Vol. VII.

Superior Court of Cincinnati.

Notwithstanding, however, the general rule by which each partner is liable for all the debts and engagements of the firm, it is competent for anyone dealing with the firm to contract not to hold the partners liable to an unlimited extent.

Again, if a person chooses to deal with a partnership or company upon the terms that its funds, and they only, shall be available to make good his demands. He cannot afterwards depart from those terms and hold the members individually iable as if no such restriction had been agreed to.

Lind, Part, p. 379. Now, was not such limited liability, with individual liability as corporators added, the extent to which the plaintiff intended, and in fact and effect did contract when buying this note? Why should it be given more than it intended to, and in fact obtained by the purchase of the note? It was willing to part, and, in fact, did part with the value it gave for the note for another, a less and a different liability than that it now seeks to enforce. Clearly, it could estop all parties from denying that the maker of the note was a corporation. It sued it as such upon the note and obtained a judgment against it as such, and took its distributive share of its assets as corporate assets. It is true, it claims that it was led by the fraud of the defendants to believe and deal with the payee of the note on the supposition that the maker was a corporation. But this fraud, so called, was merely an honest ignorance of the law; for all the defendants supposed, in good faith, that the Wharf Boat Company was a corporation. And the plaintiff, who is an Ohio corporation, was bound to know the law as well as the defendants, and hence, to know that it was not taking the note of a corporation. Yet it choose to by the note upon the assumption that the maker was a corporation. That is the length, breadth, heighth and depth, the whole of its contract. It should be held to such contract, and be held entitled to enforce it only as it made it.

I think the case of Fay v. Noble, 7 Cush., 188, which sustains the foregoing *views, lays down the true rule. It is, I think, in manifest accord with reason 499 and the principles of justice; enforce a contract as the parties intended to to make it, when the intention is plain, as it is in this case, and according to the terms they themselves have settled, I think the cases which hold the reverse of the case in 7 Cush., fail to consider sufficiently the nature and obligations of contracts; but assume that a merely unauthorized corporation is an illegal one, and that all engaged in conducting it should be peculiarly punished by persons who have contracted with and intended to deal with it as a corporation, and who can estop it and its shareholders from denying its corporate existence. While the state migut properly inflict penalties in such cases, I see no good reason for permitting individuals to do so when thereby they are to obtain what they, at the making of their contracts, never intended to secure or thought they were securing.

It will not do to assume that, in every case persons associate themselves with such companies as this Southwestern Transportation and Wharf Boat Company for the sole purpose of conducting business for gain. It is first as reasonable to suppose that to aid a business lawful and highly useful to general commerce and trade, business men are willing to contribute to their means, and to invest a certain amount without reference to ever being profitted a single cent. They may be said to give rather than to invest.

I am fully aware that a majority of the court have and abundance, yes, the larger number of reported cases to sustain their decision; but I think the time has come when the question here involved should be argued afresh and decided upon principle and reason. In ancient times and among primitive people, as in India to-day, obligations created, imposed and enforced by public authority are alone respected. The consensual contract between man and man, the fruit of the growth of the Roman Civil Law is not respected and scarcely recognized.

If these defendants are to be held personally liable in this transaction it will not be because the plaintiff, when it acquired the note and parted with the consideration therefor, intended that they should be personally liable to it, as it intended to deal as a corporation only; but because public authority creates in its favor an obligation other than that which it, in fact, desired and obtained. Had it taken the note generally and not as the note of a corporation, the case might be different, but it did not.

It seems to me, then, that the decisions recognizing and enforcing personal liability in cases like this at bar smack too strongly of the flavor of rights created by supreme public authority, different and opposed to those fixed between the parties by their consensual contract.

I, therefore, dissent, hoping that it may lead to a full consideration of the subject by the supreme court.

Swing and Mellen, Ex'rs, v. Gatch.

Vol. VII.

*LEGACY.

[Superior Court of Cincinnati, General Term, June, 1878.]

Tilden, Yaple and Force, JJ.

SWING AND MELLEN, EX'RS, V. GATCH.

5

When a testatrix, being indebted to her physician in the sum of $2,500 on running account for professional services, leaves him a legacy in the following words: "I give and bequeath to my good, kind and attentive physician, Dr. Gatch, the sum of $5,000," and after giving numerous legacies and making no mention of debts, gives whatever remains, being about $200,000, to residuary legatees, the physician is not required to elect between taking the legacy or his claim for services, nor is the legacy presumed to be in satisfaction of his claim, but he is entitled to both.

FORCE, J.

This is a petition in error to reverse a judument rendered at special term after hearing by the court; jury being waived. The action was brought by Dr. Gatch against the executors of the will of Mrs. Townsend, to recover a claim said to be due him as physician for attendance on the deceased. There is no question made that the services were not rendered or that the charge, $2,500, was not a fair charge.

The defense is this, that Mrs. Townsend, in her will, gave him a legacy of $5,000; that he accepted that legacy, and that the legacy, either on the ground of election or on the ground of satisfaction, cuts him off from his claim for the debt due him.

6

The will reads: "I will and bequeath to my good, kind and attentive physician, Dr. Gatch, the sum of $5,000." No mention of debts is made in the will, and what is left after legacies, is given to certain residuary legatees. At the time the will was made this residuum was estimated at about $200,000.

The rule as to election is, as stated in Hewson v. Cone, 24 O. S., 26, that a party is not put to an election unless the will clearly shows on its face that the testator intends the legatee shall have only one of two things, and shall not have both. The rule is reversed as to dower, in Ohio, by statute. Now the entire property of the deceased, real and personal, constitutes under our law a fund for the payment of his debts. The entire estate is first subject to the payment of debts; only after they are paid can legacies be paid. There is no necessity for making in the will a provision for the payment of debts. The gift of a legacy under our law necessarily means a gift after what is left after payment of debts. Hence when a legacy is given to a creditor, he is not put to an election whether he will take the legacy or keep his claims, unless there is in the will something equivalent to an express statement that he must surrender his claim against the estate. And the appointment of a residuary legatee is not equivalent to such an express statement; for the residuary legatee is necessarily understood to get only what is left after payment of debts and legacies, though there is no express provision made for the payment of debts.

Under the ordinary rules of election Gatch is therefore not put to an election to determine whether he will take the legacy or his claim.

But it is urged that the legacy must be held to be, though not payment, yet satisfaction (which is payment in equity) of his claim.

Vol. VII.

Superior Court of Cincinnati.

This rule as to satisfaction in equity is undoubtedly an old and wellestablished rule of the English chancery courts; but it is equally true that it survives only in a very dilapidated condition in this country. The whole doctrine of satisfaction is an arbitrary creation of the chancellors. Under the guise of interpreting a will and giving effect to the testator's intention, it in fact makes a new will, and substitutes the chancellor's notions of justice in place of the testator's ideas of bounty. The rule, so far as it applies to the redemption of legacies, does not exist with us. We have no redemption of legacies except by some *subsequent disposition by the testator of a specific article bequeathed. The rule of satisfaction as applied to double portions does not exist with us. The rule in its third form, where it applies to the satisfaction of a debt by means of a legacy of equal or greater amount, is, indeed, recognized in this country.

7

Although this rule of satisfaction of a debt by giving a legacy is long established, yet even in the English courts it is seldom referred to without recalcitration and criticism, and is subject to many limitations. One limitation was established by Lord Cowper, who said in Rawlins v. Powel, 1 P. Williams, 298, that where the debt is an open book account, it may very well be objected that the testator did not know the amount; nor the character of the indebtedness, or possibly even the fact of the indebtedness, and hence where the debt is an open book account, the court will not hold that the legacy was intended to be in satisfactiont and in such case the legatee shall have the legacy and also collect the debt.

It is also well settled that where the testator in his will assigns a particular reason for giving the legacy, there it shall be held that the legacy was given for this reason and not for the satisfaction of a debt, and the legatee shall have his legacy and also collect his debt.

In the present case, the claim of Dr. Gatch is an open, running book account, and also the will specifies a particular reason for the giving of the legacy. Hence, the rule as administered in England gives the plaintiff both his legacy and his claim. In the United States, it has been frequently stated to be an old rule too deeply seated to be overthrown, that when a legacy is given equal to or greater than a debt due from the testator to the legatee, the les acy is presumed to be in satisfaction of the debt. But in almost every case where the question has come before an American court, the court has said that while the rule is established and can not be overthrown, yet under the facts of that particular case the rule will not be enforced. If it were necessary, I should not hesitate to say that under our law for the distribution of es ates, making the entire property of the deceased, real and personal, liable for the payment of all debts, simple contract as well as specialty, no such presumption exists. But it is enough to say that under the facts of this case, the presumption would be overcome even under the English precedents. Exception was taken also to some of the testimony. The clergyman who drew the will testified to remarks made by the testatrix at the time she directed this particular provision to be inserted in the will. These remarks were that Dr. Gatch had been so very kind and attentive and serviceable to her, that the fees which he would charge would be no equivalent, and she was precise in prescribing the words. in which the legacy was expressed, and she desired especially to remember him in her will. It is claimed that this is not competent evidence. Not only the

8

text-books, but the cases, are express that where there is question as to the intention to the testator in a particular provision, testimony may be given to cotemporaneous oral statements for the purpose of establishing the intention. In the present case, however, the testimony is immaterial, because it was given to prove an intention which appeared sufficiently upon the face of the will itself. The judgment is affirmed.

Yaple J. and Harmond J. concurred.

Disney, and Strickland & Foster, for plaintiff in error.
Paxton & Warrington, for defendant in error.

ACCORD AND SATISFACTION-SHERIFF.
[Hamilton District Court, 1878.]

ISAAC RUNYAN v. D. W. VANDYKE ET AL.

A sheriff has no authority to accept part in full satisfaction of an execution though the judgment may be void for want of service; but if the creditor ratifies the act, an the lapse of seven years tends to show that he did, further execution will be enjoined.

LONGWORTH, J.

9

Runyan subscribed one hundred dollars toward establishing an omnibus line between Lebanon and Cincinnati, and was subsequently sued by Vandyke, the manager of the line, for money advanced by him for horses, and to pay indebtedness of the line, Runyan and others being sued as partners in this liability. The common pleas rendered a judgment in solido against all for $3,000 in 1870. The petition alleges the first notice. the plaintiff received of the proceeding was by the sheriff threatening to levy on his farm and stock for payment of the demand; that he persuaded the sheriff to wait for a day, and then obtained a friend, Mr. Jarvis Spencer, to call on that officer to see what could be done. This party paid to the sheriff $154, which he alleges was in full satisfaction of the judgment against Runyan. He avers that Vandyke has taken out an execution against him for the balance of the judgment and levied on his farm. He claims the judgment has been fully satisfied, and asks that the defendant may be enjoined from urther proceeding. Whether the plaintiff did receive a receipt in full, whether he believed he was discharged, and that the sheriff told him so, would make no difference, unless the owner of the judgment had authorized such compromise, or had subsequently ratified it. Vandyke testified he never intended to release and never did, in fact, release Runyan. The preponderance of the evidence would go to show that he did ratify the act of the sheriff, and the fact that he allowed seven years to pass without proceeding to collect the alleged indebtedness, should be regarded as an item of evidence to show that the subsequent execution was an aftherthought. The plaintiff showed by a preponderance of testimony that, whether the sheriff had authority to settle or not, Vandyke ratified the act, and stated that the payment was in full discharge of the liability of Runyan. A perpetual injunction would be allowed, restraining Vandyke from proceeding against the plaintiff.

S. F. Hunt, for plaintiff.
Archer & McNeil, contra.

Vol. VII.

Hamilton District Court.

PARTIES.

[Hamilton District Court, 1878.]

JACOB L. WAYNE, TRUSTEE v. JOHN D. MINOR ET AL.

One to whom the legal title in a note and mortgage has been transferred, for the purpose of collecting them in his own name may sue on them in his own name, as the trustee of an express trust.

The cause comes into this court upon appeal. The plaintiff sets forth in his petition that on July 1, 1876, the defendants, Minor and wife, made to the Cincinnati Savings Society their three promissory notes secured by a mortgage upon a tract of land in the northeaster quarter of fractional section 8, town 2, fractional range 2, in this county.

10

The petition further sets forth that the said notes and mortgage *have been assigned to him, the plaintiff, as trustee, for the purpose of bringing this action, and that as such trustee, he brings the action on behalf of the savings society and for its benefit.

The defendants, by their answer, admit all the allegations of this petition except the averment that the plaintiff is trustee for the savings society, which they deny.

The proof offered at the trial shows that the savings society transferred the notes and the mortgage to the plaintiff so as to enable him to bring suit upon them in his own name, fearing that it might possibly injure the credit of the society to have it known that it was engaged in too many collection suits.

It is contended in argument on behalf of defendants that the plaintiff, not being the real party in interest, has no right to maintain this action, but that the same should have been brought by the savings society, in its own name, and that on this account there can be no recovery.

The code of civil procedure (sec. 25) provides that every action should be brought in the name of the real party in interest, except as provided in section 27.

Section 27 makes an exception to the general rule by providing that the trustee of an express trust may maintain an action in his own name without joining with him the person for whose benefit it is prosecuted.

A trust has been defined to be "an obligation upon a person arising out of a confidence reposed in him to apply property faithfully and according to such confidence." But the best definition is that given by Mr. Erskine in his institutes of the laws of Scotland (bk. 3, p. 454), where he says: "A trust is in the nature of the deposition by which a proprietor transfers to another the property of the subject intrusted; not that it should remain with him, but that it should be applied to certain uses for the behoof of another."

trust.

This obligation to apply the property of another, if it is created by agreement, constitutes in the hands of the holder of the title an express If obligation arises not by virtue of any agreement, but by operation of law, then the trust is not express but implied. In either case to constitute any person a trustee in the sense of section 27 of the code above referred to, the title must be in him.