintiff in error. The statute is, section 3254: “And the books and records of such corporation shall' at all reasonable times be open to the inspection of every stockholder.” But it is insisted that this provision is not intended to enlarge the right, but is a mere affirmation of the common law rule, and that that rule embodies many conditions, among them that the stockholder must allege and prove that he is acting in good faith. Without stopping to discuss the extent of, and the limitations upon, the rule as established by the common law, (for the holdings are at variance upon it), we inquire what reason there is for saying that the intent of the legislature was to merely affirm the common law rule? If that had been all, why take the trouble t© legislate on the subject at all? Is it not more reasonable to conclude that the object was to get rid of all uncertainty and of various conditions, whatever they were, and establish the right by a rule, clear, direct, simple, and practically without qualification? The language is plain. The right given is clear. One condition, and one only, is attached, viz.: that the right can be exercised only at reasonable times. Ordinarily the motive, or purpose, of the party who is in the exercise of, or is about to exercise, a clear legal right, is Unimportant. Letts v. Kessler, 54 Ohio St., 73, and authorities cited; McDonald v. Smalley, 1 Pet., 620. A like rule prevails as to one’s pursuit of an equitable remedy. Morris v. Tuthill, 72 N. Y., 575; Davis v. Flagg, 35 N. J. Eq., 491; Thompson on Corp., sec. 4412, and authorities cited. No reason is apparent why the rule should not apply to the case at bar. We are of the opinion that where a suitor demands the enforcement of a clear right given him by law, whether the remedy be legal or equitable, his motive for such action is not a proper subject for judicial investigation. The petition stated a cause of action and if supported by the evidence warranted the granting of equitable relief.

Was the order of the trial court too broad? The finding by the court of all the issues for the plaintiff settles the questions of fact for this court, but it is not improper to add that there was an entire failure to show, on the part of defendant, that the plaintiff was acting from the improper motives charged in the answer, and that the evidence, all of which we have read and considered, fully justifies the finding in favor of the plaintiff. So that, even had the petition been obnoxious to a demurrer in failing to allege a proper purpose for the suit, the defendant, having obtained a full hearing on the charges stated in the answer, would have no ground of complaint on account of the action of the court on the demurrer.

The contention is that whatever right of examination the statute gives is a personal right, and must be exercised by the stockholder in person. Since when, we would inquire, has it been the law that one who has given him a clear right as to property may not exercise it by any proper agent? The proposition has the quality of novelty, but it is not sound. It must be apparent, on reflection, that if so circumscribed a limit were placed on the right, its exercise in many instances would be futile. Foster v. White, 86 Ala., 467; Mitchell v. Rubber Co. (N. J.), 37 Corp. Cases, 42, and notes, and same case in 24 Ap. Rep., 407; State ex rel. v. Bienville Oil Works, 28 La. Ann., 204.

Nor is the right limited to one inspection. It is an incident to ownership of stock, and may be exercised at any reasonable time so long as the relation of stockholder subsists. The right to take copies from the records follows as an incident to the right to inspect. It rests, as does the entire right to examination rest, upon the broad ground that the business of the corporation is not the business of the officers exclusively, but is the business of the stockholders. Phoenix Iron Co. v. Commonwealth, 113 Pa. St., 563; Mutter v. Ry. Co., L. R. 38 Chy. Div., 92.

We refrain from extended discussion of the questions involved, because they are fully and ably discussed, and the authorities cited at large, in the briefs of the respective counsel which precede, and to which attention is here directed.

We would add, however, that the rights of the plaintiff in this case are based upon a recognition of his standing as an integral part of the corporation. The idea that the corporation is an entity distinct from the corporators who compose it, has been aptly characterized as “a nebulous fiction of thought.” ' Much learning has been indulged in and much space occupied by text-writers and others in an effort to differentiate the essential character of a corporation from that of its stockholders, and great ingenuity has been displayed in the argument, but it has been in the main a fruitless metaphysical discussion. For the purpose of. description and in defining corporate rights and obligations, and characterizing corporate action, the fiction that the corporation is an artificial person or entity, apart from its members, may be convenient and possibly useful, but in the opinion of the writer the argument favoring the essential separate entity of the corporation fails, and it is believed that the effort has resulted in misleading conceptions and in much confusion of thought upon the subject. When all has been said it remains that a corporation is not in reality a person or a thing distinct from its constituent parts, and the constituent parts are the stockholders, as much so in essence and in reality as the several partners are the constituent parts of the partnership. Stripped of misleading verbiage, the corporation is a device created by law whereby an aggregation of persons who may avail themselves of its privileges by organization, are permitted to use their property in a way different from that which is permitted to others who do not so organize, and with certain special advantages, among which are a measure as to personal liability for debts, and the power to perpetuate the organization, denied by the law to all others. With this conception of a corporation, it would seem to follow as matter of course, that the property of a corporation, although subject under some conditions to rights of creditors, is, in the last analysis, that of the stockholders, and that Avhen one seeks an inspection of its books, records, or property, he is in reality but seeking an inspection of his OAvn, and that this should be accorded fully, freely, and at all times when such inspection avüI not unreasonably inconvenience others who have like interest in and rights to the property, and that the attempt to unreasonably hamper such inspection, by officers, managers, or others, is an unjust exercise of power and one which courts should not sanction.

Nor can the officers of the corporation, or the other stockholders, justly complain. They have chosen this method of investing their means and conducting the business for personal profit, a method which, as we have seen, is especially favored by the law, and they should expect to endure such inconveniences, and such chances of exposure of management, as the method entails. In other words, it is not unreasonable that they should be required to take the bitter with the sweet.

No error is found in the judgments of the courts beloAV, and they will be

Affirmed.


source: Caselaw Access Project

author: By the Court :

license: Public Domain

text:
    Findlay Brewing Company v. Brown.

      Error proceeding to the judgment of circuit court — ■Sufficiency of bill of exceptions — Cannot be determined by motion to strike from Ales — -Presumption as to proper presentation of bill to court — Court procedure.

    1. In an error proceeding to the judgment of the circuit court, the sufficiency of a bill of exceptions taken in the common pleas, can not be determined on motion to strike from the files.
    2. Where it appears by the record that the bill was in proper time presented to the court, and the same having been examined, allowed and signed, is filed and made a part of the record, but the record is silent as to its submission to opposite counsel, the court will presume that such submission was duly made.
    (Decided March 6, 1900.)
    Motion by defendant in error to strike the bill of exceptions from the files in cause No. 6816 on the general docket.
    The record shows that at the January term, 1899, of the court of common pleas of Hancock, to-wit, on the first day of April, 1899, motion by defendant to set aside the verdict and for a new trial was heard and overruled and judgment entered on the verdict in favor of Brown and against the company. Also that defendant was allowed fifty days in which to prepare and file its bill of exceptions. Also that on the third day of May, 1899, an entry was made upon the journal of the court as follows: “On this third day of May, 1899, came the defendant by its attorney, and presented to the court its bill of exceptions, taken upon the trial of said cause, and the same having been examined, allowed and signed, the same is now filed herein and made part of the record.”
    No other entry respecting such- bill appears.

      Seney & Johnson, for the motion.

      E. W. Tolerton and H. F. Shunclc, contra.

   By the Court :

The ground for the motion to strike the bill of exceptions from the files is “that the same does not appear by the record herein to have been presented to opposite counsel.”

Either one of two objections is fatal to the motion, viz:

In an error proceeding to the judgment of the circuit court the sufficiency of a bill of exceptions taken in the common pleas cannot be raised in this court on a motion to strike the bill from the files. If the circuit court considered the bill when it should have disregarded it, that is an error which, like other errors, may require a reversal of the judgment,^ but to take up and dispose of the question here on a motion would be to advance the cause and try it by piece-meal.

The fact (which appears affirmatively by the record), that the bill was presented to the court within proper time, and the same having been examined, allowed and signed, is filed and made part of the record, raises the presumption that the requirement as to submission to opposite counsel had been duly complied with, although the record in that respect is silent. The rule announced in Heddleson v. Hendricks, 49 Ohio St., 297, remains the law notwithstanding changes in the statute.

Motion overruled.


author: Burket, J.

text:
    Metropolitan Life Insurance Co v. Howle.

      Life insurance policy, action on — False answers to interrogatories— Section 3625, Rev. Stat. — Applies in application for life insurance— But does not apply to conditions of policy itself — Answers, to be cause for defense, must be wilfully false and material — Fulfillment of conditions of policy — Charge to jury 'as to knowledge of parties of conditions of policy — What is meant by “sound health.”

    1. Section 3625, Revised Statutes, applies to false answers to interrogatories in the application for a life insurance policy, but does not apply to conditions in the policy itself.
    2. Where a life insurance policy contains a condition to the effect that no obligation is assumed by the company, unless at the date of the policy the insured is alive and in sound health, there can be no recovery upon such policy if it is made to appear upon the trial that the insured was not in sound health at the date of the policy.
    3. To constitute the answer to an interrogatory in an application for a policy of life insurance a defense to a recovery on such policy, it must be clearly proved that such answer was wilfully false, and was fraudulently made, that it is material, and induced the company to issue the policy upon it, that but for such answer the policy would not have been issued, and that the agent and company had no knowledge of the falsity or fraud of such answer.
    4. In an action on a life insurance policy where there is an averment in the petition of performance of all the conditions of the policy, and the court having charged the jury that the parties are held and bound by all.the terms and conditions of the policy, it is error to add to such charge the following: “Unless there is something in the evidence that satisfies you that the parties did not know, and did not enter into the policy knowing its terms and conditions.” Such an action is for the purpose of enforcing the policy with its conditions, and not for the purpose of setting it aside or evading its conditions.

      5. In life insurance, “sound health” means that state of health which is free from any disease or ailment that seriously affects the general healthfulness of the system; not a mere indisposition.
    (Decided March 6, 1900.)

      Error to the Circuit Court of Cuyahoga County.
    The defendant in error brought his action in the court of common pleas against the plaintiff in error, upon a life insurance policy upon the life of his wife, in the sum of $2,000, bearing date November 30, 1894, and which policy was issued and accepted upon the following conditions, among others, in the body of the policy:
    “First — No obligation is assumted by this Company upon this policy until the first premium has been paid, nor prior to the date of the policy, nor unless upon said date the insured is alive and in sound health.”
    There were also answers to interrogatories as to her health in the application, which were made part of the policy by reference. The answer set out the interrogatories and answers in the application, and averred that they were material, and were wilfully false and fraudulent, and that the company relied thereon, and would not have issued the policy but for the answers to the interrogatories, and that its agents did not know that the answers were false, and also averred that the wife was not in sound health on the date of said policy or prior thereto.
    The reply denied the averments of the answer. Upon the trial the policy and the application therefor were introduced in evidence. Testimony was introduced by the Insurance Company tending to prove that the wife was not in sound health at the date of the policy, or at the date of the application. She died on the 5th day of September, 1895, and her husband contended that she was in sound health at both the date of the policy and the application.
    The case was tried to a jury and a verdict returned for the full amount. A motion was made for a new trial, which was overruled and judgment rendered upon the verdict, to all of which the Insurance Company excepted. The circuit court affirmed the judgment. Thereupon the Insurance Company filed its petition in error in this court seeking to reverse the judgments below.

      C. L. IIotee, for plaintiff in error.

      Hart, Canfield & Callaghan, for defendant in error.
   Burket, J.

The plaintiff in error requested the court of common pleas to charge the jury as follows:

“If you find that on the 30th day of November, 1894, the date of the policy, or when it was delivered to the plaintiff, Mrs. Sarah Howie Avas not in a state of sound health, you must find for the defendant." (Refused except as given in general charge. Exception by defendant.)

The general charge upon this subject was as follows: “And if you find that on the 30th day of November, 1894 — the date of the policy, or when it was delivered to plaintiff, Mrs. Sarah Howie was not in a state of sound health, and knowing that she was not in sound health, gave answers to these questions or receiAmd this policy because of the fraudulent answers which she had given to these questions, you should find for the defendant."

This charge is not the equivalent of the charge requested. The condition in the policy is that there shall be no obligation assumed by the company, unless upon the date of the policy the insured, the wife, shall be alive and in sound health. The matter of life and sound health is not made to depend upon her knowledge thereof, but upon the fact itself. She might be dead and not be conscious of it, and she' might be in unsound health and not know it, but either Avould alike defeat a recovery. The court mixed the law as to the condition in the policy, with the law applicable to answers to interrogatories in the application, and thereby committed an error. False answers to interrogatories are governed by Section 3625, Revised Statutes, but that section has no application to conditions contained in the policy itself,. The charge should have been given as requested.

The charge given by the court as to what constitutes sound health was as follows:

“Sound health as used with reference to life insurance, means that state of health free from any disease or ailment that affects the general soundness and healthfulness of the system seriously, and not a mere indisposition which does not tend to weaken or undermine the constitution of the assured. The word ‘serious’ is not generally used to signify a dangerous condition, but rather a grave or a weighty trouble.”

This is unobjectionable, and if the requested charge had been given in connection with this definition of sound health, the jury would have been correctly instructed upon this question.

There is another error in the record to which an exception ivas duly taken. The court charged the jury as follows:

“Whatever this policy states also in such terms and conditions as you will find printed either upon the face or the back of the policy, when persons accept a policy they accept its terms and conditions. They are held to know what the policy that they receive from the insurance company contains; so that, when you come to examine this policy — which you wall have in your jury room — the question may be considered concluded by you as to the acceptance of this policy with its terms and conditions, unless there is something in the evidence that satisfies you that the parties did not know and did not enter into this policy knowing its terms and conditions.”

The plaintiff below sued upon the policy as a whole, and his effort was to enforce the policy with all its conditions, and he averred in his petition that he and his wife had performed all the conditions of the policy, and he made no claim that he accepted the policy without knowing its terms and conditions. The words in the above charge “unless there is something in the evidence that satisfies you that the parties did not know, and did not enter into this policy knowing its terms and conditions,” were outside of the case, and would naturally lead the jury to think that some of the conditions — as for instance, those as to life and sound health •— were not known and not entered into, and might therefore be disregarded.

For these two errors the judgment should be reversed and a new trial granted.

Judgment reversed.

There is also another case between the same parties, in which the defendant in error brought suit upon .two smaller policies, in which there was a verdict for the plaintiff below, judgment upon the verdict, affirmed by the circuit court, and brought here upon petition in error.

The same conditions as to life and sound health were in these policies as in the other policy, the same applications, the same averments in the answers to interrogatories being wi fully false and fraudulent, etc., and the same averment that the wife was not in sound health at the dates of the policies, or the times of their delivery.

The Insurance Company requested the following charges:

“II. If you find from the evidence that Mrs. Howie was not in sound health on the dates of the policies, you must find for the defendant.

III. If you find from th'e evidence that Mrs. Howie was not in sound health on the dates of the policies, but did not know it, you must find for the defendant.”

The charges were refused and proper exceptions taken. The court did not charge the jury upon the’ subject of sound health at the dates and delivery of the policies as contained in the conditions, but as stated in the applications. Section 3625, Revised Statutes, applies to false answers to interrogatories in the application, but does not apply to conditions in the policy. The Company was therefore entitled to a charge as to sound health, based upon the conditions in the policies, independent of the answers to interrogatories in the applications. The only charge of the court as to sound health was as follows:

“But if the testimony does disclose, by a preponderance of it, that she was at that time suffering from any of the diseases named in the application, though she did not know it, though she had no reason to believe it, and the proof now satisfies you, or is of such a character as enables you rather, to find that was the condition of her physical health at that time, and the Company acted in good faith and so did she, then this plaintiff would be entitled to recover only the premiums paid upon these policies; and otherwise the defendant should have your verdict.”

This charge covers only diseases named in the applications, while the conditions in the policies are as to all diseases which constitute unsound health. The charge as given is therefore not as broad as the condition, and the refusal of the requests was error.

The Insurance Company also requested the following charge which was refused, and proper exception taken:

“VI. Sound health means that state of health which is free from any disease or ailment that affects the general healthfulness of the system seriously; not a mere indisposition.”

The court failed to charge upon the question as to what constitutes sound or unsound health, and in refusing to charge as requested, and in failing to charge the substance of the request, the court erred.

The plaintiff in error also claims that the court erred in charging the jury that the proof as to the falsity of answers to interrogatories in tbe application must be “clear and convincing.” We think that there was no substantial error in this part of the charge.

Section 3625, Revised Statutes, provides that it must be clearly proved that the answers to interrogatories were wilfully false. The difference between “clearly proved,” and “proof clear and convincing,” is more fanciful than real. It is always safer to follow the words of a statute in a charge to a jury, but it is not error to use words with substantially the same meaning.

For failing to charge the jury as requested, as above shown, the judgment will be reversed and a new trial granted.

Judgments reversed.


author: Williams, J.

text:
    Banning, as Executor of Thompson, v. Gotshall, as Administrator of Campbell.

      Action between executors or administrators of different estates — Predecessor of one of the parti-es — Not an incompetent witness, when — Section 5241, Rev. Stat., construed — Death of intestate legatee — Legacy should be paid to personal representative, when — Section 6279, Rev. Stat.- — Foreign guardian of foreign ward — Payment by executor to wrong party not a bar to subsequent action, when.

    1. In an action between executors or administrators of different estates, a person who has been the predecessor of one of the parties is not, on that account, incompetent as a witness against the-adverse party, to testify to facts which occurred before the death of the latter’s testator or intestate. Such a case is not within the reason or spirit of the provision of Section 5241 of the Revised Statutes which excludes the testimony of an assignor of a claim in certain cases.
    2. Upon the death of a legatee, intestate, before payment of the legacy, the right to receive payment belongs to his personal representative, unless a different disposition is made by the will, and the liability of the executor therefor to the personal representative is not discharged by payment to the heir.

      3. Compliance by a foreign guardian with the provisions of Section 6279 of the Revised Statutes, is necessary to entitle him to demand or receive money belonging to his ward in the hands of an executor or administrator in this state; and the probate court may, in its discretion, refuse to make an order for the payment of the money to the guardian if satisfied it will be detrimental to the interest of the ward. Payment without such order is unauthorized, and affords no protection to the persons making the' payment.
    4. The settlement of the final account of an executor or administrator showing the payment of money to a person not entitled thereto, is no bar to a subsequent action against him for 'the recovery of the money by one who is legally entitled to the same.
    (Decided March 6, 1900.)
    Error to the Circuit Court of Knox county.
    The action below was brought by Harry Gotshall as administrator of the estate of Henry M. Campbell, against Thomas D. Banning as executor of John D. Thompson’s estate, to recover the amount of a legacy alleged to he due the estate of Henry M. Campbell under his father’s will, from the estate of John D. Thompson who was executor of that will. The plaintiff recovered in the court of common pleas, and that judgment having been affirmed by the circuit court, error is prosecuted here to obtain a reversal of those judgments.
    The facts are sufficiently stated in the opinion.

      J. B. Waight and A. JR. Mclntire, for plaintiff in error.
    We claim that under subdivisions four and five of section 5241 and under subdivision eight of section 5242, Revised Statutes, Samuel R. Gotshall was not a competent witness to the matters occurring prior to Thompson’s death. Roberts v. Briscoe, 44 Ohio St., 601; Stevens v. Hartley, 13 Ohio St., 525; Almach v. Cochran, 39 Ohio St., 316.
    It will he claimed that this question is decided in Farley v. Lisey, 55 Ohio St., 627, but we think not, counsel for plaintiff in error in the Farley case, cite same authorities, from which they claim that if Farley had resigned as administrator, he would have been competent as a witness.
    The second error involves the consideration of the case on its merits, and is that the court erred in its conclusions on the law and the facts.
    The facts upon which the rights of the defendant in error, and the liability of the plaintiff in error depend are substantially uncontroverted. The plain-' tiff below as administrator brought this suit to recover a legacy alleged to be due his intestate. The defendant below pleads payment made direct to the intestate’s heir at law, the beneficiary of the fund. Was such payment made, if so, is it a discharge of the defendant’s liability?
    We concede the general rule that the legacy of a deceased legatee is payable to his personal representative, not to his heirs at law, but claim the rule is not without exceptions. The reason of the rule is founded on the right of creditors of the deceased legatee, and when there are no creditors of the deceased legatee the rule is not inflexible. The purpose of the administration of estates is to gather the property of the deceased, convert it into form for distribution, pay the debts, make distribution to the parties entitled to receive the same. When there are no debts all there is to be done in administration is to pass the property to the parties entitled to receive the same, the heirs at law of the deceased. To say that this cannot be done direct, without the intervention of administration is a technical construction that this court will not adopt unless driven by precedent thereto. McClellan v. Downey, 63 Cal., 520; Pomeroy’s Equity, section 503; Tretwell v. McLennon, 52 Ala., 124.
    The courts of Ohio have not been called upon to-pass upon the question of direct distribution in any ease that we haYe been able to find, .but they have expressed themselves upon the subject of the necessity of administration in all cases, and of course it follows that unless administration is necessary, in all cases where there is property to be distributed, they must recognize the right to make distribution direct to the heir at law. Catlin v. Huestis, Exr., 9 C. C. , 120; 5 C. D., 23; 13 Ohio St., 288; 32 Ohio St., 234.
    These authorities clearly indicate the policy of the law in Ohio as to the necessity of administration for administration’s sake, that is, that it is not necessary, and if not necessary it must be that they will recognize direct distribution.
    Section 5797 plainly indicates the policy of the law in Ohio to dispense with administration upon provision being made for the payment of the debts of the estate.
    The question when an administration is unnecessary is discussed at length in the foot note to the case of Blood v. Kane, N. Y., Court of Appeals, January, 1892, reported in 15 Lawyer’s Rep., 490.
    Where the estate owes no debts, the sole distributee may take possession of it without administration. Hudson v. Wallace, 1 Rich. Eq. 1.
    Where the one exclusively entitled to an estate has ■ taken possession thereof and there are no debts, there is no need of administration to perfect his title. Spann v. Jennings, 1 Hill Eq., 324.
    If there be no outstanding claims against the estate of an intestate, his heirs may sue in chancery to recover the chattels of the decedent. Ricks v. Hillard, 45 Miss., 359.
    It is a general rule that heirs cannot sue in their own right as heirs, for property of the estate. There are exceptions to this rule, as when the administration has been closed, or when there are no debts against the estate and no administrator. Giddings v. Steele, 28 Tex., 732; 91 Am. Dec., 336; Webster v. Willis, 56. Tex., 468; Fort v. Fitts, 66 Tex., 593; People v. Abbott, 105 Ill., 588.

      Where the estate owes no debts the account between the heirs may be adjusted in an action in equity without the appointment of an administrator. Robertson v. Robertson, 120 Ind., 333; Watson v. Bird, 53 Miss., 480; Farve v. Graves, 4 Smedes & M., 707; Rabb v. Griffin, 26 Miss., 579; Wood v. Ford, 29 Miss., 57; Marshall v. Crow, 29 Ala., 278; Brown v. Forsche, 43 Mich., 492; Wright v. Wright, Mart. & Y., 43; Amis v. Cameron, 55 Ga., 449.
    If, however, debts exist, the collection of claims in favor of the estate must be made by the administrator. Walpole v. Bishop, 31 Ind., 156; Ferguson v. Barnes, 58 Ind., 169; Taylor v. Phillips, 30 Vt., 238.
    The heir who receives a mortgage given to the intestate can maintain a suit to foreclose the same. Babbett v. Bowen, 32 Vt., 437.
    When all persons interested in the estate of a decedent paid off the debts and distributed it by agreement, without probate of the will or administration, each is invested with an equitable- title to the share received. 2129 of the Alabama Code. Par. 2594 of Code, 1886; Carter v. Owens, 41 Ala., 217; Wright v. Robinson (Ala.), December 15, 1891; Needham v. Gillett, 39 Mich., 574; Foote v. Foote, 61 Mich., 181; Vandeveer v. Alston, 16 Ala., 494.
    There is an exception to the rule even in equity, which is the same as that at law. Miller v. Eatman, 11 Ala., 609; Roberts v. Messinger, 134 Pa., 298; McLean v. Wade, 53 Pa., 146; Begien v. Freeman, 75 Ind., 398; Ferguson v. Barnes, 58 Ind., 169; Moore v. Monroe, 59 Ind., 516; Westerfield v. Spencer, 61 Ind., 339; Church v. Railway Co., 70 Ind., 167; Holzman v. Hibban, 100 Ind., 338; Salter v. Salter, 98 Ind., 522; Mitchell v. Dickson, 53 Ind., 110; Williams v. Riley, 88 Ind., 290.
    But it must appear that those suing are entitled to the money. Schneider v. Piessner, 54 Ind., 524; Cowen v. Stewart, 128 Ind., 507.
    An executor who is also a legatee may, by assenting to his own legacy vest the bequest personally in himself; and so may an administrator who is also a distributee, appropriate his own share by acts and conduct manifesting such assent. Schouler, Exrs. & Admrs., 2d Ed., 248; Buford v. Holliman, 10 Tex., 560; A. & E. Ency., 208; Needham v. Gillett, 39 Mich., 514; Fretwell v. McLennon, 52 Ala., 24; 52 Pa., 370; 15 N. H., 516; 31 N. H., 393; 45 N. H., 456; 5 N. H., 337; 30 Vt., 238; 32 Vt., 437; Redfield on Wills, sec. 19.
    The same reason for not requiring original administration of an estate would apply to administration of this fund, in the condition in which Henry M. Campbell’s estate was at the time of the distribution of the fund. 13 Ohio St., 288.
    The assent of the executor or administrator to the taking of the legacy by the legatee and allowing it to go into the posession of the legatee under this assent, invests the legatee with the absolute title to the legacy whether it be general or specific and excludes the administrator from all further title thereto. 2nd Williams Executors, 1376, Note A; 2nd Williams Executors, 1379; Flickinger v. Saum, 40 Ohio St., 591; Posegate v. South, 46 Ohio St., 397.
    Coming now to the question, did Thompson pay this money to the legal representative of the heir at law of Henry M. Campbell, the heir at law being a minor and incapable of receiving it herself?
    We call attention of the court to these averments of the answer and the admission in the reply because of the claim made by counsel for defendant in error, that Miller was only the ancillary and not the domicilary guardian of Elizabeth A. Campbell, minor. The reply admits that Miller as such guardian exhibited to Thompson a certified transcript from the records of the courts of Tennessee appointing him. Section 6279, Revised Statutes.
    Taking sections 6290 and 6279 together, a foreign guardian’s authority in Ohio is not limited to the state appointing him, bnt his authority in the state in which he is appointed is by section 6290 extended to Ohio, and section 6279 only provides for proof of these facts being brought home to the person holding the fund instead of requiring him to investigate and learn the facts himself before he is required to pay. If it is true that the steps directed to be taken in the Probate Court by section 6279 are for the benefit and protection of the party holding the fund in Ohio and do not confer any authority upon the foreign guardian, then the party holding the fund in Ohio may waive these provisions in his behalf and upon becoming satisfied by other proof of the fact of the foreign guardian’s appointment, as Thompson did in this case, he may not require formal compliance with section 6279, and if he paid the money to the foreign guardian without requiring compliance with section 6279, he takes upon himself the risk only, of the foreign guardian being duly appointed and qualified according to the laws of the foreign state. Maupin v. Dulong, 30 Am. Dec., 699; Lee v. Stone, 23 Am. Dec., 589.
    The plaintiff below was not in position to question the authority of Miller as guardian to receive the fund. The importance of a question very often depends upon who makes it. In this case the plaintiff is the administrator of Henry M. Campbell who simply represents the abstract right to handle this fund and pay it to the beneficiary. He does not in any sense represent the beneficiary of the fund. He has with full knowledge of the payment and all the circumstances under which it was made, acquiesced in it for a period of four years, if he did not at the time consent to its being so made. He now seeks to make the question as to the want of authority of Miller as guardian of Elizabeth A. Campbell.
    Mere acquiescence may work an effectual estoppel. Hermon, section 768 and 769; 2 Hermon, section 1126.

      Having acquiesced in Thompson’s payment of this money for this length of time, whatever may have been his rights at first, he is now estopped. Quinlan v. Myers, 20 Ohio St., 511.
    No one except a ward or some one claiming an interest under him can question the validity of a guardian’s act in the sale of land on the ground that he had not given sufficient bond. Goldsmith v. Gilliland, 23 Fed. Rep., 645.
    It is averred in the answer and admitted in the reply that on August 24, 1895, Thompson, as Executor of Charles M. Campbell, filed his final account in the probate court of Knox county, Ohio, due notice of which was given and the account confirmed December 26, 1895. This account contained the $50.00 voucher of S. R. Gotshall as administrator of Henry M. Campbell. Calling the attention of the court to section 6187, Revised Statutes, the effect of such final account on persons having vouchers therein is discussed in Negley v. Guard, 20 Ohio, 310; Swearingen v. Mavis, 14 Ohio St., 424; McAfee v. Phillips, 25 Ohio St., 377; Cox, Administrator, v. John, 32 Ohio St., 532; Armstrong v. Grandin, 39 Ohio St., 368.
    The appointment of Miller as guardian in Tennessee appears to be that of a domicilary or original guardian and not that of an ancillary guardian. This appointment is not subject to collateral attack in this way. “The appointment of a guardian made by a court in the due exercise of its powers is not subject to collateral attack.” King v. Bell, 36 Ohio St., 470; Long v. Stanley, 16 Ohio St., 455.
    But on the question of the minor child’s residence following the mother even after re-marriage we call the court’s attention to the case of Maxison v. Sawyer, 12 Ohio, 195; Gazette Co. v.Dean, 25 Bul., 252.

      S. S. Bloom filed a brief in behalf of the children and heirs-at-law of Anna J. Love, deceased,, one of the legatees of John D. Thompson, deceased.

      Critchfield cG Graham; S. R. Gotshall and Columbus Ewalt, for defendant in error.
    While it is the purpose of the statute to prevent a person from testifying in his own favor concerning transactions with a deceased person, it does not render such person incompetent to testify where he is a mere nominal party, or has no interest in the result of the‘controversy. Bell, Admr., v. Wilson, 17 Ohio St., 663; Baker v. Jerome, 50 Ohio St., 682; Johnson v. Connable, 41 Ohio St., 178; Ryan v. Connor, Id. 368; Cochran v. Almack, 39 Ohio St., 314.
    Prior to the amendment of section 5241 containing' paragraph 4, an assignor was a competent witness for the assignee of a chose in action in a suit by the latter to establish a claim against the administrator of a decedent debtor. Myers v. Walker’s Administrator, 9 Ohio St., 558.
    The resignation or removal in no sense operates as an assignment of the decedent’s estate to the succeeding administrator. The latter does not derive his title from the former administrator but by operation of law; nor is the latter in any manner interested in the estate in the hands of his successor, and hence has nothing to gain from his testimony. Farley v. Lisey, 55 Ohio St., 627; Jones on Evidence, Vol. 3, Sec. 792, pages 1721-2; Snyder v. Feidler, 139 U. S., 478; Rapalje, Witnesses, page 112, par. 6; McLaughlin, Admr., v. The Creditors of Nelins, 9 Ala., 925; Farrow v. Bragg, Admr., 30 Ala., 261; Walker v. Weeks’ Admr., 39 Ala., 568; Wiggin v. Plummer, 31 N. H., 25; Bird’s Executor v. McGregor’s Administrator, 2 Grant (Pa.); Burkholder v. Lapp’s Executor, 31 Pa. St., 322; Saunders v. Duval’s Admr.. 19 Tex., 467.
    Where land is directed to be sold and the proceeds paid to legatees the land is to be treated as personal property. Ferguson v. Williams’ Executors, 14 Ohio, 140; Collier v. Collier’s Exrs., 3 Ohio St., 369.

      Upon the death of a distributee before distribution his rights pass to his personal representatives. Armstrong v. Grandin, 39 Ohio St., 368; Haines v. Munger, 40 Ohio St., 493; Redfield, Law of Wills, vol. 3, page 562, and Sections 126 and 127; Giauque’s Manual for Guardians and Trustees, page 76, par. 43; Story, Conflict of Law, Sec. 504.
    In the absence of any statutory provisions, chancery has complete power to make such orders and decrees for the transmission of the property of a nonresident minor as may seem for the best interests of the estate of such minor. Earl v. Dresser, 30 Ind., 11; Wait’s Actions and Defenses, Yol. 3, 542; Woerner on Guardianship, Sec. 28, p. 87; Willis v. Fox, 25 Wis., 646; In re Wilson, 8 S. W. Rep., 369.
    The rights and authority of foreign guardians in Ohio are amply provided for by statute. Sec. 6276, Rev. Stat.; Sec. 6277.
    These statutes are in pari materia, and are to be so construed so as to give effect to each and every part. Cincinnati v. Guchenberger, Law Bull, for July 24, 1899, p. 79; State of Ohio v. Blake, 2 Ohio St., 152. Endlich, in his Interpretation of Statutes, section 431; Williams v. Adams et al., 94 Ga., 270.
    Where a trustee pays the fund of a cestui que trust to one not authorized, and the funds are lost, the trustee will be held personally responsible for the fund. Williams v. Smith, 26 Barb., 316; Lawman, Admr., v. Elmira Ry. Co., 85 Hun. (N. Y.), 188; Morrell v. Dickey, 1 Johnson Chancery, 153; Boothe v. Bailey, 3 Hump. (Tenn.), 595; Young v. Darling, 15 Ill., 481; Tierman v. Beam, 2 Ohio, 383; Bright v. Boyd, 1 Story, C. C., 486.; Dickey v. Beatty, 14 Ohio St., 389; Bright v. Boyd, 1 Story, C. C., 486; 1 Lead. Cas. in Eq., 4 Am. Ed., 379; Ware v. Johnson, 55 Mo., 500; Morion v. Branhard, 27 Mo., 351; McBride v. Wilkinson, 29 Ala., 662.
    But the probate court is one of limited jurisdiction, and in Ohio has no power to direct payment by an administrator or executor to any one but those who are entitled by law to receive such payment. Cox’s Admr. v. John, 32 Ohio St., 532; Swearinger v. Morse, 14 Ohio St., 424; Taylor v. Huber, 13 Ohio St., 288, is cited as authority for the position claimed: that Miller, as guardian, was entitled to receive the fund directly from Thompson. But the doctrine of that case has no application to the case at bar. Webster v. Bible Society, 50 Ohio St., 1; Davis v. Corwin’s Executor, 25 Ohio St., 668.
    No case is cited in which it has been held that when an administrator has been appointed, his rights as such may be disregarded by debtors or persons having funds belonging to the estate simply because the debts of the estate have been paid; and no case has been cited where administration was dispensed with except where the heirs and legatees were of full age and there were no debts. On the other hand the cases cited by counsel recognize the necessity of administration in all cases where the heirs and legatees are minors. Amis v. Cameron, 55 Ga., 449; Taylor v. Phillips, 30 Vt., 258; Bowen v. Stewart, 128 Ind., 507.
    It has been held that voluntary payment of a debt to a foreign administration will be good if there be no debts or next of kin, and there has been no administrator appointed in the state of the debtor, provided the money paid is accounted for by such foreign administrator. Wilkins v. Elliott, 9 Wall., 740; 108 U. S., 256; Vaughn, Admr., v. Barrett, 5 Vt., 333; Bartlett, Admr., v. Hyde, 3 Mo., 490; Stone, Admr., v. Scripture et al., 4 Lans., 186. McCord v. Thompson, 92 Ind., 565; Denny v. Faulkner, Admr., 22 Kan., 189; Cline v. French, 57 Miss., 662; McNamara v. McNamara, 62 Ga., 200; Loose v. Ry. Co., 63 N. H., 588. Thompson did not occupy the position of a mere debtor. He held the funds as executor, and could not dispose of them or distribute them in any other manner than that provided by law.

      The proposition that payment to one not authorized can never avail as a defense either as an equitable payment or as an equitable counter-claim, except when made directly to the beneficiary, or is accounted for and paid over to the beneficiary by the one to whom it is paid, is conceded by counsel. But it is claimed that Miller was the beneficiary. The word “beneficiary” is a term suggested by Justice Story as a substitute for the term cestui que trust (1 Story’s Eq., Sec. 321.) A cestui que trust is he for whose benefit another person is seized of lands or tenements, or is possessed of personal property (Bouvier’s Law Dictionary). These funds were held for the benefit of the ward, and not for her guardian.
    The payment by Thompson to Miller was not only without authority, but in violation of law, and the consequent duty of Miller to account for the fund, and the liability of his bondsmen for failure to so account, does not render the payment by Thompson either valid at law or good in equity. The receipt does not purport to be for any sum except Gotshall’s commission. It is not and does not purport to be a receipt for any other portion of the fund. Neither does it purport to be a consent on the part of Gotshall that the money be paid to Miller. And if it did it would not bind the estate of Henry M. Campbell, for Gotshall would have had no authority to pay over the fund to Miller had it been paid to him, and he could not have given Thompson authority to do what he himself could not have done. Nor would the plaintiff have been estopped by such a receipt had it purported to be for the whole fund, or a consent that the fund be paid to Miller. It would have been a plain breach of trust to have so consented, and would not have estopped him nor his successor. Breuer v. Hays, 22 Law Bull., 144; Huston v. Huston, 2 Ohio St., 489; Pease v. Phillips, 10 Conn., 62; Jones on Evidence, Vol. 1, Sec. 254; McGowan v. Knox, 21 Ohio St., 547.

      The rule contended for, that payments made by a trustee without an order of a court of chancery will be sanctioned if such payment would have been authorized had application therefor been made, has no application to this case, for Thompson did not act in good faith. Potter’s Appeal, 56 Conn., p. 1. The doctrine of the latter case is especially applicable to the present case.
    We come now to consider the question whether or not the probate court, under Sec. 6279, upon the application of a foreign guardian and the filing of an exemplified copy of the record of the court appointing him, and giving notice, etc., has any discretion but to grant the order permitting such guardian to receive and remove the fund of his ward, in the custody of the executor or administrator, to the state of the ward’s domicile.
    If we consider the manifest purpose and scope of the various provisions of the statute relating to the property of foreign minors situated in this state — the care that the law provides for the protection of such property, and the restrictions against its removal except upon the carefully guarded conditions provided for, the conclusion is irresistible that the object of the legislature was to invest probate courts with the same authority and power over the property of such foreign minors as is exercised by courts of chancery in the absence of statutory provisions relating to the rights and property of such minors. Such was the construction of precisely similar statutes by the supreme court of Missouri, In re Wilson, 8 S. W. Rep., 369; Earl v. Dresser, 30 Ind., 11; Woerner on Guardianship, Sec. 26, p. 80; Lamar v. Micou, 112 U. S., 447; Wait’s Actions and Defenses, Vol. 3, p. 637; Schouler’s Domestic Relations, Sec. 230; Mundy v. Baldwin, 79 Ky., p. 121; Sessions of Stephens, 19 La. An., 499.
    The question whether or not the approval by the probate courts of payments made to distributees by executors or administrators binds any person except the parties receiving the money has been so long and so well settled in Ohio, that it is not a little surprising that the claim is now made that the approval has any other effect. Swearington, Admr., v. Morris, 14 Ohio St., 424.
    The account of Thompson shows that he paid this money to Miller, the party not entitled to it, and shows that it was not paid to the party who was entitled. It should be remembered that Gotshall did not file his account until Thompson had paid the money over to Miller. The case of Ratcliff v. Warner, 32 Ohio St., 334, is cited in support of the 'foregoing proposition. That case, however, not only does not support, but conclusively controverts that proposition. In Ohio the final settlement and discharge by the probate court does not terminate the authority of the executor or administrator to represent the estate so long as there are assets to be administered. Weyer v. Watt, 48 Ohio St., 545; 29 Ohio St., 567, and 25 Ohio St., 374.
   Williams, J.

By the will of Charles M. Campbell, his executor was directed to sell certain real property of which he died seized, and pay one-fourth of the proceeds to his son, Henry M. Campbell. John D. Thompson qualified as executor of the will, in Knox county, in 1873, and afterwards sold the property in accordance with the will, and received the proceeds. The share of Henry under the will amounted to something over fourteen thousand dollars, but before its payment he died intestate, in. Knox county, and the right to receive the money, it is conceded, vested in his personal representative, no other disposition thereof having been made by the will. He left a widow who received her share of his personal estate, and an infant daughter (Elizabeth) his only heir at law, whose share, amounting to the sum of $9,558.34, was demanded by Samuel R. Gotshall, who had become the administrator of Henry’s estate.

The widow of Henry married Marcus A. Miller, and they removed from the county of Knox to the state of Tennessee, taking with them the minor child, Elizabeth, where Miller procured his appointment as guardian of her estate. He presented an authenticated transcript of his appointment together with a cop;}' of his bond as such guardian, to Thompson, who then paid him the last mentioned amount of the money bequeathed to Henry by his father’s will, taking from Miller the following receipt: “Mount Vernon, Ohio, September, 1892. $9,558.34. I, Marcus A. Miller, as the guardian of Elizabeth Campbell, - infant daughter of the late Henry M. Campbell, deceased, she being the only child and sole heir at law of said decedent, do hereby acknowledge to have received of John D. Thompson, sole acting executor of the estate of the late Charles M. Campbell, deceased, father of the said Henry M. Campbell, the sum of nine thousand, five hundred and fifty-eight and thirty-four one hundredth dollars, being the full distributive share of my said ward of the legacy and bequest to the said Henry M. Campbell under the will of his father, the said Charles M. Campbell.

Marcus A. Miller, Guardian as Above.”

No application was made to the probate court of Knox county for an order authorizing the payment of the money to Miller, nor was any proof of his appointment filed in that court, nor any order obtained for such payment.

Thompson, also, about the same time, paid to the administrator of Henry’s estate the sum of fifty dollars, for which the following receipt was given: “Mt. Vernon, Ohio, Sept. 15,1892. $50.00.

Received of John D. Thompson, executor of the estate of the late Charles M. Campbell, deceased, the sum of fifty dollars, ($50.00), which I agree to and do receive in full satisfaction of all claims due or to become due to me, either in my own right or as administrator of the estate of Henry M. Campbell, deceased, for commissions on funds in the hands of said executor coming to the heirs of said Henry M. Campbell; I having made claim that the whole of said Henry M. Campbell’s share in the said Charles M. Campbell’s estate should be paid to me as the administrator of said Henry M. Campbell’s estate, while the said Thompson as such executor claimed, and the heirs of- said Henry M. Campbell were insisting upon the right to have the said share paid directly to the said heirs of said Henry M. Campbell, and thus depriving me of all commissions thereon'; and now this amount is paid to me by and with the consent of the widow and heir of said Henry M. Campbel], deceased, as a compromise and in full satisfaction of my said claim-

S. R. Gotshall, Administrator of Henry M. OamiJbell.”

Thereafter Thompson filed his final account as executor of the will of Charles M. Campbell, including in the account the two receipts above given, and claiming credit for their respective amounts. No exceptions Avere filed to the account, and it was approved and confirmed by the court, after due publication of notice. Some time after that, Thompson died testate and Thomas D. Banning qualified as his executor ; and, the administrator of Henry’s estate having resigned, Harry Gotshall was appointed his successor, and brought the action below.

These facts are shown by the uncontroverted allegations of the pleadings, and the agreements of the parties. Issues were joined upon various allegations of bad faith on the part of Thompson in the payment of the money to Miller, and of deception and misrepresentation in obtaining the receipt from Samuel R. Gotshall. It Avas claimed by the plaintiff, and denied by the defendant, that the money was paid by Thompson to Miller in pursuance of an agreement between them that the latter should apply a part of the money to the discharge of an individual obligation of his on which Thompson was bound, a part to the payment of a debt which Miller owed Thompson, and the balance to be used by Miller in business of a speculative character for his own benefit; and that Thompson so made the payment knowing Miller was pecuniarily irresponsible.

On the trial of the action Samuel R. Gotshall, the predecessor of the plaintiff as administrator, was permitted to testify to various admissions and statements of Thompson concerning the allegations made against him. Objection was made to this testimony on the ground that the witness was incompetent to give testimony in regard to any fact which occurred prior to Thompson’s death. The overruling of that objection and the admission of the testimony presents one of the questions made in this case. The witness was not a party to the action, and by no express provision of the statute was his testimony rendered incompetent. The contention is, that it should have been excluded under that clause of section 5242 which provides that when a case is plainly within the reason and spirit of the three preceding sections, “though not within the letter, their principle shall apply”; the claim being that the testimony admitted was plainly within the reason and spirit of that provision of section 5241 which excludes the testimony of an assignor of a chose in action, in respect to any matter- to which, if a party, he would not be permitted to testify. The reason for excluding the testimony of an assignor, as provided by section 5241, does not seem applicable to a resigned administrator or executor. Before the enactment of that provision it was not uncommon to make assignments of claims for the purpose of enabling the assignor, by his testimony, to establish the claim for his own benefit, in an action by his assignee against the representative of an estate. Then, the assignment of a claim is usually accompanied with a liability of the assignor in case the proof is insufficient to enable the assignee to recover upon it. So that the assignor, in such cases, is a party in interest, though not of record, and his testimony is practically in his own behalf. Upon the resignation of the personal representative, the title tp the assets of the estate, and all the rights and duties of further administration, devolve- upon his successor by operation of law, and he ceases to have any interest in the estate. For this reason it is quite generally held that when an administrator has resigned, or been removed, he is a competent witness in behalf of his successor, in all respects as if he were a stranger to the estate. In BurcVs Executor’s v. McGregor’s Admr., 2 Grant Gas., 353, an attempt was made to bring a discharged administrator within the rule which excludes an assignor of a chose in action from being a witness to support his claim. But the court said that, “the discharge of one administrator and the appointment of another is nothing like an assignment. The discharged administrator has-nothing to do with the appointment of his successor in that trust. He makes no transfer of the claims of the decedent. He receives no value for them. He is, therefore, a competent witness to support them.” And in Rapalje on Witnesses, that author, on page 112, says that: “The authorities even at common law, are quite harmonious in conceding the competency of an executor or administrator who has resigned, or has been removed or superseded, to testify in favor of his successor in the trust, and this even if proceedings are pending to reverse the action of the court removing him. He is no longer a party nor liable for costs.”

It is further urged that as the testimony admitted related in part to a transaction between the witness and Thompson, that part was incompetent and should have been excluded. But as said in Farley v. Lisey, 55 Ohio St., 627-631: “The statute has reference to the adverse character which the parties sustain toward each other as parties to the action, and not necessarily to their relation as parties to the transaction which is the subject of the action or defence.”

The payment by Thompson, to Miller the Tennessee guardian of the infant heir of Henry M. Campbell, of the money represented by the receipt of Miller hereinbefore set forth, is relied on as an equitable defense to the action brought by the plaintiff below; and the failure of the court to render judgment thereon discharging the defendant from liability, is assigned as error here. It is conceded that upon the death of Henry the legacy was payable to his personal representative, and not to his heir; but it is claimed that since the latter was ultimately entitled to the money, the payment to the guardian should, in equity, be treated as payment to the personal representative, and by the latter to the heir, as by this means the expense of further administration and circuity of action would be avoided, and all substantial rights preserved. In support of this contention cases are cited which hold that where there are no debts of an estate, the heirs may resort to a court of equity for division and distribution of the assets, or, when sui juris, may make division and distribution among themselves by agreement, without administration. That doctrine has little relevancy here. A foreign guardian is not entitled, merely by virtue of his appointment and qualification, to receive money belonging to his ward in the hands of an executor or administrator in this state. In Story on Conflict of Law, sec. 504®, the rule is stated to be, that, “no foreign guardian can virtute officii exercise any rights, powers, or functions,' over the movable property of his ward situated in a different state or country from that in which he obtained his letters of guardianship.” And, since whatever privileges are accorded such guardian in that respect in another state or country, are conferred merely as a matter of comity, it necessarily follows that their existence and enjoyment may be made subject to such regulations and conditions as the state or country in which the property is situated may deem it just and proper to impose. In the absence of any statute on the subject it seems to have been usual and necessary to resort to ancillary guardianship in the state where the property was situated, or make application to a court having chancery powers for a proper order authorizing the foreign guardian to exercise control over the personal estate of the ward so situated, or remove it from the state; and in such cases the courts have the discretionary power to make such order as should be deemed for the best interest of the ward. In this state that power is appropriately vested in the court of probate, which has exclusive jurisdiction of all probate and testamentary matters, and the control of the conduct of executors, administrators and guardians, and the settlement of their accounts. Section 6279, of the Revised Statutes, provides that: “In any case in which a guardian, not appointed in this state, and his ward, are both non-residents of this state, and the ward is entitled to money or other property in the lawful custody of any executor, administrator or other person in this state, such guardian may by order of the probate court of the proper county, upon filing therein the proof named in the second preceding section, and giving notice to such custodian as therein prescribed, be permitted to demand, receive or recover by suit, such money or other property and remove the same, unless the terms of limitation attending the rights by which the ward owns the same conflicts with such removal.” The second preceding section referred to, is Sec. 6277 of Revised Statutes, which requires that the foreign guardian making the application for the order therein provided for, shall file in the probate court, “an exemplification from the record of the court making the foreign appointment, containing all the entries and proceedings in relation to his appointment and his giving bond, with a copy thereof, and of the letters of guardianship, all authenticated, as required by the act of congress in that behalf;” and before such application shall be heard, or any action taken thereon by the court, at least 30 days’ written notice shall be served on the custodian of the money, specifying the object of the application and the time when the same will be heard. And it is further provided that no such order shall be made unless at the time of the hearing the state or territory in which the guardian was appointed has made a similar statutory provision; and the court may, in any case, deny the application, unless satisfied that it would be to the interest of the ward to grant the same.

Compliance with these provisions by a foreign guardian is necessary in order to invest him with the right to receive or recover from an executor or administrator in this state moneys belonging to his ward, and to remove the same to another state; for, it is only by virtue of the order of the probate court that, in the langugage of the statute, the foreign guardian is “permitted to receive the money or other property” of the ward “and remove the same.” These are just and salutary provisions, designed for the protection, mot only of the executor or administrator, but also of the interests and estates of infant wards. They plainly show that however formal the application may be, the court is not necessarily required to make the order requested, but is clothed with a large discretion, similar to that formerly exercised by courts of chancery, and may refuse to grant the order if satisfied it will be detrimental to the interests of the ward. There was no compliance with these statutory provisions, by Miller, nor any attempt to comply with them, which was known to Thompson when he paid over the money; and this gives color to the claim made by the plaintiff that there was some ulterior purpose in the transaction looking to the personal advantage of both, to the prejudice of the ward.

Miller being without authority to demand and receive the money, its payment by Thompson was also without authority, and constitutes no defense to the plaintiff’s action. Whether it would be different if the money had ultimately reached the heir after becoming of age, or had been expended for her benefit in a lawful manner, is a question not before us for decision. Assuming that in such a case, Thompson having paid the money in good faith would be entitled in equity to subrogation to the rights of the heir against the personal representative of her father, or might as equitable assignee, set up her right in defence of the plaintiff’s action, it is clear that case is not before us. Apparently in pursuance of an understanding when the money was paid, a part of it was at once applied in discharge of Thompson’s individual liability for Miller, a part in satisfaction of a debt due from Miller to Thompson, and the balance embarked in a disastrous enterprise of Miller by which in a brief time it was irretrievably lost; and his bondsmen became hopelessly insolvent.

The only other question we deem it necessary to notice, is whether the settlement of the final account of Thompson as executor is a bar to this action. The claim is, that as the account includes vouchers for the amount paid Samuel R. Gotshall for commission, and the amount paid to Miller, its settlement, so long as it is not opened up or impeached, is conclusive. And it undoubtedly is, so far as the payments represented by the vouchers are concerned, and against those to whom payments were made. But it has been the settled law of this state since Swearingen, Admr., v. Morris, 14 Ohio St., 424, that such a settlement showing payment to one not entitled thereto, is no bar to an action by the person who is entitled to the money. The settlement and order of distribution does not have the effect of determining who is the rightful distributee, but is a general order to pay to the person lawfully entitled to receive payment. The conclusive effect of the settlement, as said in the case just cited, is founded on the condition that the executor or administrator has paid or delivered to the person entitled thereto, the money or other property in his hands. It may be remarked here, as it was in that case, that “the money was not ordered out of his (the executor’s) hands by a court of competent jurisdiction having the parties in interest before it. He voluntarily paid it away, and now relies upon a subsequent approval of what he had done, to turn wrong into right.” The final account of Thompson shows no payment to the plaintiff below, and its approval presents no obstacle to the maintenance of his action for the recovery of the money to which he is legally entitled.

A claim is made here on a cross-petition in error, that the plaintiff should have been awarded interest for a longer period than was allowed by the trial, court. But, without entering upon a discussion of the subject, we are not disposed to disturb the judgment in that respect.

Judgment affirmed.


author: By the Court:

text:
    Curry v. Homer, et al.

      Supersedeas bond — Under Section 6718, Rev. Stat. — Surety not liable for greater sum than fixed by court — If claims of beneficiaries exceed amount of bond — Must be pro rata distribution.

    1. A supersedeas bond given under the third paragraph of section 6718, Revised Statutes, is for the benefit of those entitled to costs as well as to the defendants in error. The surety thereon is not liable for a sum greater than the amount fixed by the court; and where the aggregate claims of the beneficiaries of the bond exceed the amount so fixed, the amount must be distributed according to the amount of their respective claims.
    2. Where the surety pays the entire amount to the defendants, without the assent of those entitled to costs, he, having paid in his own wrong, is liable over for such sum as they would have recovered in a pro rata distribution.
    (Decided March 6, 1900.)
    Error to the Circuit Court of Mahoning County.
    This case was tried in the common pleas, a finding of facts made, and judgment rendered for the defendants, which on error was affirmed by the circuit court.

      R. B. Murray, for plaintiff in error.

      (7co. F. Arrel and Frank Jacobs, for defendants in error.
   By the Court:

The action below was on a supersedeas bond given under the third paragraph of section 6718, Revised Statutes, for the purpose of staying execution upon a judgment of the circuit court, pending proceedings in error in this court. The amount of the bond was fixed by the court of common pleas at $550.00,- and stipulated that should the judgment be affirmed, the bondsmen would pay “the value of the use and occupation of the property not exceeding the sum of five hundred and fifty dollars,” to the defendants, “and pay all costs that have accrued or that may accrue in the supreme court.” The language of the statute, however, is that if the judgment is affirmed they will pay “the value of the use and occupation from the day of the undertaking until the delivery of the possession, pursuant to judgment, and all costs” and the bond must be construed according to the statute under which it is given; so that the limit of the sureties’ liability on the bond is the amount fixed by the court for which it is to be given.

On the affirmance of the judgment, the surety on the bond in connection with the principal, entered into an agreement by which he paid the defendants in error the sum of $550, which it was agreed should be in full satisfaction of his liability on the bond: The parties entitled to costs were not parties to the agreement, and nothing was or has been paid them. The plaintiff, Curry, is the owner by assignment of all the costs, and asks to recover on the bond the costs made in the case, amounting to $291.45, with interest. It is claimed that the persons entitled to costs are not obligees of the bond, and cannot, therefore, interfere with a settlement made by the obligors and obligees. We think this is erroneous. The bond, under the statute, is given to secure costs as well as the value of use and accupation, and those entitled thereto are therefore obligees or beneficiaries as well as the defendants in error, and no settlement of the bond to Avhich they are not parties can affect their rights as beneficiaries.

It is true the amount of the bond is fixed at $550 and the surety cannot be compelled to pay more; but where, as seems to have been the case here, the value of the use and occupation and the costs of suit in the aggregate, exceed the amount of the bond, the amount of the bond must be distributed among the beneficiaries according to the amount of their respective claims; it must be treated as a fund held for the equal benefit of all the beneficiaries. The finding does not ascertain what the value of the use and occupation in fact was. It seems to have been assumed to be the amount agreed on by the parties to the settlement; and as no objection was made to the finding, we must accept it in that regard as fixing the value of the use and occupation of the land.

The plaintiff, however, was entitled to a fro rata share of the amount of the bond, and is now entitled to judgment against the bondsmen for such portion of the $550 as he would have recovered had the fund been distributed according to the respective claims of all the beneficiaries. Of this the surety cannot complain; for although he will in fact pay more than the amount of the bond, it results from his own wrong in paying the entire amount of the bond to a part of the beneficiaries in disregard of the rights of the others.

Judgment reversed and cause remanded to the court of common pleas for the rendition of a judgment for the plaintiff in accordance with this opinion

Reversed and remanded.