« PreviousContinue »
population of less than 50,000, was the county others, sureties as aforesaid, as to the amount seat of Wayne county, in which was elected an- found to be due to said board and unpaid, which nually a city treasurer, who was ex officio treas- sum forms part of the judgment in favor of the urer of the city school district, and whose duty county commissioners of said county and against it was to receive from the county treasurer all Dawson and the other sureties, which judgment
belonging to the city and school district, was affirmed in the preceding case of Dawson o. and disburse the same according to law.
The State, ante Between the date of the bond and the com- These are the facts. At the March term, 1876, mencement of Koch's term of office, to wit: on of the Court of Common Pleas of Wayne County, the 2d of April, 1870, the General Assembly a judgment was rendered in favor of the County passed an act (67 Ohio L. 32), providing among Commissioners of Wayne County, against Jacob B. other things, “that in cities of first and second | Koch, treasurer of that county, and Dawson and class, having a population of less than 50,000, others, his sureties, for $26,216.23, based on the embracing a county seat, no election for city defalcation of Koch as such officer. It was found treasurer shall be held, but the county treasurer and adjudged in the case, that the amount due shall in such cases, act as city treasurer etc.” to Wayne County, the city of Wooster, and the
Hence, it is contended by plaintiffs in error, board of education of the city, was $58,680.77, that as sureties for Koch as treasurer of the while the amount in the treasury was only $38 county as aforesaid, they are not liable on their 669.86, leaving a deficit of $20,010.91, which bond, for any failure on the part of their princi- with interest and penalty amounted to the sum pal “to pay over according to law," monies for which judgment was rendered. The county which came into his hands for the use of said commissioners gave Koch a receipt, at the settlecity or school district.
ment, for the sur 80 found in the treasury, and This duty is within the very letter of the it is agreed that if the relators are entitled to a bond, and, in contemplation of law, must be re- peremptory writ of mándamus requiring the garded as within its intent and meaning as un- Board of Education of Wooster to release the surederstood by the parties at the time of its execu- ties as to any amount, such writ should require tion. The power of the legislature to modify the the release as to the sum of $5,285.66, which is duties of the officer during his term cannot be embraced in the judgment, according to the doubted, and the exercise of such power must principle determined in Commissioners 0. have been within the contemplation of the par- Springfield, 36 Ohio St. 643. ties at the time the bond was executed, “ac- The relators claim they are entitled to have cording to law," embraces statute law in force the release entered by authority of an act during the term of office, whether passed before “ for the relief of the sureties of Jacob B. Koch,” or after the execution of the bond. King, Carey etc. (74 Ohio. L. 417.) That act took effect and & Howe v. Nichols, 16 Ohio St. 80, approved and was in force from and after March 20, 1877, the followed.
day of its passage. It provided that the county Judgment affirmed.
commissioners should release and cancel the judg[This case will appear in 37 O. S.]
ment as to Dawson and the other sureties, but
not as to Koch. Before making such release and SURETIES OF PUBLIC OFFICER. cancellation, the commissioners were required to
submit the question whether such act should be SUPREME COURT OF OHIO.
done to the electors of Wayne County at the
April election, 1877, upon ten days notice pubTHE STATE OF OHIO, ON RELATION OF ARCHIBALD lished in one or more newspapers.
Electors DAWSON AND OTHERS,
throughout the county were requested to vote as
to the release of the amount due the county, and BOARD OF EDUCATION OF WOOSTER.
the ballots to be cast within the city were re
quired to contain an expression, first, as to the
March 21, 1882. release of the amount due the county; second, as A special act taking effect on the day of its passage, re- to a release of the amount due the city; and, quired the board of education of a city to release the
third, as to the release of the amount due the sureties of a county treasurer from liability for school funds of the board, which came to the hands of the treas
board of education of the city. And the act further urer for disbursement, but the reloase was not to be provided, that “if a majority of all the electors made until the question whether the sureties should be of the city of Wooster, voting at said April elecreleased was determined in favor of the release by a majority of all the votes cast in such city at the then next
tion upon the second and third propositions, or April election. Held, that the act is not in conflict with either of them, as herein specified, shall vote the Constitution; and the fact that judgmont had been 'yes,' then the board of education and city counrendered against the sureties for the amount of such funds, will make no difference. Board of Education v.
cil of the city of Wooster shall each respectively MoLandsborough, 86 Ohio St. 227, followed.
release all the sureties on the bond of the said Mandamus.
Jacob B. Koch * * * from all liability for the This is a proceeding in mandamus by Dawson payment of any sum or sums of money due to and others, su reties of Jacob B. Koch, troasurer the board of education or the city of Wooster on of Wayne County, to com pel the Board of Edu- account of such suretyship." cation of Wooster, in that county, to release from A majority of the votes cast at the aforesaid liability to said 'board Archibald Dawson and election was in favor of such release as to the
amount due to the board of education, but the ACCOMMODATION INDORSER-COLLAT. board of education refused to make or entor such
ERAL SECURITY. release, and this proceeding by mandamus is to com pel the board to perform that service.
SUPREME COURT OF OHIO. Lynch, Day and Lynch, for relators.
PITTS, GRAHAM & Co. The law was not invalid because the release was not to be entered until it was shown
CHRISTIAN FOGLESONG. that a majority of those voting at the April election were in favor of such release. 1 Ohio St 77;
March 21, 1882. 1 Ohio St. 105; 2 Ohio St. 607; 2 Ohio St. 647; One not induced by fraud who indorses a negotiable 5 Ohio St. 497; 8 Ohio St. 564; 26 Ohio St. 618;
promissory note owned by another, for his accommoda36 N. J. 72; 108 Mass. 27; 42 Md. 71; 13 Grat. 90;
tion, without restriction as to its use, is liable to an iodor.
see who receives it in good faith from the owner, before 26 Vt. 365; 72 Pa. St. 491; 42 Conn. 364; 10 dne, as collateral security for an antecedent debt of such Foster, 279.
owner, although there be no other consideration for giv
ing such collateral. Roxborough v. Messick. 8 Ohio St. W. J. Gilmore, J. McSweeney, sr. and J. Mc
448, distinguished. Sweeney, jr., for the defendant.
Error to the District Court of Fairfield
County. As to 1st point of per curiam, Ram. on judg- On January 18, 1872, Creed Bros, of Lancaster, ment, 17; Rev. Stats. § 1126; 2 Bl. Com. 137 ; Ohio, being indebted to Pitts, Graham & Co., of Acheson o. Miller, 2 Ohio St. 203. As to the 28 Baltimore Md., in the sum of $864.48, executed point, Goodale v. Fennell, 27 Ohio St. 426. As and delivered to them, payable to their order, to the 3d point, Rev. Stats. § 1080. As to the two promissory notes of that date, each for 4th point, Kelly 0. The State, 6 Ohio St. 269; 8432.24, one due in sixty and the other in ninety Lehman 6. McBride, 15 Ohio St. 573; Ex parté days after dats. At the same time Creed Bros. Hagan, 25 Ohio St. 426. As to the statutes to were owners of a promissory note for $850, dated require a preliminary vote, 2 Ohio St. 607; 8 August 10, 1871, due two years after date, with Ohio St. 564; 1 Ohio St. 105 ; 26 Ohio St. 618. interest from date, executed by Charles Becker, In all these cases the thing to be done was pro and payable to William Keller, or order. This spective.
note had been indorsed by Keller "without re
course," and in March, 1872, and previous to the BY THE COURT.
18th of that month, it was indorsed by FogleSeveral objections are urged against the allow song, for the accommodation of Creed Bros., at ance of the peremptory writ:
the request of their father, and without restric1. The legislature is prohibited by the con
tion as to the manner in which the note should
be used. stitution, Art. 1, § 19, from passing an act to require the release of the amount due the board On March 13, 1872, Creed Bros. seeing that of education, which is passed into judgment.
they would be unable to make payment in full 2. The act is retroactive and impairs the ob
of their note for $432.24, falling due in that ligation of a contract, and hence is prohibited.by
month, applied to Pitts, Graham & Co. for an exthe const. Art 2, § 28.
tension of time as to part of it. They proposed 3. The money directed to be released is a
to make to Pitts, Graham & Co. a payment on the trust fund, under the const., Art. 6, SS 1 and 2 ;
note, and informed them that they owned the and the general assembly had no such power with
Becker note, and desired to forward it to them
so that they could have it discounted, apply the respect to it.
proceeds in satisfaction of such indebtedness, and 4 The act has a general subject matter, but send to them (Creed Bros.) the balance. This being special, it is in conflict with the const. proposition was assented to by Pitts, Graham & Art. 2, & 26.
Co., and in pursuance of an agreement between In answer to this contention it is sufficient to them and Creed Bros., the latter, on March 19, say that the objections are not well taken, and 1872, sent to them $232.24 in cash and their note that the case is not distinguishable in principle of that date for $200, payable to the order of Pitts, from Board of Education v. McLandsborough, 36 Graham & Co. on April 18, 1872, which cash and Ohio St. 227. And see State ex rel., Corry v. note equaled the note so falling due in March, Hoffman, 35 Ohio St. 435; Nelson o. Milford, 7 and Creed Bros. also sent to Pitts, Graham & Co. Pick. 18; The State v. Hammonton, 38 N. J. L. the Becker note, which cash and notes were re430. The only question before us is as to the ceived by the latter by due course of mail. Pitts, legislative power
, and that being resolved in fa- Graham & Co. having failed to procure a disvor of its existence, the responsibility as well as count of the Becker note, informed Creed Bros. of the power, with respect to such legislation, must the fact, and they, on April 8, 1872, wrote to rest with the general assembly.
Pitts, Graham & Co. as follows: "We wish you Peremptory writ awarded, requiring a release
to hold (the Becker note) in protection to youras to $5,285.66.
selves and us until you hear from us." In reply
to this, on April 20, 1872, Pitts, Graham & Co. [This case will appear in 37 O. S.]
acknowledged receipt of the letter, and said · “We will hold the note as collateral security for ser, will not be affected, with respect to his right your notes to us.". And there was no objection to recover, by the fact that such defendant is an at any time from Creed Bros. or Foglesong that accommodation indorser. The obligation of the the Becker note should be so held.
indorser in such case is the same, whether the Creed Bros. failed, without paying any part of indorsement was for value received or for accomtheir remaining indebtedness to Pitts, Graham modation. Stone 0. Vance, 6 Ohio 246; Riley & Co., and the latter demanded payment of the 0. Johnson, 8 Ohio 526; Williams v. Bosson, 11 Beckér note when it became due and
notice Ohio 62; Clinton Bank v. Ayers, 16 Ohio 282; of non-payment to Foglesong, and subsequently Portage Co. Bank v. Lane, 8 Ohio St. 405; Erwin brought suit against Foglesong in the Court of v. Shaffer, 9 Ohio St. 43; Knox Co. Bank v. Lloyd, Common Pleas of Fairfield County. In that 18 Ohio Śt. 353; Kingland v. Pryor, 33 Ohio St. court it was found that the amount of the Becker 19; First National Bank_o. Fowler, 36 Ohio St. note exceeded the indebtedness of Creed Bros. to 524. `And see Jackson v. Bank, 42 N. J. L. 177. Pitts. Graham & Co., and judgment was rendered The question in this case is, therefore, as to in favor of the latter, and against Foglesong, for the liability of Foglesong upon his indorsement, $799.50 the amount of such indebtedness. That in view of the fact that the note so indorsed was judgment was reversed in the district court, and transferred by Creed Bros. as collateral security this petition in error was filed in this court to re- for the payment of notes to become due from verse the judgment of reversal.
them to Pitts, Graham & Co., no express agreeJohn S. Brasee, for plaintiffs in error.
ment having been made by the latter for an ex
tension of time or other favor with respect to "It is universally conceded that the holder of an
the notes made by Creed Bros. accommodation note, without restriction as to the In Roxborough v. Messick, 6 Ohio St. 448, it mode of using it, may transfer it, either in pay- was held: “Where the note of a third person ment or as collateral security for an antecedent is transferred bona fide before due, as collateral debt, and the maker will have no defense.” 1
security, and for value, such as in consideration Parsons on Bills and N. 226; Rutland Bank v. of a loan or advancement, or a stipulation, exBuck, 5 Wend. 66; Grandin v. Le Roy, 2 Paige,
press or implied, of further time to pay a pre509; Lathrop v. Morris 5 Sand. 7; Mohawk Bank
existing debt, or in consideration of a change of v. Corey, 1 Hill, 513; Mathews r. Rutherford, 7
securities of a pre-existing debt, or the like, the La Ann. 225; Appleton v. Donaldson, 3 Pa. St. holder of such collateral will be protected from 386; Boyd v. Cummings, 17 N. Y. 161; DeZeng infirmities affecting the instrument before it v. Fyfe, 1 Bosw. 335; Robbins v. Richardson, Ž was thus transferred.” And see 1 Daniel's Neg. Bosw. 248; Kirnbro v. Lytle, 10 Xerg. 427; Lord
Insts. $ 830. v. Ocean Bank, 20 Pa. St. 384; 12 S. & R. 382; 3 Here there was no consent on the part of Pitts, Barr, 381. And this is not inconsistent with Graham & Co. to the extension of time as to any Roxborough v. Messick, 6 Ohio St. 448, or Kings-part of the debt, until their debtors proposed to land v. Pryor, 33 Ohio St. 19.
place in their hands the Becker note, and it is a K. Fritter, for defendant in error.
presumption which is by no means unreasonable
that obtaining possession of that note was with It is stated in the note sued on that it is se
them an essential part of the arrangement by cured by mortgage, and hence Pitts, Graham & which the time was extended. True, they had Co. were not protected against defense that the
been unable to dispose of the note in the mannote as to Foglesong was without consideration.
ner intended, though it does not appear that Baily v. Smith, 14 Ohio St. 396. The note was
they had abandoned hope of disposing of it subindorsed to enable the parties to procure discount stantially in the same way. If is certain that of the same, and hence Foglesong is not liable to
they did not return it to Creed Bros., but repersons who assume to hold it as collateral secu
tained possession, and it is not probable they rity. Stone v. Vance, 6 Ohio 246; Williams v.
would have consented to part with possession Bosson, 11 Ohio, 62; Knox Co. Bank, v. Lloyd 18 before they were paid. That they only agreed Ohio St. 353. Regarded as collateral security it
not to dispose of the note in view of the agreewas taken without any extension of time or
ment that they should hold it as collateral seother consideration, and hence, as against Fogle-curity, and that this is in harmony with the song is 'no more enforceable in favor of Pitts, original purpose of the parties, is by no means Graham & Co. then it would be in favor of Creed improbable. Moreover, they did in fact wait unBros. Roxborough v. Messick, 6 Ohio St. 448;
til the Becker note became due, retaining it in Quebec Bank v. Weyand, 2 Cin. Sup. Ct. 538.
the meantime; and they demanded payment of OKEY, C. J.
the maker, at the maturity of the note, and Where one not induced by fraud indorses a gave notice of non payment to Foglesong, the negotiable promissory note for the accommoda- indorser, and then brought suit, the debt from tion of another, without restriction as to the use Creed Bros. remaining un paid. But whether or which may be made of the note, a third person not it is to be fairly inferred from these facts who receives it before due as collateral security that time was given to Creed Bros. in considerafor a debt to become due from the person for tion of the security afforded by the Becker note, whom the indorsement was made, and subse- within the rule so stated in Roxborough o. Mes quently prosecutes an action against such indor sick, is a question not entirely free from difficulty, and it is unnecessary to express any defi- without restriction as to its use, an indorsee taknite opinion upon it,
ing it in good faith as collateral security for an The defendant's counsel insists that the case antecedent debt of the payee and indorser, withfalls within the second proposition decided in out other consideration, occupies the position of Roxborough v. Messick, and hence that Pitts, a holder for value, and can recover thereon Graham & Co. were not entitled to recover. That against the maker. The precedent debt is a sufproposition is as follows: “When a debt is cre- ficient consideration for the transfer, and no new ated, without any stipulation for further secur- consideration need be shown. It is only where ity, and the debtor afterward, without any obli- the note has been diverted from the purpose for gation to do so, voluntarily transfers a negotia- which it was intended, by the payee, or where ble instrument, to secure the pre-existing debt, some other equity exists in favor of the maker, and both parties are left in respect to the pre-ex- that it is necessary that the holder should have isting debt, in statu quo, no new consideration, parted with value on the faith of the note, in orstipulation for delay, or credit being given, or der to enforce the same.' And the same distincright parted with, by the creditor, he is not a tion had been asserted in that State previously, holder of the collateral for value, in the usual and has been re-asserted subsequently. Schepp course of trade, and receives it subject to all the v. Carpenter, 51 N. Y. 602; Freund v. Bank, 76 equities existing against it at the time of the N. Y. 352. transfer."
Cases in support of the distinction here made We are by no means disposed to question the are quite numerous. Many of them are collected proposition so decided. While it is not concur- in 14 Am. L. Rev. 486, 488; Story on Prom. Notes red in by some judges for whose opinions we (7th ed.) 265, 266, note; Maitland v. Citizens have great respect (Railroad Company v. Na- Bank, 40 Md. 540, 567; 9 Ohio St. 51. Indeed, tional Bank, 102 U. S. 14; Poirior v. Morris, 2 E. the only case. I have found which can be re& B. 89; Currie v. Misa, L. R. 10 Ex. 153; 1'App. garded as supporting a different view of the law Cas. 554; 14 Am. L. Rev. 481), its correctness has upon this subject, is Bramhall v. Beckett, 31 been repeatedly recognized in this court and Maine, 205 (cited in Nutter v. Storer, 48 Maine, elsewhere. Hatch v: Langlon, 7 Ohio St. 248, 163); but in that case the distinction so well 255; Gebhart v. Sorrels, 9 Ohio St. 461, 466 made in Lord v. Ocean Bank, Grocers' Bank v. Cleveland v. State Bank, 19 Ohio St. 145, 150, Penfield, and other cases cited, is not alluded Copeland v. Manton, 22 Ohio St. 398, 402; 14 Am. to by court or counsel. L. Rev. 485.
A claim has been made that the language But the principle so stated in Roxborough v. of the court in Roxborough v. Messick is broad Messick, is not applicable to this case, and hence enough to warrant the conclusion that Foglecannot control it. The same rule prevails in song, is exonerated from liability upon the Pennsylvania (Petrie v. Clark, 11 S. & R. 377; mere ground that he was an accommodation Royer v. Keystone Bank, Cummings v. Boyd, 83 indorser. But in that case it appeared that Pa. St. 248, 372), and yet in Lord v. Ocean Bank, Roxborough, the maker of the notes, had a de20 Pa. St. 384, it was held that “the maker of an fense to them, and their transfer by Wilcox, the accommodation note cannot set up the want of payee and indorser, as collateral security, was a' consideration as a, defense against it in the fraud upon him.' Of course the learned judge hands of a third person, though it be there who delivered the opinion in that case never merely as a collateral security for a debt of the intended it to extend to a case arising on an payee." Black, C. J., who delivered the opinion, accommodation indorsement of this character, fully recognized the rule applied in Roxborough and any general language he may have emv. Messick, and added: "But the maker of an ployed must be limited to cases like that which accommodation note cannot set up the want of was then before the court. consideration as a defense against it in the hands Judgment reversed. of a third person, though it be there as a collat- [This case will appear in 37 0. S.] eral security merely. He who chooses to put himself in the front of a negotiable instrument
MUTUAL AID ASSOCIATIONS. for the benefit of his friend, must abide the consequence (12 S. & R. 382), and has no more right
SUPREME COURT OF OHIO. to complain, if his friend accommodates himself by pledging it for an old debt, than if he had
THE STATE EX REL. FIDELITY AID ASSOCIATION used it in any other way." And the same thing had been asserted before, and was asserted after
CHARLES H. MOORE, SUPERINTENDENT. ward in the same court. Appleton v. Donaldson, 3 Barr, 381; Work v. Kase, 34 Pa. St. 138.
March 21, 1882.
1. A company of another State organized for “insur.. So, in New York the rule is as stated in the ing lives on the plan of assessment upon surviving memsecond proposition in Roxborough v. Messick, bers,” without limitation, does not come within the (14 Am. L. Rev. 485; Duncomb o.N. Y. etc R. Co.
class of companies provided for in Section 3630 of the Re
vised Statutes. That section does not embrace compan84 N. Y. 190, 204), and yet in Grocers Bank v. ies insuring the lives of members for the benefit of others Penfield, 69 N. Y. 502, the court, fully recogniz
than their families and heirs. ing that fact, hold: "Where a promissory note
2. The supplementary act of April 12, 1880 (77 O. L. is made for the accommodation of the payee, but
178), does not enlarge the class of companies provided for in said section, but merely proscribes the regulations un
der which such companies, whethor domostic or foreigo, and policy of insurance sball bo void unloss at may do business in the State, and subjects them to addi. tional supervision.
sented to in writing by the president or treas Mandamus.
urer of the association." This is an application by the State on the re- Bateman & Harper and E. B. Jewett for lation of the Fidelity Mutual Aid Association, a plaintiff. corporation organized under the laws of Pennsyl- George K. Nash, Attorney General, for defendvania, for a mandamus against Charles H. Moore, ant. the Superintendent of Insurance of this State, to WÁITE, J. require him to issue a certificate to the relator,
The relator is a life insurance company, organto the effect that it has complied with the laws of this State" regulating corporations, compan
ized under the laws of the State of Pennsylvania, ies or associations organized for the mutual pro
and the question raised by the Attorney General
on behalf of the defendant is, whether it is entection of its members within this State."
titled to do business in this state without com. The relation shows that the relator was organ- plying with section 3604 of the Revised Statutes. ganized under section 37 of the act of the Legis- The business of life insurance in this state is lature of Pennsylvania approved May 18t 1876, regulated by statute. These regulations are which is averred to be as follows: "Companies found in chapter 10 of the Revised štatutes, cominsuring lives on the plan of assessments upon mencing with section 3587, and in certain surviving members may be organized in the amendatory 'acts. same manner as provided in this act for the or
The relator, from the nature of its organizaganization of mutual fire insurance companies, tion, claims to be exempt from the operation of and the provisions of the act to which this is
section 3604, and to be entitled to carry on busisupplementary, shall not apply to said compan- ness in the State under section 3630, and section ies, and companies heretofore organized, if their 3630 e. of the supplementary act of April 12, 1880, business is transacted in accordance with the 77 0. L. 181. provisions of their respective charters, whether The character of the company or assocoation with or without capital stock, guarantee capital, authorized to do business under section 3630 is or accumulated reserve, in lieu of capital stock; thus described in the section: “A company or provided however that each of said companies association may be organized for the purpose of shall be required to exhibit an annual state
mutual protection and relief of its members, and ment to the insurance department which shall
for the payment of stipulated sums of money to be published in the annual report of the insur- the families or heirs of the deceased members of ance commissioner, of the amount, if any, of its such company or association, and may receive capital stock; and also of all of its assets, assess
money, either by voluntary donation or contri. ments and liabilities, and to answer such inter
bution, or collect the same by assessment on its rogatories as the insurance commissioner may re- members, * * * * ; and such association quire, in order to acertain its character and con- shall not be subject to the preceding sections of dition. For this purpose the said commissioner this chapter." may at any time institute an examination of
It is companies and associations of this charthe affairs of any such company, as is provided acter alone that are exempt from the operation in the case of mutual insurance companies, by of the preceding sections of the act, and this exthe act to which this is supplemental; pro- emption is allowed on account of the limited navided, also, that no part of such assessment upon ture of the life insurance they are authorized to surviving members shall be applied to any other
assume, being confined to insurance for the benpurpose than the payment of death losses, unless
efit of the families and heirs of members. the amount intended for other purposes is spe- The exemption is not enlarged by the supplecially stated in the notice of such assessment mentary act of April 12, 1880, already referred to. and the object or objects for which it is intended; Section 3630 a. of that act only embraces companprovided further, that all policies or certificates ies or associations organized under the laws of issued by said companies shall state that the
this State “for the purpose of doing business uncompany issuing the same, is not required byder the provisions of section 3630, or for the purlaw to maintain the reserve which life insurance
pose of doing such business as is comtemplated companies are required by the act to which it is by said section." a supplement.”
The object of the act is to prescribe the reguThe scheme and mode of doing buisiness by lations under which such companies or associathe company is determined by its by-laws, à tions may do business and to subject them to adcopy of which is annexed to the relation and ditional supervision. which are averred to be still in force and to gov- Section 3630 e. of the supplementary act does ern the condition of its membership. Article not enlarge the class of companies or associations, one is as follows: “The object of this associa- but merely prescribes what such companies or tion shall be to secure to those having an inter-associations, organized under the laws of any est in the lives of deceased members, a specified other State, shall be required to do before they sum of money by assessment on surviving mem- are permitted to do business in this State. They bers.”
are required to comply with the laws of this State "Art. 17. An assignment of a membership regulating, like companies and associations or