population of less than 50,000, was the county seat of Wayne county, in which was elected annually a city treasurer, who was ex officio treasurer of the city school district, and whose duty it was to receive from the county treasurer all moneys belonging to the city and school district, and disburse the same according to law.

Between the date of the bond and the commencement of Koch's term of office, to wit: on the 2d of April, 1870, the General Assembly passed an act (67 Ohio L. 32), providing among other things, "that in cities of first and second class, having a population of less than 50,000, embracing a county seat, no election for city treasurer shall be held, but the county treasurer shall in such cases, act as city treasurer etc."

Hence, it is contended by plaintiffs in error, that as sureties for Koch as treasurer of the county as aforesaid, they are not liable on their bond, for any failure on the part of their principal "to pay over according to law," monies which came into his hands for the use of said city or school district.

This duty is within the very letter of the bond, and, in contemplation of law, must be regarded as within its intent and meaning as understood by the parties at the time of its execution. The power of the legislature to modify the duties of the officer during his term cannot be doubted, and the exercise of such power must have been within the contemplation of the parties at the time the bond was executed, “ cording to law," embraces statute law in force during the term of office, whether passed before or after the execution of the bond. King, Carey & Howe v. Nichols, 16 Ohio St. 80, approved and followed.

Judgment affirmed.

[This case will appear in 37 O. S.]

SURETIES OF PUBLIC OFFICER.

SUPREME COURT OF OHIO.

ac

THE STATE OF OHIO, ON RELATION OF ARCHIBALD DAWSON AND OTHERS,

V.

BOARD OF EDUCATION OF WOOSTER.

March 21, 1882.

A special act taking effect on the day of its passage, required the board of education of a city to release the sureties of a county treasurer from liability for school funds of the board, which came to the hands of the treasurer for disbursement, but the release was not to be made until the question whether the sureties should be released was determined in favor of the release by a majority of all the votes cast in such city at the then next April election. Held, that the act is not in conflict with the Constitution; and the fact that judgment had been rendered against the sureties for the amount of such funds, will make no difference. Board of Education v. McLandsborough, 36 Ohio St. 227, followed.

Mandamus.

This is a proceeding in mandamus by Dawson and others, sureties of Jacob B. Koch, treasurer of Wayne County, to compel the Board of Education of Wooster, in that county, to release from liability to said board Archibald Dawson and

others, sureties as aforesaid, as to the amount found to be due to said board and unpaid, which sum forms part of the judgment in favor of the county commissioners of said county and against Dawson and the other sureties, which judgment was affirmed in the preceding case of Dawson v. The State, ante.

These are the facts. At the March term, 1876, of the Court of Common Pleas of Wayne County, a judgment was rendered in favor of the County Commissioners of Wayne County, against Jacob B. Koch, treasurer of that county, and Dawson and others, his sureties, for $26,210.23, based on the defalcation of Koch as such officer. It was found and adjudged in the case, that the amount due to Wayne County, the city of Wooster, and the board of education of the city, was $58,680.77, while the amount in the treasury was only $38669.86, leaving a deficit of $20,010.91, which with interest and penalty amounted to the sum for which judgment was rendered. The county commissioners gave Koch a receipt, at the settlement, for the sum so found in the treasury, and it is agreed that if the relators are entitled to a peremptory writ of mandamus requiring the Board of Education of Wooster to release the sureties as to any amount, such writ should require the release as to the sum of $5,285.66, which is embraced in the judgment, according to the principle determined in Commissioners v. Springfield, 36 Ohio St. 643.

The relators claim they are entitled to have the release entered by authority of an act "for the relief of the sureties of Jacob B. Koch," etc. (74 Ohio.L. 417.) That act took effect and was in force from and after March 20, 1877, the day of its passage. It provided that the county commissioners should release and cancel the judgment as to Dawson and the other sureties, but not as to Koch. Before making such release and cancellation, the commissioners were required to submit the question whether such act should be done to the electors of Wayne County at the April election, 1877, upon ten days notice published in one or more newspapers. Electors throughout the county were requested to vote as to the release of the amount due the county, and the ballots to be cast within the city were required to contain an expression, first, as to the release of the amount due the county; second, as to a release of the amount due the city; and, third, as to the release of the amount due the board of education of the city. And the act further provided, that "if a majority of all the electors of the city of Wooster, voting at said April election upon the second and third propositions, or either of them, as herein specified, shall vote 'yes,' then the board of education and city council of the city of Wooster shall each respectively release all the sureties on the bond of the said Jacob B. Koch *** from all liability for the payment of any sum or sums of money due to the board of education or the city of Wooster on account of such suretyship."

A majority of the votes cast at the aforesaid election was in favor of such release as to the

amount due to the board of education; but the board of education refused to make or enter such release, and this proceeding by mandamus is to compel the board to perform that service.

Lynch, Day and Lynch, for relators.

The law was not invalid because the release was not to be entered until it was shown that a majority of those voting at the April election were in favor of such release. 1 Ohio St 77; 1 Ohio St. 105; 2 Ohio St. 607; 2 Ohio St. 647; 5 Ohio St. 497; 8 Ohio St. 564; 26 Ohio St. 618; 36 N. J. 72; 108 Mass. 27; 42 Md. 71; 13 Grat. 90; 26 Vt. 365; 72 Pa. St. 491; 42 Conn. 364; 10 Foster, 279.

W. J. Gilmore, J. McSweeney, sr. and J. McSweeney, jr., for the defendant.

As to 1st point of per curiam, Ram. on judgment, 17; Rev. Stats. § 1126; 2 Bl. Com. 137; Acheson v. Miller, 2 Ohio St. 203. As to the 2d point, Goodale v. Fennell, 27 Ohio St. 426. As to the 3d point, Rev. Stats. § 1080. As to the 4th point, Kelly . The State, 6 Ohio St. 269; Lehman v. McBride, 15 Ohio St. 573; Ex parte Hagan, 25 Ohio St. 426.

As to the statutes to require a preliminary vote, 2 Ohio St. 607; 8 Ohio St. 564; 1 Ohio St. 105; 26 Ohio St. 618. In all these cases the thing to be done was prospective.

BY THE COURT.

Several objections are urged against the allowance of the peremptory writ:

1. The legislature is prohibited by the constitution, Art. 1, § 19, from passing an act to require the release of the amount due the board of education, which is passed into judgment.

2. The act is retroactive and impairs the obligation of a contract, and hence is prohibited by

the const. Art 2, § 28.

3. The money directed to be released is a trust fund, under the const., Art. 6, §§ 1 and 2; and the general assembly had no such power with respect to it.

4 The act has a general subject matter, but being special, it is in conflict with the const. Art. 2, § 26.

In answer to this contention it is sufficient to say that the objections are not well taken, and that the case is not distinguishable in principle from Board of Education v. McLandsborough, 36 Ohio St. 227. And see State ex rel., Corry v. Hoffman, 35 Ohio St. 435; Nelson v. Milford, 7 Pick. 18; The State v. Hammonton, 38 N. J. L. 430. The only question before us is as to the legislative power, and that being resolved in favor of its existence, the responsibility as well as the power, with respect to such legislation, must rest with the general assembly.

Peremptory writ awarded, requiring a release as to $5,285.66.

[This case will appear in 37 O. S.]

One not induced by fraud who indorses a negotiable promissory note owned by another, for his accommodation, without restriction as to its use, is liable to an indorsee who receives it in good faith from the owner, before due, as collateral security for an antecedent debt of such owner, although there be no other consideration for giving such collateral. Roxborough v. Messick. 6 Ohio St. 448, distinguished.

Error to the District Court of Fairfield County.

On January 18, 1872, Creed Bros, of Lancaster, Ohio, being indebted to Pitts, Graham & Co., of Baltimore Md., in the sum of $864.48, executed and delivered to them, payable to their order, two promissory notes of that date, each for $432.24, one due in sixty and the other in ninety days after date. At the same time Creed Bros. were owners of a promissory note for $850, dated August 10, 1871, due two years after date, with interest from date, executed by Charles Becker, and payable to William Keller, or order. This note had been indorsed by Keller "without recourse," and in March, 1872, and previous to the 18th of that month, it was indorsed by Foglesong, for the accommodation of Creed Bros., at the request of their father, and without restriction as to the manner in which the note should be used.

On March 13, 1872, Creed Bros. seeing that they would be unable to make payment in full of their note for $432.24, falling due in that

This

month, applied to Pitts, Graham & Co. for an extension of time as to part of it. They proposed to make to Pitts, Graham & Co. a payment on the note, and informed them that they owned the Becker note, and desired to forward it to them so that they could have it discounted, apply the proceeds in satisfaction of such indebtedness, and send to them (Creed Bros.) the balance. proposition was assented to by Pitts, Graham & Co., and in pursuance of an agreement between them and Creed Bros., the latter, on March 19, 1872, sent to them $232.24 in cash and their note of that date for $200, payable to the order of Pitts, Graham & Co. on April 18, 1872, which cash and note equaled the note so falling due in March, and Creed Bros. also sent to Pitts, Graham & Co. the Becker note, which cash and notes were received by the latter by due course of mail. Pitts, Graham & Co. having failed to procure a discount of the Becker note, informed Creed Bros. of the fact, and they, on April 8, 1872, wrote to Pitts, Graham & Co. as follows: "We wish you. to hold (the Becker note) in protection to yourselves and us until you hear from us." In reply to this, on April 20, 1872, Pitts, Graham & Co. acknowledged receipt of the letter, and said ·

"We will hold the note as collateral security for your notes to us." And there was no objection at any time from Creed Bros. or Foglesong that the Becker note should be so held.

Creed Bros. failed, without paying any part of their remaining indebtedness to Pitts, Graham & Co, and the latter demanded payment of the Becker note when it became due and gave notice of non-payment to Foglesong, and subsequently brought suit against Foglesong in the Court of Common Pleas of Fairfield County. In that court it was found that the amount of the Becker note exceeded the indebtedness of Creed Bros. to Pitts. Graham & Co., and judgment was rendered in favor of the latter, and against Foglesong, for $799.50 the amount of such indebtedness. That judgment was reversed in the district court, and this petition in error was filed in this court to reverse the judgment of reversal.

John S. Brasee, for plaintiffs in error.

"It is universally conceded that the holder of an accommodation note, without restriction as to the mode of using it, may transfer it, either in payment or as collateral security for an antecedent debt, and the maker will have no defense." Parsons on Bills and N. 226; Rutland Bank v. Buck, 5 Wend. 66; Grandin v. Le Roy, 2 Paige, 509; Lathrop v. Morris 5 Sand. 7; Mohawk Bank v. Corey, 1 Hill, 513; Mathews v. Rutherford, 7 La Ann. 225; Appleton v. Donaldson, 3 Pa. St. 386; Boyd v. Cummings, 17 N. Y. 161; DeZeng v. Fyfe, 1 Bosw. 335; Robbins v. Richardson, 2 Bosw. 248; Kirnbro v. Lytle, 10 Xerg. 427; Lord v. Ocean Bank, 20 Pa. St. 384; 12 S. & R. 382; 3 Barr, 381. And this is not inconsistent with Roxborough v. Messick, 6 Ohio St. 448, or Kingsland v. Pryor, 33 Ohio St. 19.

K. Fritter, for defendant in error.

It is stated in the note sued on that it is secured by mortgage, and hence Pitts, Graham & Co. were not protected against defense that the note as to Foglesong was without consideration. Baily v. Smith, 14 Ohio St. 396. The note was indorsed to enable the parties to procure discount of the same, and hence Foglesong is not liable to persons who assume to hold it as collateral security. Stone v. Vance, 6 Ohio 246; Williams v. Bosson, 11 Ohio, 62; Knox Co. Bank, v. Lloyd 18 Ohio St. 353. Regarded as collateral security it was taken without any extension of time or other consideration, and hence, as against Foglesong is no more enforceable in favor of Pitts, Graham & Co. then it would be in favor of Creed Bros. Roxborough v. Messick, 6 Ohio St. 448; Quebec Bank v. Weyand, 2 Cin. Sup. Ct. 538. OKEY, C. J.

Where one not induced by fraud indorses a negotiable promissory note for the accommodation of another, without restriction as to the use which may be made of the note, a third person who receives it before due as collateral security for a debt to become due from the person for whom the indorsement was made, and subsequently prosecutes an action against such indor

ser, will not be affected, with respect to his right to recover, by the fact that such defendant is an accommodation indorser. The obligation of the indorser in such case is the same, whether the indorsement was for value received or for accommodation. Stone v. Vance, 6 Ohio 246; Riley v. Johnson, 8 Ohio 526; Williams v. Bosson, 11 Ohio 62; Clinton Bank v. Ayers, 16 Ohio 282; Portage Co. Bank v. Lane, 8 Ohio St. 405; Erwin v. Shaffer, 9 Ohio St. 43; Knox Co. Bank v. Lloyd, 18 Ohio St. 353; Kingland v. Pryor, 33 Ohio St. 19; First National Bank v. Fowler, 36 Ohio St. 524. And see Jackson v. Bank, 42 N. J. L. 177.

The question in this case is, therefore, as to the liability of Foglesong upon his indorsement, in view of the fact that the note so indorsed was transferred by Creed Bros. as collateral security for the payment of notes to become due from them to Pitts, Graham & Co., no express agreement having been made by the latter for an extension of time or other favor with respect to the notes made by Creed Bros.

In Roxborough v. Messick, 6 Ohio St. 448, it was held: "Where the note of a third person is transferred bona fide before due, as collaterai security, and for value, such as in consideration of a loan or advancement, or a stipulation, express or implied, of further time to pay a preexisting debt, or in consideration of a change of securities of a pre-existing debt, or the like, the holder of such collateral will be protected from infirmities affecting the instrument before it was thus transferred." And see 1 Daniel's Neg. Insts. § 830.

Here there was no consent on the part of Pitts, Graham & Co. to the extension of time as to any part of the debt, until their debtors proposed to place in their hands the Becker note, and it is a presumption which is by no means unreasonable that obtaining possession of that note was with them an essential part of the arrangement by which the time was extended. True, they had been unable to dispose of the note in the manner intended, though it does not appear that they had abandoned hope of disposing of it substantially in the same way. It is certain that they did not return it to Creed Bros., but retained possession, and it is not probable they would have consented to part with possession before they were paid. That they only agreed not to dispose of the note in view of the agreement that they should hold it as collateral security, and that this is in harmony with the original purpose of the parties, is by no means improbable. Moreover, they did in fact wait until the Becker note became due, retaining it in the meantime; and they demanded payment of the maker, at the maturity of the note, and gave notice of non payment to Foglesong, the indorser, and then brought suit, the debt from Creed Bros. remaining unpaid. But whether or not it is to be fairly inferred from these facts that time was given to Creed Bros. in consideration of the security afforded by the Becker note, within the rule so stated in Roxborough v. Messick, is a question not entirely free from diffi

culty, and it is unnecessary to express any definite opinion upon it,

The defendant's counsel insists that the case falls within the second proposition decided in Roxborough v. Messick, and hence that Pitts, Graham & Co. were not entitled to recover. That proposition is as follows: "When a debt is created, without any stipulation for further security, and the debtor afterward, without any obligation to do so, voluntarily transfers a negotiable instrument, to secure the pre-existing debt, and both parties are left in respect to the pre-existing debt, in statu quo, no new consideration, stipulation for delay, or credit being given, or right parted with, by the creditor, he is not a holder of the collateral for value, in the usual course of trade, and receives it subject to all the equities existing against it at the time of the transfer."

We are by no means disposed to question the proposition so decided. While it is not concurred in by some judges for whose opinions we have great respect (Railroad Company v. National Bank, 102 U. S. 14; Poirior v. Morris, 2 E. & B. 89; Currie v. Misa, L. R. 10 Ex. 153; 1 App. Cas. 554; 14 Am. L. Rev. 481), its correctness has been repeatedly recognized in this court and elsewhere. Hatch v Langlon, 7 Ohio St. 248, 255; Gebhart v. Sorrels, 9 Ohio St. 461, 466; Cleveland v. State Bank, 19 Ohio St. 145, 150; Copeland v. Manton, 22 Ohio St. 398, 402; 14 Am. L. Rev. 485.

But the principle so stated in Roxborough v. Messick, is not applicable to this case, and hence cannot control it. The same rule prevails in Pennsylvania (Petrie v. Clark, 11 S. & R. 377; Royer v. Keystone Bank, Cummings v. Boyd, 83 Pa. St. 248, 372), and yet in Lord v. Ocean Bank, 20 Pa. St. 384, it was held that "the maker of an accommodation note cannot set up the want of consideration as a defense against it in the hands of a third person, though it be there merely as a collateral security for a debt of the payee." Black, C. J., who delivered the opinion, fully recognized the rule applied in Roxborough v. Messick, and added: "But the maker of an accommodation note cannot set up the want of consideration as a defense against it in the hands of a third person, though it be there as a collateral security merely. He who chooses to put himself in the front of a negotiable instrument for the benefit of his friend, must abide the consequence (12 S. & R. 382), and has no more right to complain, if his friend accommodates himself by pledging it for an old debt, than if he had used it in any other way." And the same thing had been asserted before, and was asserted afterward in the same court. Appleton v. Donaldson, 3 Barr, 381; Work v. Kase, 34 Pa. St. 138.

So, in New York the rule is as stated in the second proposition in Roxborough v. Messick, (14 Am. L. Rev. 485; Duncomb . N. Y. etc R. Co. 84 N. Y. 190, 204), and yet in Grocers Bank v. Penfield, 69 N. Y. 502, the court, fully recognizing that fact, hold: "Where a promissory note is made for the accommodation of the payee, but

without restriction as to its use, an indorsee taking it in good faith as collateral security for an antecedent debt of the payee and indorser, without other consideration, occupies the position of a holder for value, and can recover thereon against the maker. The precedent debt is a sufficient consideration for the transfer, and no new consideration need be shown. It is only where the note has been diverted from the purpose for which it was intended, by the payee, or where some other equity exists in favor of the maker, that it is necessary that the holder should have parted with value on the faith of the note, in order to enforce the same." And the same distinction had been asserted in that State previously, and has been re-asserted subsequently. Schepp v. Carpenter, 51 N. Y. 602; Freund v. Bank, 76 N. Y. 352.

Cases in support of the distinction here made are quite numerous. Many of them are collected in 14 Am. L. Rev. 486, 488; Story on Prom. Notes (7th ed.) 265, 266, note; Maitland v. Citizens' Bank, 40 Md. 540, 567; 9 Ohio St. 51. Indeed, the only case. I have found which can be regarded as supporting a different view of the law upon this subject, is Bramhall v. Beckett, 31 Maine, 205 (cited in Nutter v. Storer, 48 Maine, 163); but in that case the distinction so well made in Lord v. Ocean Bank, Grocers' Bank v. Penfield, and other cases cited, is not alluded to by court or counsel.

A claim has been made that the language of the court in Roxborough v. Messick is broad enough to warrant the conclusion that Foglesong, is exonerated from liability upon the mere ground that he was an accommodation indorser. But in that case it appeared that Roxborough, the maker of the notes, had a defense to them, and their transfer by Wilcox, the payee and indorser, as collateral security, was a fraud upon him. Of course the learned judge who delivered the opinion in that case never intended it to extend to a case arising on an accommodation indorsement of this character, and any general language he may have employed must be limited to cases like that which was then before the court.

Judgment reversed.

[This case will appear in 37 O. S.]

MUTUAL AID ASSOCIATIONS.

SUPREME COURT OF OHIO.

THE STATE EX REL. FIDELITY AID ASSOCIATION

V.

CHARLES H. MOORE, SUPERINTENDENT.

March 21, 1882.

1. A company of another State organized for "insuring lives on the plan of assessment upon surviving members," without limitation, does not come within the class of companies provided for in Section 3630 of the Revised Statutes. That section does not embrace companies insuring the lives of members for the benefit of others than their families and heirs.

2. The supplementary act of April 12, 1880 (77 O. L. 178), does not enlarge the class of companies provided for in said section, but merely prescribes the regulations un

der which such companies, whether domestic or foreign, may do business in the State, and subjects them to aɗditional supervision.

Mandamus.

This is an application by the State on the relation of the Fidelity Mutual Aid Association, a corporation organized under the laws of Pennsylvania, for a mandamus against Charles H. Moore, the Superintendent of Insurance of this State, to require him to issue a certificate to the relator, to the effect that it has complied with the laws of this State" regulating corporations, companies or associations organized for the mutual protection of its members within this State."

The relation shows that the relator was organganized under section 37 of the act of the Legislature of Pennsylvania approved May 1st 1876, which is averred to be as follows: "Companies insuring lives on the plan of assessments upon surviving members may be organized in the same manner as provided in this act for the organization of mutual fire insurance companies, and the provisions of the act to which this is supplementary, shall not apply to said companies, and companies heretofore organized, if their business is transacted in accordance with the provisions of their respective charters, whether with or without capital stock, guarantee capital, or accumulated reserve, in lieu of capital stock; provided however that each of said companies shall be required to exhibit an annual statement to the insurance department which shall be published in the annual report of the insurance commissioner, of the amount, if any, of its capital stock; and also of all of its assets, assessments and liabilities, and to answer such interrogatories as the insurance commissioner may require, in order to acertain its character and condition. For this purpose the said commissioner may at any time institute an examination of the affairs of any such company, as is provided in the case of mutual insurance companies, by the act to which this is supplemental; provided, also, that no part of such assessment upon surviving members shall be applied to any other purpose than the payment of death losses, unless the amount intended for other purposes is specially stated in the notice of such assessment and the object or objects for which it is intended; provided further, that all policies or certificates issued by said companies shall state that the company issuing the same, is not required by law to maintain the reserve which life insurance companies are required by the act to which it is a supplement."

The scheme and mode of doing buisiness by the company is determined by its by-laws, a copy of which is annexed to the relation and which are averred to be still in force and to govern the condition of its membership. Article one is as follows: "The object of this association shall be to secure to those having an interest in the lives of deceased members, a specified sum of money by assessment on surviving members."

"Art. 17. An assignment of a membership

and policy of insurance shall be void unless assented to in writing by the president or treasurer of the association."

Bateman & Harper and E. B. Jewett for plaintiff.

George K. Nash, Attorney General, for defend

ant.

WÁITE, J.

The relator is a life insurance company, organized under the laws of the State of Pennsylvania, and the question raised by the Attorney General on behalf of the defendant is, whether it is entitled to do business in this State without complying with section 3604 of the Revised Statutes..

The business of life insurance in this State is

regulated by statute. These regulations are found in chapter 10 of the Revised Statutes, commencing with section 3587, and in certain amendatory acts.

The relator, from the nature of its organization, claims to be exempt from the operation of section 3604, and to be entitled to carry on business in the State under section 3630, and section 3630 e. of the supplementary act of April 12, 1880, 77 0. L. 181.

The character of the company or assocoation authorized to do business under section 3630 is thus described in the section: "A company or association may be organized for the purpose of mutual protection and relief of its members, and for the payment of stipulated sums of money to the families or heirs of the deceased members of such company or association, and may receive money, either by voluntary donation or contribution, or collect the same by assessment on its members, * * * * and such association shall not be subject to the preceding sections of this chapter."

It is companies and associations of this character alone that are exempt from the operation of the preceding sections of the act, and this exemption is allowed on account of the limited nature of the life insurance they are authorized to assume, being confined to insurance for the benefit of the families and heirs of members.

The exemption is not enlarged by the supplementary act of April 12, 1880, already referred to. Section 3630 a. of that act only embraces companies or associations organized under the laws of this State "for the purpose of doing business under the provisions of section 3630, or for the purpose of doing such business as is comtemplated by said section."

The object of the act is to prescribe the regulations under which such companies or associations may do business and to subject them to additional supervision.

Section 3630 e. of the supplementary act does not enlarge the class of companies or associations, but merely prescribes what such companies or associations, organized under the laws of any other State, shall be required to do before they are permitted to do business in this State. They are required to comply with the laws of this State regulating, like companies and associations or